I&M Bank Kenya Limited & another v Synergy Industrial Credit Limited & 2 others (Civil Appeal E758 & E788 of 2021 (Consolidated)) [2024] KECA 855 (KLR)

Order 22 Rule 48 of the Civil Procedure Rules expressly provides that attachment of immovable property is complete upon registration of the prohibitory order or inhibition against the title. Contrary case law holding that execution is complete only upon sale of the attached property is per incuriam. Since the attachment was registered against the title, the appeals questioning the leave to execute present no live controversy, though the Court still pronounced on the merits for its didactic role.

The First Schedule to the debenture did not cover the suit property L.R. 209/19436; the Bank's charge related to a different property. The suit property was encumbered by a caveat registered on 7th September 2011 pursuant to a court order and a published caveat emptor, so no valid security could be created over it. The administration was activated with suspicious timing, immediately after Cape Holdings exhausted all legal avenues, against a company that was solvent and not in default.

Section 560(1) is disjunctive: a party may seek either the administrator's consent or the court's approval. The judge considered the statutory purpose of administration, the absence of evidence of distress or default, the timing of the administration immediately after the Supreme Court's decision, the rental income being diverted, the caveat and prohibition order on the title, and the bad faith and collusion between the Bank and Cape Holdings. These were all relevant considerations; the Court of Appeal would not interfere with a discretionary decision so grounded.

No valid legal interest could be created over property while Synergy's caveat subsisted and while a court prohibition order dated 1st September 2011 remained registered against the title. A debenture conceived in collusion and registered in contempt of an extant court order is fraudulent and null and void and cannot defeat the rights of the decree holder. The argument about prejudicing the general body of creditors was academic since no other creditors were shown to exist.

Striking out is provided for only in specific rules, principally Rule 86 relating to notices and records of appeal, and is a draconian power to be sparingly exercised. Rule 94(1) grants a respondent wide, unfettered discretion to lodge a supplementary record of appeal containing further documents the respondent considers necessary; the question is one of relevance and weight, not admissibility. Rule 31 additional-evidence procedure applies ordinarily to appellants, not respondents.