Tropicana Hotels Limited v Smb Bank Kenya Limited Formerly Known As Fidelity Commercial Bank Limited
The bottom line
#Kenya's Court of Appeal blocked SBM Bank from auctioning a borrower's land, ruling the appeal raised real issues and selling the property would make the appeal pointless.
What this practically means
#Executive summary
#Key legal issues
#Invocation of Rule 5(2)(b) jurisdiction
Jurisdiction was properly invoked because a notice of appeal was in place and the record of appeal had already been filed, on the basis of which the application was anchored.
The Court restated that its mandate under Rule 5(2)(b) is original, independent and discretionary, and that the jurisdiction arises only where a notice of appeal has been lodged. Since the applicant had filed a notice of appeal in June 2018 and a record of appeal on 6th February 2019, the threshold for seisin was met, following Githunguri v Jimba Credit Corporation Ltd (No. 2).
Whether the appeal is arguable
The appeal, with twenty-five grounds including the mandatory 90-day statutory notice and section 44A of the Banking Act, is arguable and not frivolous.
The Court reconsidered the twenty-five grounds in the memorandum of appeal and found they warrant the Court's interrogation and the respondent's response. It reiterated that one arguable point suffices and that an arguable appeal need not necessarily succeed but must not be frivolous, citing Kenya Railways Corporation v Edermann Properties Ltd and Joseph Gitahi Gachau v Pioneer Holdings.
Whether the appeal would be rendered nugatory
The nugatory limb was satisfied because the property sought to be realized is the very substratum of the appeal, and once realized there would be no basis for pursuing it.
The applicant's contention, undisputed by the respondent, was that the property targeted under the 45-day notice and notification of sale forms the very substratum of the appeal already filed. Following Damji Pragji Mandavia v Sara Lee Household & Body Care (K) Ltd, the Court held that realizing the security would destroy the subject matter of the appeal.
Right to be heard on the appeal already filed
Unless and until vitiated, the applicant is entitled to be heard on the appeal already filed, and it was prudent to accord it that opportunity by preserving the suit premises.
The Court invoked the constitutionally and statutorily crystallized right to a hearing, citing Richard Nchapi Leiyagu v IEBC, Mbaki & Others v Macharia and Abbas Sherally v Abdul Fazaiboy, holding that the right to be heard is the cornerstone of the rule of law and a decision made in violation of it is nullified as a breach of natural justice.
Legal principles established
#- An applicant under Rule 5(2)(b) must satisfy both twin principles: that the appeal is arguable and that, if stay or injunction is refused, the appeal will be rendered nugatory.
- In considering whether an appeal is arguable, it is sufficient if a single bona fide arguable ground of appeal is raised.
- The Court's jurisdiction under Rule 5(2)(b) is original, independent and discretionary and does not constitute an appeal from the trial judge's discretion.
- The jurisdiction under Rule 5(2)(b) only arises where the applicant has lodged a notice of appeal.
- A decision arrived at in violation of a party's right to be heard will be nullified even if the same decision would have been reached had the party been heard, as a breach of natural justice.
Court orders
#- 1.The respondent SBM Bank Kenya Limited by itself and its agent Keysian Auctioneers restrained from offering for sale and from auctioning land portion numbers 775 and 776 registered as CR Numbers 10407 and 10431 pending the hearing and determination of this appeal
- 2.Costs of the application be provided for
- On appeal from
- Environment and Land Court, Malindi
- ELC Case No. 220 of 2015
- Jurisdiction invoked
- Sections 3, 3A and 3B of the Appellate Jurisdiction Act and Rule 5(2)(b) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kenya Railways Corporation v Jihan Freighters Limited[2026] KECA 47 (KLR)30 Jan 2026
Cite this brief
#Cite this brief
Caselaw, "Tropicana Hotels Limited v Smb Bank Kenya Limited Formerly Known As Fidelity Commercial Bank Limited", Case Analysis (2021). Civil Application No. E329 of 2021 (as extracted from Malindi ELC Case No. 220 of 2015 appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/249/eng@2021-12-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.