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Court of AppealAllowedCivil Application No. E290 of 2024 (Nairobi)· [2024] KECA 1753 (KLR)

Kenya Deposit Insurance Corporation v ABSA Bank Kenya PLC (ABSA) (Civil Application E195 of 2024) [2024] KECA 1753 (KLR)

Court of Appeal
6 December 2024
2,043 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 paused a Kshs 215 million High Court ruling against KDIC until the full appeal is heard, protecting government bodies from execution in the meantime.

What this practically means

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Executive summary

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Kenya Deposit Insurance Corporation moved the Court of Appeal under rule 5(2)(b) seeking stay of execution of a ruling of the High Court (Sifuna, J., Commercial & Tax Division, Civil Suit No. E411 of 2022) delivered on 15th March 2024, which dismissed its application to enlarge time to file a defence and to arrest a pending ruling, and suo moto declared sections 13A and 21 of the Government Proceedings Act unconstitutional. The High Court had endorsed interlocutory judgment of Kshs. 215,346,841.00 against the applicant, to be applied prospectively towards the respondent's annual contributions. The applicant argued the appeal was arguable and would be rendered nugatory absent stay, citing the risk of execution against National and County Governments and the ruling's conflict with section 2(6) of the Kenya Deposit Insurance Act. The respondent countered that the intended appeal was moot and frivolous and that no nugatory effect had been shown, the award being compensatory. The court first addressed a threshold point: a negative order cannot be stayed, but the suo moto declaration of unconstitutionality was a positive order with far-reaching ramifications capable of being stayed. Applying the twin principles of arguability and nugatory effect, the court found the intended appeal raised at least one bona fide arguable ground - notably the Judge's suo moto constitutional pronouncement - and that absent stay the appeal would be rendered nugatory. The application was allowed with costs abiding the outcome of the appeal. The decision does not disturb the High Court's ruling; it preserves the position pending appeal.

Key legal issues

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01

Whether a dismissal order can attract a stay of execution from the Court of Appeal

Holding

A negative order cannot be stayed, but the suo moto declaration of unconstitutionality of sections 13A and 21 of the Government Proceedings Act was a positive order capable of being stayed.

Reasoning

The court observed that ordinarily a dismissal order attracts no stay because a negative order cannot be executed. However, the trial court went further, suo moto, to declare sections 13A and 21 of the Government Proceedings Act unconstitutional. Although that order was peripheral, it was a positive order with far-reaching ramifications for the National and County Governments, and therefore capable of being stayed.

p. 3
02

Whether the intended appeal is arguable

Holding

The appeal is arguable on the question whether the Judge erred in finding the delay in filing the defence unexplained, and in suo moto pronouncing on the constitutionality of sections 13A and 21 of the Government Proceedings Act.

Reasoning

Applying the Kang'ethe Kinyanjui test, the court held that only one bona fide arguable ground is required. The applicant raised arguable points including whether the Judge erred in finding the delay unexplained and whether he erred in delving suo moto into the constitutionality of statutory provisions neither pleaded nor submitted on by the parties. Such points need not succeed, only merit ventilation.

p. 3
03

Whether the appeal would be rendered nugatory absent stay

Holding

The applicant demonstrated that absent stay the appeal would be rendered nugatory, given the potential for execution against the National and County Governments and the conflict with section 2(6) of the Kenya Deposit Insurance Act.

Reasoning

The court weighed the conflicting claims of both parties. The applicant's fears - possible wanton attachment of National and County Government assets previously shielded by the impugned provisions, and the ruling's contradiction of section 2(6) of the Kenya Deposit Insurance Act prohibiting reduced or adjusted contributions - were held not idle. Undue hardship considerations applied by parity of reasoning.

p. 4

Legal principles established

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  • A negative order (a dismissal) is not capable of being stayed because it is incapable of execution, but where the decision also contains a positive order with far-reaching ramifications, that positive order is capable of being stayed.
  • To succeed on a rule 5(2)(b) application, the applicant must establish that the appeal is arguable and that it will be rendered nugatory if the order is not granted.
  • An arguable appeal need not necessarily succeed; it need only not be frivolous and deserving of full argument.

Court orders

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  1. 1.The Notice of Motion dated 23rd April 2024 is allowed
  2. 2.Costs shall abide the outcome of the appeal

Authorities

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Legislation

  • Appellate Jurisdiction Actsections 3, 3A and 3B
  • Court of Appeal Rulesrule 5(2)(b)
  • Government Proceedings Actsections 13A and 21
  • Kenya Deposit Insurance Actsection 2(6)

Cases cited (8)

  • Five Star Agencies Limited vs. National Land Commission & National Bank of Kenya
    Civil Appeal No. E290 of 2023
  • Trust Bank Limited and Another vs. Investech Bank Limited and 3 Others
    [2000] eKLR
  • Kanwal Sarjit Singh Dhiman vs. Keshavji Juvraj
    [2008] eKLR
  • Co-operative Bank of Kenya Ltd vs. Banking Insurance & Finance Union (Kenya)
    [2015] eKLR
  • Alfred Mincha Ndubi vs. Standard Limited
    [2020] eKLR
  • Stanley Kangethe Kinyanjui vs. Tony Ketter & Others
    [2013] eKLR
  • Housing Finance Company of Kenya Limited vs. Sharok Kher Mohamed Ali Hirji & Another
    [2019] eKLR
  • Reliance Bank Ltd vs. Norlake Investments Ltd
    [2002] E.A. 227
On appeal from
High Court of Kenya
Civil Suit No. E411 of 2022
Jurisdiction invoked
Sections 3, 3A and 3B of the Appellate Jurisdiction Act and 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, "Kenya Deposit Insurance Corporation v ABSA Bank Kenya PLC (ABSA) (Civil Application E195 of 2024) [2024] KECA 1753 (KLR)", Case Analysis (2024). Civil Application No. E290 of 2024 (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1753/eng@2024-12-06

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