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Court of AppealDismissedCivil Appeal No. 82 of 1998 (consolidated with Civil Appeal No. 83 of 1998)· [1998] KECA 141 (KLR)

DAIMA BANK LIMITED & 2 OTHERS vs K. H. OSMOND [1998] KECA 141 (KLR)

Court of Appeal of Kenya
19 October 1998
ROR. S. C. OmoloPhilip Kiptoo TunoiP. K. TunoiALA. A. Lakha
1,202 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that judges' discretionary decisions on injunctions will stand unless the judge was clearly wrong or misdirected.

What this practically means

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Executive summary

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Two consolidated appeals arose from rulings of Kuloba, J. delivered on 12th March 1998 in two suits brought by K. H. Osmond, an advocate, against Daima Bank Limited, its advocates Kangethe & Company, and Whitestone Auctioneers (K) Limited. The dispute centred on a mortgage over L.R. No. 1/835, Nairobi, and a chattels mortgage securing a loan the respondent could not service, with arrears and interest standing at over Shs.43 million by July 1997. The respondent alleged an unlawful invasion of his premises and removal of his goods, and contended that the chattels mortgage was void because it was neither witnessed, dated, stamped nor registered. He obtained ex parte injunctions restraining the attachment of his goods and the auction of the property, and the High Court, in reserved rulings, granted the injunctions, holding that the pleadings disclosed disputed facts and law - notably the validity of the mortgages - which could not be resolved on affidavit evidence, and that prime developed land should not be lost by public auction before trial. Daima Bank counterclaimed for over Shs.44 million. On appeal, the appellants argued that the Judge applied the wrong test and that damages were an adequate remedy. The Court of Appeal, applying the established principle in Mbogo & Another v Shah, held that it would not interfere with the exercise of a judge's discretion absent misdirection or manifest error causing misjustice. It found that the Judge had correctly exercised his discretion since the allegations of invalidity and unconscionable interest had not been tried. Both appeals were dismissed with costs.

Key legal issues

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01

Interference with judicial discretion on appeal

Holding

The Court of Appeal declined to interfere with the High Court's discretionary grant of injunctions because the appellants showed no misdirection or clear error by the learned Judge.

Reasoning

The Court applied the established principle in Mbogo & Another v Shah that an appellate court will not disturb the exercise of discretion unless the judge misdirected himself and arrived at a wrong decision, or it is manifest from the case as a whole that the judge was clearly wrong causing misjustice. The Judge had before him allegations that the mortgages, the foundation of the suits and counterclaim, were invalid and could not be rebutted by affidavit evidence, and that the interest charged was unconscionable and manifestly excessive. These issues were untried, so the Judge correctly exercised his discretion in favour of the respondent.

p. 3
02

Grant of injunction where serious disputed issues on validity of securities exist

Holding

Where pleadings disclose disputed facts and law, particularly the validity of the mortgages underpinning the claim and counterclaim, such disputes cannot be resolved on affidavit evidence at an interlocutory stage, and a prime developed property should not be lost by public auction before trial.

Reasoning

The learned Judge observed that the controversy focused on a diversity of questions going beyond affidavit materials and interlocutory arguments, and that attempting to resolve the conflict at that stage would prejudice the parties. The disputed validity of the mortgages could not be rebutted by affidavit evidence, and the property was prime, fully developed land that should not be lost by public auction before the disputed aspects were determined. The Court of Appeal found no error in this approach.

p. 3

Legal principles established

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  • An appellate court will not interfere with the exercise of a judge's discretion unless the judge misdirected himself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge was clearly wrong and misjustice has resulted.

Court orders

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  1. 1.The appeals (Civil Appeal No. 82 of 1998 and the consolidated Civil Appeal No. 83 of 1998) are dismissed
  2. 2.The appellants to pay the costs of the appeals
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 2630 of 1997 (and H.C.C.C. No. 3052 of 1998)
Jurisdiction invoked
First appellate jurisdiction over the High Court under the Constitution and the Appellate Jurisdiction Act (not expressly stated in the judgment)

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, "DAIMA BANK LIMITED & 2 OTHERS vs K. H. OSMOND [1998] KECA 141 (KLR)", Case Analysis (1998). Civil Appeal No. 82 of 1998 (consolidated with Civil Appeal No. 83 of 1998). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/141/eng@1998-10-19

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