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Court of AppealPartially AllowedCivil Appeal (Application) No. 179 of 2020· [2021] KECA 391 (KLR)

Golden Services Organization & 3 others v Sidian Bank Limited [2021] KECA 391 (KLR)

Court of Appeal
23 July 2021
1,823 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 stopped the sale of two properties but refused to help where two others had already been auctioned.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Mombasa (Sichale, J. Mohammed and Kantai, JJ.A) on the applicants' motion under Rule 5(2)(b) of the Court of Appeal Rules seeking an injunction restraining Sidian Bank Limited from advertising for sale, auctioning or otherwise interfering with four suit properties pending the hearing and determination of their appeal against the judgment of the Environment and Land Court at Mombasa (A. Omollo, J.) delivered on 9th June 2020, which dismissed their suit arising from the bank's failure to disburse an approved Kshs. 50 million facility and to release existing securities. Applying the settled twin principles from Trust Bank v Investech Bank, the Court found the appeal arguable on the questions whether the respondent fundamentally breached the agreement and the charge over KWALE/MSAMBWENI 'A'/2910 by failing to disburse the funds, and whether it was entitled to special damages of Kshs. 142,806,841.16. On the nugatory limb, the Court noted the respondent had sold two of the four properties (KILIFI/KIJIPWA/369 and CR 21195/1) by public auction to innocent purchasers for value, rendering the application overtaken by events as to them. However, valuation reports showed the remaining two properties contained residential and commercial developments on which the applicants depended for income and residence; auctioning them would render the appeal nugatory. The Court therefore granted the injunction in respect of GATURI/GITHIMU/5556 and LR NO. MOMBASA/SHANZU SQUATTER/1464 only, with costs of the application to abide the outcome of the appeal. The ruling is interlocutory and does not disturb the ELC judgment.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The appeal is arguable; it is arguable whether the respondent fundamentally breached the agreement and the charge by failing to disburse Kshs. 50 million, and whether it was entitled to the special damages claimed.

Reasoning

Applying the settled principles in Trust Bank v Investech Bank and Stanley Kang’ethe Kinyanjui v Tony Ketter, the Court need not find the appeal will succeed, only that it is not frivolous and ought to be argued fully. The grounds on breach of the agreement and charge, and the entitlement to special damages of Kshs. 142,806,841.16 for lost income, were sufficient to establish arguability.

p. 3
02

Whether the appeal would be rendered nugatory if the injunction is refused

Holding

Yes, as regards the two unsold properties; auctioning them to third parties would render the appeal nugatory because the applicants depend on the properties and developments thereon for income and residence.

Reasoning

The Court weighed the conflicting claims: although the applicants did not prove the properties were matrimonial homes, valuation reports showed GATURI/GITHIMU/5556 contains a permanent residential house partly occupied by the 2nd applicant's family and partly let to tenants, and a commercial cum residential building stands on MOMBASA/SHANZU SQUATTER/1464. Irreversible disposal to third parties would defeat the appeal if it succeeded.

p. 3
03

Effect of the sale of two of the four suit properties

Holding

The application is overtaken by events regarding KILIFI/KIJIPWA/369 and CR 21195/1, so no injunction is granted in respect of them.

Reasoning

The respondent demonstrated that those two properties had been sold by public auction to innocent purchasers for value, with a Memorandum of Sale annexed. Injunctive relief can no longer serve any purpose as to properties already alienated, so relief was confined to the remaining two unsold properties.

p. 3

Legal principles established

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  • To succeed on a Rule 5(2)(b) application an applicant must demonstrate both that the appeal is arguable and that it will be rendered nugatory if stay/injunction is not granted; both limbs must be satisfied.
  • A single bona fide arguable ground of appeal suffices to show the appeal is arguable.
  • In determining whether an appeal will be rendered nugatory, the Court considers the conflicting claims of both parties and each case is determined on its merits.

Court orders

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  1. 1.Injunction restraining the respondent from advertising for sale, selling, auctioning or otherwise interfering with GATURI/GITHIMU/5556 pending the hearing and determination of the appeal
  2. 2.Injunction restraining the respondent from advertising for sale, selling, auctioning or otherwise interfering with LR NO. MOMBASA/SHANZU SQUATTER/1464 pending the hearing and determination of the appeal
  3. 3.No orders of injunction in respect of KILIFI/KIJIPWA/369 and CR 21195/1 (subdivision of MN/111/1512), the application having been overtaken by events as regards those properties
  4. 4.Costs of the application to abide the outcome of the appeal

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 40
  • Constitution of Kenya, 2010Article 159(2)
  • Appellate Jurisdiction ActSection 3
  • Appellate Jurisdiction ActSection 3A
  • Appellate Jurisdiction ActSection 3B
  • Court of Appeal RulesRule 5(2)(b)
  • Court of Appeal RulesRule 42
  • Court of Appeal RulesRule 47

Cases cited (5)

  • Trust Bank Limited and Another v. Investech Bank Limited and 3 Others
    [2000] eKLR
  • Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 others
    [2013] eKLR
  • Damji Pragji Mandavia v Sara Lee Household & Body Care (K) Ltd
    Civil Application No. Nai 345 of 2004
  • Joseph Gitahi Gachau & Another v. Pioneer Holdings (A) Ltd. & 2 others
    Civil Application No. 124 of 2008
  • Reliance Bank Limited v Norlake Investments Ltd
    [2002] 1 EA 227
On appeal from
Environment and Land Court at Mombasa
Mombasa E.L.C. Case No. 315 of 2017
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules; Sections 3, 3A and 3B of the Appellate Jurisdiction Act; Articles 40 and 159(2) of the Constitution

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, "Golden Services Organization & 3 others v Sidian Bank Limited [2021] KECA 391 (KLR)", Case Analysis (2021). Civil Appeal (Application) No. 179 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/391/eng@2021-07-23

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