DEVCON GROUP LIMITED V TIMSALES LIMITED [2009] KECA 137 (KLR)
The bottom line
#Kenya's Court of Appeal paused execution of a Kshs.19 million judgment, but only if Devcon deposited the principal amount within 30 days.
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
- 2.Whether the intended appeal would be rendered nugatory if stay of execution is not granted
Key legal issues
#Whether the intended appeal is arguable
The appeal is arguable because the questions whether there was agreement to charge interest and the extent of application of custom and usage to interest are not frivolous.
The applicant intended to argue that the trial court admitted inadmissible secondary evidence, that there was no agreement to pay interest, and that judgment was based on unproven custom and usage. The court held that whether there was agreement to charge interest and the extent of application of custom and usage as regards charging of interest are not frivolous issues, satisfying the first test for stay under rule 5(2)(b).
Whether the appeal, if successful, would be rendered nugatory without a stay
Yes: the substantial decretal sum of about Kshs.19 million could drive the applicant into bankruptcy or liquidation, a hardship disproportionate to the respondent's loss of the fruits of judgment, justifying a conditional stay balancing the hardship.
The court weighed the respondent's delay in recovering a substantial money decree against the applicant's risk of bankruptcy. Relying on Reliance Bank v Norlake and Oraro & Rachier v Co-operative Bank, it held that disproportionate hardship amounting to nugatory effect existed principally because of possible bankruptcy or liquidation, and opted to spread the hardship evenly on a balance of convenience through a conditional stay.
Legal principles established
#- Where it is properly proved that refusal of a stay would cause the applicant hardship out of proportion to any suffering the respondent might undergo awaiting the appeal, the Court may take that as a factor amounting to rendering success in the pending appeal nugatory.
- The twin tests for stay under rule 5(2)(b) — arguability and nugatory effect — share the overriding objective of enabling the court to act justly, and the court may balance hardship between the parties, including by granting a conditional stay.
Court orders
#- 1.Conditional stay of execution and judgment in Nairobi High Court Civil Case No. 165 of 2007 pending the hearing and determination of the intended appeal
- 2.Applicant to pay within 30 days Kshs.8,598,696.11 (the accepted principal amount) into an interest-earning account in the joint names of the applicant and respondent firms of advocates in a reputable bank, to be maintained until the appeal is heard and determined or until further orders
- 3.In default of compliance, the application shall automatically stand dismissed
- 4.Costs of the application to abide the outcome of the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi (Milimani Commercial)
- H.C.C.C. No. 165 of 2007
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#An unconditional stay of execution
The court struck a balance of hardship between the parties by conditioning the stay on deposit of the principal amount, holding hardship to both parties inevitable
Costs
The costs of this application shall abide the outcome of the intended appeal.
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.
when it is properly proved that a refusal to grant an order of stay would result in an applicant suffering a hardship as would be out of proportion to any suffering a respondent might undergo awaiting the hearing of an appeal, the Court would take that as a factor amounting to rendering the success in the pending appeal nugatory
both tests as set out above have one overriding objective, namely to enable the court to act justly
In the circumstances, our inclination is to grant a conditional stay and the same is hereby granted on condition that the applicant pays within 30 days the sum of Kshs.8,598,696.11 being the accepted principal amount into an account in the joint names of the applicant and the respondent firms of advocates
We further order that in default of compliance with the above terms the application shall automatically stand dismissed.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "DEVCON GROUP LIMITED V TIMSALES LIMITED [2009] KECA 137 (KLR)", Case Analysis (2009). Civil Application 204 of 2009 (UR 140/2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/137/eng@2009-10-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.