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Court of AppealAllowedCivil Appli 147 of 2008 (UR 94/2008)· [2009] KECA 383 (KLR)

Ndima Tea Factory Limited v Joseph Mwaniki Muchira t/a Central Associates [2009] KECA 383 (KLR)

Court of Appeal of Kenya
13 March 2009
ROR. S. C. OmoloPWP. N. WakiJOJ. W. Onyango Otieno
2,449 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 stopped collection of a Ksh.25 million judgment because the company wasn't properly notified of the hearing that decided against it.

What this practically means

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Executive summary

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This is a ruling of a three-judge bench of the Court of Appeal at Nairobi on a notice of motion dated 25th June 2008 brought under rule 5(2)(b) of the Court of Appeal Rules by Ndima Tea Factory Limited. The applicant sought a stay of execution of an ex-parte judgment of Khaminwa J, delivered on 17th January 2008 in H.C.C.C. No. 102 of 2007, awarding the respondent Ksh.13,098,000 plus interest at 24% per annum and dismissing the applicant's counter-claim. The applicant's earlier application to set aside that judgment was dismissed on 3rd June 2008, prompting a notice of appeal and a substantive appeal (Civil Appeal Number 185 of 2008, Nyeri). The court restated the settled twin principles for rule 5(2)(b) applications: the appeal must be arguable, and its success must be rendered nugatory if the stay is refused; both must be demonstrated. The court found three arguable points: non-service of the hearing notice for the ex-parte hearing of 10th December 2007, the validity of the sale agreements said to lack the applicant's seal, and the basis for the 24% interest rate. On the second limb, the decretal amount had grown to over Ksh.25,148,160, the applicant's unrebutted affidavit warned of insolvency, and the respondent's claim of owning property worth Ksh.40,000,000 was unsupported by evidence. Both limbs were satisfied. The court allowed the motion and stayed execution of the judgment and decree until the appeal is heard and determined, with costs of the motion in the appeal. The decision below was not disturbed; this was an interlocutory application, not the appeal itself.

Key legal issues

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01

The governing principles for stay of execution under rule 5(2)(b)

Holding

The applicant must show the appeal is arguable and that refusing the stay would render the appeal's success nugatory; both must be established.

Reasoning

The court restated the settled two-pronged test from J.K. Industries v Kenya Commercial Bank Ltd & Another. Both limbs must be demonstrated before the order is granted; proof of only one does not suffice. The court then applied each limb in turn to the facts before it.

p. 3
02

Arguability of the intended appeal

Holding

Three arguable points were identified: non-service of the hearing notice, validity of the sale agreements, and the basis for interest at 24% p.a.

Reasoning

The court noted the respondent's alleged hearing notices related to a 2006 hearing, not the 10th December 2007 hearing, and no signed and stamped copies were annexed; service was therefore an arguable point. The validity of agreements said to lack the applicant's seal and involving non-parties, and the 24% interest rate, also raised arguable points.

p. 3
03

Nugatory-ness if stay is refused

Holding

The decretal amount exceeding Ksh.25,000,000 may render the applicant insolvent and the respondent gave no evidence of ability to refund, so the appeal would be rendered nugatory.

Reasoning

The award had swollen to over Ksh.25,148,160. The applicant's unrebutted affidavit stated payment may render it insolvent. The respondent's assertion that he owned property worth about Ksh.40,000,000 was unsupported by any valuation or identification of the properties, leaving the applicant unable to recover if the appeal succeeded.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy both the arguability and the nugatory-ness principles; proof of only one will not suffice.
  • Only one arguable point is sufficient to satisfy the first limb of the rule 5(2)(b) test.
  • Where a party is found not to have been served with a hearing notice, the court has no discretion but to set aside the ex-parte order.

Court orders

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  1. 1.Execution of the judgment and decree of the superior court made on 17th January 2008 is stayed till the appeal already filed at the Court of Appeal Registry at Nyeri is heard and determined
  2. 2.Costs of the motion shall be in the appeal

Authorities

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Legislation

  • Court of Appeal Rulesrule 5(2)(b)
  • Chapter 300

Cases cited (3)

  • J. K. Industries vs. Kenya Commercial Bank Ltd & Another
    [1987] KLR 506
  • Maina v. Mugiria
    Civil Appeal No. 27 of 1982 (unreported)
  • Oraro Rachier Advocates vs. Co-operative Bank of Kenya Ltd
    Civil Application No. NAI. 358 of 1999
On appeal from
High Court of Kenya at Embu
H.C.C.C. No. 102 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, "Ndima Tea Factory Limited v Joseph Mwaniki Muchira t/a Central Associates [2009] KECA 383 (KLR)", Case Analysis (2009). Civil Appli 147 of 2008 (UR 94/2008). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/383/eng@2009-03-13

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