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Court of AppealDismissedCivil Appeal (Application) No. 255 of 2020· [2020] KECA 72 (KLR)

Mashreq Bank PSC v Kuguru Food Complex Limited [2020] KECA 72 (KLR)

Court of Appeal
4 December 2020
HOHannah OkwenguPKP. O. KiageJMJ. Mohammed
1,124 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause an old commercial suit, ruling the bank showed the appeal was arguable but failed to prove it would be futile without a stay.

What this practically means

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Executive summary

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This was an application under Rule 5(2)(b) of the Court of Appeal Rules by Mashreq Bank PSC seeking a stay of proceedings in High Court Civil Case No. 1287 of 1999, pending the hearing and determination of its intended appeal against a ruling of Kasango J delivered on 4 October 2019, in which the High Court refused to strike out the bank's name from the suit. The bank contended that its assets and liabilities had been transferred to Dubai Bank and that it was no longer a proper party to the suit. The application was supported by an affidavit of Mostafa Abdel Latif Hussein and was canvassed by written submissions owing to the Covid-19 pandemic. The bank argued that its appeal was arguable and would be rendered nugatory without a stay. The respondent countered that no arguable issues had been raised, that a Havelock J judgment the bank sought to rely on was inapplicable between different parties, and that Section 44 of the Evidence Act could not supersede the Banking Act. Applying the two-limb test from National Bank of Kenya Limited v Loenard G. Kamweti, the Court of Appeal (Okwengu, Kiage and J. Mohammed, JJ.A) found the first limb satisfied but held that the bank had failed to demonstrate the nugatory aspect: if the appeal succeeded, appropriate orders could be made and the situation reversed, with the bank compensable through costs. The court also noted the suit was very old and a stay would further delay it. The application was dismissed with costs to the respondent.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The first limb was satisfied; the applicant raised arguable issues including whether the High Court judge rightfully exercised her discretion in refusing to strike out the applicant.

Reasoning

The court found the applicant intended to canvass issues in the appeal concerning the exercise of discretion in refusing to strike it out from the High Court suit and whether its assets and liabilities had been transferred to Dubai Bank Limited. These were issues requiring determination in the appeal and were therefore arguable, not frivolous.

p. 2
02

Whether the appeal would be rendered nugatory without a stay of proceedings

Holding

The second limb failed; the applicant did not demonstrate how the intended appeal would be rendered futile if the High Court suit proceeded, since any outcome could be reversed and the applicant compensated through costs.

Reasoning

The court held that if the High Court suit proceeded and was determined, the applicant's appeal would remain relevant; if the appeal succeeded, appropriate orders could be made regarding the High Court suit. The situation could easily be reversed and the applicant compensated through costs. Additionally, the suit was very old and a stay would further delay it to the respondent's prejudice.

p. 2

Legal principles established

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  • Under Rule 5(2)(b), an applicant for stay of proceedings must satisfy both limbs - that the appeal is arguable and that it would be rendered nugatory if stay is not granted; both must co-exist.

Court orders

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  1. 1.Dismissal of the applicant's motion dated 3rd August 2020 seeking stay of proceedings in HC Civil Case No. 1287 of 1999
  2. 2.Costs awarded to the respondent

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Evidence ActSection 44
  • Banking Act

Cases cited (1)

  • National Bank of Kenya Limited v Loenard G. Kamweti
    [2015] eKLR
On appeal from
High Court of Kenya at Nairobi (Commercial & Tax Division)
Civil Case No. 1287 of 1999
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 (3)

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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, "Mashreq Bank PSC v Kuguru Food Complex Limited [2020] KECA 72 (KLR)", Case Analysis (2020). Civil Appeal (Application) No. 255 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/72/eng@2020-12-04

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