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Court of AppealDismissedCivil Application No. 170 of 2012· [2013] KECA 385 (KLR)

Dream Camp Kenya Limited v Mohammed Eltaff & 3 others [2013] KECA 385 (KLR)

Court of Appeal of Kenya
1 March 2013
JOJ.W. Onyango OtienoWilliam OukoW. OukoFSF. Sichale
1,377 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause a share valuation case, ruling that the cost and inconvenience of continuing litigation doesn't justify a stay of proceedings.

What this practically means

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Executive summary

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The applicant, Dream Camp Kenya Limited, sought an order under Rule 5(2)(b) of the Court of Appeal Rules staying further proceedings in HCCC No. 450 of 1999 before the High Court pending an intended appeal against a ruling of Mabeya, J. delivered on 11 November 2011. The underlying dispute concerned the sale of shares, the remainder of a lease, goodwill and assets. Mulwa, J. had directed that the applicant's 10% shareholding be sold to existing shareholders at a fair market value determined by an arbitrator. After a prior appeal was dismissed and review orders by Kimaru, J. directed valuation by a panel of auditors, Mabeya, J. held that the effective date of valuation was the date of valuation (execution of the decree) rather than the date of judgment. The applicant intended to appeal that ruling and sought a stay of the High Court proceedings, arguing among other grounds that the judge erred in fixing the valuation date. The respondents opposed, contending the appeal was not arguable and would not be rendered nugatory. The Court of Appeal (Onyango Otieno, Ouko and Sichale, JJA) accepted that the effective-date question was triable, satisfying the arguability limb, but held the nugatory limb failed: what remained pending was merely the appointment of auditors to constitute a panel of arbitrators to value the shares, an exercise that would not render the appeal worthless if it ultimately succeeded, since wasted proceedings could be compensated in costs. Following Malde Transporters, the Court held the inconvenience and expense of litigation do not render an appeal nugatory. The motion was dismissed with costs to the respondents. This ruling now binds the High Court on the two-limb Rule 5(2)(b) test.

Key legal issues

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01

Whether the intended appeal on the effective date of valuation of shares was arguable

Holding

The Court accepted that the question whether the effective date of valuation ought to be the date of judgment or the date of valuation was a triable issue, satisfying the arguability limb.

Reasoning

The Court found that the dispute over whether the fair market value of the applicant's 10% shareholding should be assessed as at the date of judgment or the date of valuation was a triable question. That sufficed for the arguability threshold under Rule 5(2)(b), which requires only that the appeal not be frivolous and deserve consideration, not that it necessarily succeed.

p. 3
02

Whether the intended appeal would be rendered nugatory if stay of High Court proceedings was refused

Holding

The Court held the appeal would not be rendered nugatory because what was pending was merely the appointment of auditors/arbitrators to value the shares, and if the applicant succeeded on appeal the proceedings would have been unnecessary but compensable in costs.

Reasoning

The only pending step in the High Court was the appointment of auditors to form a panel of arbitrators to value the applicant's shareholding. That exercise would not destroy the subject matter or render the appeal worthless; should the appeal succeed, the proceedings would simply have been unnecessary, and an appropriate order for costs could remedy any prejudice. Reliance was placed on Malde Transporters for the proposition that the discomfort of litigation is remedied by costs, not by stay.

p. 3

Legal principles established

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  • An application under Rule 5(2)(b) for stay will only be granted where the intended appeal is arguable (not frivolous) and, if the stay is refused, the appeal would be rendered nugatory if it eventually succeeds.
  • An arguable appeal need not be one that would succeed; it need only be one deserving of the court's consideration.
  • An appeal is rendered nugatory if it would be rendered worthless, futile, invalid, or of no significance or value.
  • The mere inconvenience, expense and rigours of continued litigation do not render an intended appeal nugatory; these are ordinarily remedied by costs.

Court orders

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  1. 1.Dismissal of the notice of motion seeking stay of proceedings in the High Court pending the intended appeal
  2. 2.Costs of the application awarded to the respondents

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)

Cases cited (1)

  • Malde Transporters Limited v Bashir Arab Mohamed and Fatuma Haji Hassan (suing as the administrators of the Estate of Arab Mohamed Ahmed and John Ngandu Kinuthia
    Civil Application No. Nai 155 of 2005
On appeal from
High Court of Kenya at Nairobi (Milimani)
Civil Appeal No. 450 of 1999
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 (25)

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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, "Dream Camp Kenya Limited v Mohammed Eltaff & 3 others [2013] KECA 385 (KLR)", Case Analysis (2013). Civil Application No. 170 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/385/eng@2013-03-01

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