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Court of AppealPartially AllowedCivil Application Nai. 4 of 2007 & 5 of 2007 (UR. 3/2007)

Mbaraki Bulk Terminal Limited v East African Bulking Services Limited & 1 other

Court of Appeal of Kenya
16 March 2007
EGE. M. Githinji
2,687 words in judgment
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The bottom line

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Kenya's Court of Appeal stopped a High Court order from taking effect, ruling it would destroy a Mombasa business worth over USD 4.6 million before an appeal could be heard.

What this practically means

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Executive summary

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This is a single-judge ruling of the Court of Appeal (Githinji JA) delivered on 16th March 2007 in consolidated civil applications Nai. 4 and 5 of 2007 (UR. 3/2007) brought by Mbaraki Bulk Terminal Limited under rule 5(2)(b) of the Court of Appeal Rules. MBTL sought stay of execution of a High Court ruling of Sergon J dated 15th December 2006 which, in judicial review proceedings brought by East African Bulking Services Limited, quashed the District Land Registrar Mombasa's decision of 9th December 2005 consolidating three Mombasa titles into one, registering a transfer to MBTL, and removing EABSL's cautions. The dispute arose from competing sale agreements over the same four plots and business assets: EAMCL first contracted to sell to EABSL for USD 4,000,000, then after non-completion sold to MBTL for USD 4,640,000 inclusive of VAT, delivering possession and completing registration. The court found the intended appeal arguable, with counsel for EABSL conceding this, and held that refusal of stay would cause a colossal loss of over USD 4,600,000 and the virtual, irredeemable collapse of the business, rendering a successful appeal nugatory. EABSL's fear of alienation was met by a prohibitory order (inhibition) on the titles. The court allowed both applications, granted stay pending appeal, ordered an inhibition against the four titles, and directed costs of the application to be costs in the appeal.

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal raised several arguable issues of law, including the competency of the judicial review application and the jurisdiction of the High Court to grant the impugned orders; the first respondent's counsel conceded arguability.

Reasoning

The applicant filed a draft memorandum of appeal with 14 grounds raising issues of law on the competency of the judicial review application and the court's jurisdiction. Counsel for the applicant demonstrated arguability and counsel for the first respondent properly conceded it, satisfying the first limb of the rule 5(2)(b) test.

p. 4
02

Whether the appeal would be rendered nugatory absent stay

Holding

Deregistration of the applicant as proprietor would cause a colossal loss of over USD 4,600,000 paid as purchase price and the virtual, irredeemable collapse of the entire business, rendering a successful appeal nugatory.

Reasoning

The effect of certiorari would be to cancel MBTL's registration and restore EAMCL as proprietor, returning the properties to EAMCL free of charge despite it having been paid and having discharged the bank loan. Without title MBTL could not run the business, deal with subtenants, employees or licences, so the business would collapse, a loss irredeemable even if the appeal succeeded. EABSL would gain no direct benefit, its claim resting on the pending HCCC No. 250 of 2005.

p. 5
03

Balance of convenience and protection of the respondent

Holding

The first respondent's feared prejudice (alienation of the plots) could be cured by an appropriate protective order, justifying stay coupled with an inhibition registered against the titles.

Reasoning

The court distinguished money decrees, noting no money decree existed here. Relying on Reliance Bank v Norlake, the balance of convenience is an element of the nugatory test. Since EABSL's real interest was preventing alienation, an inhibition on the titles preserved its position while preventing the collapse of the business pending appeal.

p. 5

Legal principles established

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  • On a rule 5(2)(b) application, the applicant must show the intended appeal is not frivolous and that, unless stay is granted, the appeal if successful would be rendered nugatory; the discretion is unfettered and the nugatory test varies with the facts of each case.

Court orders

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  1. 1.Stay of execution of the ruling of the High Court (Sergon J) dated 15th December 2006 pending the hearing and determination of the intended appeal
  2. 2.Registration of a prohibitory order (inhibition) against title Nos. Mombasa/Block XLVIII/135, 138, 139 and 140 prohibiting registration of any transaction pending determination of the appeal
  3. 3.Costs of the application to be costs in the appeal
On appeal from
High Court of Kenya at Mombasa
Miscellaneous Civil Application No. 946 of 2005 (and Misc. Appl. No. 967 of 2006)
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules - discretionary interlocutory relief pending intended appeal

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Mbaraki Bulk Terminal Limited v East African Bulking Services Limited & 1 other", Case Analysis (2007). Civil Application Nai. 4 of 2007 & 5 of 2007 (UR. 3/2007). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/7/eng@2007-03-16

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