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Court of AppealPartially AllowedCivil Application 312 of 2005

Hutchings Biemer Ltd. v Barclays Bank of Kenya Ltd., Adrian Spencer Dearing & J.S. Ward

Court of Appeal of Kenya
24 March 2006
2,527 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed it can block a property sale pending appeal, but only if the borrower pays a substantial part of the debt first.

What this practically means

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Executive summary

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Hutchings Biemer Ltd. borrowed from Barclays Bank of Kenya against three charges over L.R. No. 209/5884 and a debenture over all its assets. On default, the bank issued a statutory notice and appointed receivers. In H.C.C.C No. 85 of 2005 the parties recorded a consent order on 3rd March 2005 under which the applicant was to pay Ksh.30 million in two instalments secured by irrevocable undertakings from Satish Gautama S.C, with accounts to be taken and the status quo maintained. The first instalment was paid, but the second failed owing to a delay in obtaining a rates clearance certificate. The applicant's application to review and vary the consent order, extend time, and restrain the bank was dismissed by Ochieng', J on 9th November 2005. The applicant then moved the Court of Appeal under rule 5(2)(b) for an injunction pending an intended appeal. The Court (Githinji, Waki and Onyango Otieno, JJA) reaffirmed the two-limb test of arguability and nugatory effect, and held that it has concurrent jurisdiction with the High Court to grant injunctions pending appeal to preserve the status quo. It found the appeal arguable only on the refusal of extension of time, holding that a dispute over accounts cannot stop a mortgagee exercising its power of sale where a debt is due. Balancing the risk of the applicant losing its property and business against the admitted large debt and the bank's interests, the Court granted the injunction conditionally: payment of Ksh.30 million within 30 days, with a limited 30-day stay to comply, and costs to the first respondent.

Key legal issues

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01

Jurisdiction of the Court of Appeal to grant injunctions pending appeal

Holding

The Court has jurisdiction to grant an injunction pending appeal in deserving matters to preserve the status quo, notwithstanding that the superior court declined one.

Reasoning

Relying on Madhupaper International Limited v Kerr, the Court read that authority as recognising concurrent jurisdiction of the superior court and the Court of Appeal in granting injunctions. Injunctive orders preserve property and maintain the status quo, so the Court may grant them during the pendency of the appeal, though the ordinary principles for granting injunctions must still be strictly adhered to.

p. 4
02

Arguability of the intended appeal

Holding

The intended appeal is arguable only on the refusal of extension of time; the dispute over accounts cannot ground the appeal.

Reasoning

Without holding a mini-appeal, the Court found the accounts dispute was fully catered for by the consent order and cannot stop a mortgagee's power of sale where a debt is due. However, on perusal of the record and the Gautama S.C letter, the Court felt the intended appeal was arguable on the refusal to extend time for payment.

p. 4
03

Nugatory value and conditional relief

Holding

Refusal of the injunction would likely lead to sale of the charged property, rendering a successful appeal nugatory; but the respondent's interests justified conditional relief.

Reasoning

If the property were sold and the appeal later succeeded, the applicant would lose the property, its business and all that goes with it. Yet the applicant admitted owing a large sum, and the respondent's business interests had to be considered. The Court balanced these by granting the injunction conditioned on payment of Ksh.30 million within 30 days.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must show the appeal is arguable and that it would be rendered nugatory if stay or injunction is refused.
  • The Court of Appeal has concurrent jurisdiction with the High Court to grant injunctive orders pending appeal to preserve property and maintain the status quo.
  • A dispute as to accounts cannot form a valid ground to stop a mortgagee from exercising his power of sale so long as there is a debt due to the mortgagee.

Court orders

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  1. 1.Injunction granted upon condition that the applicant pays the first respondent Ksh.30,000,000/= within thirty (30) days of the date of the ruling
  2. 2.Upon compliance with the condition, the injunction sought is granted till the intended appeal is heard and determined
  3. 3.Limited stay for 30 days from the date of the ruling to enable the applicant to comply with the order
  4. 4.First respondent to have costs of the application
On appeal from
High Court of Kenya at Nairobi
H.C.C.C No. 85 of 2005
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, "Hutchings Biemer Ltd. v Barclays Bank of Kenya Ltd., Adrian Spencer Dearing & J.S. Ward", Case Analysis (2006). Civil Application 312 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/287/eng@2006-03-24

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