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Court of AppealPartially AllowedCivil Application No. 61 of 2007 (UR 44/2007)· [2007] KECA 267 (KLR)

MENNO TRAVEL SERVICES LIMITED v KEMBI GITURA T/A KEMBI GITURA & COMPANY ADVOCATES [2007] KECA 267 (KLR)

Court of Appeal of Kenya
6 July 2007
Philip Kiptoo TunoiP.K. TunoiSBS.E.O. BosireEGE.M. Githinji
1,646 words in judgment
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The bottom line

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The Court of Appeal paused the threatened sale of Menno Travel's shares — but only if the company deposited Shs 10 million as security first.

What this practically means

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Executive summary

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This was a single-judge-panel application under rule 5(2)(b) of the Court of Appeal Rules by Menno Travel Services Limited seeking a stay of proceedings and of execution pending an intended appeal against a ruling of Kasango, J dated 13th March 2007, by which the High Court dismissed the applicant's application under section 37 of the Arbitration Act to refuse recognition or enforcement of an arbitral award of Shs.10 million plus interest at 20% p.a. in favour of the respondent advocate. The award arose from an agreement of 14th April 1997 under which the respondent claimed a consultancy fee for negotiating loan facilities for the applicant. Applying the twin principles for rule 5(2)(b) applications, the Court held without deciding that the intended appeal was arguable, and found the nugatory element in the threatened sale of the applicant's shares in Menno Plaza Limited, which it accepted would be lost forever if sold. The Court granted the stay, but only as regards the sale of the shares and only on terms: the applicant was to deposit Shs.10,000,000 in an interest-bearing account in the joint names of counsel within 30 days, failing which the application would stand dismissed. No stay of the High Court proceedings was granted, as no valid reasons were offered for it. Costs were ordered to be in the intended appeal. The decision rested on interlocutory discretion and thus settled no definitive rights between the parties.

Key legal issues

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01

Twin principles for rule 5(2)(b) stay

Holding

The applicant must establish that the intended appeal is arguable and that, if successful, it would be rendered nugatory absent a stay; the court was prepared to hold without deciding that the appeal was arguable.

Reasoning

The court restated the established twin criteria, citing S.M. Githunguri v Jimba Credit Corporation Ltd and J.K. Industries Ltd v Kenya Commercial Bank Ltd. It declined to make final findings of fact lest the intended appeal be prejudiced, but accepted the appeal was arguable and focused on the nugatory element, namely the imminent sale of the applicant's shares in Menno Plaza Limited.

p. 3
02

Nugatory aspect and security as a condition of stay

Holding

The risk that shares representing the applicant's investment would be lost forever if sold justified a stay of their sale, but only on terms securing the decretal sum, since the respondent was not averse to security.

Reasoning

The applicant feared that attachment and sale of its shares in Menno Plaza Limited would cause it to lose its lifetime investment, which would be irrecoverable. The respondent indicated no objection if the decretal sum were secured in a bank account. Balancing the parties' interests, the court granted a stay limited to the sale of the shares, conditioned on a deposit of Shs.10,000,000 within 30 days, failing which the application would stand dismissed.

p. 3

Legal principles established

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  • To obtain stay under rule 5(2)(b), an applicant must show both that the intended appeal is arguable (not frivolous) and that it would be rendered nugatory if successful unless stay is granted; each case is considered on its own merits.
  • A stay under rule 5(2)(b) may be granted on terms, and the discretion is exercised on the respective merits of the parties' cases.

Court orders

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  1. 1.Stay granted as sought in the Notice of Motion, limited to the sale of the applicant's shares in Menno Plaza Limited, subject to the applicant depositing Shs.10,000,000 in an interest-bearing account with a reputable bank in the joint names of counsel for the parties within 30 days from the date of the ruling
  2. 2.In default of the deposit, the application shall stand dismissed
  3. 3.Costs of the application to be in the intended appeal

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Court of Appeal RulesRule 74
  • Arbitration ActSection 37
  • Arbitration ActSection 35
  • Advocates ActSection 46
  • Constitution of KenyaSection 60

Cases cited (4)

  • S.M. Githunguri v Jimba Credit Corporation Ltd
    Civil Appl. No. 161 of 1988
  • J.K. Industries Ltd v Kenya Commercial Bank Ltd
    [1982-88] KAR
  • Butt v Rent Restriction Tribunal
    [1982] KRL 1
  • Oraro & Rachier Advocates v Co-operative Bank of Kenya Ltd
    [1999] LLR 118 (CAK)
On appeal from
High Court of Kenya, Nairobi
H.C. Misc. Civil Application No. 986 of 2003
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay pending determination of an intended appeal)

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, "MENNO TRAVEL SERVICES LIMITED v KEMBI GITURA T/A KEMBI GITURA & COMPANY ADVOCATES [2007] KECA 267 (KLR)", Case Analysis (2007). Civil Application No. 61 of 2007 (UR 44/2007). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/267/eng@2007-07-06

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