Muga Developers Limited v Equity Bank of Kenya Ltd & 4 others

2. The application is opposed by the 1st respondent through a replying adavit sworn by its director corporate banking, one Moses Ndirangu. In the adavit he has reiterated that credit facilities were advanced to the applicant and securities created by the applicant to secure the credit facilities; that the applicant failed to repay the facilities advanced to it; that the 1st respondent has in the last 4 years attempted to recover the monies from the applicant without success; that the applicant has admitted its indebtedness; and that the High Court only issued the limited temporary order of injunction because it found that the 1st respondent had not served a statutory notice to enable it exercise its statutory power of sale. It is contended that the applicant has not made any attempt to exercise its equity of redemption, nor has it made any oer to repay the entire amount arising from the charge. Finally, the 1st respondent contends that it is a reputable bank and can meet any award of damages that may be awarded against it in the likely event that the applicant’s appeal is successful. 3. We have carefully considered this application, and the contending parties written submissions as well as authorities. The application before us being one under Rule 5(2) (b) of the Court of Appeal Rules, this Court in Stanley Kang’ethe Kinyanjui vs Tony Keter & 5 Others [2013] eKLR restated the principles to be applied in considering such an application. An applicant must satisfy the Court on the twin principles of arguability of the appeal and the nugatory aspect, if the order sought to be stayed is not granted. It is also instructive that a single bona de arguable issue is sucient, and that an arguable appeal is not necessarily one that must succeed. 4. The issue that emerges for determination in this application is whether the applicant has satised the twin principles under Rule 5(2)(b) of the Court of Appeal Rules so as to justify the granting of the orders sought. It is common ground that the applicant obtained nancial facility from the 1st respondent in consideration for which it provided the suit property as security. The applicant has not denied that there is money due and owing from it to the bank in regard to the nancial security provided to it. The learned Judge of the High Court found that the 1st respondent had the statutory power of sale, but issued a limited injunction because the 1st respondent had not served a statutory notice. The applicant has not demonstrated any eorts to pay the owed amount even though he claims that the 1st respondent has fettered its right of redemption. 5. In Mrao Limited vs First American Bank of Kenya & 2 Others [2003] eKLR, the Court of Appeal adopted Halsbury’s Laws of England, Vol. 32 (4th edition) at paragraph 725 on the circumstances in which a mortgagee may be restrained from exercising his statutory power of sale as follows: “ …The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.” 6. It is evident to us that to the extent that the applicant admits that the nancial facility was accorded to it by the bank and money arising from the facility, his appeal against the orders issued by the learned Judge in regard to the realization of the security is not arguable. As regards the nugatory aspect, while it is true that the 1st respondent may exercise its statutory power of sale, the applicant’s appeal cannot be said to be rendered nugatory. First, the applicant having oered the suit property as security, it has become a commercial entity that can be compensated in monetary value. Secondly, if the applicant is successful in the appeal, he would be entitled to damages and it is common knowledge that the 1st respondent is a reputable banking institution and would have no diculties in paying damages. https://new.kenyalaw.org/akn/ke/judgment/keca/2022/453/eng@2022-03-18 2

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7. For the above reasons, we nd that the applicant has failed to satisfy the conditions under Rule 5(2) (b) of the Court of Appeal Rules. Its application has no merit and is accordingly dismissed. DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF MARCH, 2022. R. N. NAMBUYE .................................... JUDGE OF APPEAL HANNAH OKWENGU .................................... JUDGE OF APPEAL DR. K. I. LAIBUTA .................................... JUDGE OF APPEAL I certify that this is a true copy of the original Signed DEPUTY REGISTRAR https://new.kenyalaw.org/akn/ke/judgment/keca/2022/453/eng@2022-03-18 3

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