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Court of AppealDismissedCivil Application No. 172 of 2020· [2020] KECA 255 (KLR)

Levnel Enterprises Limited & another v Grofin Sgb Kenya Limited & another [2020] KECA 255 (KLR)

Court of Appeal
23 October 2020
661 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal refused to block the sale of charged property, holding that you cannot stay a negative order and the borrowers failed the two-part test.

What this practically means

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Executive summary

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This is a ruling of a three-judge bench of the Court of Appeal at Nairobi (Warsame, Murgor and Sichale, JJ.A) on a Notice of Motion dated 25th June 2020 by Levnel Enterprises Limited and Fredrick G. Ndegwa, brought under Article 159 of the Constitution and Rule 5(2)(b) of the Court of Appeal Rules. The applicants sought an injunction restraining the respondents, Grofin SGB Kenya Limited and Antique Auctioneers, from attaching, transferring, alienating, advertising or selling property known as L.R No. Samurumwitingiri/Block 1/798 pending the hearing and determination of an intended appeal against a ruling of the High Court (Odero, J) dated 16th June 2020. The application was unopposed, as no replying affidavit was filed. Applying the principles in Stanley Kang’ethe Kinyanjui v Tony Keter & 5 Others, the court held the applicants failed on both limbs: the statutory notice of sale had been served at the 2nd applicant's postal address, indebtedness was not denied, and the respondents' alleged irregularity in the sale did not disclose an arguable appeal. On the nugatory limb, the court relied on Kenya Commercial Bank v Tamarind Meadows Ltd to hold that the applicants were in effect seeking to stay a negative order - the dismissal of their injunction application - and there was no evidence the respondent financial institution could not refund any sum recovered. The application was dismissed with costs to the applicants' detriment. As an interlocutory ruling on an unopposed application, it binds no wider proposition beyond restating the established twin test under Rule 5(2)(b).

Key legal issues

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01

Arguability of the intended appeal on the ground of non-service of the statutory notice of sale

Holding

The intended appeal was not arguable because the statutory notice was served on the 2nd applicant's postal address and indebtedness was not denied

Reasoning

The court noted that the applicants' sole challenge was to the sale of the charged property for failure to serve the statutory notice of sale. However, the record showed the notice was sent to the 2nd applicant's postal address, and the 2nd applicant did not deny the debt, only alleging an 'irregularity' of the sale. On that material the arguability limb of the Rule 5(2)(b) test was not met.

p. 2
02

Nugatory value and staying a negative order

Holding

A refusal of an injunction is a negative order that is not capable of being stayed, and the respondent financial institution's ability to refund any sum recovered meant the appeal would not be rendered nugatory

Reasoning

Relying on Kenya Commercial Bank Limited v Tamarind Meadows Limited & 7 others, the court held that an order dismissing an injunction is a negative order which cannot be stayed. Further, no material established that the respondent financial institution could not refund the sum recoverable, so absent stay the appeal would not be rendered nugatory.

p. 2

Legal principles established

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  • An applicant under Rule 5(2)(b) must demonstrate both an arguable appeal and that the appeal would be rendered nugatory if the orders sought are not granted; failure on either limb is fatal.
  • Where the order sought to be stayed is a negative order (a refusal of an injunction), the nugatory-prong will generally not be satisfied, particularly where the respondent is capable of refunding any sum recovered.

Court orders

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  1. 1.The Notice of Motion dated 25th June, 2020 is disallowed
  2. 2.The applicants shall bear the costs of the application

Authorities

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Legislation

  • Constitution of KenyaArticle 159
  • Court of Appeal RulesRule 5(2)(b)

Cases cited (2)

  • Stanley Kang’ethe Kinyanjui vs. Tony Keter & 5 Others
    [2013] eKLR
  • Kenya Commercial Bank Limited vs. Tamarind Meadows Limited & 7 others
    [2016] eKLR
On appeal from
High Court of Kenya at Nairobi
Civil Appeal No. 179 of 2019 (ruling dated 16th June 2020, arising from Civil Case No. 129 of 2019)
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules; Article 159 of the Constitution cited in the application

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, "Levnel Enterprises Limited & another v Grofin Sgb Kenya Limited & another [2020] KECA 255 (KLR)", Case Analysis (2020). Civil Application No. 172 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/255/eng@2020-10-23

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