Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
Court of AppealDismissedNot stated in the judgment (application under Rule 5(2)(b) of the Court of Appeal Rules)· [2021] KECA 13 (KLR)

Intex Construction Limited v African Banking Corporation Limited & another (Civil Application E266 of 2020) [2021] KECA 13 (KLR)

Court of Appeal of Kenya
23 September 2021
1,813 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

#

Kenya's Court of Appeal refused to halt payment from an escrow account because the bank could refund the money if the appeal later succeeded.

What this practically means

#

Executive summary

#
By a Notice of Motion dated 1st September 2020 under section 3 of the Appellate Jurisdiction Act and Rules 2, 5(2)(b) and 42 of the Court of Appeal Rules, the applicant sought a stay of execution of a ruling by Maureen Odero, J. in HCCC No. 282 of 2018, or in the alternative, a stay of enforcement of all orders ensuing from the ruling of 28th July 2020, pending an intended appeal. The underlying dispute concerned banking facilities of over KShs.753 million advanced between 2014 and 2016, secured in part by an assignment of contract receivables from the 2nd respondent's road construction projects. After defaults, the parties opened an escrow account holding KShs.233,200,623.40, and the trial court directed its release to the 1st respondent in part settlement of a debt of KShs.330,000,000. The Court of Appeal (W. Karanja, H. Okwengu and M. Warsame, JJ.A) applied the Rule 5(2)(b) test: the intended appeal was arguable, but it would not be rendered nugatory because the amount payable stood independently in the escrow account and the 1st respondent, an established bank, was capable of refunding any sums found due. The application was accordingly dismissed with costs on 23rd September 2021.

Key legal issues

#
01

Whether the intended appeal is arguable

Holding

The Court found arguable points on the amount payable, the granting of unpleaded orders and determination of liability at an interlocutory stage.

Reasoning

The Court applied the settled test that an arguable appeal is one which is not frivolous and which ought to be argued fully, not one which must succeed. On the draft memorandum of appeal, the applicant raised bona fide grounds including the amount payable to settle the debt and the grant of orders that were not pleaded, satisfying the first limb of the Rule 5(2)(b) test.

p. 3
02

Whether the intended appeal would be rendered nugatory if stay is not granted

Holding

The appeal would not be rendered nugatory because the funds stand independently in an escrow account and the 1st respondent is capable of refunding any sums found due.

Reasoning

Although huge sums were involved, the Court noted that the escrow account of KShs.233,200,623.40 stands independently to settle part of the KShs.330,000,000 debt. Payment from that account would not be trifling, and the matter remains pending before the trial court, so the 1st respondent is capable of compensating the applicant should the appeal succeed.

p. 4

Legal principles established

#
  • An applicant for relief under Rule 5(2)(b) must demonstrate that the intended appeal is arguable and that it will be rendered nugatory if the order of stay sought is not granted.
  • An arguable appeal need not necessarily succeed; a single bona fide arguable ground of appeal is sufficient.
  • In money decrees, requiring an applicant to pay a huge sum before the appeal is heard may render the appeal nugatory, and the balance of convenience and the claims of both sides are elements to be considered.
  • Whether an appeal would be rendered nugatory depends on the circumstances of each particular case, considering the conflicting claims of both sides.

Court orders

#
  1. 1.Dismissal of the Notice of Motion dated 1st September 2020 seeking stay of execution and, in the alternative, an interlocutory injunction
On appeal from
High Court of Kenya
HCCC No. 282 of 2018
Jurisdiction invoked
Section 3 of the Appellate Jurisdiction Act, Cap 9, and Rules 2, 5(2)(b) and 42 of the Court of Appeal Rules

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Intex Construction Limited v African Banking Corporation Limited & another (Civil Application E266 of 2020) [2021] KECA 13 (KLR)", Case Analysis (2021). Not stated in the judgment (application under Rule 5(2)(b) of the Court of Appeal Rules). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/13/eng@2021-09-23

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