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Court of AppealDismissedCivil Application No. Nai. of 2021 (Notice of Motion dated November 10, 2021)· [2023] KECA 319 (KLR)

First Community Bank Limited v Isaac Investments Limited

Court of Appeal
17 March 2023
2,881 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~12 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled you cannot get a stay of execution against a dismissal order, and you must appeal the specific order you want stayed.

What this practically means

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Executive summary

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This was an application under Rule 5(2)(b) of the Court of Appeal Rules, 2010 and sections 3A and 3B of the Appellate Jurisdiction Act by First Community Bank, seeking stay of execution of a High Court ruling of October 13, 2021 (Ngenye, J) dismissing its application for review, and an order for status quo ante a ruling of July 22, 2021 which referred its dispute with the respondent to arbitration under Clause 25 of a Musharaka Finance Agreement and restrained transfer of the suit property pending arbitration. The Bank argued that it had sold 15 apartments by auction in September 2020 pursuant to an earlier ruling by Nzioka, J, and that the arbitration referral exposed it to re-litigation and prejudiced bona fide purchasers protected under section 99 of the Land Act. The respondent countered that the October 13, 2021 order was a negative order incapable of being stayed, and that no notice of appeal had been filed against the operative July 22, 2021 ruling. Restating the settled principles from Stanley Kangethe Kinyanjui v Tony Ketter, the Court held that the stay sought could not be anchored on an appeal against the dismissal of the review application; if the Bank was aggrieved by the July 22, 2021 ruling, it should have appealed against it. Following George Ole Sangui v Kedong Ranch Limited, the Court held that a dismissal order is a negative order not capable of execution or stay. The Bank also failed the nugatory limb, since arbitration proceedings were already in progress and no third-party interests were demonstrated. The Court dismissed the motion with costs on March 17, 2023 (Okwengu, M'inoti and Sichale, JJA).

Key legal issues

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01

Whether a stay of execution can be granted in respect of a negative order dismissing an application for review

Holding

No. A negative order that merely dismisses an application and confers no relief is not capable of execution or stay.

Reasoning

The Court relied on George Ole Sangui v Kedong Ranch Limited, where it held that a dismissal order is not a positive order requiring any party to do or refrain from doing anything, is not capable of execution or enforcement, and cannot be stayed. The Ruling of October 13, 2021 merely dismissed the review application; staying it would not affect the orders of July 22, 2021, whose execution through arbitration was already in progress.

p. 5
02

Whether the stay sought could be anchored on an appeal against the dismissal of the review application rather than the substantive ruling

Holding

No. The Bank filed no notice of appeal against the Ruling of July 22, 2021 which it effectively sought to stay.

Reasoning

The Court observed that the Bank had only appealed against the October 13, 2021 ruling dismissing review. The operative orders it wished to stay were those of July 22, 2021 referring the dispute to arbitration and preserving the suit property. An applicant under Rule 5(2)(b) must appeal against the order sought to be stayed; a stay cannot ride on an appeal against a different order.

p. 5
03

Whether the intended appeal would be rendered nugatory absent the stay

Holding

No. Execution of the arbitration referral and preservatory orders could not render an appeal against the review dismissal nugatory.

Reasoning

Applying the Kinyanjui principles, the Court found the nugatory limb unmet: the dispute was already subject to arbitration under the Arbitration Act, the July 22, 2021 orders were interim preservatory orders, and no third-party interests were demonstrated, as no third party had been enjoined nor evidence of their interests produced.

p. 5

Legal principles established

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  • An order of stay of execution cannot be anchored on an appeal against a negative order (such as dismissal of an application for review), as such an order is not capable of execution or enforcement.
  • An application for stay under Rule 5(2)(b) cannot be sustained against a ruling where the applicant filed no notice of appeal against the operative order sought to be stayed.

Court orders

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  1. 1.The Bank's notice of motion dated November 10, 2021 is dismissed with costs
On appeal from
High Court
Jurisdiction invoked
Sections 3A and 3B of the Appellate Jurisdiction Act and Rules 5(2)(b) & 42 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, "First Community Bank Limited v Isaac Investments Limited", Case Analysis (2023). Civil Application No. Nai. of 2021 (Notice of Motion dated November 10, 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/319/eng@2023-03-17

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