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Court of AppealPartially AllowedCivil Application No. Nai. 238 of 2005 (UR. 144/2005)· [2006] KECA 333 (KLR)

National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Lantech Ltd

Court of Appeal
10 February 2006
ROR.S.C. OmoloEOE.O. O'KubasuEGE.M. Githinji
1,489 words in judgment
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The bottom line

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Kenya's Court of Appeal froze a Kshs.2.8 million judgment payment until an appeal is decided, because the judgment debtor never disclosed his finances.

What this practically means

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Executive summary

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The Court of Appeal (Omolo, O'Kubasu and Githinji, JJ.A) ruled on National Industrial Credit Bank Ltd's application under Rule 5(2)(b) of the Court of Appeal Rules for stay of execution of a High Court decree (Ibrahim, J, dated 24 May 2005) awarding Aquinas Francis Wasike Kshs.2,800,000 on a counterclaim. The court first clarified that Rule 5(2)(b) provides only for a stay of execution, not an 'interim' or ex-parte stay, and that the occasions for ex-parte orders are extremely limited. It rejected the respondents' argument that an invalid notice of appeal defeated the application, holding that the Rule requires only a notice lodged under Rule 74; validity is a matter for striking out under Rule 80, and no such application had been made. Restating the twin tests - arguability and nugatory-ness - the court found the twenty-six grounds in the draft memorandum clearly arguable, and held that an applicant need only point to arguable grounds without arguing them. On nugatory-ness, the court held the legal burden lies on the applicant, but once a reasonable fear of non-repayment is expressed, the evidential burden shifts to the respondent to disclose his resources under section 112 of the Evidence Act. The first respondent's failure to disclose his shareholding, salary or contract values left his means wholly unknown. The court granted a stay of execution until the lodging, hearing and determination of the intended appeal or further order, with costs of the motion in the intended appeal. This ruling binds subordinate courts and the High Court on the Rule 5(2)(b) tests and the burden-shifting approach.

Key legal issues

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01

Twin test under Rule 5(2)(b)

Holding

The court considers only whether the appeal is arguable and whether refusal of stay would render its success nugatory

Reasoning

The court restated the two limbs of the Rule 5(2)(b) test: arguability of the appeal or intended appeal, and whether success would be rendered nugatory by earlier refusal of stay. Both limbs were satisfied on the draft memorandum's twenty-six grounds and the undisclosed means of the first respondent.

p. 2
02

Validity of notice of appeal on stay application

Holding

Validity of a notice of appeal is determined under Rule 80, not on a Rule 5(2)(b) application; the Rule requires only a notice lodged under Rule 74

Reasoning

The respondents argued the notice of appeal was invalid, so no stay could issue. The court held Rule 5(2)(b) does not require a valid notice, only one lodged under Rule 74; invalidity is a matter for striking out under Rule 80, and no such application had been made.

p. 2
03

Burden of proof on nugatory-ness

Holding

Legal burden lies on the applicant, but shifts evidentially to the respondent to disclose resources once a reasonable fear of non-repayment is shown

Reasoning

The applicant need not know in detail a respondent's resources; a reasonable fear that the decretal sum cannot be repaid shifts the evidential burden to the respondent, per section 112 of the Evidence Act. The first respondent disclosed neither shareholding value, salary, nor contract values, so the means remained wholly unknown.

p. 2
04

Reliance on draft memorandum grounds

Holding

An applicant need only point to arguable grounds in the draft memorandum; grounds need not be argued at this stage

Reasoning

Counsel for the respondents objected that no particular arguable issue was identified. The court held the draft memorandum was on the record and it is perfectly open to the Court to examine the grounds; the applicant need only point out grounds believed arguable and leave the assessment to the Court.

p. 2

Legal principles established

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  • On a Rule 5(2)(b) application the twin tests are arguability and nugatory-ness; the validity of the notice of appeal is not a consideration
  • Once an applicant shows a reasonable fear that a respondent cannot repay the decretal sum, the evidential burden shifts to the respondent to disclose his resources

Court orders

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  1. 1.Stay of execution of the decree of the superior court dated 24th May, 2005 granted, in force until the lodging, hearing and determination of the intended appeal or until further order of the Court
  2. 2.Costs of the motion to be in the intended appeal

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Court of Appeal RulesRule 74
  • Court of Appeal RulesRule 76(1) proviso
  • Court of Appeal RulesRule 80
  • Evidence Act, Chapter 80 Laws of KenyaSection 112
On appeal from
High Court of Kenya at Milimani Commercial Courts, Nairobi
H.C.C.C. No. 1414 of 2001
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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Later judgments citing this (6)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Lantech Ltd", Case Analysis (2006). Civil Application No. Nai. 238 of 2005 (UR. 144/2005). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/333/eng@2006-02-10

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