Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
Court of AppealDismissedCivil Application No. NAI 101 of 2017· [2017] KECA 140 (KLR)

Cosmas Kyalo Muthembwa v Co-operative Bank of Kenya Limited & another [2017] KECA 140 (KLR)

Court of Appeal
24 November 2017
RNR.N. NambuyeDMD.K. MusingaWilliam OukoW. Ouko
1,983 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

#

Kenya's Court of Appeal refused to stop a bank from selling charged Karen property because the applicant failed both legal tests and ignored a court order.

What this practically means

#

Executive summary

#
This was an application under rule 5(2)(b) of the Court of Appeal Rules seeking an injunction pending an intended appeal against a ruling of the High Court (G.L. Nzioka, J.) delivered on 12th April 2017 in H.C.C.C. No. 110 of 2016. The High Court had granted the applicant a temporary injunction restraining the 1st respondent bank from exercising its statutory power of sale over L.R. No. 12661/58, Karen, on condition that the applicant deposit Kshs.8,000,000/= into the 2nd respondent's account within thirty days and continue servicing monthly instalments; on default, the injunction would stand vacated. The applicant, who had guaranteed a loan advanced to the 2nd respondent (of which he was Managing Director) and had charged the suit property as security, did not comply with the conditions. The Court of Appeal, composed of Nambuye, Musinga and Ouko, JJ.A., restated the twin tests for an injunction pending appeal - arguability and nugatory aspect - both of which must be satisfied. Applying the principles in United India Assurance Co. Ltd v East African Underwriters (Kenya) Ltd, the court held that the High Court judge had properly exercised her discretion and that the applicant had failed to show the intended appeal was arguable. On the nugatory test, guided by Reliance Bank v Norlake Investments, the court held the applicant had not demonstrated that damages would be inadequate, having knowingly offered the property as collateral irrespective of its alleged matrimonial character. The application was dismissed with costs to the 1st respondent.

Key legal issues

#
01

Whether the intended appeal was arguable

Holding

The court found the intended appeal not arguable; the High Court judge had exercised her discretion properly in granting a conditional injunction, and the applicant failed to show any improper exercise of that discretion.

Reasoning

The 2nd respondent did not respond to the application, so its indebtedness to the 1st respondent stood undisputed per the High Court's finding. The applicant, as the 2nd respondent's Managing Director and guarantor, had charged the suit property to secure the loan and defaulted in compliance with the conditional injunction. Applying the principles in United India Assurance, the court could find no misdirection in law or fact, no wrong considerations, and no plainly wrong decision. The applicant also did not explain his failure to deposit the Kshs.8,000,000/= ordered by the High Court.

p. 4
02

Whether the intended appeal would be rendered nugatory if the injunction were not granted

Holding

The applicant failed to demonstrate nugatory aspect; damages would be an adequate remedy and he had accepted the consequences of offering the property as collateral.

Reasoning

The applicant claimed the suit property's peculiar character would make damages inadequate, but the court noted that by offering the property as collateral he was aware of the consequences of default, including the lender's statutory right of sale, whether or not the property was matrimonial. Nugatoriness depends on the circumstances of each case (Reliance Bank v Norlake). The 1st respondent's ability to compensate the applicant if the appeal succeeded was not displaced.

p. 4

Legal principles established

#
  • An injunction pending appeal under rule 5(2)(b) can only be granted where both the arguability test and the nugatory test are satisfied; either test failing is fatal.
  • An appellate court will not interfere with a discretionary decision of the trial judge unless the judge misdirected himself in law, misapprehended the facts, took into account considerations he should not have, failed to take into account considerations he should have, or his decision is plainly wrong.
  • Whether an appeal would be rendered nugatory, if successful, depends on the peculiar circumstances of each case.
  • A chargor who offers property as collateral is taken to be aware of the consequences of default, including the exercise of the lender's statutory power of sale, irrespective of whether the property is matrimonial property.

Court orders

#
  1. 1.Application for injunction pending appeal dismissed
  2. 2.Applicant to bear the 1st respondent's costs of the application

Authorities

#

Legislation

  • Court of Appeal Rulesrule 5(2)(b)

Cases cited (3)

  • Silvergate Academy Limited v National Bank of Kenya Limited
    [2016] eKLR
  • United India Assurance Co. Ltd v East African Underwriters (Kenya) Ltd
    [1985] E.A. 898
  • Reliance Bank Limited v Norlake Investments Limited
    [2002] 1 E.A. 227
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 110 of 2016
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (1)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Cosmas Kyalo Muthembwa v Co-operative Bank of Kenya Limited & another [2017] KECA 140 (KLR)", Case Analysis (2017). Civil Application No. NAI 101 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/140/eng@2017-11-24

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