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Court of AppealDismissedNot stated in judgment· [2024] KECA 3 (KLR)

Equip Agencies Limited & 3 others v Diamond Trust Bank Limited & 1 other

Court of Appeal
19 January 2024
Mohamed Abdulahi WarsameM. WarsameSKS. Gatembu KairuJLJ. Lesiit
961 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to stop the sale of charged properties because an arguable appeal alone is not enough — the appeal must also become worthless without an injunction.

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 seeking an injunction restraining the respondents from selling or interfering with two charged properties - LR No. Eldoret Municipality Block 10/34 and LR No. 209/3477 Dar es Salaam Road, Industrial Area, Nairobi - pending the hearing of an intended appeal against a High Court ruling by Mwita J. dated October 27, 2023, which dismissed the applicants' earlier application for injunctive relief. The facilities advanced by the 1st respondent bank to the 1st and 4th applicants were guaranteed by the 2nd and 3rd applicants and secured by charges over the properties; upon default the bank issued statutory notices under section 90 of the Land Act and instructed the 2nd respondent auctioneer to sell by public auction. A Deed of Settlement and Satisfaction of April 22, 2021 provided for payment, but only the first instalment of Kes 68,000,000 was paid, leaving Kes 272,000,000 outstanding. The court restated the settled twin principles: the applicant must show both an arguable appeal and that, if successful, the appeal would be rendered nugatory without the orders, citing Trust Bank Limited v Investech Bank Limited. The court found the grounds - including an alleged misapprehension of res judicata and error in upholding the Deed of Settlement - arguable. However, the nugatory limb failed: the applicants had willingly charged the properties, damages from the reputable bank would be an adequate remedy, and both principles must be satisfied. The application was dismissed with costs to the 1st respondent.

Key legal issues

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01

Arguability of the intended appeal

Holding

The draft grounds of appeal, including the contention that the superior court misapprehended res judicata and erred in upholding the Deed of Settlement, were arguable

Reasoning

The court applied the settled rule 5(2)(b) threshold, holding that an arguable ground need not be one that would succeed; it suffices that it deserves consideration by the court. The grounds concerning res judicata and the Deed of Settlement met that threshold.

p. 2
02

Whether the appeal would be rendered nugatory absent injunctive relief

Holding

The appeal would not be rendered nugatory because damages would be an adequate remedy; the applicants voluntarily charged the properties and the 1st respondent bank can compensate them

Reasoning

The court held that the applicants willingly offered the suit properties as security with full knowledge they could be sold on default. As the 1st respondent is a reputable bank able to compensate, damages are an adequate remedy, so the nugatory limb fails. Since both twin principles must be satisfied, the application is dismissed with costs.

p. 2

Legal principles established

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  • An applicant under rule 5(2)(b) must establish both that the appeal is arguable and that it will be rendered nugatory if the orders are not granted; satisfaction of only one limb is fatal to the application
  • An arguable ground is not one that must succeed, but one deserving of consideration by the court

Court orders

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  1. 1.The applicants' notice of motion application is dismissed
  2. 2.Costs of the application awarded to the 1st respondent
On appeal from
High Court (superior court)
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, "Equip Agencies Limited & 3 others v Diamond Trust Bank Limited & 1 other", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/3/eng@2024-01-19

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