https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1525

Northern Construction Company Ltd & 3 others v KCB Bank Kenya Limited (Civil Application E091 of 2025) [2026] KECA 1525 (KLR) (31 July 2026) (Ruling) Neutral citation: [2026] KECA 1525 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E091 of 2025 W Karanja, LA Achode & AI Hassan, JJA July 31, 2026 Between Northern Construction Company Ltd 1st Applicant Hima Products Enterprises Limited 2nd Applicant Mohamed Koriow Nur 3rd Applicant Aisha Abdulahi 4th Applicant and KCB Bank Kenya Limited Respondent (An application for stay of execution from the ruling of the High Court of Kenya at Nairobi (Mabeya J.) delivered on 27th November, 2024 in High Court Commercial Suit No. E302 of 2023) Ruling 1.Before us is the Notice of Motion dated 17th February 2025 brought under Rule 5(2) (b) of the Court of Appeal Rules wherein the applicants seek, principally, an order of stay of execution of the ruling and orders of the High Court (Mabeya J.) delivered on 27th November 2024 in Nairobi High Court Commercial Suit No. E302 of 2023 pending the hearing and determination of the intended appeal. 2.The application is supported by the affidavit of Mohamed Koriow Nur sworn on behalf of the applicants. The respondent opposes the application through the replying affidavit of Lilian Sogo sworn on 26th March 2025. 3.The background to the application is largely uncontested. The respondent instituted Nairobi High Court Commercial Suit No. E302 of 2023 against the applicants seeking recovery of monies advanced to the applicants and guaranteed by some of them. The applicants failed to enter appearance and file a defense within the prescribed period, whereupon default judgment was entered against them. Thereafter, the applicants moved the High Court seeking to set aside the default judgment and to be granted leave to defend the suit. 4.Upon considering the parties’ respective positions, the learned Judge dismissed the application on 27th November 2024 and upheld the default judgment. 5.Aggrieved by that decision, the applicants lodged a notice of appeal and now seek an order staying execution pending the hearing and determination of the intended appeal. Applicants’ Case 6.The applicants contend that the intended appeal is arguable and raises substantial issues regarding service of summons, entry of default judgment and the exercise of judicial discretion by the High Court. 7.They submit that unless stay is granted, the respondent will proceed with execution for a colossal decretal amount thereby rendering the intended appeal nugatory. 8.The applicants further maintain that they have an arguable defense and ought to be afforded an opportunity to ventilate the dispute on merit. Respondent’s Case 9.The respondent opposes the application and submits that the applicants were duly served with summons, pleadings and subsequent court documents through recognized modes of service including email and WhatsApp. 10.The respondent asserts that affidavits of service demonstrating service upon the applicants were filed before the High Court and formed the basis upon which default judgment was entered. 11.It is further contended that the applicants offered no satisfactory explanation for their failure to file a defense within time. 12.According to the respondent, the High Court properly exercised its discretion in declining to set aside a regular judgment entered in default of their defense. 13.The respondent also avers that the decretal sum presently stands at approximately Kshs.1,865,818,122.65 and that no security has been offered by the applicants for the due performance of the decree. 14.The respondent further states that it is one of the largest financial institutions in Kenya and possesses the financial capacity to refund any sums paid should the intended appeal ultimately succeed. 15.It is therefore urged that the application be dismissed with costs. Principles Applicable 16.The jurisdiction of this Court under Rule 5(2) (b) is original, discretionary and well settled. 17.An applicant seeking relief under the Rule must satisfy two limbs. First, the applicant must demonstrate that the intended appeal is arguable, meaning that it is not frivolous and raises at least one bona fide issue deserving consideration by the Court. Secondly, the applicant must demonstrate that unless the order sought is granted, the intended appeal, if successful, will be rendered nugatory. 18.The two requirements are conjunctive, and both must be satisfied. These principles have been restated in numerous decisions of this Court including Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 Others [2013] eKLR, Reliance Bank Ltd v Norlake Investments Ltd [2002] 1 EA 227 and Republic v Kenya Anti-Corruption Commission & 2 Others [2009] KLR 31. Whether the Intended Appeal is Arguable 19.We have considered the draft memorandum of appeal, the impugned ruling, submissions by the parties and all the material placed before us. 20.The intended appeal principally challenges the exercise of discretion by the learned Judge in refusing to set aside the default judgment. 21.It is trite that an appellate court is slow to interfere with the exercise of judicial discretion unless it is shown that the Judge misdirected himself in law, considered irrelevant considerations, failed to consider relevant matters or reached a plainly wrong conclusion. 22.The material before us shows that the respondent presented evidence of service upon the applicants through email and WhatsApp. This is not contested. 23.The record further reveals that appearance was eventually entered for some of the applicants after service had already been affected and after the prescribed period had elapsed. 24.The learned Judge considered the circumstances under which default judgment was entered and concluded that the judgment was regular. 25.On the material presently before us, we are not persuaded that the intended appeal raises any substantial question capable of disturbing the exercise of discretion by the High Court. 26.The applicants have not demonstrated, even on a prima facie basis, any obvious error of principle committed by the learned Judge. 27.In our view, the intended appeal appears directed at findings that were properly grounded on evidence placed before the High Court. Consequently, we are not satisfied that the applicants have demonstrated an arguable appeal within the meaning of Rule 5(2) (b). Whether the Appeal Would be Rendered Nugatory 28.Even assuming that the intended appeal was arguable, the applicants must still satisfy the nugatory aspect. 29.The decree in question is a money decree. Ordinarily, where the decree is monetary in nature, an applicant must demonstrate that the respondent would be unable to refund the decretal sum if the appeal eventually succeeds. 30.The applicants have not placed before us any evidence showing that the respondent lacks the financial ability to make restitution. 31.To the contrary, the respondent has expressly deponed that it is one of Kenya’s largest banks with an asset base exceeding Kshs.1.3 trillion and can refund any sums recovered in execution should the appeal succeed. That deposition has not been rebutted by any evidence from the applicants. 32.We therefore find no basis for concluding that the intended appeal would be rendered nugatory if stay is declined. 33.We also note that despite seeking equitable relief, the applicants have not offered any form of security for the due performance of the decree. The absence of any proposal on security further militates against the exercise of our discretion in their favor. 34.Having carefully considered the application, the affidavits on record, the submissions of counsel and the applicable law, we are not persuaded that the applicants have satisfied either limb of the test under Rule 5(2) (b) of the Court of Appeal Rules. 35.The applicants have failed to demonstrate that the intended appeal is arguable. They have also failed to demonstrate that the intended appeal would be rendered nugatory if the orders sought are not granted. 36.The Notice of Motion dated 17th February 2025 is therefore devoid of merit. Accordingly, the application is hereby dismissed with costs to the respondent. 37.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JULY, 2026W. KARANJA.............................. JUDGE OF APPEALL. ACHODE.............................. JUDGE OF APPEALAHMED HASSAN.............................. JUDGE OF APPEALI certify that this is a True copy of the originalSignedDEPUTY REGISTRAR