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Court of AppealDismissedCivil Application No. Nai. (unspecified)

Kiru Investment Housing Company Limited v Others (Civil Appeal (Application) 166 of 2019) [2024] KECA 361 (KLR)

Court of Appeal of Kenya
22 March 2024
1,500 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 halt court-ordered company elections because waiting too long meant there was nothing left to stay.

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 on a Notice of Motion dated 24th October 2019 brought by Kiru Investment Housing Company Limited under rule 5(2)(b) of the Court of Appeal Rules, seeking a stay of execution of orders made on 8th October 2019 by the High Court at Murang'a, which directed the company to hold a general meeting, including elections of directors, within 90 days, and maintenance of the status quo pending an intended appeal. The respondents, claiming to be shareholders, had sued to compel the company, which had not held an Annual General Meeting since 2006, to convene one and tender accounts. The company opposed, disputing the respondents' bona fide membership. The Court restated the twin requirements for a rule 5(2)(b) application: the appeal must be arguable and, absent a stay, the successful appeal would be rendered nugatory. On arguability, the Court found that the applicant's complaint that the trial court in effect determined the suit at an interlocutory stage was a bona fide arguable point. However, on the nugatory limb, the Court held that the 90-day period ordered by the trial court had expired by the time of the hearing, so the application would have been overtaken by events and there would be nothing left to stay. The application was accordingly dismissed with costs in the appeal. The ruling was delivered under rule 32(3) of the Court of Appeal Rules, 2022 because Koome JA (as she then was) had been appointed Chief Justice.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the intended appeal is arguable
  2. 2.Whether, if the orders sought are not granted and the appeal succeeds, the appeal will be rendered nugatory

Key legal issues

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01

Whether the intended appeal was arguable

Holding

Yes - the applicant's complaint that the trial court's ruling in effect determined the intended appeal at an interlocutory stage was an arguable ground justifying a hearing on appeal

Reasoning

Although the applicant did not annex a draft memorandum of appeal, the Court found that the complaint that the trial court ordered elections at an interlocutory stage, effectively determining the suit, was a bona fide arguable point. An arguable appeal need not succeed; it need only raise a single bona fide arguable point.

p. 3
02

Whether the appeal, if successful, would be rendered nugatory absent a stay

Holding

No - because the 90-day period ordered by the trial court had expired, the application would have been overtaken by events and there would be nothing left to stay

Reasoning

The Court noted the lapse of time between the ruling of 8th October and the hearing of the application. Given the expiry of the 90-day period within which the general meeting was to be held, nothing remained capable of being stayed, so the nugatory limb was not satisfied and the application necessarily failed.

p. 3

Legal principles established

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  • An application under rule 5(2)(b) must satisfy twin principles: the appeal must be arguable and, if the stay is not granted and the appeal succeeds, it will be rendered nugatory
  • An arguable appeal is not one which must necessarily succeed, but one which is not frivolous and raises even a single bona fide arguable point
  • An applicant who fails to satisfy either one of the twin limbs of the rule 5(2)(b) test fails the application

Court orders

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  1. 1.The Notice of Motion dated 24th October 2019 seeking stay of execution of the High Court orders of 8th October 2019 is dismissed
  2. 2.Costs in the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
Martha Karambu Koome
KoomeJA
Currently serving
majority
On appeal from
High Court of Kenya at Murang'a
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay of execution pending appeal)

Relief refused

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Stay of execution of the High Court orders of 8th October 2019 directing the company to hold a general meeting/elections within 90 days

The applicant satisfied the arguability limb but failed the nugatory limb; following the expiry of the 90-day period ordered by the trial court, the application would have been overtaken by events and there would be nothing left to stay

p. 3

Maintenance of status quo pending the intended appeal

The application failed the nugatory limb of the rule 5(2)(b) test and was dismissed in its entirety

p. 3

Costs

Costs in the appeal

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The jurisdiction of the Court under Rule 5(2)(b) is original and discretionary and it is trite law that to succeed an applicant has to show firstly that his appeal or intended appeal is arguable, to put another way, it is not frivolous and secondly that unless he is granted a stay the appeal or intended appeal, if successful will be rendered nugatory.
p. 3Rule 5(2)(b) twin principles
an arguable appeal is not one which must necessarily succeed but rather one which is not frivolous and raises even a single bona fide arguable point that deserves to be considered and determined by the Court
p. 3Meaning of arguable appeal
In sum, the applicant having failed to satisfy one limb of the key requirements for a rule 5 (2) (b) application, the Notice of Motion dated 24th October 2021 is unmerited and is hereby dismissed. Costs in the appeal.
p. 3Disposition - application dismissed, costs in the appeal

Issues in the judgment

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minor

Internal inconsistency in the date of the Notice of Motion: paragraph 1 and paragraph 2 describe a Notice of Motion dated 24th October 2019, but the disposition refers to a Notice of Motion dated 24th October 2021

minor

Internal inconsistency in the date of the High Court ruling: the record repeatedly states the ruling was delivered on 8th October 2019, but paragraph 13 states it was delivered on 8th October 2021

minor

Internal inconsistency on hearing date: paragraph 13 states the application was heard on 8th March 2021, while paragraph 3 records a replying affidavit sworn on 1st March 2020 and the judgment is dated 22nd March 2024

minor

The third member of the bench, Koome JA (as she then was), is named in the judgment as having been appointed Chief Justice, but only two judges (Asike-Makhandia and A. K. Murgor) appear in the signature block

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, "Kiru Investment Housing Company Limited v Others (Civil Appeal (Application) 166 of 2019) [2024] KECA 361 (KLR)", Case Analysis (2024). Civil Application No. Nai. (unspecified). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/361/eng@2024-03-22

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