KCB Bank Formerly Kenya Commercial Bank Limited & 2 others v Datini Mercantille Limited & 3 others (Civil Application E122 of 2024) [2024] KECA 885 (KLR)
The bottom line
#Kenya's Court of Appeal paused a Kshs 172 million judgment against KCB Bank, ruling the winning company failed to prove it could refund the money if the appeal succeeded.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable
- 2.Whether, unless stay of execution is granted, the intended appeal, if successful, will be rendered nugatory
Key legal issues
#Whether the intended appeal is arguable
The limb was satisfied; the grounds on breach of the debenture, exercise of the power of sale, and the quantum of damages were not idle but arguable.
The court perused the memorandum of appeal and submissions and found the grounds raised, including whether the 1st respondent breached the debenture terms and whether the Kshs 172,000,000 award was unsubstantiated and exorbitant, were bona fide grounds fit for full argument. An arguable appeal need not succeed; it need only not be frivolous, and one bona fide arguable ground suffices.
Whether the appeal would be rendered nugatory if stay is not granted
The limb was satisfied because the 1st respondent adduced no evidence of ability to refund the colossal decretal sum, being allegedly no longer a going concern.
The applicants alleged the respondent's impecunity; the onus shifted to the respondent to rebut it. Counsel for the 1st respondent conceded no evidence of financial capability to refund was put forward and the issue was not addressed in the replying affidavit. The court treated that admission as establishing the nugatory limb and granted stay.
Legal principles established
#- An applicant under rule 5(2)(b) must satisfy both limbs - arguability of the appeal and nugatory-ness - and both limbs must be proven to exist.
- A single bona fide arguable ground suffices to establish the arguability limb.
- Where impecunity of the respondent is alleged as the basis of nugatory-ness, the onus shifts to the respondent to rebut the allegation with evidence.
- Nugatory is not confined to worthless, futile or invalid; it also means trifling, and the test is whether what is stayed is reversible or compensable in damages.
Court orders
#- 1.An order of stay of execution of the judgment and decree of the High Court of Kenya Commercial & Admiralty Division dated 1st March 2024 pending the hearing and determination of the intended appeal
- 2.Costs of the application to be in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya, Commercial & Admiralty Division
- Jurisdiction invoked
- rule 5(2)(b) of the Court of Appeal Rules
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
It is trite law that for an application under rule 5 (2)(b) the applicant must satisfy this Court on two (2) limbs; firstly, that the appeal or the intended appeal is arguable, and secondly; that unless the orders sought are granted, the appeal, if successful, shall be rendered nugatory.
In considering this application, we are mindful that in determining whether the appeal is arguable, it is suficient if a single bona fide arguable ground of appeal is raised.
Whether or not an appeal will be rendered nugatory depends on whether or not what is sought to be stayed if allowed to happen is reversible, or if it is not reversible whether damages will reasonably compensate the party aggrieved.
Consequently, we grant an order of stay of execution of the judgment and decree of the High Court of Kenya Commercial & Admiralty Division dated 1st March 2024 pending the hearing and determination of the intended appeal. The costs of this application shall be in the appeal.
Issues in the judgment
#The applicants' written submissions are dated 25th March 2021, while the application itself is dated 14th March 2024 and was heard on 30th April 2024; the 2021 date appears to be a typographical error in the judgment.
The name of the 1st respondent is never stated in the judgment; the parties are referred to only as 'the 1st respondent' and 'the applicants', so the case title cannot be fully ascertained from the text.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "KCB Bank Formerly Kenya Commercial Bank Limited & 2 others v Datini Mercantille Limited & 3 others (Civil Application E122 of 2024) [2024] KECA 885 (KLR)", Case Analysis (2024). Not stated in the judgment text (Notice of Motion dated 14th March 2024, Court of Appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/885/eng@2024-07-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.