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Court of AppealPartially AllowedCivil Application No. E397 of 2020· [2021] KECA 772 (KLR)

Mits Electrical Company Limited & 2 others v UBA Kenya Limited [2021] KECA 772 (KLR)

Court of Appeal
19 March 2021
WKW. KaranjaHOHannah OkwenguDMD. K. Musinga
1,086 words in judgment
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The bottom line

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Kenya's Court of Appeal paused the USD 427,400 judgment against MITS Electrical, but only on condition the company deposits USD 200,000 as security.

What this practically means

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Executive summary

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This is a single-judgment ruling of a three-judge bench of the Court of Appeal in Nairobi disposing of the applicants' notice of motion dated 10th December 2020 under rules 5(2)(b) and 42 of the Court of Appeal Rules. The applicants sought a stay of execution of the judgment of the High Court (Majanja, J.) delivered on 3rd February 2020 in H.C. Civil Case No. 171 of 2014, consolidated with H.C. Civil Case No. 20 of 2016, awarding UBA Kenya Limited US Dollars 427,400.65 with interest at 9.5% per annum from 6th February 2014. The High Court had dismissed the applicants' claim that the Bank delayed in issuing banking facilities, causing them loss of Kshs.15,000,000, while granting the respondent an adjusted amount of its claim arising from facilities extended to facilitate importation of elevators and escalators. Applying the settled twin principles for rule 5(2)(b) applications, the Court found the intended appeal arguable on two grounds - the disputed decretal amount and the alleged failure to consider the applicants' evidence - and held that the substantial judgment sum meant execution could render the appeal worthless, futile, invalid or trifling. The Court granted a conditional stay: the applicants were to deposit US Dollars 200,000 in an interest-earning joint account, failing which the stay would lapse and the respondent could execute; the intended appeal was to be filed within thirty days. The applicants were ordered to bear the costs of the application. This is an interlocutory ruling; the High Court's decision itself was not affirmed, reversed or varied.

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal was arguable on the two grounds advanced, namely the disputed judgment amount and the alleged failure to consider the applicants' evidence and submissions.

Reasoning

The Court perused the affidavits filed by both parties, the impugned judgment and the draft memorandum of appeal. Applying the settled rule 5(2)(b) principles, it found the grounds raised were not frivolous and merited full consideration, though it declined to say more at that interlocutory stage.

p. 2
02

Whether the appeal would be rendered nugatory absent a stay

Holding

Given the substantial judgment sum inclusive of interest, execution before the hearing of the appeal could render the appeal totally inoperative; a conditional stay with a deposit struck the balance.

Reasoning

The Court applied the full meaning of 'nugatory' as worthless, futile, invalid or trifling, noting the substantial judgment sum. Relying on Oraro & Rachier, it reasoned that requiring payment of the full decretal amount would put the applicants in a tight situation while the respondent would not be gravely affected if the claimed sum was kept pending the appeal, justifying a conditional stay with security of US Dollars 200,000.

p. 2

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy the Court that the appeal or intended appeal is arguable and that, absent the order sought, the appeal if successful will be rendered nugatory.
  • An arguable appeal need not be one that must succeed; it is one that is not frivolous, and even one arguable ground suffices.
  • The word 'nugatory' must be given its full meaning, namely that the appeal will not be rendered worthless, futile, invalid or even trifling.

Court orders

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  1. 1.Pending hearing and determination of the intended appeal, the applicants to deposit US Dollars 200,000 in an interest earning account in the joint names of the advocates for the parties
  2. 2.In the event of any default on the part of the applicants, the order of stay of execution shall lapse and the respondent shall be at liberty to execute the decree
  3. 3.The intended appeal to be filed and served within thirty (30) days from the date of the ruling
  4. 4.The applicants to bear the costs of the application

Authorities

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Legislation

  • Court of Appeal Rulesrule 5(2)(b)
  • Court of Appeal Rulesrule 42

Cases cited (3)

  • Joseph Gitahi Gachau & Another v Pioneer Holdings (A) Ltd & 2 Others
    Civil Application No. 124 of 2008
  • Hashmukhlal Virchand Shah & 2 Others v Investment & Mortgages Bank Limited
    [2014] eKLR
  • Oraro & Rachier Advocates v Co-operative Bank of Kenya Limited
    [2000] eKLR
On appeal from
High Court
H.C. Civil Case No. 171 of 2014 Consolidated with H.C. Civil Case No. 20 of 2016
Jurisdiction invoked
Rules 5(2)(b) and 42 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, "Mits Electrical Company Limited & 2 others v UBA Kenya Limited [2021] KECA 772 (KLR)", Case Analysis (2021). Civil Application No. E397 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/772/eng@2021-03-19

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