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Court of AppealPartially AllowedCivil Application No. 74 of 2015 (UR 63 of 2015)· [2015] KECA 447 (KLR)

Housing Finance Company Of Kenya v Hirji & another (Civil Application 74 of 2015) [2015] KECA 447 (KLR)

Court of Appeal
31 July 2015
AVAlnashir VisramMartha Karambu KoomeM. KoomePhilomena Mbete MwiluP. M. Mwilu
2,644 words in judgment
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The bottom line

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The Court of Appeal paused collection of a judgment debt against Housing Finance, but only after ordering it to deposit the full decretal sum as security.

What this practically means

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Executive summary

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The applicant, Housing Finance Company of Kenya, moved the Court of Appeal under rule 5(2)(b) of its Rules for a stay of execution pending an intended appeal against a High Court judgment of Khaminwa J dated 29th November 2010, which awarded the 1st respondent Shs.20,434,226.54 with interest at 26% per annum from 19th January 2000 and costs. The suit arose from the applicant's exercise of its statutory power of sale over the respondent's Runda property following default on a charge. The applicant argued the appeal was arguable, including on the refund of Shs.5,079,159 from sale proceeds, the variation of interest by Gikonyo J when the trial court was functus officio, and execution without leave under section 96 of the Civil Procedure Act. The 1st respondent opposed, contending no record of appeal had been filed and nothing would be rendered nugatory. The court first held that jurisdiction under rule 5(2)(b) was properly invoked, since a notice of appeal had been filed on 6th December 2010 and the validity of a notice of appeal need not be determined on such an application. It then found several arguable points without determining the merits, and on the nugatory limb noted that although the decree was a money decree, the sum sought in execution had ballooned to Shs.722,581,646.60 with no demonstrated capacity by the respondent to refund. Balancing the parties' interests, the court allowed the application conditionally: the applicant to deposit the decretal sum of Shs.20,434,226.54 as security in an interest-earning account in the joint names of the advocates within sixty days. Costs of the application were to be in the intended appeal. This is a single judgment of the full bench; it binds subordinate courts on the rule 5(2)(b) principles it restates.

Key legal issues

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01

Whether jurisdiction under rule 5(2)(b) is properly invoked without a filed record of appeal

Holding

A notice of appeal filed on 6th December 2010 demonstrated a clear intention to appeal; the court need not determine the validity of the notice of appeal when considering a rule 5(2)(b) application.

Reasoning

The court held that rule 5(2)(b) jurisdiction arises upon lodging a notice of appeal, whether or not a record of appeal has been filed. Validity of the notice of appeal is a matter under rule 80 of the Court's Rules, not a preliminary issue on a stay application. The respondent did not ask the court to determine the notice's validity.

p. 3
02

Whether the intended appeal is arguable

Holding

The applicant satisfied the arguability limb; several arguable points were raised, including the validity of the power of attorney, proof of damages, the applicable interest rate and computation, and the refund made to the respondent.

Reasoning

The court perused the Notice of Motion, grounds, affidavits and draft memorandum of appeal and identified several arguable points, among them the validity of the power of attorney, whether damages were proved, the interest rate and its computation, and the refund of Shs.5,079,159. It stressed that it should not determine the merits lest it embarrass the trial judge.

p. 3
03

Whether the appeal would be rendered nugatory if stay is refused

Holding

Given the colossal sum sought in execution (Shs.722,581,646.60) against a judgment of Shs.20,434,226.54, and the respondent's failure to demonstrate ability or willingness to repay, there was a likelihood of the appeal being rendered nugatory.

Reasoning

Although a money decree normally does not render an appeal nugatory, the court applied the riders in Kenya Hotel Properties v Willesden: the huge escalation of the decretal sum, the disputed computation subject to the appeal, and the absence of any material showing the respondent's capacity to refund created reasonable apprehension that success on appeal would be illusory.

p. 4

Legal principles established

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  • An application under rule 5(2)(b) succeeds only if both limbs are satisfied: the appeal is arguable and, if successful, would not be rendered nugatory by refusal of stay.
  • The jurisdiction under rule 5(2)(b) arises where a notice of appeal has been lodged; the court need not determine the validity of the notice of appeal on such an application.
  • An applicant for stay need only show at least one arguable issue; the appeal need not be shown likely to succeed.
  • A money decree ordinarily does not render an appeal nugatory unless the respondent is shown to be a man of straw, but riders apply where refusal would cause undue hardship.
  • In stay applications the court balances the applicant's right to appeal against the respondent's right to the fruits of judgment, safeguarding both.

Court orders

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  1. 1.The Notice of Motion dated 12th March 2015 is allowed, subject to the condition that the applicant deposits security in the sum of Shs.20,434,226.54 being the decretal sum in an interest earning account with a reputable bank other than the applicant in the joint names of the respective advocates within sixty (60) days from the date of the judgment
  2. 2.The costs of the application to be in the intended appeal

Authorities

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Legislation

  • Court of Appeal Rulesrule 5(2)(b)
  • Court of Appeal Rulesrule 80
  • Civil Procedure Actsection 96

Cases cited (13)

  • Nyamogo & Nyamogo Advocates v Barclays Bank of Kenya
    [2015] eKLR
  • Peter Njuguna Njoroge v Zipporah Wangui Njuguna
    [2013] eKLR
  • Reliance Bank Ltd (In Liquidation) vs. Norlake Investments Ltd
    Civil Appl. No. Nai. 93/02 (UR)
  • Republic v. Kenya Anti-Corruption Commission & 2 others
    [2009] KLR 31
  • Jacinta Wairimu Njoroge v Julia Wanjiru & 4 others
    [2008] eKLR
  • National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Another
  • Safaricom Ltd v. Ocean View Beach Hotel Ltd & 2 others
    Civil Application No. 327 of 2009 (UR)
  • Africa Eco-Camps Limited v Exclusive African Treasurers Limited
    [2014] eKLR
  • Kenya Tea Growers Association & Another vs Kenya Planters & Agricultural Workers Union
    Civil Application Nai. No. 72 of 2001
  • Kenya Railways Corporation v. Edermann Properties Ltd.
    Civil Appeal No. NAI 176 of 2012
  • Ahmed Musa Ismael v. Kumba Ole Ntamorua & 4 others
    Civil Appeal No. NAI.256 of 2013
  • Carter & Sons Ltd. v. Deposit Protection Fund Board & Two Others
    Civil Appeal No. 291 of 1997
  • Kenya Hotel Properties Limited v Willesden Properties Limited
    Civil Application Nai. No. 322 of 2006 (UR 178/06)
On appeal from
High Court of Kenya at Nairobi
HCCC No. 223 of 2006
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 (4)

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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, "Housing Finance Company Of Kenya v Hirji & another (Civil Application 74 of 2015) [2015] KECA 447 (KLR)", Case Analysis (2015). Civil Application No. 74 of 2015 (UR 63 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/447/eng@2015-07-31

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