CFC Financial Services v Juja Road Fancy Store Limited [2017] KECA 171 (KLR)
The bottom line
#Kenya's Court of Appeal set aside a High Court order because it required reversing a stock market share purchase that was legally impossible to undo.
What this practically means
#Executive summary
#Key legal issues
#Whether the High Court properly exercised its discretion in granting a mandatory injunction at the interlocutory stage
The discretion was not exercised judicially because the judge failed to take into account the circumstances of purchase and transfer of shares, the involvement of third parties, and the applicable statutory regulations.
Although uncontroverted affidavit evidence supported a prima facie case and special circumstances existed given the volatility of shares, the judge did not consider that the impugned purchase was effected through the stock market involving third parties such as the Nairobi Stock Exchange and ICDC Investment Company, and was governed by specific statutory regulation. Interference with discretion is warranted where irrelevant matters are ignored or the result is unjust.
Whether the mandatory injunction order was capable of performance
The order directing the appellant to reverse and cancel the entry reflecting the share purchase was meaningless and incapable of performance.
The purchase had already occurred through the stock market, involving third parties and governed by specific law; the appellant could not cancel or reverse the entry. The best it could do was mitigate by selling the shares, but that was neither sought nor ordered. An injunction whose terms cannot be executed cannot stand even if special circumstances exist.
The correct test for a mandatory injunction at the interlocutory stage
The applicant must establish special circumstances, a clear case or easily remedied simple act or stealing a match, a high likelihood of affirmation at trial, all founded on a prima facie case.
The court adopted the test in Kenya Breweries Ltd v Washington O. Okeyo as approved in Shariff Abdi Hassan v Nadhif Jama Adan, holding that the primary purpose of interim relief is preservation of property and mitigation of losses, and that a mandatory injunction may restore the contested status preceding the controversy where the court can give final appropriate relief.
Legal principles established
#- An appellate court will not interfere with a trial judge's exercise of discretion on interlocutory injunctions unless the judge misdirected herself or the exercise of discretion was clearly wrong and has resulted in injustice.
- The threshold for granting a mandatory injunction at the interlocutory stage requires special circumstances, a clear case or a simple and summary act or an attempt to steal a match, and a high chance of the injunction being affirmed at trial, founded on a prima facie case.
- An interlocutory mandatory injunction must be capable of performance; an order requiring reversal of a stock-market transaction regulated by statute, involving third parties, is meaningless and will be set aside.
Court orders
#- 1.Appeal allowed
- 2.Orders of the learned judge made on 6th February 2009 set aside
- 3.Substituted therefor an order dismissing the respondent's motion filed on 11th July 2008
- 4.Each party to bear their own costs
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C No. 331 of 2008
- Jurisdiction invoked
- First appeal against an interlocutory discretionary order of the High Court under the Court of Appeal's appellate jurisdiction (no specific provision stated in the judgment)
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.
- Leo Investment Limited t/a Mara Concord Game Lodge v Samson Ololmaitai & 3 others [2022] KEELC 1898 (KLR)[2022] KEELC 1898 (KLR)31 Jan 2022
Cite this brief
#Cite this brief
Caselaw, "CFC Financial Services v Juja Road Fancy Store Limited [2017] KECA 171 (KLR)", Case Analysis (2017). Civil Appeal No. 12 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/171/eng@2017-11-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.