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Court of AppealDismissedCivil Appeal No. 72 of 2020· [2020] KECA 418 (KLR)

Kaushik Panchamatia & 3 others v Prime Bank Limited & another [2020] KECA 418 (KLR)

Court of Appeal
7 August 2020
RNR. N. NambuyeMartha Karambu KoomeM. K. KoomeASAsike-Makhandia
2,977 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 dismissed the Panchamatia family's bid to stop Prime Bank, confirming you cannot 'stay' a court order that merely dismissed your application.

What this practically means

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Executive summary

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The four applicants sought, by Notice of Motion dated 3rd July 2020 under Section 3A of the Appellate Jurisdiction Act, Rules 5(2)(b), 41 and 47 of the Court of Appeal Rules, 2010 and the court's inherent power, a stay of execution of and a temporary injunction restraining enforcement of the High Court ruling of 24th June 2020 (Cherere, J.) in Commercial Case No. 2 of 2020 dismissing their injunction application. The dispute arose from loan facilities extended by Prime Bank Limited to the 2nd and 3rd applicants, secured by guarantees from the 1st and 4th applicants and charges over two Kisumu properties; statutory notices of sale in 2017 prompted the litigation. The court restated the settled twin principles under Rule 5(2)(b): the applicant must demonstrate both that the intended appeal is arguable and that it would be rendered nugatory absent relief. The court accepted that the proposed appeal, raising nine grounds on guarantors' obligations and the statutory power of sale, was arguable. However, it held that the order sought to be stayed was a negative order - a mere dismissal - incapable of being stayed, following Western College v Oranga. On the nugatory test, the applicants did not show the respondents could not pay damages, and one property, Kisumu Municipality/Block 12/310, had already been sold by public auction to Pasaka Ventures Limited for KShs 24.1 million, making the application overtaken by events. The application was dismissed with costs to the 1st respondent. This ruling binds the High Court on the principles governing stays of negative orders and the nugatory test under Rule 5(2)(b).

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The court was satisfied the applicants intended to present an arguable appeal, with the caution that an arguable appeal need not ultimately succeed

Reasoning

The court reviewed the nine grounds in the draft memorandum of appeal, including challenges to the treatment of guarantors' obligations, the respondent's statutory power of sale, and the dismissal of the injunction application, and concluded a single bona fide arguable ground suffices at that stage.

p. 4
02

Whether a stay can issue in respect of a negative order

Holding

A negative order is incapable of being stayed because there is nothing to stay; the court has no mandate to grant such a stay

Reasoning

Relying on Western College of Arts and Applied Sciences v Oranga, the court held that where the High Court merely dismissed an application, the only executable element is costs; the High Court had not ordered any party to do, refrain from doing, or pay anything, so there was nothing to enforce or restrain by injunction.

p. 4
03

Whether the intended appeal would be rendered nugatory

Holding

The applicants failed to demonstrate the appeal would be rendered nugatory; they did not show the respondents could not pay damages, and one suit property had already been sold

Reasoning

The applicants asserted their proprietary rights would be extinguished but did not demonstrate that the respondents would be unable to pay damages should the appeal succeed. Further, Kisumu Municipality/Block 12/310 had been sold to Pasaka Ventures Limited for KShs 24.1 million, making any order in respect of it futile.

p. 4

Legal principles established

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  • A negative order of the High Court, such as the dismissal of an application, is incapable of being stayed because there is nothing to stay
  • An applicant under Rule 5(2)(b) must satisfy both of the twin principles: an arguable appeal and that the appeal will be rendered nugatory absent the relief
  • Whether an appeal will be rendered nugatory depends on whether what is sought to be stayed is reversible, or whether damages will reasonably compensate the aggrieved party

Court orders

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  1. 1.The application dated 3rd July 2020 is dismissed
  2. 2.Costs of the application to the 1st respondent
On appeal from
High Court of Kenya at Kisumu
Commercial Case No. 2 of 2020
Jurisdiction invoked
Section 3A of the Appellate Jurisdiction Act and Rule 5(2)(b) of the Court of Appeal Rules, 2010

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (9)

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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, "Kaushik Panchamatia & 3 others v Prime Bank Limited & another [2020] KECA 418 (KLR)", Case Analysis (2020). Civil Appeal No. 72 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/418/eng@2020-08-07

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