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Court of AppealDismissedCivil Appeal (Application) No. 106 of 2009 (UR 67/2009)· [2009] KECA 203 (KLR)

TRANSWESTERN CANE HARVESTERS LIMITED & ANOTHER V BARCLAYS BANK OF (K) LIMITED [2009] KECA 203 (KLR)

Court of Appeal of Kenya
17 July 2009
2,126 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal refused to stop a bank selling charged land, ruling the appeal could still succeed even if the property were sold.

What this practically means

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Executive summary

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The applicants, Transwestern Cane Harvesters Limited and Nairobi Grapes Plantation Limited, moved the Court of Appeal at Kisumu under rule 5(2)(b) of the Court of Appeal Rules seeking a temporary injunction restraining Barclays Bank of Kenya Limited from disposing of or alienating land parcel Suna East/Wasweta 1/1372 pending an intended appeal against the ruling of Musinga, J. delivered at Kisii on 1st April 2009 in H.C.C.C. No. 97 of 2008, which had dismissed their injunction application against the exercise of the bank's statutory power of sale. The dispute concerned whether the charge over the second applicant's property secured the whole Kshs.32 million facility including a later Kshs.5 million overdraft, and whether the bank's interest calculations breached the Central Bank of Kenya (Amendment) Act 2004 and the Banking Act. The court restated the twin rule 5(2)(b) tests: the applicant must show an arguable appeal (a single arguable point suffices) and that the appeal would be rendered nugatory absent relief. It found the intended appeal arguable on the interpretation of section 39 of the Central Bank of Kenya Act and the 2004 Amendment Act's retrospective operation, but held the nugatory limb failed: a charged property is a marketable security, the presence of an academy on the land was irrelevant to its mandate, and successful applicants would not be without remedy. The application was dismissed with costs on 17th July 2009.

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The intended appeal was arguable because it raised, inter alia, the interpretation of section 39 of the Central Bank of Kenya Act and the Central Bank of Kenya (Amendment) Act 2004, including issues of retrospective operation and alleged unconstitutionality.

Reasoning

The court reviewed the intended grounds of appeal, including whether the overdraft facility was covered by the second applicant's charge, the alleged interest rate illegality, and the retrospective effect of the CBK (Amendment) Act 2004. It concluded these issues could not be said to be frivolous, satisfying only the first limb of the rule 5(2)(b) test.

p. 4
02

Whether the intended appeal would be rendered nugatory if the injunction was not granted

Holding

The nugatory test was not satisfied. A charged property is a marketable security; the presence of an academy on the land did not establish that the appeal would be rendered nugatory, since a successful purchaser might continue running the academy and the applicants would not be without remedy on success.

Reasoning

The court held that consideration of irreparable damage from sale of property hosting a school falls outside its mandate on a rule 5(2)(b) application. Should the applicants succeed in the intended appeal, adequate remedies would be available against the respondent or through the purchaser, so the sale would not render the appeal nugatory.

p. 4

Legal principles established

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  • On an application under rule 5(2)(b), an applicant must establish both that the intended appeal is arguable (not frivolous) and that, if it were to succeed, it would be rendered nugatory unless the order sought is granted; a single arguable issue suffices.
  • A solitary arguable issue is sufficient to satisfy the first limb of the rule 5(2)(b) test.
  • The principles governing interlocutory relief in the High Court (the Giella test) are different from the twin considerations applying to a rule 5(2)(b) application in the Court of Appeal; whether a school stands on charged land and claims of irreparable damage are not relevant to that second limb.
  • Once a property is charged it becomes a marketable security, and an applicant whose appeal succeeds will not be without remedy even if the charged property is sold.

Court orders

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  1. 1.The notice of motion dated 20th April 2009 seeking an injunction pending appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Banking ActSection 52(3)
  • Central Bank of Kenya Act (Cap. 491 Laws of Kenya)Section 39
  • Central Bank of Kenya (Amendment) Act No. 8 of 2004

Cases cited (3)

  • Habib Bank A.G. Zurich vs. Pop-In (K) Ltd. & Others
    Civil Appeal No. 147 of 1989 (unreported)
  • Giella vs. Cassman Brown & Co. Ltd.
    [1973] E.A. 358
  • Judicial Commission of Inquiry into the Goldenberg Affairs & 3 Others vs. Kilach
    [2003] KLR 2459
On appeal from
High Court of Kenya at Kisii
H.C.C.C. No. 97 of 2008
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules - application for injunction/stay pending the lodging, hearing and determination of an intended appeal

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "TRANSWESTERN CANE HARVESTERS LIMITED & ANOTHER V BARCLAYS BANK OF (K) LIMITED [2009] KECA 203 (KLR)", Case Analysis (2009). Civil Appeal (Application) No. 106 of 2009 (UR 67/2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/203/eng@2009-07-17

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