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Court of AppealAllowedApplication dated 28th September, 2023 in Nairobi Civil Appeal No. E782 of 2023· [2024] KECA 101 (KLR)

Central Bank of Kenya v Bogongo & another (Civil Application E456 of 2023) [2024] KECA 101 (KLR)

Court of Appeal of Kenya
9 February 2024
ASAsike-MakhandiaMNMumbi NgugiMGM. Gachoka
2,059 words in judgment
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The bottom line

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The Court of Appeal allowed the Central Bank of Kenya to keep the 2020 Credit Reference Bureau Regulations in force while it appeals a decision that nullified them.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Asike-Makhandia, Mumbi Ngugi and Gachoka JJA) on an application dated 28th September 2023 by the Central Bank of Kenya under rule 5(2)(b) of the Court of Appeal Rules. CBK sought a stay of execution of the judgment of Mugure Thande J. in Nairobi High Court Petition No. E255 of 2021 (28th August 2023), and in particular suspension of the High Court's declaration that the Banking (Credit Reference Bureau) Regulations 2020 are null and void for non-compliance with section 11 of the Statutory Instruments Act, 2013, pending the hearing of Nairobi Civil Appeal No. E782 of 2023. The High Court had found no violation of the petitioner's pleaded rights but nullified the Regulations for late transmission to the National Assembly. Applying the settled twin test - an arguable appeal and nugatory-ness - the Court found the first limb met since the 1st respondent did not dispute arguability. On the second limb, the Court noted the 1st respondent's concession that upon invalidation of the 2020 Regulations there was no regulatory regime in place, the 2013 Regulations having been repealed, leaving a lacuna in the credit information sharing framework and preventing CBK from performing its statutory role. Relying on Schachter v. Canada and National Assembly of Kenya v Kina, the Court held a declaration of invalidity may be suspended where striking down threatens the rule of law or the public. The application was allowed; the declaration of invalidity was suspended pending the appeal, with costs of the application abiding the outcome of the appeal. The decision below was not otherwise disturbed at this interlocutory stage.

Key legal issues

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01

Whether the applicant satisfied the twin test under rule 5(2)(b) for stay and suspension pending appeal

Holding

The application was allowed: the appeal was arguable (not disputed by the 1st respondent) and the appeal would be rendered nugatory because invalidation of the CRB Regulations 2020 left no regulatory regime in place.

Reasoning

The trial court had declared the CRB Regulations 2020 null and void for non-compliance with section 11 of the Statutory Instruments Act, though it found no violation of the petitioner's pleaded rights. Since the 2013 Regulations had been repealed upon enactment of the 2020 Regulations, the invalidation left a regulatory vacuum. The applicant could not perform its statutory role of regulating CRBs, and the 1st respondent conceded the framework was left in a vacuum. Both limbs of rule 5(2)(b) were therefore satisfied.

p. 4
02

Whether a declaration of invalidity can be suspended pending appeal

Holding

Yes. Drawing on Schachter v. Canada and National Assembly of Kenya v Kina, the Court held that the effect of a declaration of invalidity may be suspended where striking down poses potential danger to the public or threatens the rule of law.

Reasoning

The Court invoked the jurisprudence permitting suspension of a striking-down order until the void is filled, holding that the applicant and the general public would suffer irreparable harm given the lacuna left by the impugned declaration. This justified suspending the declaration of invalidity rather than merely staying execution.

p. 4

Legal principles established

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  • To exercise discretion under rule 5(2)(b), the Court must be satisfied on twin principles: an arguable appeal and that the appeal would be rendered nugatory absent stay or injunctive orders.
  • An arguable appeal need not necessarily succeed; it is one which is not frivolous and ought to be argued fully.
  • A court may suspend the effect of a declaration of invalidity where striking down legislation poses a potential danger to the public or threatens the rule of law.

Court orders

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  1. 1.The declaration issued by the High Court that the Banking (Credit Reference Bureau) Regulations 2020 are null and void for non-compliance with section 11 of the Statutory Instruments Act 2013 is suspended pending the hearing and determination of Nairobi Civil Appeal No. E782 of 2023
  2. 2.The costs of the application shall abide the outcome of the appeal

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 94(4) and (5)
  • Constitution of Kenya, 2010Article 231(1)
  • Statutory Instruments Act, 2013section 11
  • Statutory Instruments Act, 2013section 13(j)
  • Banking Actsection 31(3)(b)
  • Banking (Credit Reference Bureau) Regulations 2020
  • Court of Appeal RulesRule 5(2)(b)

Cases cited (5)

  • George Otieno Gache & Another vs Judith Akinyi & 5 Others
    [2017] eKLR
  • National Assembly of Kenya v Kina & another
    (Civil Appeal 166 of 2019) [2022] KECA 548 (KLR)
  • Trust Bank Limited and Another v Investech Bank Limited and 3 Others
    [2000] eKLR
  • Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 Others
    [2013] eKLR
  • Schachter v. Canada
    [1992] 2 S.C.R. 679
On appeal from
High Court of Kenya at Nairobi
Nairobi High Court Petition No. E255 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, "Central Bank of Kenya v Bogongo & another (Civil Application E456 of 2023) [2024] KECA 101 (KLR)", Case Analysis (2024). Application dated 28th September, 2023 in Nairobi Civil Appeal No. E782 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/101/eng@2024-02-09

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