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Court of AppealDismissedCivil Application E172 of 2021· [2022] KECA 699 (KLR)

Heshimart Enterprises v Kenya Women Microfinance Bank Limited

Court of Appeal
8 July 2022
PKP. O. KiageMNMumbi NgugiFTF. Tuiyott
951 words in judgment
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The bottom line

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The Court of Appeal refused to stop a bank from selling a borrower's land because the borrower never showed the appeal had real merit.

What this practically means

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Executive summary

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Heshimart Enterprises, a borrower, applied to the Court of Appeal at Kisumu under Rule 5(2)(b) of the Court of Appeal Rules, 2010 for an injunction and maintenance of the status quo over Eldoret Municipality/Block 6/251, charged to Kenya Women Microfinance Bank Limited, pending an intended appeal against High Court decisions culminating in the dismissal of its suit and refusal of stay. The applicant's director deposed that auctioneers had been instructed to sell the charged property and that the appeal would be rendered nugatory if the sale proceeded. Counsel asserted arguability but, even when prodded by the Court, specified no arguable point and produced no draft memorandum of appeal. The respondent countered that the applicant owed Ksh 21,605,598.69, had made no effort to pay, and could be adequately compensated in damages. Applying the settled twin test from Stanley Kangethe Kinyanjui v Tony Ketter, the Court held that the applicant failed the arguability limb entirely, and that even if the appeal were viable, the second limb failed because the bank respondent could pay damages, which would be a sufficient remedy, particularly where the debt risked outstripping the property's value. A single-judge bench of three Judges of Appeal (Kiage, Ngugi and Tuiyott, JJ.A) unanimously dismissed the application with costs on 8 July 2022. The ruling binds subordinate courts and High Courts on the Rule 5(2)(b) twin-test formulation it restates.

Key legal issues

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01

Arguability of the intended appeal

Holding

The applicant failed to demonstrate arguability by draft memorandum, grounds, affidavit or argument, despite the Court's prodding.

Reasoning

The Court requires the applicant to show at least one ground deserving consideration at hearing. Counsel for the applicant asserted arguability but, even when prodded by the Court, specified no arguable point, and no draft memorandum of appeal was exhibited. The first limb of the Rule 5(2)(b) test therefore failed.

p. 2
02

Whether the appeal would be rendered nugatory

Holding

Even if arguable, the application fails on the second limb because the bank respondent can pay damages, which would be a sufficient remedy.

Reasoning

The applicant charged the suit property as security and admitted indebtedness. Even if the exercise of the statutory power of sale were premature or otherwise illegal, the applicant never contended that the bank could not pay damages or that damages would be inadequate. Further delay risked the debt outstripping the property's value.

p. 2

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy both the arguability limb and the nugatory-ness limb; an arguable appeal need not necessarily prevail but must not be trifling, and one good ground suffices.
  • Where the respondent is a bank capable of paying damages, damages will ordinarily be an adequate remedy and the nugatory-ness limb fails.

Court orders

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  1. 1.The application dated December 6, 2021 is dismissed with costs

Authorities

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Legislation

  • Court of Appeal Rules, 2010Rule 5(2)(b)

Cases cited (1)

  • Stanley Kangethe Kinyanjui v Tony Ketter & 5 others
    [2013] eKLR

    The twin test for stay or injunction under Rule 5(2)(b): arguability and nugatory-ness, both limbs to be satisfied

On appeal from
High Court
Eldoret HCCC No. 49 of 2018
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules, 2010

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, "Heshimart Enterprises v Kenya Women Microfinance Bank Limited", Case Analysis (2022). Civil Application E172 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/699/eng@2022-07-08

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