Kenya Posts & Telecommunications Corporation v Paul Gachanga Ndarua [2001] KECA 121 (KLR)

The Court restated the settled criteria for rule 5(2)(b) applications as the threshold for exercising its discretionary jurisdiction. Both limbs - arguability and nugatory-ness - must be established on the material placed before the court. Because the power is judicial discretion, it cannot be exercised in a factual vacuum; the applicant must adduce sound evidence and invoke clear legal principles in support of each limb of the test.

The Corporation's amended defence pleaded that all the respondent's claims arose by November 1993 and were barred by section 109(b) of the Kenya Posts & Telecommunications Act (Cap 411) as the suit was filed more than a year later. The respondent countered that the admission and payment of the principal waived limitation and constituted an acknowledgement under sections 23 and 24 of the Limitations of Actions Act. The Court found it arguable whether admission of part of a claim defeats such a defence and when interest would accrue.

In the absence of any contract to pay interest, the respondent's claim depended on the court's statutory discretion. Section 26(1) empowers the court, where the decree is for payment of money, to order interest on the principal sum adjudged at such rate as it deems reasonable, covering periods both before and after suit. Exercise of that discretion requires material, and on the record before it the Court found it arguable that the trial judge had none to support the 30% rate she applied.

The respondent's successful application for judgment on admission was anchored on correspondence written by the Corporation during settlement negotiations. Such correspondence is in ordinary circumstances inadmissible under section 23 of the Evidence Act. The trial judge admitted it on the view that negotiations which ended in a settlement attract no prejudice. The Court held that the existence of such an exception to section 23 was arguable, reinforcing the arguability of the intended appeal.

Ordinarily the applicant bears the burden of showing that success on appeal would be rendered nugatory, but a person's property is peculiarly within his own knowledge, so where it is alleged the decree-holder has no known assets the evidential burden shifts to him. The decree exceeded Kshs.53 million. The respondent merely denied being a man of straw and offered an undertaking to furnish a bank or insurance bond, which the Court held insufficient on these facts, leaving the nugatory limb satisfied.

Counsel for the respondent argued that only a party who has filed a valid notice of appeal may invoke rule 5(2)(b), and the copy on record bore only a court date stamp, not the Registrar's endorsement. The Court found no evidence about the original, observed that the respondent had not sought to strike out the notice and should have checked the superior court record if he wished to pursue the point, and held there was inadequate material to invalidate the notice.

Reviewing the summary judgment route taken below, the Court emphasized that striking out a pleading is draconian and reserved for clear cases. The Corporation's amended defence raised the statutory limitation defence and, in the absence of any contract, whether interest on the delayed principal was payable, upon what basis and at what rate - matters committed to judicial discretion and requiring material. Those issues made the intended appeal arguable and bore directly on whether the striking out was justified.