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Court of AppealDismissedCivil Application No. 290 of 2008· [2010] KECA 94 (KLR)

Twiga Chemical Industries Limited v Allan Stephen Reynolds

Court of Appeal of Kenya
22 October 2010
1,249 words in judgment
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The bottom line

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The Court of Appeal refused Twiga Chemical's request to halt a KShs.12 million deposit, ruling that companies who already obey a court order can't get a stay.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi dismissing an application by Twiga Chemical Industries Limited for stay of execution of a High Court ruling by Waweru J dated 3rd October 2008, which had directed the applicant to deposit KShs.12,203,040.50 (the decretal sum net of KShs.2 million already in court) within 30 days as a condition of stay pending appeal. The application was brought under rule 5(2)(b) of the Court of Appeal Rules. The Court reiterated the twin principles governing such applications: the applicant must show the appeal is arguable and that refusal of stay would render its success nugatory, citing Reliance Bank v Norlake Investments. The Court found that the applicant had already complied with the deposit order before the hearing, remained in trading, and had shown no demonstrable adverse effect over more than two years, so the nugatory limb failed. It also held that the applicant bore the onus of showing on a prima facie basis that the sums ordered were excessive and oppressive, which it failed to do, notwithstanding the principle in Gitahi v Warugongo that security should be least disadvantageous to the party providing it. Significantly, the Court held it had no jurisdiction at the stay stage to review the deposit order; that power vests in the bench hearing the eventual appeal, which had not been filed. The application was dismissed with costs to the respondent. The judgment binds lower courts on the twin-test and on the limits of rule 5(2)(b) jurisdiction.

Key legal issues

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01

Whether a stay of execution can still be granted where the applicant has already complied with the order sought to be stayed

Holding

Compliance with the order rendered the motion for stay largely academic; refusal of stay would not render the appeal nugatory since the deposit was in place and no demonstrable adverse effect on the applicant was shown.

Reasoning

The applicant, fearing execution, deposited the entire decretal sum before the hearing. The Court noted over two years had passed with the applicant still trading and no demonstration that the deposit had adversely affected it. Absent proof that the sums exceeded the decretal sum, the second rule 5(2)(b) condition was not satisfied and the motion served no useful purpose.

p. 2
02

The limits of the Court's jurisdiction under rule 5(2)(b)

Holding

The Court's power on a rule 5(2)(b) application is confined to granting or refusing a stay; it cannot review or vary the underlying order of the superior court.

Reasoning

The applicant sought in substance a review of the deposit condition and substitution with a bank guarantee. The Court held that review power vests in the bench that will eventually hear the appeal, not in the rule 5(2)(b) application bench, and that the appeal against the stay order had not been filed.

p. 2
03

Burden of proof regarding oppressive or excessive security

Holding

The applicant bore the onus of showing on a prima facie basis that the ordered deposit was too high and oppressive, which it failed to discharge.

Reasoning

Although the Court accepted the principle from Gitahi v Warugongo that security should be least disadvantageous to the party providing it, the applicant produced no material demonstrating that the sums ordered exceeded the decretal sum. The respondent showed that an earlier bank guarantee of KShs.5 million had lapsed, so the deposit fell within sums due.

p. 2

Legal principles established

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  • An applicant under rule 5(2)(b) must demonstrate, first, that the appeal or intended appeal is arguable, and second, that the success of the appeal would be rendered nugatory if stay or injunction is not granted.
  • On an application under rule 5(2)(b), the Court of Appeal's duty extends only to granting or refusing a stay; it has no jurisdiction to review or vary the order sought to be stayed.
  • The onus lies on the party challenging the security ordered by the court to present material showing on a prima facie basis that the security is excessive or oppressive.
  • The discretionary power under rule 5(2)(b) must be exercised on the basis of evidence and sound legal principles.

Court orders

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  1. 1.The application dated 31st August 2008 is dismissed
  2. 2.Costs of the application awarded to the respondent
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 2772 of 1997
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, "Twiga Chemical Industries Limited v Allan Stephen Reynolds", Case Analysis (2010). Civil Application No. 290 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2010/94/eng@2010-10-22

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