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Court of AppealDismissedCivil Application No. E054 of 2021· [2021] KECA 526 (KLR)

Kenlink Global Limited & 2 others v Paramount Universal Bank Limited

Court of Appeal
4 June 2021
1,743 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 stop a bank selling charged property because the owners could be paid money damages instead.

What this practically means

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Executive summary

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This was a Rule 5(2)(b) application in the Court of Appeal at Nairobi in which the applicants, Kenlink Global Limited, Winfred Kaburu Kinyua and Yolets Agencies Limited, sought an interim injunction restraining Paramount Universal Bank Limited from selling or dealing with two charged properties - the Maruti Flat and Jipe Villas - pending the hearing and determination of an intended appeal against a ruling of D. S. Majanja, J. delivered on 21st January 2021 in High Court Civil Case No. E260 of 2020, which had dismissed their injunction application with costs. The applicants argued both limbs of the Rule 5(2)(b) test: that the draft memorandum of appeal raised six arguable grounds, and that a threatened sale of Jipe Villas to a third party would render the appeal nugatory. The respondent countered that it had exercised its statutory power of sale under a settlement agreement pursuant to which Jipe Villas had already been transferred, and that the application was overtaken by events and futile. The Court, in a single unanimous ruling of Nambuye, Asike-Makhandia and Sichale JJ.A, applied the Stanley Kangethe Kinyanjui principles. It found the intended appeal arguable on the first limb, but held the second limb failed because the property threatened with disposal was capable of valuation and the applicants could be adequately compensated in damages. Since both prerequisites must be satisfied, the application failed and was dismissed with costs to the respondent.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The Court found the grounds in the draft memorandum of appeal were arguable, their ultimate success notwithstanding

Reasoning

The applicants relied on a draft memorandum of appeal containing six grounds faulting the learned Judge's findings on prima facie case, the third party's interest in Jipe Villas, statements of account and property rights. The Court applied the settled test that an arguable appeal need not succeed but must raise a bona fide issue, and a single bona fide arguable ground suffices. On that measure the grounds passed the threshold.

p. 2
02

Whether the appeal would be rendered nugatory if the injunction is not granted

Holding

The nugatory limb failed because the threatened property is capable of valuation and the applicants can be adequately compensated by damages

Reasoning

The Court adopted the test that the nugatory inquiry depends on whether the act sought to be stayed is reversible or, if irreversible, whether damages would reasonably compensate the aggrieved party. Since the property threatened with disposal (Jipe Villas) could be valued, damages would be an adequate remedy, so the applicants could not demonstrate that the intended appeal would be rendered nugatory if the sale proceeded.

p. 3
03

Whether both Rule 5(2)(b) prerequisites must be satisfied for relief to issue

Holding

Yes - both limbs must be satisfied; only one was met, so the application failed

Reasoning

The Court restated the twin-prerequisite test from Stanley Kangethe Kinyanjui v Tony Ketter: an applicant must demonstrate an arguable appeal and that the appeal will be rendered nugatory if the relief is denied. Having found only the arguability limb satisfied and the nugatory limb unsatisfied, the Court held the application must fail as a matter of principle.

p. 3

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy both limbs - an arguable appeal and that the appeal will be rendered nugatory if the relief is not granted - failing which the application fails
  • An arguable appeal is not one which must necessarily succeed, but one which is not frivolous and raises a bona fide issue capable of full argument; a single bona fide arguable ground suffices
  • The nugatory test turns on whether what is sought to be stayed is reversible or, if not reversible, whether damages would reasonably compensate the aggrieved party

Court orders

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  1. 1.Prayer (c) of the application seeking an injunction pending the hearing and determination of the intended appeal is dismissed
  2. 2.The application is dismissed with costs to the respondent
On appeal from
High Court of Kenya at Nairobi, Commercial and Tax Division
Civil Case No. E260 of 2020
Jurisdiction invoked
Section 3A and 3B of the Appellate Jurisdiction Act and Rule 5(2)(b) of the Court of Appeal Rules

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, "Kenlink Global Limited & 2 others v Paramount Universal Bank Limited", Case Analysis (2021). Civil Application No. E054 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/526/eng@2021-06-04

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