Cooperative Bank of Kenya Limited v Catherine Kanini Kioko & 2 others [2018] KECA 387 (KLR)
The bottom line
#Kenya's Court of Appeal kept a property injunction in place but demanded real security — a Kshs.3.5 million bank guarantee — ruling that written undertakings are practically worthless.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Court of Appeal should interfere with the learned Judge's exercise of discretion in granting an interlocutory injunction
- 2.Whether failure by the respondents to submit on the second limb (irreparable loss) of the Giella v Cassman Brown principles should have defeated the injunction
- 3.Whether the form of security ordered (written undertaking in place of a bank guarantee) was proper
Key legal issues
#Interference with discretionary interlocutory decisions on appeal
The appeal against discretion fails absent misdirection or clear wrongness; the ELC Judge's decision to preserve the suit property was not faulted.
Applying the Mbogo v Shah principles, the Court found the Judge correctly found a prima facie case, properly resorted to balance of convenience when irreparable loss was doubtful, and preserved the property to avoid rendering the suit moot. No extraneous matters or misdirection were identified, so the injunction could not be vacated entirely.
Sequential application of the Giella v Cassman Brown principles
The three principles are sequential, but balance of convenience is only invoked when the court is in doubt whether the first two limbs are proved.
Following Nguruman, the Court held the principles are sequential, but clarified that the third limb arises only 'when in doubt'. Here doubt existed as to irreparable harm, which justified the Judge falling on balance of convenience. Failure to submit on the second limb was not fatal given the undisputed extensive developments on the property.
Adequacy of the security for the injunction
A written undertaking as to damages is inadequate enforcement value; the Judge's substitution of a written undertaking for the bank guarantee the appellant requested warranted interference.
The Judge accepted the appellant's offer conditional on a Kshs.7 million bank guarantee but ordered only a written undertaking. The Court held such a paper 'is only as good as the paper it was written on' and vacated that part, substituting a bank guarantee of Kshs.3,500,000 or a deposit in a joint interest-earning account within 60 days, failing which the injunction lapses.
Limits of an appeal against an interlocutory order
An appellate court on an interlocutory appeal must eschew final determinations that might embarrass the trial court.
Issues of service of statutory notices, retroactive application of the Land Act, registration of ownership and fraud remain for trial before the ELC. The Court confined itself to the exercise of discretion and declined to pronounce on the substantive issues raised in the appeal.
Legal principles established
#- An appellate court will not interfere with the exercise of discretion by a judge unless the judge misdirected himself on some matter and arrived at a wrong decision, or it is manifest from the case as a whole that the judge was clearly wrong in the exercise of discretion resulting in injustice
- The third Giella principle of balance of convenience arises only where the court is in doubt as to whether the first two principles have been established; where the first two are crystal clear it does not arise
- Failure by a party to submit on the second limb of the injunction principles should not necessarily be held against them where the material before the court supports preservation of the property
- An interlocutory injunction may issue to preserve the status quo where there is a substantial question to be investigated
Court orders
#- 1.The order of injunction granted by the ELC is not vacated and remains in force
- 2.The part of the order requiring the respondents to provide a written undertaking as to damages is vacated
- 3.Substituted order: the respondents deposit a bank guarantee for Ksh.3,500,000 or, in the alternative, deposit Ksh.3,500,000 in an interest-earning joint bank account in the names of counsel for the appellant and the 1st and 2nd respondents within 60 days, failing which the injunction automatically lapses
- 4.Each party to bear its own costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Environment and Land Court at Mombasa
- E.L.C No. 159 of 2016
- Jurisdiction invoked
- First appeal against exercise of discretion of the Environment and Land Court (appellate jurisdiction of the Court of Appeal)
Relief refused
#Setting aside the injunction in its entirety as sought by the appellant
The Court found no misdirection by the learned Judge in preserving the suit property pending trial
Costs
Each party to bear its own costs of this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In our view, their written undertaking is only as good as the paper it was written on.
We do not find any misdirection on the part of the learned Judge in the manner she arrived at the decision to preserve the property.
the 3rd principle of balance of convenience only comes in “When in doubt”. Would there be any doubt if the first 2 principles were crystal clear? The answer is no.
In an application such as this, we must be circumspect and eschew making any final determinations that might embarrass the court below.
We vacate the part of the Order that required the respondents to provide a written undertaking as to damages, and substitute thereof an order that the appellants either deposit a bank guarantee for Ksh.3,500,000 or in the alternative that the Ksh.3,500,000 be deposited in an interest earning joint bank account in the names of counsel for the appellant and 1st and 2nd respondents within 60 days from the date of this judgment failing which the order of injunction will automatically lapse.
Issues in the judgment
#The memorandum of appeal is dated 31st October, 2017 but the ruling appealed from is dated 31st August, 2017; the notice of motion is dated 22nd March, 2013 although the suit is ELC No. 159 of 2016 - the motion date predates the suit number and appears inconsistent
The substituted security order refers to 'the appellants' depositing the bank guarantee, though security is logically to be provided by the respondents; the passage is internally inconsistent
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Cooperative Bank of Kenya Limited v Catherine Kanini Kioko & 2 others [2018] KECA 387 (KLR)", Case Analysis (2018). Civil Appeal No. 92 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/387/eng@2018-07-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.