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Court of AppealAllowedCivil Application No. NAI. 314 of 2018 (UR 252/2018)· [2019] KECA 73 (KLR)

Rift Valley Railways (Kenya) Limited v Siewa Furniture and Interior Designers Limited & another [2019] KECA 73 (KLR)

Court of Appeal
20 December 2019
2,465 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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The Court of Appeal paused a High Court order requiring Rift Valley Railways to deposit Ksh. 57 million as security until its appeal is heard.

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 (Karanja, Koome and Kantai, JJ.A.) on a Rule 5(2)(b) application by Rift Valley Railways (Kenya) Limited seeking stay of a High Court ruling by Ng'etich, J. dated 25th May 2018 in HCCC No. 104 of 2016. The High Court had ordered the applicant to deposit Ksh. 57,000,000.00 in court as security for Siewa Furniture's claim of Ksh. 174,719,746.00 arising from a coach-refurbishment contract, on the reasoning that the plaintiff had justifiable fear that any decree might go unsatisfied. Before the Court of Appeal, the applicant argued that the Judge had found no mischief or intent to obstruct or delay the court process, yet ordered security, contrary to Order 39 Rules 1 and 5 of the Civil Procedure Rules, and that its officers faced committal to civil jail. The Court restated the twin Rule 5(2)(b) principles: arguability and nugatory effect, both of which must coexist. On arguability, it held that the Judge's finding of no mischief alongside a security order raised an arguable point, invoking the Kuria Kanyoko principle that attachment before judgment must not be exercised lightly. On the nugatory limb, it found that although the contempt application had been withdrawn, it could be refiled, creating a real danger of the officers' incarceration, an irreversible harm. The Court allowed the application with costs in the appeal and stayed the impugned ruling pending the intended appeal. The decision does not disturb the High Court's ruling; it suspends its operation pending appeal.

Key legal issues

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01

Whether the learned Judge applied the correct test under Order 39 Rules 1 and 5 of the Civil Procedure Rules in ordering deposit of security

Holding

The Court found the question whether the correct test was applied - given the Judge's finding of no mischief yet an order for security - to be an arguable point on appeal.

Reasoning

Order 39 Rule 1 covers defendants who abscond or dispose of property with intent to delay or obstruct, and Rule 5 requires satisfaction that the defendant has intent to obstruct or delay execution before security is ordered. The learned Judge did not find such intent on the part of the applicant; her ruling rested on apprehension about the applicant's ability to satisfy a decree. Whether inability to pay, absent proof of mischief, justifies a security order is a triable question meriting consideration on appeal.

p. 3
02

Whether the appeal would be rendered nugatory if stay is not granted

Holding

Yes - although the committal application was withdrawn, there is no bar to refiling it, creating a real danger of the applicant's officers being jailed pending appeal, an irreversible harm.

Reasoning

The applicant faced a notice of motion for committal to civil jail for contempt of the security order. Though withdrawn, that application could be reinstated. If the officers were incarcerated before the appeal was heard, the harm to their liberty could not be reversed on success, rendering the appeal nugatory. The second limb of the twin principles was therefore satisfied.

p. 3

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy both the arguability and the nugatory limbs, and both must exist together before relief is granted.
  • An arguable appeal is not one that must succeed, but one that is not frivolous and merits the consideration of the Court.
  • Security before judgment under Order 39 requires clear proof of intent to obstruct or delay the court process or execution; mere inability to pay does not suffice.

Court orders

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  1. 1.Stay of the ruling of the High Court (Ng'etich, J.) dated 25th May 2018 ordering the applicant to deposit Ksh. 57,000,000.00 as security, pending the hearing and determination of the intended appeal
  2. 2.Costs of the application to the applicant

Authorities

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Legislation

  • Civil Procedure Rules, 2010Order 39 Rule 1
  • Civil Procedure Rules, 2010Order 39 Rule 5
  • Civil Procedure Rules, 2010Order 38 rule 5
  • Court of Appeal RulesRule 5(2)(b)

Cases cited (4)

  • John Kipkemboi Sum vs Lavington Security Guards Limited
    [1998] eKLR
  • Kuria Kanyoko t/a Amigos Bar & Restaurant v Francis Kinuthia Nderu and Others
    (1988) 2 KAR 126
  • Reliance Bank Ltd vs Norlake Investments Ltd
    [2002] 1 E.A. 227
  • Republic vs. Kenya Anti-Corruption Commission & 2 others
    [2009] KLR 31
On appeal from
High Court of Kenya at Nairobi (Commercial & Admiralty Division)
HCCC No. 104 of 2016
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

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, "Rift Valley Railways (Kenya) Limited v Siewa Furniture and Interior Designers Limited & another [2019] KECA 73 (KLR)", Case Analysis (2019). Civil Application No. NAI. 314 of 2018 (UR 252/2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/73/eng@2019-12-20

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