Nielsen v Stern (Also known as Hermannus Philipus Steyn) & 2 others (Civil Application E648 of 2024) [2025] KECA 1168 (KLR)
The bottom line
#The Court of Appeal refused to pause a Kshs 40 million security-for-costs order against Jan Bonde Nielsen, ruling his appeal would not be pointless even if he deposited the money.
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 (not frivolous)
- 2.Whether, unless stay of execution and further proceedings is granted, the intended appeal will be rendered nugatory if it ultimately succeeds
Key legal issues
#Whether the intended appeal against the security-for-costs order was arguable
The Court found the intended appeal arguable, since it raised bona fide arguable points including the alleged inordinate delay by the respondents and the claimed tension with access-to-justice rights.
The Court reiterated the low threshold for arguability under rule 5(2)(b): a single bona fide arguable point suffices, without making definitive findings on merits. Points raised — failure to follow Supreme Court precedent, access to justice under Article 48, and the trial court's finding of inordinate delay — met that threshold. However, arguability alone is insufficient.
Whether the intended appeal would be rendered nugatory if stay were refused
The Court held the appeal would not be rendered nugatory: the deposited sum is held in a joint interest-earning account in the names of the advocates, securing the interests of all parties, and dismissal of the suit for failure to provide security is not automatic.
The nugatory test depends on the peculiar circumstances of each case and aims to prevent a pyrrhic or paper victory. Here the money is not paid out to the respondents but held pending determination of the suit, available to whoever prevails. Further, dismissal for non-compliance is not automatic under Order 26 rule 5 of the Civil Procedure Rules, and the applicant retains other legal avenues. Both limbs of rule 5(2)(b) having not been satisfied, the application failed.
Whether an order for security for costs infringes the right of access to justice
Requiring security for costs is not ipso facto a denial of access to justice; whether it constitutes such a denial depends on the circumstances, requiring a balance between the applicant's access to justice and the respondent's right to recover costs.
Security for costs is expressly provided for in the law. The Court held that the balance must weigh the applicant's Article 48 right of access to justice against the respondents' right to recover costs where there is genuine reason to apprehend the applicant may not pay. Nielsen's admitted foreign nationality, prior bankruptcies in Denmark and the United Kingdom, and lack of evidence of financial status in Kenya bore on that balance.
Legal principles established
#- On a rule 5(2)(b) application the applicant must satisfy the twin tests: the intended appeal must be arguable and, unless stay is granted, the appeal will be rendered nugatory if it succeeds; failure on either limb is fatal.
- An order for security for costs is not, of itself, a denial of the right of access to justice; the court must balance the applicant's access to justice against the respondent's right to recover costs where there is genuine reason to apprehend the applicant cannot pay.
- An arguable appeal is one that raises even a single bona fide arguable point which need not ultimately succeed; the threshold is low.
Court orders
#- 1.The notice of motion dated 26th November 2024 is dismissed
- 2.Costs of the application to the respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No. 322 of 2010 (ruling on security for costs)
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (stay of execution and further proceedings pending appeal)
Relief refused
#Stay of execution and further proceedings pending appeal under rule 5(2)(b) of the Court of Appeal Rules
Although the intended appeal was found arguable, the applicant failed the nugatory- limb: the deposit is held in a joint interest-earning account securing all parties and dismissal of the suit for non-compliance is not automatic
Reduction of the Kshs 40,000,000.00 security for costs to a figure deemed reasonable by the Court
Not addressed on the merits as the application failed the rule 5(2)(b) twin considerations
Costs
The notice of motion dated 26th November 2024 is dismissed with costs to the respondents.
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.
The applicant has to satisfy the Court that the intended appeal is arguable or that it is not frivolous, and that unless stay of execution is granted, the appeal will be rendered nugatory if it ultimately succeeds.
an arguable appeal is one that raises even one bona fide arguable point, which need not succeed when the appeal is heard. The threshold is fairly low and we therefore grant that the intended appeal is arguable.
It is crystal clear to us that requiring a party to provide security for costs is not ipso facto, a denial of the right to access justice.
For the foregoing reasons, the applicant has not satisfied both considerations under rule 5(2) (b) of the Court of Appeal Rules and therefore the notice of motion dated 26th November 2024 is hereby dismissed with costs to the respondents. It is so ordered.
Issues in the judgment
#The judgment states that the 3rd respondent Nguruman's written submissions are dated '26th January 2027', a date later than the judgment date of 20th June 2025; this is evidently a typographical error, probably for 2025.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nielsen v Stern (Also known as Hermannus Philipus Steyn) & 2 others (Civil Application E648 of 2024) [2025] KECA 1168 (KLR)", Case Analysis (2025). Court of Appeal Civil Application (Nairobi) — notice of motion dated 26th November 2024, arising from intended appeal against High Court ruling of 31st October 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1168/eng@2025-06-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.