Trade Bank Limited (In Liquidation) v L. Z. Engineering Construction Limited [1997] KECA 85 (KLR)
The bottom line
#Kenya's Court of Appeal struck out two appeals because Trade Bank failed to make directly affected parties respondents, showing joinder rules are mandatory.
What this practically means
#Executive summary
#Key legal issues
#Whether Yaya Towers Limited was a party directly affected by the interlocutory appeals
Yaya was directly affected because the amendments refused and the defence portions struck out went to the core of who its directors and shareholders are and whether the charge over its assets was valid.
The court rejected counsel's argument that a company need not care who its shareholders are, holding that a company acts through its directors and must be concerned with who controls its affairs. The pleadings at issue concerned the validity of the board resolution of 7 February 1992, the allotment of shares, and the charge over Yaya's assets, all of which directly affect Yaya.
Consequence of failing to join parties directly affected by an appeal
Failure to make directly affected parties respondents is a failure to take an essential step within the prescribed time, rendering the appeals incompetent and ordinarily liable to be struck out under Rule 80.
Relying on Kneller JA in Abdul W. Sheikh, the court held the service and joinder requirements of Rule 76(1) are mandatory and embody natural justice. The appellant could not rely on the words 'for information only' on served notices, nor on the absence of a notice of address for service, to escape the duty to make directly affected parties respondents.
Whether the court should exercise discretion to save the appeals by ordering service instead of striking out
The discretion was refused because it should have been obvious that Yaya and the Fund were directly affected, and the appellant should have invoked the proviso to Rule 76(1) for directions rather than deciding the matter itself.
While Sanitary Equipment shows the court may grant time to correct a misjoinder, the court declined to depart from the usual practice of striking out given the appellant's unilateral and unwise determination of the issue, compounded by the unresolved conflict over who was legitimately instructed for Yaya.
Legal principles established
#- A person served with a notice of appeal who is directly affected by the appeal must be joined as a respondent; an intended appellant may not unilaterally decide who is directly affected.
- Failure to join a party directly affected by an appeal is a failure to take an essential step, and ordinarily such an appeal must be struck out under Rule 80.
- The requirements of Rule 76(1) and its proviso regarding service on persons directly affected are mandatory, embodying audi alteram partem.
- There is no distinction between final and interlocutory appeals for this purpose, since pronouncements on interlocutory appeals determine parties' rights to some extent.
- Absence of a notice of address for service does not excuse an appellant from filing an appeal against a party directly affected.
Court orders
#- 1.Civil Appeal No. 174 of 1994 struck out as incompetent
- 2.Civil Appeal No. 175 of 1994 struck out as incompetent
- 3.Costs of the appeals awarded to the applicant
- 4.Costs of the two notices of motion awarded to the applicant
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 3791 of 1993
- Jurisdiction invoked
- Rules 42(1) and 80 of the Court of Appeal Rules (application to strike out appeals)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Trade Bank Limited (In Liquidation) v L. Z. Engineering Construction Limited [1997] KECA 85 (KLR)", Case Analysis (1997). Civil Appeal No. 174 of 1994 (with Civil Appeal No. 175 of 1994). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/85/eng@1997-05-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.