MAIMME MANAGEMENT LIMITED & ANOTHER vs HERITAGE BANK LIMITED (In Liquidation) [1998] KECA 252 (KLR)
The bottom line
#Kenya's Court of Appeal stopped the sale of charged land, confirming courts will preserve property pending appeal if the appeal is arguable and sale would make it pointless.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable
- 2.Whether the intended appeal would be rendered nugatory if the orders sought are not granted
Key legal issues
#Whether the intended appeal is arguable
The intended appeal is arguable because the applicants raise a substantial issue that the respondent's failure to issue the Letter of Credit caused total failure of consideration, rendering the charge unenforceable and the statutory power of sale unavailable.
The court accepted that counsel's proposed ground - that failure to provide the Letter of Credit frustrated the transaction's objective, causing total failure of consideration and rendering the charge unenforceable so that the statutory power of sale cannot be exercised over a defective charge - was a substantial and serious issue. On that basis the intended appeal could not be described as frivolous, satisfying the first limb of the rule 5(2)(b) test.
Whether the appeal would be rendered nugatory if stay is not granted
The nugatory limb is satisfied because the property charged is the subject-matter of the intended appeal and is threatened with sale; if sold, a successful appeal would be rendered nugatory.
The subject-matter of the intended appeal was the charged property, L.R. No. 3734/776 Nairobi, of substantial value, which the liquidator sought to recover by exercising the statutory power of sale. The court held that if the property were disposed of, the applicants' intended appeal, if successful, would be rendered nugatory. Both limbs of the rule 5(2)(b) test being met, the Motion was allowed subject to a security condition.
Legal principles established
#- An application for stay under rule 5(2)(b) succeeds where the intended appeal is arguable (not frivolous) and where, if the subject-matter is disposed of, the intended appeal would be rendered nugatory.
- Where property threatened with sale is the subject-matter of an intended appeal, its disposal would render a successful appeal nugatory, justifying a stay.
Court orders
#- 1.Stay of execution of the orders of the superior court granted in prayer A of the Notice of Motion
- 2.Restraint on the respondent from dealing with the charged property, granted in prayer B of the Notice of Motion
- 3.Orders granted subject to the applicants depositing KShs. 486,555/- within 30 days into an interest-earning account with Barclays Bank of Kenya in the joint names of counsel for both sides
- 4.Costs of the Motion to be in the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 1745 of 1998
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
That may be so and on that account their intended appeal cannot be said to be frivolous.
It is threatened with sale. If disposed of, the applicants' intended appeal, if successful, will be rendered nugatory.
In the circumstances, we allow the applicants' Notice of Motion and grant the orders sought in prayer A and B of the said Motion, subject to the applicant depositing within 30 days the sum of KShs. 486,555/- into an interest earning account with a branch of Barclays Bank of Kenya in the joint names of counsel of both sides.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "MAIMME MANAGEMENT LIMITED & ANOTHER vs HERITAGE BANK LIMITED (In Liquidation) [1998] KECA 252 (KLR)", Case Analysis (1998). Civil Application No. Nai. 215 of 1998 (86/98 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/252/eng@1998-10-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.