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Court of AppealDismissedCivil Appeal No. 202 of 2014· [2017] KECA 627 (KLR)

Ecomil Pasag Co. Limited & 2 others v UAP Insurance Co. Limited [2017] KECA 627 (KLR)

Court of Appeal
31 March 2017
EGE. M. GithinjiPWP. N. WakiPKP. O. Kiage
2,892 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to block the sale of charged land, confirming land offered as commercial security is not 'unique' and damages usually suffice.

What this practically means

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Executive summary

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This was an interlocutory first appeal against Havelock J.'s dismissal of the appellants' application for a temporary injunction restraining UAP Insurance from exercising its statutory power of sale over two charged properties. The underlying suit concerned a performance guarantee for a contract with Rwanda's Ministry of Agriculture; the appellants claimed they paid a premium and executed charges over the properties but no guarantee was ever issued by the respondent, whereas the respondent asserted it arranged the guarantee through the Rwandese company CORAR under a Reinsurance Guarantee Policy and, having reimbursed CORAR, was entitled to enforce the charges. The Court of Appeal framed three issues: whether the trial court's discretion should be interfered with, whether the Giella requirements for an injunction were met, and whether the application should have been allowed. Applying United India Insurance and Mbogo v Shah on appellate interference with discretion, and Nguruman on the sequential triple test, the court re-examined the documentary record and found that a prima facie case had not been established, the appellants' own correspondence contradicting the cornerstone of their claim. Since no prima facie case existed, the other Giella tests fell away. In obiter, the court added that damages would have been an adequate remedy because the land was offered as commercial security, its value was quantifiable, and the respondent was not shown incapable of paying. While accepting that conclusive findings of character and conduct without oral evidence would be a valid ground of complaint, the court held the trial judge made no final findings. The appeal was dismissed with costs to the respondent; the trial court's decision was affirmed.

Key legal issues

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01

Whether a prima facie case was established for purposes of a temporary injunction

Holding

No prima facie case was established; the appellants' own documents contradicted the cornerstone of their claim, and the trial court was entitled to weigh the documents without hearing oral evidence at the interlocutory stage.

Reasoning

The court re-examined the documents as a first appellate court and found the trial judge entitled to weigh them. The appellants' claim rested on the assertion that they arranged the guarantee with CORAR, contradicted by their own letters. A prima facie case requires apparent infringement of a right with probability of success, a standard higher than arguability. Final findings on conduct remain for trial, but the judge made no such final findings.

p. 5
02

Whether the appellate court should interfere with the trial court's discretion

Holding

No; the discretion was exercised judiciously on the documents and none of the United India Insurance or Mbogo v Shah parameters for interference were met.

Reasoning

Citing Mbogo v Shah and United India Insurance, the court reiterated that appellate interference requires misdirection, misapprehension of facts, consideration of irrelevant or disregard of relevant matters, or a plainly wrong decision. Having re-examined the documents, the court was not persuaded there was no basis for the trial court's view, so the discretion stood undisturbed.

p. 5
03

Whether land uniqueness establishes irreparable harm

Holding

No; as obiter, land offered as security in a commercial transaction with a quantifiable value and a solvent respondent does not justify an injunction on the ground of irreparable loss.

Reasoning

The court held in obiter that even if a prima facie case existed, damages would be adequate: the parcels were charged as security, alienation on default was anticipated, value was quantifiable, and there was no evidence the respondent could not pay damages. The 'scarce resource' argument was rejected.

p. 5

Legal principles established

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  • An appellate court will not interfere with a trial judge's exercise of discretion unless the judge misdirected himself, acted on or failed to consider relevant matters, or arrived at a plainly wrong decision resulting in injustice.
  • The three Giella conditions for an interlocutory injunction are sequential, distinct hurdles; if no prima facie case is established, irreparable injury and balance of convenience need not be considered.
  • Where land is offered as security in a commercial transaction, damages are ordinarily an adequate remedy and uniqueness of the land will not justify an injunction.

Court orders

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  1. 1.The interlocutory appeal is dismissed
  2. 2.Costs of the appeal to be borne by the appellants

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 40 Rule 1
  • Rules of this Court (Court of Appeal Rules)Rule 5(2)(b)

Cases cited (9)

  • Giella v Cassman Brown & Co. Ltd
    [1973] EA 358
  • United India Insurance Co. Ltd & 2 Others v East African Underwriters (Kenya) Ltd
    [1985] KLR 898
  • Hashmukhlal Virchand Shah & 2 Others v Investment & Mortgages Bank Ltd
    [2014] eKLR
  • Naftali Ruth Kinyua v Patrick Thuita Gachure & Another
    [2015] eKLR
  • Mbogo & Another v Shah
    [1968] EA 93
  • Nguruman Ltd v Jan Bonde Nielsen & 2 Others
    C A No. 77 of 2012
  • Kenya Commercial Finance Co. Ltd v Afraha Education Society
    [2001] Vol. 1 EA 86
  • Vivo Energy Kenya Limited v Maloba Petrol Station Limited & 3 Others
    [2015] eKLR
  • Mrao Ltd v First American Bank of Kenya Ltd & 2 Others
    (2003) KLR 125
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 110 of 2013
Jurisdiction invoked
First appellate jurisdiction under the Civil Procedure Act and Appellate Jurisdiction Act over an interlocutory appeal from the High Court

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, "Ecomil Pasag Co. Limited & 2 others v UAP Insurance Co. Limited [2017] KECA 627 (KLR)", Case Analysis (2017). Civil Appeal No. 202 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/627/eng@2017-03-31

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