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Case Brief · caselaw.co.ke
Court of AppealPartially AllowedCivil Application No. 322 of 2006 (consolidated with Civil Application No. 332 of 2006)· [2019] KECA 62 (KLR)

Willesden Investments Limited v Kenya Hotel Properties Limited

Court of Appeal of Kenya
20 December 2019
4,450 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal refused to release a bank guarantee because unresolved related cases could affect it, even though the applicant had won its appeal.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Nambuye, Koome and Okwengu, JJA) delivered on 20 December 2019 on two consolidated applications between Willesden Investments Limited and Kenya Hotel Properties Limited. Willesden, the successful party in HCCC No. 367 of 2000 whose judgment was affirmed on appeal in Civil Appeal No. 184 of 2013 (dismissed on 16 February 2018), applied under Rules 4 and 47 of the Court of Appeal Rules for release of Bank Guarantee No. DBK2007/030 held as security, so that Development Bank could pay out the amount due to it. Kenya Hotel opposed, relying on pending proceedings - a review application in Civil Appeal No. 149 of 2007 and Civil Appeal No. 404 of 2018 arising from High Court Petition No. 438 of 2015 - and filed its own application seeking stay of execution and maintenance of the status quo ante 2 April 2009. The guarantor, Development Bank, similarly opposed release, asserting Willesden had no known assets from which a refund could be made and that title to the suit property LR 209/12748 was questionable; Willesden filed no rejoinder to these assertions. The Court, exercising its inherent jurisdiction under Rule 1(2) of the Court of Appeal Rules, guided by the overriding objective in Sections 3A and 3B of the Appellate Jurisdiction Act and Article 159(2)(d) of the Constitution, held that the uncontroverted concerns of the guarantor and Kenya Hotel could not be ignored. It dismissed Willesden's application, stayed release of the guarantee pending determination of the review in CA No. 149 of 2007 and CA No. 404 of 2018, and ordered each party to bear own costs.

Key legal issues

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01

Whether a judgment creditor is entitled as of right to release of a bank guarantee held as security after dismissal of the appeal against its judgment

Holding

Release was refused because uncontroverted evidence showed pending related proceedings (review in CA No. 149 of 2007 and CA No. 404 of 2018) likely to affect the guarantee, and Willesden's inability to refund the guarantor was not rebutted.

Reasoning

Although Willesden succeeded in the appeal (CA No. 184 of 2013 was dismissed and the stay discharged), the guarantor and Kenya Hotel filed uncontroverted affidavits warning that pending proceedings could impact the guarantee and that Willesden had no known assets for refund. The Court, exercising inherent jurisdiction and guided by the overriding objective and Article 159(2)(d), held the interests of justice required denial of release pending the outcome of those proceedings.

p. 5
02

The scope of the Court's inherent jurisdiction under Rule 1(2) of the Court of Appeal Rules

Holding

The inherent jurisdiction is a residual source of powers the court may draw upon whenever it is just or equitable to do so, exercised cautiously and sparingly, to prevent injustice and abuse of process.

Reasoning

Relying on Equity Bank v West Link Mbo and Kenya Power & Lighting v Benzene Holdings, the Court described inherent jurisdiction as part of procedural law, exercisable by summary process, enabling the court to control its process, prevent abuse and do justice between the parties. It is distinct from ordinary judicial discretion and may be exercised even where rules of court apply.

p. 4
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The relationship between Article 159(2)(d) and procedural rules

Holding

Article 159(2)(d) requires courts to render substantial justice rather than uphold technicalities, but it is not a licence to disregard express statutory procedures.

Reasoning

The Court canvassed authorities including Jaldesa Tuke Dabelo v IEBC, Raila Odinga v IEBC, Lemaken Arata v Lempaka and Patricia Cherotich Sawe v IEBC, concluding that Article 159(2)(d) emboldens the court to achieve substantive justice and overcome technicalities, yet not all procedural deficiencies can be remedied by it, and clear statutory procedures must still be followed.

p. 5

Legal principles established

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  • The Court's inherent jurisdiction under Rule 1(2) of the Court of Appeal Rules may be invoked to stay release of a bank guarantee pending related proceedings where the ends of justice dictate so, but it is exercised cautiously and sparingly.
  • Uncontroverted affidavit evidence on matters bearing on the release of security, such as the inability of a judgment creditor to refund and questionable title, may justify declining release of a bank guarantee.
  • The exercise of judicial discretion in appellate applications must be based on sound reason rather than whim, caprice or sympathy.

Court orders

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  1. 1.Willesden's application dated 7th March 2018 dismissed
  2. 2.Release of the original security Bond/Bank Guarantee No. DBK2007/030 stayed pending hearing and determination of the application for review in CA No. 149 of 2007 and the hearing and determination of CA No. 404 of 2018
  3. 3.Each party to bear own costs
On appeal from
High Court of Kenya
HCCC No. 367 of 2000 (as affirmed in Civil Appeal No. 184 of 2013)
Jurisdiction invoked
Rules 4 and 47 and Rule 1(2) of the Court of Appeal Rules 2010; Sections 3A and 3B of the Appellate Jurisdiction Act; Article 159(2)(d) of the Constitution

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Willesden Investments Limited v Kenya Hotel Properties Limited", Case Analysis (2019). Civil Application No. 322 of 2006 (consolidated with Civil Application No. 332 of 2006). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/62/eng@2019-12-20

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