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Court of AppealDismissedCivil Application No. 159 of 2007· [2007] KECA 171 (KLR)

Daniel Kamita Gichuhi & 1 other v Consolidated Bank of Kenya Ltd

Court of Appeal of Kenya
9 November 2007
EGE. M. GithinjiJOJ. W. Onyango OtienoWDW. S. Deverell
1,590 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Court of Appeal let a bank auction borrowers' property because they failed to prove the bank couldn't compensate them if their appeal succeeded.

What this practically means

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Executive summary

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The applicants, Daniel Kamita Gichuhi and Josephine Kabura Gichuhi, moved the Court of Appeal under rule 5(2)(b) of the Court of Appeal Rules seeking an injunction restraining Consolidated Bank of Kenya Ltd from selling by public auction their property known as L.R. No. 7660/114 (I.R. No. 38645) Tigoni, Kiambu, pending their intended appeal. The intended appeal challenges a ruling of Warsame J delivered on 26 June 2007 in H.C.C.C. No. 500 of 2006, in which the High Court dismissed both an injunction application under Order 39 of the Civil Procedure Code and the entire suit, holding the suit res judicata and an abuse of the judicial process in light of earlier suits (HCCC No. 466/2002, HCCC No. 5056/92 and HCCC No. 4520/94). The applicants' dispute arose from a loan of Kshs.1.3 million originally advanced by Home Savings & Mortgages Limited, whose assets and liabilities had been transferred to the respondent bank, with the bank now claiming Kshs.8,803,343.30 based on interest rates the applicants contend were unlawful. The Court of Appeal found the intended appeal arguable but held the applicants had failed to demonstrate that the appeal would be rendered nugatory if the injunction were refused, since the bank was not shown to be financially incapable of compensating them. The application was accordingly dismissed with costs in the intended appeal.

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The Court found the intended appeal raised sufficient arguable issues and was not frivolous, but this alone was insufficient.

Reasoning

The Court accepted that the intended appeal challenging the dismissal of the injunction application and the entire suit raised arguable issues. However, under rule 5(2)(b) arguability is only the first limb; the applicant must also demonstrate that the appeal would be rendered nugatory if the injunction is refused. The applicants failed on the second limb.

p. 3
02

Whether the intended appeal would be rendered nugatory without the injunction

Holding

The Court held the appeal would not be rendered nugatory because the respondent bank is financially capable of compensating the applicants if the appeal succeeds.

Reasoning

Applying the established nugatory test from Reliance Bank, Githunguri v Jimba Credit and J.K. Industries, the Court considered the applicants' financial-loss claim. It found no demonstration that the respondent bank would be unable to fully compensate the applicants were the appeal to succeed, so refusal of the injunction would not render the appeal nugatory.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy the twin requirements of an arguable appeal and that the appeal would be rendered nugatory if the order sought is not granted; the nugatory limb requires proof that the respondent cannot compensate the applicant if the appeal ultimately succeeds.

Court orders

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  1. 1.The application for an injunction pending appeal is dismissed
  2. 2.The costs of the application shall be in the intended appeal
On appeal from
High Court of Kenya at Nairobi, Milimani Commercial Court
H.C.C.C. No. 500 of 2006
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, "Daniel Kamita Gichuhi & 1 other v Consolidated Bank of Kenya Ltd", Case Analysis (2007). Civil Application No. 159 of 2007. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/171/eng@2007-11-09

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