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Court of AppealDismissedCivil Appeal (Application) No. 24 of 2019· [2019] KECA 474 (KLR)

Duncan Chengo Bandari v Philomena Gertrude Bandari [2019] KECA 474 (KLR)

Court of Appeal of Kenya
25 July 2019
1,869 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Court of Appeal refused to stop the sale of a company property because the applicant seeking the stay had behaved dishonestly.

What this practically means

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Executive summary

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This is a single-judge-panel ruling of the Court of Appeal at Mombasa (Okwengu, Gatembu Kairu and Murgor, JJ.A.) on a Notice of Motion dated 11th January 2019 by Duncan Chengo Bandari seeking stay of execution of a High Court ruling (Njoki Mwangi, J.) of 18th January 2019 in Winding Up Cause No. 5 of 2006, pending an intended appeal. The background is a long-running shareholder dispute over Zaini Holdings Limited, whose sole asset is Plot No. 6308/I/MN. Sergon, J. had earlier ordered the applicant to purchase the respondent's shares at a value determined by an independent valuer; the applicant did not appeal, and on his refusal to comply, the High Court ordered attachment and sale of the property on 7th April 2017, with the January 2019 ruling directing sale before costs were ascertained by taxation. The court applied the two-pronged rule 5(2)(b) test: the intended appeal was arguable, since whether the judge revised Sergon, J.'s order in a functus officio manner was fit for ventilation on appeal. However, the applicant failed to show the appeal would be rendered nugatory if the property were sold, and the court held that his documented schemes to improperly alienate the property - including a false adverse-possession claim and fraudulent procurement of a provisional title - meant he did not come to equity with clean hands. The application was dismissed with costs to the respondent. The decision below was not disturbed; the stay sought was refused.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The intended appeal was arguable: whether the High Court, by ordering attachment and sale, revised Sergon, J.'s order that the applicant buy the respondent's shares was a matter fit for ventilation on appeal, even though the applicant filed no memorandum of appeal.

Reasoning

The court reiterated that an arguable ground need not succeed; a single ground that is not frivolous suffices. Although the applicant did not attach a draft memorandum of appeal, the court discerned from the motion a grievance that the property was ordered sold before costs were ascertained by taxation, and that the judge acted as functus officio by varying Sergon, J.'s order. That question was fit for the full court.

p. 2
02

Whether the appeal would be rendered nugatory if the property were sold

Holding

The applicant failed to demonstrate what loss he would suffer from the sale; alienation of the property would diminish the company's and the shares' value, particularly the respondent's.

Reasoning

The second limb of the rule 5(2)(b) test was not met. The applicant did not show the loss he would suffer if the property were attached and sold. Indeed he had himself sought to dispose of the property through schemes without the respondent's consent, and any alienation from the company would diminish share value, harming the respondent rather than vindicating the applicant.

p. 3
03

Whether the applicant deserved the discretionary, equitable relief of stay

Holding

The applicant was not entitled to the exercise of the court's discretion because he did not come with clean hands, having devised improper schemes to alienate the company's sole asset and defeat the respondent's share value.

Reasoning

Stay orders being equitable, the clean-hands principle applies. The respondent's affidavit detailed the applicant's attempts to unlawfully dispose of the property in 1995, to defeat her interest by a false adverse-possession claim culminating in default judgment, to obtain a provisional title by misrepresentation, and to frustrate the valuer. Given this conduct, the court found the applicant undeserving of the discretionary relief.

p. 3

Legal principles established

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  • An application for stay under rule 5(2)(b) requires the applicant to show the appeal is arguable and that it would be rendered nugatory if the stay is not granted; a single arguable ground suffices.
  • In dealing with a rule 5(2)(b) application the Court of Appeal exercises original and discretionary jurisdiction, which does not constitute an appeal from the judge's discretion.
  • Stay of execution orders are discretionary and equitable; an applicant must come to equity with clean hands.

Court orders

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  1. 1.The application for stay of execution pending the intended appeal is dismissed
  2. 2.Costs of the application are awarded to the respondent

Authorities

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Legislation

  • Appellate Jurisdiction Actsection 3A
  • Appellate Jurisdiction Actsection 3B
  • Court of Appeal Rulesrule 31
  • Court of Appeal Rulesrule 41
  • Court of Appeal Rulesrule 42(1)
  • Court of Appeal Rulesrule 43(1)
  • Court of Appeal Rulesrule 47(1) and (2)
  • Court of Appeal Rulesrule 5(2)(b)
  • Companies Actsection 211

Cases cited (3)

  • Stanley Kang’ethe Kinyanjui vs Tony Keter & 5 Others
    Civil Application No. NAI. 31/2012
  • Ruben & Others vs Nderitu & Another
    (1989) KLR 459
  • John Njue Nyaga v Nicholas Njiru Nyaga & Another
    (2013) eKLR
On appeal from
High Court of Kenya at Mombasa
Winding Up Cause No. 5 of 2006
Jurisdiction invoked
Sections 3A and 3B of the Appellate Jurisdiction Act and rules 31, 41, 42(1), 43(1) and 47(1) and (2) of the Court of Appeal Rules (intended appeal under rule 5(2)(b))

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Duncan Chengo Bandari v Philomena Gertrude Bandari [2019] KECA 474 (KLR)", Case Analysis (2019). Civil Appeal (Application) No. 24 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/474/eng@2019-07-25

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