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Court of AppealDismissedCivil Appeal 136 of 1996· [1997] KECA 99 (KLR)

COMMERCIAL EXCHANGE LIMITED & another v BARCLAYS BANK OF KENYA LIMITED [1997] KECA 99 (KLR)

Court of Appeal of Kenya
3 July 1997
JGJ. E. GicheruPhilip Kiptoo TunoiP. K. TunoiASA. B. Shah
1,424 words in judgment
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The bottom line

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Kenya's Court of Appeal threw out borrowers' bid to stop Barclays auctioning their properties, warning that abandoning one lawsuit to file another cannot escape court-ordered agreements.

What this practically means

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Executive summary

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The Court of Appeal at Nairobi (Gicheru, Tunoi and Shah, JJ.A) dismissed this appeal against a ruling of Ole Keiwua J. in H.C.C.C. No. 1112 of 1996 refusing the appellants an interlocutory injunction to restrain Barclays Bank of Kenya from auctioning some nineteen charged properties. The first appellant had obtained successive loan and overdraft facilities from the bank secured by charges, a floating debenture and directors' guarantees; on releasing each new facility the bank deducted the outstanding balance of the previous loan, to which the appellants raised only verbal complaints while the facilities kept coming. All facilities were payable on demand and the securities were perfected. After consent orders in an earlier suit (requiring deposit of Kshs.3,500,000 before negotiations) were not complied with, the appellants discontinued that suit and filed a fresh suit seeking similar orders without disclosing the consent orders. The Court held this was a wrongful use of court process, noting counsel's concession that discontinuance does not affect consent orders. On the injunction, the court applied Giella v Cassman Brown: the appellants alleged breach but cited no authority, quantified no damage, and made no payments, failing both the prima facie case and adequacy-of-damages limbs, so the balance of convenience need not be considered. The appeal was dismissed as frivolous and unmeritorious with costs to the bank, and certification for two counsel was refused. The decision affirms the High Court ruling and binds lower courts on the injunction test and on the abuse of process in serial suits evading consent orders.

Key legal issues

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01

Whether the appellants were entitled to an injunction restraining sale of the charged properties

Holding

The appeal was dismissed as frivolous and unmeritorious; the appellants failed both limbs of the Giella v Cassman Brown test, so the injunction could not issue and the balance of convenience need not be examined.

Reasoning

The facilities were payable on demand, the securities were perfected, and interest, commission and fees were agreed. The appellants alleged breach by the bank's deduction of outstanding balances from successive loans but cited no authority, made no attempt to quantify any damage, and made no payments towards the debt. Without a prima facie case and without showing damages inadequate, the injunction could not stand.

p. 3
02

Whether the fresh suit after discontinuance of the earlier suit was an abuse of process

Holding

The court found the appellants used the process of the court wrongfully by discontinuing the earlier suit, in which consent orders had been recorded, and filing a fresh suit seeking very similar orders.

Reasoning

The appellants failed to pay the Kshs.3,500,000 required by the consent orders of 2nd May 1996, then discontinued H.C.C.C. No. 887 of 1996 and filed H.C.C.C. No. 1112 of 1996 seeking similar orders without disclosing the consent orders. Counsel conceded discontinuance does not affect consent orders. The court viewed this as legal ingenuity to escape obligations and an abuse of process, though the learned judge had declined to decide the point.

p. 3

Legal principles established

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  • An applicant for an injunction must establish a prima facie case with a probability of success and that damages would not be an adequate remedy; failing both limbs, the balance of convenience need not be considered.
  • Discontinuance of a suit does not affect consent orders already made in that suit, and a party cannot evade such orders by discontinuing and filing a fresh suit seeking similar orders.
  • It is an abuse of process to discontinue a suit without disclosing the reasons for discontinuance or the existence of far-reaching consent orders made in the previous suit, and to seek similar orders afresh.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The appellants to pay the respondent's costs of the appeal
  3. 3.Certification for two counsel is refused

Authorities

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Cases cited (1)

  • Giella v Cassman Brown
On appeal from
High Court of Kenya
H.C.C.C. No. 1112 of 1996
Jurisdiction invoked
First appellate jurisdiction over an appeal from the High Court (ruling and order dated 11th July, 1996 in H.C.C.C. No. 1112 of 1996)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (15)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "COMMERCIAL EXCHANGE LIMITED & another v BARCLAYS BANK OF KENYA LIMITED [1997] KECA 99 (KLR)", Case Analysis (1997). Civil Appeal 136 of 1996. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/99/eng@1997-07-03

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.