Intex Construction Limited v Credit Bank Limited [2019] KECA 566 (KLR)
The bottom line
#The Court of Appeal upheld a High Court order requiring Intex Construction to keep paying the bank Kshs 3 million monthly while their debt dispute goes to trial.
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 learned judge misdirected himself in holding that the respondent could vary the applicable interest rates without one month's prior notice to the appellant
- 2.Whether the learned judge erred in directing the appellant to continue remitting monthly instalments of not less than Kshs. 3,000,000 when the applicable interest rate had not been determined
- 3.Whether the respondent was obliged to file a counter-claim before enforcing payment of the alleged debt
- 4.Whether the learned judge fairly applied the principle of balance of convenience in granting the conditional injunction
Key legal issues
#Interference with the trial judge's discretionary interlocutory orders
The Court of Appeal declined to interfere: the judge balanced the injustice of stopping the bank from demanding an acknowledged but unascertained debt against the injustice of compelling payment of a possibly inflated debt, and no misdirection was shown.
The Court rehearsed the Mogobo v Shah principle that an appellate court interferes with discretion only where the judge misdirected himself, was clearly wrong, and injustice resulted. It found the judge had weighed both parties' competing prejudices and struck a balance by ordering continued monthly payments of not less than Kshs. 3,000,000 while restraining call-up of the guarantees. The exact indebtedness and interest rates remained for trial, so no conclusive views were expressed.
Whether a counter-claim was necessary before enforcing the debt
It was not necessary for the respondent to file a counter-claim; it could rely on its statutory power of sale and the demands and guarantee enforcement already made.
The appellant argued that absent a counter-claim the judge had no jurisdiction to impose new payment terms. The Court rejected this, holding that the bank's demands and enforcement of the guarantee sufficed to enforce its contractual rights, and that the conditional injunction was properly made subject to monthly payments given that the indebtedness itself was undisputed; only the quantum was in issue.
Reservation of conclusive findings pending trial
The Court declined to make conclusive remarks on the disputed interest rates and penalty interest because the suit remains pending before the High Court.
Following United India Insurance Co. Ltd & others v East African Underwriters (Kenya) Ltd, the Court refrained from expressing concluding views on issues that would arise at trial, namely the correct interest rates, penalty rates and residual balance, so as not to embarrass the trial court.
Legal principles established
#- An appellate court will not interfere with a judge's exercise of discretion unless it is satisfied the judge misdirected himself, was clearly wrong, and injustice resulted
- An appellate court in an interlocutory appeal should refrain from making conclusive remarks on issues pending trial, lest it embarrass the trial court
- A lender whose debtor's indebtedness is not disputed need not file a counter-claim to enforce payment; it may exercise its statutory power of sale, and a conditional injunction may be granted subject to payment
Court orders
#- 1.Appeal dismissed with costs
- 2.The High Court ruling of 14th September 2016 (conditional injunction requiring the appellant to remit monthly instalments of not less than Kshs. 3,000,000, with the respondent restrained from calling up the guarantees so long as those payments were made) stands
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Nairobi H.C.C.C No. 134 of 2016
- Jurisdiction invoked
- First appeal / appeal as of right from an interlocutory ruling of the High Court under the Court of Appeal's appellate jurisdiction (Civil Appeal), the judgment not invoking a specific constitutional provision
Relief refused
#Allowing the appeal and granting the application dated 20th April 2016 as prayed (interim injunction restraining the respondent from demanding payment of Kshs. 64,258,872.35 or calling up the KCB guarantee)
The learned judge exercised his discretion judicially and no misdirection or resulting injustice was shown; the exact indebtedness, applicable interest rate and entitlement to penalty interest remain matters for trial
Costs
The appeal was dismissed with costs to the respondent.
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.
The upshot of the above is that we find no merit in this appeal. It is hereby dismissed with costs.
It is trite law that an appellate court should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising his discretion has misdirected himself and has been clearly wrong in the exercise of the discretion and that as a result there had been injustice
as a Court, we do not wish to make conclusive remarks in this matter bearing in mind that the suit is pending lest we embarrass the trial court
it was not necessary for the respondents to have filed a counter-claim as it has the right to exercise its statutory power of sale and the conditional order of injunction which the learned judge granted was subject to payment of Kshs 3,000,000 per month
Issues in the judgment
#Internal inconsistencies in figures and typographical errors: the debt is variously stated as Kshs. 298,900,873.39 and Kshs. 298,900,875.39; the revised instalment appears as both Kshs. 5,651,254.94 and Kshs. 5,652,254.94; the guarantor is referred to as both 'Kenya Commercial Bank (KCB)' and 'Kenya commercial Bank'; and the date of counsel's filings is given as '9th October, 2011' though the appeal was filed in 2017
The judgment body contains typographical corruption in the key discretionary-finding sentence
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Intex Construction Limited v Credit Bank Limited [2019] KECA 566 (KLR)", Case Analysis (2019). Civil Appeal 95 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/566/eng@2019-06-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.