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Court of AppealDismissedCivil Application (Rule 5(2)(b) motion dated 12th November 2024) arising from intended appeal against ruling in Nairobi HCCOMMIC No. E027 of 2022

Mbugua v Yusuf & another (Sued as the Administrators of the Estate of Ibrahim Ahmed - Deceased) (Civil Application E607 of 2024) [2025] KECA 526 (KLR)

Court of Appeal
21 March 2025
2,223 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal refused to halt bankruptcy proceedings, ruling that paying a disputed debt under protest is a viable alternative to staying an ongoing case.

What this practically means

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Executive summary

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This is a single-judgment decision of a three-member bench of the Court of Appeal at Nairobi (Musinga, Ngugi and Tuiyott, JJA) delivered on 21st March 2025 in an application under rule 5(2)(b) of the Court of Appeal Rules, 2022. The applicant, Simon Mbugua, faced bankruptcy proceedings brought by the administrators of the estate of Ibrahim Ahmed (deceased) and sought a stay of those proceedings pending an intended appeal against a ruling of Mong'are, J. delivered on 19th September 2024, which dismissed his application to set aside a statutory demand on the ground that he had not proved settlement of the debt. The Court applied the settled test: the applicant must show the intended appeal is arguable and that, absent a stay, it would be rendered nugatory. It accepted that the appeal was arguable, holding it arguable that the insolvency court failed to carry out an exhaustive analysis of the evidence of payment. However, on the nugatory limb, the Court found the exceptional threshold for stay of proceedings unmet. It reasoned that a bankruptcy declaration would not legally bar the applicant's appeal, that automatic stays cannot follow every appeal from a dismissed setting-aside application, and that since the applicant did not claim he could not pay the disputed debt, payment under protest could avert bankruptcy consequences while the appeal proceeded. The Court accordingly dismissed the notice of motion dated 12th November 2024 with costs to the respondents. The decision below was not disturbed; the application simply failed. The judgment binds lower courts on the higher threshold applicable to stay of proceedings as compared to stay of execution.

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, absent a stay of the bankruptcy proceedings, the intended appeal would be rendered nugatory
  3. 3.Whether the exceptional relief of stay of proceedings should be granted

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal was arguable because the applicant may demonstrate that the insolvency court failed to carry out an exhaustive analysis of the evidence before concluding the debt was not proved settled.

Reasoning

The Court found it arguable that the insolvency court did not exhaustively analyse the affidavits of Peter Muchiri and Kevin Malinga and the bank statements before finding the evidence of payment insufficient. That ground alone was enough to satisfy the arguability limb of rule 5(2)(b), without the Court expressing a view on ultimate merits.

p. 4
02

Whether the appeal would be rendered nugatory absent a stay of the bankruptcy proceedings

Holding

The applicant failed to establish nugatory effect; a declaration of bankruptcy would not bar his appeal, and he did not show that paying the contested debt under protest was beyond his reach.

Reasoning

The Court was not persuaded that presumption of insolvency would negate the applicant's right to appeal. It also held that automatic stay cannot follow every appeal against dismissal of a setting-aside application. Balancing the parties' positions, since the applicant did not claim he could not pay the debt, payment under protest could avert bankruptcy consequences while the appeal proceeds.

p. 5

Legal principles established

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  • Stay of proceedings pending appeal is exceptional relief; a higher nugatory threshold applies than for stay of execution because a stay of proceedings derails the trial court's pending proceedings and may curtail the respondent's right of access to justice under Article 159(2)(d).
  • In deciding whether an appeal would be rendered nugatory, the Court weighs the competing claims of both parties on their merits under the overriding objective (sections 3A and 3B of the Appellate Jurisdiction Act) and the principle of proportionality.
  • The test for stay of proceedings pending appeal is that the applicant must show the intended appeal is arguable and that, if successful, it would be rendered nugatory absent a stay.

Court orders

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  1. 1.Dismissal of the notice of motion dated 12th November 2024
  2. 2.Costs of the application to the respondents

The bench

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

majority
majority
majority
On appeal from
High Court of Kenya (Insolvency Division), Nairobi
HCCOMMIC No. E027 of 2022 (setting aside proceedings in Nairobi HCCCOMM No. E119 of 2022)
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules, 2022, with reliance also on the Appellate Jurisdiction Act and constitutional provisions

Relief refused

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Stay of proceedings in Nairobi HCCOMMIC No. E027 of 2022 (bankruptcy proceedings) pending appeal

The applicant failed to demonstrate that the intended appeal would be rendered nugatory; the exceptional threshold for stay of proceedings was not met and payment of the disputed debt could be made under protest while the appeal is pursued

p. 5

Costs

The notice of motion dated 12th November 2024 was dismissed with costs to the respondents.

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 applicant must first demonstrate that the appeal or intended appeal is arguable, that is, it is not frivolous,and that the appeal or intended appeal, if successful would, in the absence of an order of stay, be rendered nugatory
p. 2Test for stay of proceedings pending appeal
We dismiss the notice of motion dated 12th November 2024 with costs to the respondents.
p. 5Final orders - dismissal of the application
It has not been explained why payment cannot be made under protest even as the applicant pursues his appeal so that the dire consequences of a bankruptcy order can be avoided.
p. 5Balancing competing interests in the nugatory limb

Issues in the judgment

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minor

The judgment states the debt amount inconsistently in two passages

minor

The amount proposed for deposit by the respondents also differs from the debt figure in paragraph 15

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, "Mbugua v Yusuf & another (Sued as the Administrators of the Estate of Ibrahim Ahmed - Deceased) (Civil Application E607 of 2024) [2025] KECA 526 (KLR)", Case Analysis (2025). Civil Application (Rule 5(2)(b) motion dated 12th November 2024) arising from intended appeal against ruling in Nairobi HCCOMMIC No. E027 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/526/eng@2025-03-21

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