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Court of AppealPartially AllowedCivil Appeal 194 of 2004· [2006] KECA 369 (KLR)

East African Development Bank v Hyundai Motors Kenya Limited

Court of Appeal of Kenya
22 September 2006
Philip Kiptoo TunoiP.K. TunoiSBS.E.O. BosireEOE.O. O'Kubasu
3,642 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that judges cannot grant injunctions on fairness grounds once an applicant fails the established legal tests.

What this practically means

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Executive summary

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This Court of Appeal judgment (Tunoi, Bosire and O'Kubasu, JJA) allowed an appeal by East African Development Bank against a ruling of Njagi, J of the High Court at Milimani granting Hyundai Motors Kenya Limited interlocutory injunctions restraining the Bank from selling charged property L.R. No. 209/9705 Nairobi and from commencing winding-up proceedings. The High Court Judge had expressly found that Hyundai failed to establish a prima facie case with a probability of success and failed to show irreparable injury not compensable by damages, yet granted the injunction on the basis that it would be unfair to deny Hyundai the benefit of arguing points of law on Sections 59, 69 and 100A of the Transfer of Property Act at a full trial, and to maintain the status quo. The Court of Appeal held that the Giella v Cassman Brown conditions are well settled and exhaustive; once the Judge made clear findings that the first two conditions failed, no other avenue remained open to grant the injunction. Relying on Abel Salim v Okong'o and National Bank of Kenya v Sam-Con Ltd, the Court held that considerations such as fairness or preservation of property cannot supplement the settled conditions, and that the balance of convenience arises only where the court is in doubt. Applying Mukisa Biscuit v West End Distributors, the Court further held that the points of law the Judge wished to reserve for trial were pure points of law requiring no evidence and could be raised by preliminary objection. The appeal was allowed, the High Court order set aside, the Chamber Summons dismissed, and costs of both the appeal and the superior court awarded to the Bank.

Key legal issues

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01

Grant of interlocutory injunction despite failure of the Giella conditions

Holding

The appeal was allowed because the learned Judge, having expressly found that the respondent failed both the prima facie case and irreparable injury limbs, had no basis left to grant the injunction.

Reasoning

The Court held that the conditions in Giella v Cassman Brown are well settled and exhaustive. The Judge's own ruling showed he found no prima facie case and no irreparable injury compensable only by damages. Having made those clear findings, considerations of fairness, guidance to the trial court, or maintaining the status quo could not justify the grant. Reliance on Abel Salim v Okong'o confirmed that no other circumstances may be considered.

p. 6
02

Whether points of law needed a full trial

Holding

The points of law on Sections 59, 69 and 100A of the Transfer of Property Act vis-à-vis the Registration of Titles Act did not require evidence and could be raised by preliminary objection.

Reasoning

The learned Judge had justified the injunction partly on the need to let the respondent argue points of law at a full hearing. The Court, applying Mukisa Biscuit v West End Distributors, held that a preliminary objection raises a pure point of law argued on the assumption that all facts pleaded by the other side are correct, and cannot be raised where facts must be ascertained or discretion exercised. Here the legal questions required no trial since evidence would not change the legal position.

p. 5

Legal principles established

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  • Once a court expressly finds that the applicant has failed the first two Giella conditions, there is no residual discretion to grant an injunction on other considerations such as fairness or preservation of the status quo.
  • The balance of convenience is considered only where the court is in doubt after the first two conditions.
  • Pure points of law arising from pleadings may be disposed of by preliminary objection and do not require a full trial with evidence.

Court orders

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  1. 1.Appeal allowed
  2. 2.Order of the superior court delivered on 11th November, 2003 set aside
  3. 3.Respondent's Chamber Summons Application dated 18th August, 2003 dismissed
  4. 4.Costs of the appeal and of proceedings in the superior court awarded to the appellant

Authorities

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Legislation

  • Civil Procedure RulesOrder XXXIX Rules 1, 2, 3 and 9
  • Civil Procedure ActSection 3A
  • Indian Transfer of Property ActSections 52, 59, 69, 100A
  • Indian Transfer of Property (amendment) Act1959 amendment
  • Government Lands ActSection 106
  • Registration of Titles Actcorresponding provisions (unspecified)

Cases cited (5)

  • GIELLA VS. CASSMAN BROWN AND COMPANY LIMITED
    (1973) E.A. 358

    Settled conditions for grant of interlocutory injunction: prima facie case, irreparable injury, balance of convenience.

  • E.A. INDUSTRIES VS. TRUFOODS
    [1972] E.A. 420

    Cited within the Giella passage on deciding applications on balance of convenience where the court is in doubt.

  • MUKISA BISCUIT MANUFACTURING CO. LTD. V. WEST END DISTRIBUTORS LTD
    [1969] E.A. 969

    Definition of preliminary objection as a pure point of law argued on assumed facts, per Law JA.

  • NATIONAL BANK OF KENYA LTD & 2 OTHERS VS. SAM-CON LTD
    [2003] KLR 462

    Adopted Giella conditions; held other circumstances cannot be considered and balance of convenience applies only if in doubt.

  • ABEL SALIM & OTHERS V. OKONG'O & OTHERS
    [1976] KLR 42

    Rejection of considering circumstances apart from the settled Giella conditions in interlocutory injunction applications.

On appeal from
High Court of Kenya at Milimani Commercial Courts
H.C.C.C. No. 503 of 2003
Jurisdiction invoked
Appellate jurisdiction of the Court of Appeal over an appeal from a ruling and order of the High Court

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, "East African Development Bank v Hyundai Motors Kenya Limited", Case Analysis (2006). Civil Appeal 194 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/369/eng@2006-09-22

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