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Court of AppealDismissedNyeri Civil Application No. E017 of 2020· [2021] KECA 739 (KLR)

Rift Valley Agricultural Contractors Limited (rvacl) & 1 other v Agricultural Finance Corporation (afc) & 1 other

Court of Appeal of Kenya
19 March 2021
1,869 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 refused to pause a long-running loan dispute, confirming that Kenyan courts strike out pleadings filed without permission after deadlines close.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nyeri (Koome, M'inoti and Murgor, JJ.A.) dismissing an application under Rule 5(2)(b) of the Court of Appeal Rules for stay of proceedings in Nakuru High Court Civil Suit No. 21 of 2009 pending an intended appeal against a ruling of J.N. Mulwa, J., who struck out the applicants' Further, Further Amended plaint and associated documents filed on 7th January 2019 without leave of the court. The applicants, who had borrowed development loans from the Agricultural Finance Corporation secured by charges over two parcels of land, alleged fraud and financial misconduct by the respondents and their former directors concerning loan proceeds of approximately Kshs. 18 million, 24 million and 19.2 million. The respondents did not oppose the application, but the court held that non-opposition does not relieve an applicant of the burden of satisfying the twin Rule 5(2)(b) principles of arguability and nugatory-ness. The court found the intended appeal not demonstrably arguable: pleadings had closed nearly ten years earlier, and it is trite that once pleadings close, further amendments require leave; a pleading filed without leave is a nullity liable to be struck out. On the nugatory limb, the court noted the applicants' suit had not been heard and they would have an opportunity to adduce evidence at trial. The application was dismissed with no order as to costs since it was unopposed. The decision affirms that stays of proceedings are granted sparingly and only in exceptional circumstances.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The court was not persuaded of arguability because the amended pleadings were filed without leave long after pleadings had closed, and striking them out was a legitimate exercise of discretion.

Reasoning

Pleadings had closed nearly ten years earlier upon filing of the defence. Under Order 8 Rule 1(1) a party may amend once without leave only before pleadings close; thereafter leave is required. The further, further amended plaint was filed without leave, and the Court of Appeal in Kiru Tea Factory held such pleadings are a nullity. The trial judge's discretion to strike them out therefore disclosed no arguable ground.

p. 3
02

Whether the appeal would be rendered nugatory if proceedings are not stayed

Holding

The nugatory principle was not satisfied because the applicants' suit had not been heard and they would have an opportunity to adduce evidence at the hearing.

Reasoning

The striking out of the amended pleadings did not terminate the suit; the main suit remained set down for hearing. Any grievance the applicants hold could be litigated on the merits at trial, so success on appeal would not be rendered academic or illusory if the proceedings continued in the interim.

p. 3
03

The applicable principles for stay of proceedings under Rule 5(2)(b)

Holding

The jurisdiction is discretionary and guided by the twin principles of an arguable appeal and nugatory-ness; a stay of proceedings is a grave interruption granted sparingly.

Reasoning

The court invoked Rule 5(2)(b), the Githunguri formulation of the twin principles, and Halsbury's statement that a stay of proceedings is a serious, grave and fundamental interruption in a party's right to conduct litigation, to be exercised sparingly and only in exceptional cases where proceedings are frivolous, vexatious or manifestly groundless.

p. 2

Legal principles established

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  • Once pleadings have closed, further pleadings can only be filed with the leave of the court; a pleading filed without leave where leave is required is a nullity and liable to be struck out.
  • An order for stay of proceedings is granted sparingly and only in exceptional circumstances because it interrupts a party's right to conduct its litigation.
  • Under Rule 5(2)(b), an applicant must show the appeal is arguable and that, unless a stay is granted, the appeal will be rendered nugatory.

Court orders

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  1. 1.The application for stay of proceedings is dismissed
  2. 2.No order as to costs
On appeal from
High Court of Kenya at Nakuru
H.C.C.S. No. 21 of 2009
Jurisdiction invoked
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, "Rift Valley Agricultural Contractors Limited (rvacl) & 1 other v Agricultural Finance Corporation (afc) & 1 other", Case Analysis (2021). Nyeri Civil Application No. E017 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/739/eng@2021-03-19

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