Mtwapa EPZ Limited v Coast Apparel EPZ Limited & another [2018] KECA 744 (KLR)
The bottom line
#Kenya's Court of Appeal suspended a ruling stopping bank guarantee payments, confirming Rule 5(2)(b) offers only stay, proceedings-stay, or injunction relief.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether a Notice of Appeal against the order of 31st October 2017 was on record, clothing the Court with jurisdiction under Rule 5(2)(b)
- 2.Whether the orders sought (suspension of the order of 31st October 2017) fall within the orders contemplated under Rule 5(2)(b)
- 3.Whether the intended appeal is arguable
- 4.Whether the intended appeal would be rendered nugatory if the orders sought are not granted
Key legal issues
#Jurisdiction under Rule 5(2)(b) and the requirement of a Notice of Appeal
The Court had jurisdiction because a Notice of Appeal against the order of 31st October 2017 was on record, contrary to the 1st respondent's allegations.
The Court reiterated that a Notice of Appeal is what clothes the Court with jurisdiction under Rule 5(2)(b) where the appeal proper has not been filed, citing Equity Bank Limited vs. West Link Mbo Limited. The record showed a Notice of Appeal against the 31st October 2017 order, defeating the 1st respondent's objection that none had been filed.
Scope of orders available under Rule 5(2)(b)
The jurisdiction is limited to stay of execution, stay of proceedings and injunction; a declaration of nullity is not available. A prayer for 'suspension' is in substance a stay of execution.
The Court held that although the applicant framed its prayer as suspension, this did not derogate from the fact that what was sought was a stay of execution, since stay connotes suspension. However, prayer (c), seeking a declaration that the order was a nullity, fell outside the three orders contemplated by Rule 5(2)(b) and could not be granted.
Merits threshold: arguability and nugatory-ness
Whether the learned Judge could direct the bank not to pay under an irrevocable guarantee pending delivery of his ruling is arguable, and the applicant stood to suffer irreparable harm from looming statutory notices, rendering the appeal nugatory.
Applying the settled twin principles from Ishmael Kagunyi Thande vs. Housing Finance of Kenya Ltd, the Court found arguability in whether the Judge could issue such an order given the bank's obligation to honour the irrevocable guarantee. It found the nugatory limb satisfied by the risk of statutory notices against the suit property on default of the loan, without delving into the merits of the appeal.
Legal principles established
#- A Notice of Appeal is what clothes the Court of Appeal with jurisdiction to entertain an application under Rule 5(2)(b) where the appeal proper has not been filed
- The jurisdiction of the Court of Appeal under Rule 5(2)(b) is restricted to three orders: stay of execution, stay of proceedings and injunction
- Stay of execution connotes suspension of an order; the choice of the word 'suspension' does not derogate from the fact that what is sought is a stay
- An applicant under Rule 5(2)(b) must demonstrate that the intended appeal is arguable and that the success of the appeal will be rendered nugatory unless the orders are granted
Court orders
#- 1.Prayer (b) of the applicant's application granted: the orders made by Olola, J. on 31st October 2017 that the 2nd respondent should not effect any further payment to the applicant under the guarantee are suspended pending the hearing and determination of the intended appeal
- 2.Prayer (c) seeking a declaration that the order of 31st October 2017 is null and void is refused as not contemplated under Rule 5(2)(b)
- 3.Costs of the application to abide the outcome of the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Environment and Land Court at Malindi
- ELC No. 174 of 2017
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Declaration that the orders of 31st October 2017 are null and void and of no effect
Not one of the orders contemplated under Rule 5(2)(b)
Costs
Costs of this application shall abide the outcome of the intended 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 the circumstances, we find that the application has merit and we hereby issue prayer (b) of the applicant's application. Costs of this application shall abide the outcome of the intended appeal.
Our jurisdiction under Rule 5(2) (b) is restricted to issuing three orders namely, stay of execution, stay of proceedings and injunction.
A Notice of Appeal is what clothes this Court with jurisdiction to entertain an application under Rule 5(2)(b) where the appeal proper has not been filed.
Stay of execution connotes suspension of an order.
Issues in the judgment
#The judgment states the underlying agreement is dated 17th November, 2017, yet the suit over that agreement was filed earlier in 2017 and the ruling under challenge is dated 31st October, 2017 - the agreement date appears to be an error (likely 2016).
The judgment records that Omollo, J. heard the application on 24th October, 2007, which is inconsistent with the surrounding chronology of 2017 events.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mtwapa EPZ Limited v Coast Apparel EPZ Limited & another [2018] KECA 744 (KLR)", Case Analysis (2018). Civil Application No. 65 of 2017 (UR 53/2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/744/eng@2018-02-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.