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Court of AppealDismissedCivil Application 63 of 2012· [2013] KECA 338 (KLR)

Case Trading Company Limited v Vishak Builders Limited & another [2013] KECA 338 (KLR)

Court of Appeal
19 April 2013
2,553 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause a KShs 17.9 million deposit order, confirming that winning a stay application requires proving both an arguable appeal and real risk of loss.

What this practically means

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Executive summary

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Case Trading Company Limited applied under Rule 5(2)(b) of the Court of Appeal Rules for stay of execution of, and stay of proceedings pursuant to, the ruling of Ogola, J of the High Court delivered on 8th December 2011 in HCCC No. 77 of 2011, a construction dispute arising from a contract to build forty housing units on L.R. No. 209/13535, Lang'ata Road. The High Court had ordered the applicant to deposit KShs.17,940,979.81 as security in an interest bearing account in the joint names of counsel for both parties. The applicant argued that the order was made without full facts, would harm its business and might lead to its being shut out of proceedings, rendering the intended appeal nugatory. The 1st respondent countered that the appeal was unarguable and that the funds, being in a joint interest-bearing account, would remain secure and available. The Court of Appeal (Karanja, Ouko and Mohammed, JJ.A) framed two issues: whether the intended appeal was arguable, and whether its success would be rendered nugatory if stay was refused. The court restated the settled twin-limb test from Republic v Kenya Anti-Corruption Commission, applied the overriding objective under Sections 3A and 3B of the Appellate Jurisdiction Act, and held the appeal arguable on the counterclaim amounts. However, because the deposit would be readily available on determination of the appeal, the nugatory limb failed. Having satisfied only one limb, the applicant could not succeed. The application was dismissed with costs to the 1st respondent. This ruling binds subordinate courts on the twin-limb requirement in Rule 5(2)(b) applications.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The intended appeal is not frivolous and is arguable; the question whether the 1st respondent owes the applicant the amounts claimed in the counterclaim is arguable.

Reasoning

The court applied the settled Rule 5(2)(b) principles, reiterating that an arguable appeal is not one that must necessarily succeed but one deserving of the court's consideration. On the material on record, the claim in the applicant's defence and counterclaim, that the 1st respondent owed it the amounts claimed, raised an arguable point. The first limb was therefore satisfied.

p. 4
02

Whether the intended appeal would be rendered nugatory if stay is refused

Holding

The appeal would not be rendered nugatory because the ordered deposit is to be held in an interest earning account in the joint names of both parties' counsel and will be readily available upon determination of the appeal.

Reasoning

The court weighed and balanced the competing claims of the parties, guided by the overriding objective and the oxygen principle as explained in African Safari Club v Safe Rentals. Since the High Court ordered the deposit into a joint interest-bearing account, the funds would be secure, available and earning interest, so refusal of stay would not render a successful appeal nugatory. The second limb failed.

p. 5

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy both the arguability limb and the nugatory limb; satisfying only one does not avail the order sought.
  • An arguable appeal need not necessarily succeed; it is enough that it is deserving of the court's consideration.
  • Whether success of an appeal would be rendered nugatory must be assessed by weighing and balancing the competing claims of the parties within the circumstances of each particular case, guided by the overriding objective.

Court orders

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  1. 1.Declined to grant an order for stay of execution pending the filing and final determination of the intended appeal
  2. 2.Declined to grant an order for stay of proceedings pending the filing and final determination of the intended appeal
  3. 3.Dismissed the application with costs to the 1st respondent

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Appellate Jurisdiction ActSection 3A
  • Appellate Jurisdiction ActSection 3B

Cases cited (9)

  • Republic v Kenya Anti-Corruption Commission & 2 Others
    (2009) KLR 31
  • Reliance Bank Ltd v Norlake Investments Ltd
    (2002) 1 EA 227
  • Githunguri v Jimba Credit Corporation Ltd & Others (No. 2)
    1988 KLR 828
  • Wardpa Holdings Ltd & Others v Emmanuel Waweru Mathai & HFCK
    Civil Appeal No. 72 of 2011 (unreported)
  • Dennis Mogambi Mang’are v Attorney General & 3 Others
    Civil Application No. NAI 265 of 2011 [UR 175/2011]
  • African Safari Club Limited v Safe Rentals Limited
    Nairobi Civil Appeal [Application] No. 53 of 2010 (unreported)
  • E. Muriu Kamau & Njoroge Nani Mungai Trading as Muriu Njoroge & Co Advocates v National Bank of Kenya Ltd
    Civil Application No. NAI 258 of 2009 [Ur 180/2009]
  • Oraro & Rachier Advocates v Co-Operative Bank of Kenya Ltd
    Civil Application No. NAI 358 of 1999 [149/99 Ur]
  • Harit Sheth Trading as Harit Sheth Advocate v Shamas Charania
    Civil Application No. NAI 68 of 2008 [UR 26/2008]
On appeal from
High Court of Kenya at Nairobi
HCCC No. 77 of 2011
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules, together with Sections 3A and 3B of the Appellate Jurisdiction Act

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, "Case Trading Company Limited v Vishak Builders Limited & another [2013] KECA 338 (KLR)", Case Analysis (2013). Civil Application 63 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/338/eng@2013-04-19

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