Governors Balloon Safaris Limited v Skyship Company Limited & another [2008] KECA 41 (KLR)
The bottom line
#The Court of Appeal refused to stop a rival balloon operator because money losses can be calculated and repaid, so an injunction wasn't necessary.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable (not frivolous)
- 2.Whether the success of the intended appeal would be rendered nugatory if the injunction pending appeal is refused
Key legal issues
#Whether the intended appeal was arguable
The Court accepted that the intended appeal was arguable on whether the learned Judge was right that the alleged substitution of the original signatory did not entitle the applicant to benefit from the agreement.
The Court reviewed the ruling of the superior court and the submissions. Without going into detail for fear of prejudicing the intended appeal, it found the first hurdle of the rule 5(2)(b) test cleared, since the question whether the substitution of the applicant for the original signatory incorporated the applicant into the contract was a live, arguable issue.
Whether the intended appeal would be rendered nugatory if the injunction was refused
The nugatory limb was not demonstrated: the applicant itself quantified its losses at Kshs.1.5 billion in the plaint and the respondents asserted they were capable of meeting those losses, so damages would be an adequate remedy.
The Court noted that the alleged breach had already occurred, that the Kenya Civil Aviation Authority had licensed the first respondent, and that the business was conducted from private land. The applicant's plaint quantified losses at Kshs.1.5 billion, contradicting counsel's claim that the loss was not quantifiable, and the respondents did not dispute their capacity to pay. The matter was essentially one of business competition, where losses are ascertainable and compensable.
Whether both limbs of the rule 5(2)(b) test must be satisfied
Both limbs must be satisfied; satisfying only the arguability limb does not avail the applicant, so the application failed.
The Court restated the settled principles for rule 5(2)(b) applications, citing Reliance Bank Ltd v Norlake Investments Ltd and Githunguri v Jimba Credit Corporation Ltd (No. 2): the Court exercises an unfettered discretion to be exercised judicially, requiring first an arguable appeal and second that the appeal's success not be rendered nugatory. Having found only the first limb satisfied, the Court dismissed the application.
Legal principles established
#- An applicant under rule 5(2)(b) must satisfy both limbs - an arguable appeal and that the appeal, if successful, would not be rendered nugatory - and satisfying only one limb does not avail the applicant.
- Where the heart of a dispute is business competition and loss of profit, such losses are generally quantifiable and compensable in damages, undermining a claim that refusal of an injunction would render a successful appeal nugatory.
Court orders
#- 1.The notice of motion dated 7th November 2008 seeking injunctions pending the hearing and determination of the intended appeal is dismissed
- 2.The respondents are awarded the costs of the notice of motion
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Milimani Commercial Courts, Nairobi
- H.C.C.C No. 461 of 2008
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (injunction pending the hearing and determination of an intended appeal)
Relief refused
#Injunction restraining the second respondent from breaching the contract dated 1st August 2000 by allowing the first respondent to operate hot air balloon safaris within the exclusive zone
Both limbs of the rule 5(2)(b) test must be satisfied; the applicant failed to demonstrate that the appeal would be rendered nugatory because its losses were quantified and respondents stated they could pay them
Injunction restraining the first respondent from procuring a breach of the contract dated 1st August 2000
Same failure to satisfy the nugatory limb; the breach had already occurred, licences had been issued by the Kenya Civil Aviation Authority and the business was being operated from private land
Costs
The respondents will have the costs of the notice of motion.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The general principles on which the Court would base its unfettered discretion were first, that the appeal should not be frivolous or the applicant must show that he has an arguable appeal and, secondly, that the Court should ensure that the appeal, if successful, should not be nugatory.
All these, in our view, suggest that, at the heart of the matter, is a business competition in which a breach of contract would lead to one party losing business and thus suffering loss of profit. In such a case, the party losing would be able to ascertain its losses. The applicant has done so in the plaint.
In the result, the application is dismissed. The respondents will have the costs of the notice of motion. Order accordingly.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Governors Balloon Safaris Limited v Skyship Company Limited & another [2008] KECA 41 (KLR)", Case Analysis (2008). Civil Appli. NAI No. 297 of 2008 (UR 198/2008). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2008/41/eng@2008-12-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.