CHARTERHOUSE BANK LIMITED v CENTRAL BANK OF KENYA & 2 others [2007] KECA 100 (KLR)
The bottom line
#Kenya's Court of Appeal refused to stop the Central Bank's appointed manager from running Charterhouse Bank, finding the bank's appeal had no real chance.
What this practically means
#Executive summary
#Key legal issues
#Whether the intended appeal against the refusal of an interlocutory injunction was arguable
The Court held the intended appeal was not arguable because the applicant attacked the merits of the suit rather than the manner in which the Judge exercised his discretion on the injunction application.
Interlocutory injunctions are equitable and discretionary remedies. The focus of an intended appeal from such a ruling must be on whether the Judge exercised his discretion judicially. The applicant bank failed to demonstrate that Azangalala J acted on wrong principles, took into account irrelevant matters or failed to consider relevant ones, having instead argued the merits of the suit. Issues about the legality of the statutory management could only be conclusively determined at the trial of the suit.
Whether the appeal, if successful, would be rendered nugatory absent an injunction
The Court held the appeal would be nugatory in any event because the statutory management period of twelve months would expire by operation of law before the appeal could be heard and determined.
The statutory manager had already assumed office, and the maximum twelve-month statutory management period under section 34(3) of the Banking Act would expire within three months, before the appeal was even filed. An injunction would not reactivate the Board of Directors and would effectively remove the statutory manager from office without a mandatory injunction having been sought. Even a successful appeal would produce no efficacious result.
Whether an injunction could issue restraining the statutory manager from exercising statutory duties
The Court held that such an injunction would be unlawful because the statutory manager was validly in office and enjoined by statute to discharge her duties.
Section 34(4) of the Banking Act obliges a manager to discharge her duties with diligence and in accordance with sound banking principles, with due regard to the institution, its depositors and other creditors. The Minister for Finance confirmed his approval of the appointment, and there was no complaint that the statutory manager had breached any statutory duty. Restraining her would therefore produce unlawful and undesirable consequences.
Legal principles established
#- An applicant under Rule 5(2)(b) must demonstrate that the intended appeal is arguable and that, if successful, its results would be rendered nugatory unless the order sought is granted.
- Where the decision appealed against is discretionary, an appellate court will interfere only where the discretion was exercised unjudicially - on wrong principles, taking into account irrelevant matters or disregarding relevant ones - and an intended appeal on such a ruling must attack the exercise of discretion, not the merits.
- The purpose of an injunction pending appeal is to preserve the status quo and prevent the appeal, if successful, from being rendered nugatory.
Court orders
#- 1.The application under Rule 5(2)(b) of the Court of Appeal Rules is dismissed
- 2.Costs of the application awarded to the respondents
- On appeal from
- High Court of Kenya at Nairobi (Milimani Commercial Courts)
- H.C.C.C. No. 329 of 2006
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (application for injunction pending intended appeal)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "CHARTERHOUSE BANK LIMITED v CENTRAL BANK OF KENYA & 2 others [2007] KECA 100 (KLR)", Case Analysis (2007). Civil Application Nai 200 of 2006 (UR. 114/2006). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/100/eng@2007-03-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.