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Court of AppealAllowedCivil Application No. Nai. 200 of 1997 (86/97 UR)· [1997] KECA 230 (KLR)

Dhanjal Investments Limited v Shabaha Investments Limited [1997] KECA 230 (KLR)

Court of Appeal
8 August 1997
JGJ. E. GicheruROR. S. C. OmoloPhilip Kiptoo TunoiP. K. Tunoi
1,057 words in judgment
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The bottom line

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Kenya's Court of Appeal paused a KSh 38.7 million High Court payment order, confirming that a stay is granted where an appeal is arguable and money may be unrecoverable.

What this practically means

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Executive summary

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The Court of Appeal at Nairobi (Gicheru, Omolo and Tunoi, JJ.A.) ruled on a notice of motion under rule 5(2)(b) of the Court of Appeal Rules in which Dhanjal Investments Limited sought a stay of execution of an order made by Ang'awa, J. in Mombasa H.C.C.C. No. 38 of 1997. The High Court had ordered the applicant, the defendant in the suit, to deposit Shs.38,700,000/= in an interest-bearing account in joint names of the parties' advocates and the Deputy Registrar within seven days, failing which summary judgment would be entered; upon payment the applicant would have leave to defend the suit and prosecute its counter-claim. The dispute arose from the applicant's purchase of a seafront property (including the Piccolo Beach Hotel) from the respondent for Shs.43,000,000/=, sold under a special condition confirming no pending litigation, only for the applicant to be met with injunctions in related suits invoking lis pendens. Applying the established twin test for stay - an arguable appeal and the nugatory principle - the court found the intended appeal arguable, a point conceded by the respondent's counsel, and held that the appeal would be rendered nugatory without a stay given the size of the deposit and doubts about the respondent's means to refund it. The court also held that a clerical error in the motion did not oust its jurisdiction. The application succeeded: the High Court order was stayed pending the intended appeal, subject to the applicant depositing the title documents with the Deputy Registrar and refraining from dealing with them, with the status quo to prevail and costs of the motion in the proposed appeal.

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The intended appeal was arguable; counsel for the respondent conceded this and the court agreed, satisfying the first test for stay.

Reasoning

Counsel for the applicant pointed to substantial matters of law and fact arising from the agreement of sale, the pleadings, interlocutory proceedings and rulings of the two Mombasa Resident judges. Counsel for the respondent readily admitted the appeal was arguable, and the court agreed with that concession.

p. 2
02

Whether the appeal would be rendered nugatory without a stay

Holding

The appeal would be rendered nugatory if stay were refused, because the applicant would have to deposit Shs.38,700,000/= with a respondent of doubtful means to refund it.

Reasoning

The applicant had bought a law suit rather than a good investment, with income lost and continuing losses. The deposit of Shs.38,700,000/= was a large sum, and given the various pending suits against the respondent in the High Court and Resident Magistrate's Courts, the court was not persuaded the respondent had means to refund the money if paid over.

p. 2
03

Effect of a clerical error in the notice of motion on the court's jurisdiction

Holding

A clerical error or slip in the motion, referring to a ruling dated July 17, 1997 when none was made on that date, does not deprive the court of jurisdiction since the notice of appeal is valid.

Reasoning

The notice of appeal lodged on June 20, 1997 correctly specified dissatisfaction with the decision of June 17, 1997. The erroneous date in the notice of motion was obviously a clerical error or slip, and the validity of the notice of appeal preserved the court's jurisdiction to entertain the application.

p. 2

Legal principles established

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  • To obtain a stay of execution pending appeal under rule 5(2)(b), the applicant must satisfy two conditions: that the intended appeal is arguable, and that it would be rendered nugatory if stay is not granted.

Court orders

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  1. 1.The order of Ang'awa, J. made on June 17, 1997 is stayed pending the determination of the intended appeal
  2. 2.The applicant shall provide security by depositing the documents of title to the suit property with the Deputy Registrar of the Court
  3. 3.The applicant shall not alienate, charge or otherwise deal with the title documents until further orders of the Court
  4. 4.The status quo shall prevail
  5. 5.The costs of the motion shall be in the proposed appeal
On appeal from
High Court of Kenya at Mombasa
H.C.C.C. No. 38 of 1997
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Dhanjal Investments Limited v Shabaha Investments Limited [1997] KECA 230 (KLR)", Case Analysis (1997). Civil Application No. Nai. 200 of 1997 (86/97 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/230/eng@1997-08-08

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