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Court of AppealDismissedCivil Appli. Nai 178 of 2008 (UR. 112/2008)· [2008] KECA 98 (KLR)

Bawan Roses Limited v Barclays Bank of Kenya Limited [2008] KECA 98 (KLR)

Court of Appeal of Kenya
17 October 2008
2,052 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 refused to stop Barclays Bank from selling a borrower's charged land, ruling the appeal was weak and a signed sale agreement had already changed the game.

What this practically means

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Executive summary

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This is a single-judgment ruling of a three-Judge Court of Appeal bench (Githinji, Onyango Otieno and Aluoch JJA) on an application under Rule 5(2)(b) of the Court of Appeal Rules for an injunction pending an intended appeal. The applicant, Bawan Roses Limited, sought to restrain Barclays Bank of Kenya from selling or interfering with two charged floriculture properties pending appeal against a High Court ruling (Kasango J, 30 June 2008) dismissing its application for an interlocutory injunction. The Court restated the Rule 5(2)(b) twin tests: arguability of the intended appeal and the nugatory-ness of a successful appeal if no injunction is granted. On arguability, it held that an appeal against refusal of a discretionary interlocutory remedy must show the judge misdirected himself or was clearly wrong; the applicant's grounds instead demanded final findings of fact that could not properly be made at the interlocutory stage, and no arguable points arose from three letters admitting indebtedness. Separately, the Court noted the bank had, on 24 September 2008, entered into an agreement of sale of the charged properties with Diana International Limited for Shs.82,000,000. By that agreement the bank divested itself of its mortgagee rights and conferred rights on the purchaser, subject to completion; the Court had no jurisdiction in the proceedings to adjudicate the agreement's legality, and until set aside it pre-empted and rendered futile the injunction application, making it unnecessary to decide the nugatory issue. The Court dismissed the application with no orders as to costs. The High Court decision itself was not disturbed.

Key legal issues

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01

Arguability of the intended appeal against refusal of an interlocutory injunction

Holding

The intended appeal was not arguable because the draft grounds faulted the judge for not making findings of fact which could not be made at an interlocutory stage, and no arguable points arose from the letters admitting indebtedness

Reasoning

Where the order appealed against is discretionary, the applicant must show reasonable arguments that the superior court misdirected itself by failing to consider relevant matters or by considering irrelevant ones. The grounds here instead demanded final findings of fact, which the trial court properly declined to make at the interlocutory stage. The finding of no prima facie case rested on three letters admitting indebtedness, and no arguable construction points arose from them.

p. 3
02

Effect of the intervening agreement of sale dated 24th September 2008

Holding

The agreement of sale divested the bank of its rights as mortgagee, pre-empted the application and rendered it futile; the Court had no jurisdiction in the proceedings to adjudicate its legality

Reasoning

By executing the agreement of sale with Diana International Limited, the bank divested itself of its mortgagee rights and conferred rights to the properties, subject to completion, on the purchaser. The legality of that agreement could only be questioned in an appropriate forum. Until it was set aside, an injunction pending appeal could not achieve its purpose, so it was unnecessary to decide the nugatory question.

p. 3
03

Whether an injunction pending appeal should issue on the nugatory and hardship test

Holding

An injunction would inflict greater hardship on the bank and the purchaser than it would avoid

Reasoning

Following Madhupaper International Ltd v Kerr, it would be wrong to grant an injunction where the appeal is frivolous or where granting it would inflict greater hardship than it would avoid. Here the properties were already subject to a sale agreement with a completion date, so an injunction would cause greater hardship to the bank and the purchaser than it would avoid.

p. 2

Legal principles established

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  • An applicant for an injunction under Rule 5(2)(b) must show the appeal is arguable and that refusal would render the appeal nugatory
  • An appellate court will not interfere with a trial judge's exercise of discretion unless the judge misdirected himself or was clearly wrong resulting in injustice
  • An intended appeal against refusal of an interlocutory injunction must show reasonable arguments that the judge misdirected himself by failing to consider relevant or by considering irrelevant matters, not mere disagreement with factual findings not open at interlocutory stage
  • An executed agreement of sale by a mortgagee pre-empts and renders futile an application for injunction pending appeal, and the legality of such agreement can only be questioned in an appropriate forum

Court orders

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  1. 1.Application for injunction pending appeal dismissed
  2. 2.No orders as to costs
On appeal from
High Court of Kenya at Nyeri
H.C.C.C. No. 78 of 2007
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, "Bawan Roses Limited v Barclays Bank of Kenya Limited [2008] KECA 98 (KLR)", Case Analysis (2008). Civil Appli. Nai 178 of 2008 (UR. 112/2008). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2008/98/eng@2008-10-17

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