Muga Developers Limited v Equity Bank of Kenya Ltd & 4 others
The bottom line
#Kenya's Court of Appeal refused to stop Equity Bank from selling a borrower's land because the borrower admitted owing the money and could be compensated with damages.
What this practically means
#Executive summary
#Key legal issues
#Arguability of the intended appeal
The appeal against the orders on realization of the security was not arguable because the applicant admitted the facility and the indebtedness.
The court found it common ground that the applicant obtained a financial facility and provided the suit property as security. The applicant did not deny money was due and owing, and made no demonstrated efforts to pay. On that admission, the appeal against the orders permitting realization of the security could not be said to raise an arguable issue.
Nugatory aspect
The appeal would not be rendered nugatory if the injunction were refused, as the suit property is compensable in monetary value and the bank can pay damages.
The court reasoned that the applicant having offered the suit property as security, it is a commercial entity that can be compensated in monetary value. If successful on appeal, the applicant would be entitled to damages, and the first respondent, a reputable banking institution, would have no difficulty paying them. The twin test therefore failed.
Legal principles established
#- An applicant under Rule 5(2)(b) must satisfy the twin principles of arguability of the appeal and the nugatory aspect; a single bona fide arguable issue suffices and an arguable appeal need not be one that must succeed.
- A mortgagee will not be restrained from exercising his statutory power of sale merely because the amount due is in dispute or a redemption action has begun; he will be restrained only if the mortgagor pays the amount claimed into court, unless the claim is excessive.
Court orders
#- 1.The application under Rule 5(2)(b) of the Court of Appeal Rules is dismissed
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. E082 of 2020
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muga Developers Limited v Equity Bank of Kenya Ltd & 4 others", Case Analysis (2022). Civil Application E082 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/453/eng@2022-03-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.