Macharia & 6 others v Family Bank Ltd & 5 others (Civil Application E624 of 2024) [2025] KECA 697 (KLR)
The bottom line
#Kenya's Court of Appeal refused to pause High Court orders managing an insurer, ruling that a stay only preserves things, not reverses them.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether prayer (2) of the Motion, seeking appointment of receiver managers, is competent within an application under rule 5(2)(b) for stay pending appeal
- 2.Whether the intended appeal is arguable
- 3.Whether the intended appeal, if successful, would be rendered nugatory absent stay
- 4.Whether it is in the public interest that the orders of 4th October 2024 be stayed, having regard to the 1st respondent's business as an insurer
Key legal issues
#Scope of rule 5(2)(b) jurisdiction
The jurisdiction under rule 5(2)(b) is original, independent and discretionary, and is essentially a tool of preservation of the subject matter of an appeal or intended appeal.
The Court restated the settled principles, citing Githunguri v Jimba Credit Corporation, Equity Bank v West Link Mbo and the Supreme Court's decision in the TSC case, that the rule illuminates the Court's inherent discretionary jurisdiction to preserve the substratum of an appeal, and that it arises only where a notice of appeal or appeal has been lodged.
Competence of a receiver-manager prayer within a stay application
A prayer for appointment of receiver managers that does not arise from the ruling intended to be appealed against cannot be granted in a rule 5(2)(b) application.
The Court held that the purpose of a stay application is preservation of the subject matter so that a successful appeal is not nugatory. Because the receiver-manager prayer does not arise from the ruling to be appealed against, it is substantive in nature and outside the purview of rule 5(2)(b), and the Court declined it.
Arguability of the intended appeal
The intended appeal is arguable because the shareholding of the 1st respondent, which the applicants contend was finally determined at the interlocutory stage, is a non-frivolous issue.
The Court emphasised that at the stay stage it must not make definitive findings of fact or law, only a prima facie view. Although the respondents argued that shareholding was the subject of other suits, the Court found the issue central to the proceedings and not frivolous, hence arguable, without tying the hands of the bench that will hear the appeal.
Nugatory-ness and the public interest in insurance regulation
The applicants failed to show the intended appeal would be rendered nugatory; and the public interest in the orderly management of an insurer covering mandatory third-party liability weighed against a stay.
The Court noted the interim board was appointed only pending the suit and a forensic audit ordered, and the applicants could still approach the trial court if mismanagement occurred. Applying the overriding objective and proportionality, and citing Munya, the Court held that staying the orders would not serve the public interest, given the incessant changes in the insurer's management before determination of the real controversy.
Legal principles established
#- Rule 5(2)(b) is a preservation jurisdiction that safeguards the substratum of an appeal; a stay does not reverse, annul or undo what has already been done, but merely suspends performance to preserve the status quo pending appeal.
- A substantive prayer that does not arise from the ruling intended to be appealed against, and that is not directed at preserving the subject matter of the appeal, cannot be granted under rule 5(2)(b).
- In exercising its discretionary jurisdiction under rule 5(2)(b), the Court must apply proportionality and may take into account the interests of the public, including persons not directly represented in the litigation, when deciding whether to stay orders.
Court orders
#- 1.Prayer (2) of the Motion seeking appointment of receiver managers is declined as falling outside rule 5(2)(b)
- 2.The Notice of Motion dated 20th November 2024 is dismissed
- 3.Costs of the application to be in the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya (Commercial and Tax Division)
- HCCC No E328 of 2024
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules, 2010 (derived from Article 164(3) of the Constitution) and section 63 of the Civil Procedure Act
Relief refused
#Stay of execution of the thirteen orders made by the High Court on 4th October 2024 and related injunctions pending the intended appeal
The applicants failed to satisfy the second limb of the rule 5(2)(b) test; the interim board was appointed only pending the suit and the applicants were free to move the trial court if mismanagement was suspected, so the appeal would not be rendered nugatory
Appointment of Ms Stella Kinoti, Mr Julius Orenge and Mr Kelvin Mogeni as receiver managers of the 1st respondent pending the intended appeal
The prayer is substantive in nature and does not arise from the ruling intended to be appealed against, so it falls outside the preservation purpose of rule 5(2)(b)
Costs
The costs will be in the intended appeal.
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 clear to us that Rule 5(2) (b) is essentially a tool of preservation. It safeguards the substratum of an appeal, if invoked by an intending appellant, in consonance with principles developed by that Court over the years…Rule 5(2) (b) of the Court of Appeal Rules, 2010 is derived from Article 164(3) of the Constitution.
A “stay” does not reverse, annul, undo or suspend what already has been done or what is not specifically stayed nor pass on the merits of orders of the trial court, but merely suspends the time required for performance of the particular mandates stayed, to preserve a status quo pending appeal.
We are not required to make a finding whether that issue will succeed. We are however satisfied that the issue is not frivolous. It is arguable.
Proportionality, in our view, requires that we take into account the interests of the public which may not be directly represented in the litigation, but which is likely to be prejudiced by the orders that the Court may make.
The Notice of Motion dated 20th November 2024 fails and is dismissed. The costs will be in the intended appeal.
Issues in the judgment
#The judgment does not state its own Court of Appeal case number or a neutral citation; it identifies itself only by the Notice of Motion dated 20th November 2024 arising from High Court Case No E328 of 2024.
The parties/roles are not consistently set out: the application is described as being by 'the applicants' while the persons designated '1st respondent' in the underlying suit (through whom the suit was allegedly filed) appear as applicants in the description of the High Court applications, creating possible ambiguity in party numbering.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Macharia & 6 others v Family Bank Ltd & 5 others (Civil Application E624 of 2024) [2025] KECA 697 (KLR)", Case Analysis (2025). Notice of Motion dated 20th November 2024 (intended appeal from High Court Commercial and Tax Division Case No E328 of 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/697/eng@2025-04-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.