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Court of AppealDismissedCivil Application E005 of 2022· [2022] KECA 786 (KLR)

Endmor Steel Millers Limited v Tata International West Asia DMCC & another

Court of Appeal
10 June 2022
SKS. Gatembu KairuAMA. Mbogholi-MsaghaPNP. Nyamweya
2,509 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 protect Endmor Steel's cargo, confirming you cannot 'stay' a court order that merely dismissed your case.

What this practically means

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Executive summary

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The applicant, Endmor Steel Millers Limited, moved the Court of Appeal at Mombasa under Rule 5(2)(b) seeking conservatory orders over 2,308.780 metric tonnes of steel billets held by the 1st respondent and a stay of the High Court's ruling of 28 October 2021 (Chepkwony, J.) dismissing its applications and striking out its suit seeking release of the billets. The applicant argued the appeal was arguable - the High Court had jurisdiction because third parties not bound by the arbitration clause were involved, and the applicant had paid for the cargo in full - and that the 1st respondent was about to sell the cargo, rendering the appeal nugatory. The 1st respondent countered that the applicant had breached the payment terms, that 1,000 metric tonnes had already been sold to a third party, that damages would compensate the applicant, and that a negative order could not be stayed, citing Feisal Amin Janmohammed. The Court held that the order sought to be stayed was a negative order incapable of being stayed, following Western College v Oranga, so the stay prayers could not be entertained. Treating the conservatory prayers as essentially injunctive, the Court found the appeal arguable, and stated that the second (nugatory) requirement was also met, yet dismissed the application with costs, reasoning elsewhere that damages would reasonably compensate the applicant and that the balance of inconvenience tilted against the 1st respondent. The ruling binds subordinate courts on the impossibility of staying negative orders.

Key legal issues

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01

Whether the High Court's order of 28 October 2021 could be stayed

Holding

The order was negative and incapable of being stayed; the stay prayers could not be entertained.

Reasoning

The High Court had dismissed the three applications before it and struck out the applicant's suit. It ordered no party to do or refrain from doing anything, so there was nothing capable of execution or stay, following Western College v Oranga.

p. 4
02

Whether the intended appeal was arguable

Holding

Yes - the applicant satisfied the first requirement.

Reasoning

The draft memorandum raised arguable issues on jurisdiction where parties outside the arbitration clause were involved, and on whether the judge properly reached his decision considering the arbitration application. These deserved to be argued fully.

p. 4
03

Whether the appeal would be rendered nugatory without the orders

Holding

The Court found the second requirement met but nonetheless dismissed the application, reasoning that damages would reasonably compensate the applicant.

Reasoning

The Court weighed the consequences: damages would reasonably compensate the applicant if the appeal succeeded, while preserving the status quo tilted the balance of inconvenience against the 1st respondent, who faced storage costs and potential third-party suit.

p. 5

Legal principles established

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  • A negative order of the High Court, such as dismissal of a suit, is incapable of being stayed and an application for stay of such an order cannot be entertained.
  • Under Rule 5(2)(b), the Court grants a stay or injunction only if the appeal is arguable and, if successful, would be rendered nugatory absent the order.
  • It is sufficient for an applicant to raise a single bona fide arguable ground of appeal; an arguable appeal need not necessarily succeed.
  • Whether an appeal will be rendered nugatory depends on whether what is sought to be stayed is reversible or, if not, whether damages will reasonably compensate the aggrieved party.

Court orders

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  1. 1.The application is dismissed with costs

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Court of Appeal RulesRule 77(1)

Cases cited (8)

  • Feisal Amin Janmohammed T/A Dunyia Forwarders v Shami Trading Company Limited
    [2014] eKLR

    A negative order is incapable of execution hence cannot be stayed.

  • United Millers Limited v Kenya Bureau of Standards & 5 others
    [2019] eKLR

    Court looks to the ultimate aim of an application from the submissions, not merely its framing.

  • Western College of Arts and Applied Sciences v EP Oranga & 3 others
    [1976] eKLR

    Where a suit is merely dismissed, there is nothing to execute and a stay cannot be ordered.

  • Bob Morgan Systems Ltd & another v Jones
    [2004] eKLR

    Twin principles for grant of stay or injunction under Rule 5(2)(b).

  • Stanley Kang’ethe v Tony Keter & 5 others
    [2013] eKLR

    Single bona fide arguable ground suffices; nugatory test of reversibility and damages.

  • Reliance Bank Limited v Norlake Investments Ltd
    [2002] 1 EA 227

    Court weighs consequences of refusal against suffering of the respondent.

  • Damji Pragji Mandavia v Sara Lee Household & Body Care (K) Ltd
    Civil Application No. Nai 345 of 2004

    Single bona fide arguable ground suffices (as quoted in Kang’ethe).

  • Joseph Gitahi Gachau & Another v Pioneer Holdings (A) Ltd & 2 others
    Civil Application No. 124 of 2008

    An arguable appeal is one that ought to be argued fully, not one that must succeed (as quoted in Kang’ethe).

On appeal from
High Court
Mombasa HCCC E031 of 2021
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, "Endmor Steel Millers Limited v Tata International West Asia DMCC & another", Case Analysis (2022). Civil Application E005 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/786/eng@2022-06-10

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