Bulk Medicals Limited (In Receivership) v Paramount Universal Bank Ltd & 2 others [2011] KECA 190 (KLR)
The bottom line
#Kenya's Court of Appeal dismissed Bulk Medicals' bid to stay a security-for-costs order because the company waited until after the compliance deadline had expired.
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 and not frivolous
- 2.Whether the intended appeal, if successful, would be rendered nugatory unless stay of execution of the High Court's security-for-costs order is granted
- 3.Whether an order for stay of execution under Rule 5(2)(b) can issue in respect of an order that has already taken effect
Key legal issues
#Whether the intended appeal was arguable
The court accepted that whether a company in receiversship ought to have been ordered to furnish security was an arguable, non-frivolous issue fit for agitation on appeal.
The court weighed the proposed grounds, including whether security could be ordered against a company in receivership that could not raise funds, and whether receiver-managers controlling the company's assets could demand security from the same company. It found these issues of law worth agitating before the appellate court and declined to brand the appeal frivolous, satisfying the first limb of the Rule 5(2)(b) test.
Whether a stay under Rule 5(2)(b) can issue where the order has already taken effect
No. The motion was filed after expiry of the 30-day compliance period, so the consequential order staying all proceedings had taken effect; a stay motion cannot undo what has already occurred.
Relying on the explanation of 'stay' in the Kileleshwa Service Station case, the court held that a stay only suspends the time for performance of an order and does not reverse, annul, undo or suspend what has already been done. Granting the order sought would in effect reverse or annul the security order and would be tantamount to deciding the appeal on a motion, which is outside the Rule 5(2)(b) jurisdiction.
Whether the intended appeal would be rendered nugatory if stay was not granted
It would not. The money ordered to be deposited would be held jointly by all parties in an interest-earning account and would be available to whichever party succeeded in the appeal.
The nugatory test was not satisfied because the security funds would be preserved in a joint interest-earning account in the names of counsel on record, available to any of the parties in the event of losing or winning the intended appeal. The company would therefore not be irreversibly ejected from the seat of justice, and the loss of an opportunity to pursue the claim was not established as a real risk.
Legal principles established
#- A stay of execution does not reverse, annul or undo what has already been done; it merely suspends the time required for performance of the order stayed to preserve the status quo pending appeal. The Court of Appeal exercising Rule 5(2)(b) jurisdiction cannot, on a motion for stay, restore superior court orders that have already taken effect, as that would amount to deciding the appeal on a motion.
- An order requiring payment of money within a specified period remains capable of being stayed before it takes effect by suspending the time for its performance.
Court orders
#- 1.The application for stay of execution of the ruling and order of the High Court dated 18th March 2009 is dismissed
- 2.The applicant to pay the costs of the application
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 249 of 2006
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Stay of execution of the entire ruling and order of the High Court requiring the applicant to deposit Kshs.4.0 million in a joint account within 30 days, failing which all proceedings would be stayed
The application was filed after the expiry of the time limited for compliance, so the second order (stay of proceedings) had already taken effect; a stay under Rule 5(2)(b) cannot restore orders that have taken effect, and the appeal would not be rendered nugatory because the deposit would be jointly held and available to whichever party prevails
Costs
The motion was dismissed with costs to the respondents
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.
A "stay" does not reverse, annul, undo or suspend what already had been done or what is not specifically stayed nor pass on the merits of the orders of the trial court, but merely suspends the time required for performance of the particular mandates stayed, to preserve a status quo pending appeal.
This motion, however, was filed after the expiry of the time limited for compliance with the order and therefore the second order for stay of proceedings had taken effect.
On the whole the motion is not only misconceived but also lacking in merit and we order that it be and is hereby dismissed with costs.
In accordance with the order, the money would be jointly held by all the parties and would be available to any of them in the event of losing or winning the intended appeal.
Issues in the judgment
#The second respondent's name appears as 'HARVEEN GADHOKE' in the cause title but is not referred to again in the body of the ruling; both respondents are collectively described as 'the receivers' throughout.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Bulk Medicals Limited (In Receivership) v Paramount Universal Bank Ltd & 2 others [2011] KECA 190 (KLR)", Case Analysis (2011). Civil Application No. NAI. 113 of 2009 (UR. 72/2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2011/190/eng@2011-07-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.