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Court of AppealAllowedCivil Application No NAI 283 of 2015 (UR 241/2015)· [2016] KECA 608 (KLR)

National Bank Of Kenya Limited & another v Muotia (Civil Appeal Suit 283 of 2015) [2016] KECA 608 (KLR)

Court of Appeal
29 April 2016
2,697 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 paused contempt findings against a bank and auctioneer, ruling that even one arguable appeal ground justifies staying contempt proceedings that could mean jail.

What this practically means

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Executive summary

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The applicants, a chargee bank and its instructed auctioneer, were found guilty of contempt by Amin, J. of the High Court on 11th November 2015 for proceeding to advertise a public auction of charged property after an ex parte injunction had been granted on 23rd January 2015. They filed a notice of appeal and moved the Court of Appeal under rule 5(2)(b) seeking stay of execution of the contempt orders and stay of the contempt proceedings pending appeal. The respondent objected that the Court lacked jurisdiction because there were no positive orders capable of being stayed, and argued no appeal lay as of right under section 75 of the Civil Procedure Act, and that the applicants should not be heard until they purged their contempt. The Court held its rule 5(2)(b) jurisdiction is original and discretionary, extends to granting injunctions pending appeal to preserve the subject matter of the appeal, and that the application was competent. Applying the settled two-limb test, it found the appeal arguable: the substratum concerned whether service on a gateman after working hours on a Friday imputed knowledge of the order, and whether failure to cancel the advertisement constituted contempt. On the nugatory limb, the Court noted the applicants' officers faced likely sentencing entailing loss of liberty, which would render a successful appeal nugatory. The application was allowed as prayed, with costs of the application to abide the outcome of the appeal.

Key legal issues

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01

Jurisdiction to stay where no positive orders are capable of being stayed

Holding

The Court rejected the respondent's objection and held it has jurisdiction under rule 5(2)(b) to grant an injunction pending appeal to preserve the subject matter or facilitate a proportionate resolution of the dispute.

Reasoning

The respondent argued there were no positive orders capable of being stayed. The Court, reading the impugned ruling and the prayers, held its rule 5(2)(b) jurisdiction extends to granting injunctions pending appeal to preserve the subject matter of the appeal or to facilitate proportionate resolution, and that the prospect of substantial loss, harm or damage is a relevant consideration. The application was therefore competent and within jurisdiction.

p. 3
02

Whether the intended appeal is arguable

Holding

The intended appeal was arguable on the question whether service on a gateman after working hours gave the applicants knowledge of the order such that continuing the auction advertisement amounted to contempt.

Reasoning

The Court applied the settled test that a single bona fide issue suffices. The substratum of the appeal concerned service of the court order: service occurred after working hours on a Friday upon a gateman, raising the questions whether knowledge could be imputed and whether failure to cancel the advertisement was contempt. The respondent conceded service was past working hours. These bona fide issues sufficed; the Court declined to express itself further to avoid prejudicing the appeal.

p. 4
03

Whether the appeal would be rendered nugatory if stay is refused

Holding

The nugatory limb was satisfied because the applicants faced likely sentencing involving loss of liberty before the appeal could be heard.

Reasoning

The Court weighed the competing claims on the peculiar facts. Without a stay, High Court contempt proceedings would continue and officers of the applicant company would likely be sentenced, possibly by committal to civil jail. By the time the appeal was heard the sentence would have been served, rendering any successful appeal nugatory. Precedents involving jail sentences pending appeal supported this conclusion.

p. 4

Legal principles established

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  • The jurisdiction of the Court of Appeal under rule 5(2)(b) is original and discretionary, and requires the applicant to demonstrate both an arguable appeal and that the appeal would be rendered nugatory if stay is refused.
  • A single bona fide arguable ground suffices to establish an arguable appeal; the appeal need not necessarily succeed.
  • Where an alleged contemnor intends to appeal and raises issues deserving the Court's consideration, it is just to stay the contempt order and related proceedings pending the appeal.

Court orders

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  1. 1.Stay of execution of the orders of Amin, J. of 11th November 2015 finding the applicants in contempt of court
  2. 2.Stay of further proceedings before the High Court in so far as they relate to the application for contempt of court, pending the hearing and determination of the intended appeal
  3. 3.Costs of the application to abide the outcome of the appeal

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Civil Procedure RulesOrder 50 rule 9
  • Civil Procedure ActSection 75

Cases cited (10)

  • Equity Bank Limited v West Link MBO Limited
    [2013] eKLR (Civil Application No. Nai 78 of 2011)
  • Githinji v Amrit & Another
    [2004] eKLR
  • Ishmael Kagunyi Thande v Housing Finance of Kenya Ltd
    [2006] eKLR (Civil Application No. NAI 157 of 2006)
  • Mbaabu Mbui & Another v Langata Gardens Limited
    [2011] eKLR (Civil Application Nai 73 of 2011 (UR 49/2011))
  • Lake Tanners Limited & 2 others v Oriental Commercial Bank Limited
    [2010] eKLR (Civil Application No. 64 of 2010)
  • Stanley Kangethe Kinyanjui v Tony Ketter & 5 others
    [2013] eKLR (Civil Application 31 of 2012)
  • Justus Kariuki Mate & another v Martin Nyaga Wambora & another
    [2014] eKLR (Civil Application No. Nyr. 8 of 2014 (UR 6/2014))
  • Reliance Bank Ltd v Norlake Investments Limited
    (2000) 1 EA 227
  • Rev. Jackson Kipkemboi Koskey & 7 Others v Rev. Samuel Muriithi Njogu & 4 others
    [2007] eKLR (Civil Application No 311 of 2006)
  • Stanislus Nyagaka Ondimu v Kalyasoi Farmers Co-Operative Society & Others
    Civil Application No. Nai. 337 of 2005 (unreported)
On appeal from
High Court of Kenya at Nairobi
H.C.C.C No 23 of 2015
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 (1)

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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, "National Bank Of Kenya Limited & another v Muotia (Civil Appeal Suit 283 of 2015) [2016] KECA 608 (KLR)", Case Analysis (2016). Civil Application No NAI 283 of 2015 (UR 241/2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/608/eng@2016-04-29

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