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Court of AppealPartially AllowedCivil Application No. 167 of 2012· [2012] KECA 82 (KLR)

Kenya Railways Corporation v Erdemann Property Limited [2012] KECA 82 (KLR)

Court of Appeal
28 September 2012
AVAlnashir VisramMartha Karambu KoomeM. K. KoomeHOH. M. Okwengu
1,507 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 suspended a High Court injunction freezing Kenya Railways properties, but ordered the underlying lawsuit to continue while the appeal is heard.

What this practically means

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Executive summary

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Kenya Railways Corporation applied to the Court of Appeal under Rule 5(2)(b) of the Court of Appeal Rules for (i) a stay of proceedings in High Court Suit No. 294 of 2012 and (ii) a stay of the order of Mabeya, J dated 8th June 2012, pending an intended appeal. The underlying dispute arose from Erdemann Property Limited's suit against Kenya Railways for specific performance of a contract for the sale of property L.R. No. 209/11953 for Kshs. 1.765 billion, or alternatively special damages of some Kshs. 26 billion, together with a permanent injunction restraining disposal of the suit property. The High Court had issued ex parte conservatory orders restraining disposal of several of the applicant's properties; on 8th June 2012 the judge varied those orders, discharging most properties but keeping a smaller list under injunction, applying the overriding objective under Sections 1A and 1B of the Civil Procedure Act. The Court of Appeal applied the established two-limb test: arguability and nugatory-ness. It found the appeal arguable on the proper interpretation of section 88 of the Kenya Railways Corporation Act and on whether the judge exceeded the relief sought in the plaint by injuncting properties not in dispute, and held the appeal would be rendered nugatory because the applicant would be compelled to breach contractual and statutory obligations. The Court granted the stay of the High Court order of 8th June 2012 pending the intended appeal but refused a stay of the proceedings, directing the High Court suit to continue to its logical conclusion.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The intended appeal was arguable because counsel were diametrically opposed on the effect of section 88 of the Kenya Railways Corporation Act and on whether the judge could injunct properties beyond those in dispute in the plaint.

Reasoning

The Court identified two arguable points: the correct interpretation and application of section 88 of the Kenya Railways Corporation Act (whether assets may be 'preserved' or 'attached'), and whether the High Court judge exceeded the scope of the orders sought in the plaint by restraining numerous properties not the subject of the litigation. It stressed that arguability does not require a demonstration that the appeal must succeed, only that the point merits full argument.

p. 3
02

Whether the appeal would be rendered nugatory absent a stay

Holding

The Court was satisfied the intended appeal would be rendered nugatory without a stay, because the applicant would be compelled to breach contractual and statutory obligations in respect of the injuncted properties.

Reasoning

The nugatory-prong test was satisfied: the injunctive orders prevented the applicant from dealing with several of its properties, and the applicant would thereby be forced to breach its contractual and statutory obligations, rendering any eventual success on appeal illusory. The Court therefore granted a stay of the High Court order of 8th June 2012 pending the intended appeal.

p. 3
03

Whether stay of the High Court proceedings should also issue

Holding

Stay of proceedings was refused; the High Court proceedings were to continue to their logical conclusion notwithstanding the pending appeal.

Reasoning

Although the applicant also sought stay of the proceedings in HCCC No. 294 of 2012, the Court found no justification for suspending the trial. Only the order of 8th June 2012 was stayed; the substantive suit was to proceed. An application for stay of proceedings before the Court of Appeal requires distinct justification and was not made out here.

p. 3

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy the court both that the intended appeal is arguable and that, unless the order sought is granted, the appeal if successful would be rendered nugatory; an arguable appeal need not necessarily succeed but must be one that ought to be argued fully.

Court orders

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  1. 1.Stay of the Order issued by the High Court on 8th June 2012 in Civil Suit No. 294 of 2012 pending the hearing and determination of the intended appeal (prayer 2 granted)
  2. 2.Refusal of stay of proceedings in the High Court; proceedings to continue in the High Court to their logical conclusion (prayer 1 refused)

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Kenya Railways Corporation ActSection 88
  • Civil Procedure ActSections 1A and 1B
  • Appellate Jurisdiction Act
  • Civil Procedure RulesSections 1A and 1B (as referenced by the High Court)

Cases cited (1)

  • E. Muiru Kamau and Another vs National Bank of Kenya Ltd
    (2009) eKLR
On appeal from
High Court of Kenya at Nairobi
HCCC No. 294 of 2012
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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Later judgments citing this (6)

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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, "Kenya Railways Corporation v Erdemann Property Limited [2012] KECA 82 (KLR)", Case Analysis (2012). Civil Application No. 167 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2012/82/eng@2012-09-28

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