https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1651

NW Realite Ltd Valuers & Property Consultants Ltd v NCBA Bank Kenya PLC (Civil Application E127 of 2026) [2026] KECA 1651 (KLR) (31 July 2026) (Ruling) Neutral citation: [2026] KECA 1651 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E127 of 2026 SG Kairu, GV Odunga & HI Ong'udi, JJA July 31, 2026 Between NW Realite Ltd Valuers & Property Consultants Limited Applicant and Ncba Bank Kenya Plc Respondent (Being an application for stay of execution pending appeal from the judgment of the High Court at Nairobi (P. Mulwa J.) delivered on 26th February 2026) in HCCOMM No. E398 of 2019) Ruling 1.By a Notice of Motion dated 10th March 2026 brought under Rule 5(2)(b) of this Court’s Rules, the applicant, NW Realite Ltd Valuers & Property Consultants Limited seeks an order of stay of execution of the judgment and decree of the High Court at Nairobi (P. Mulwa J.) delivered on 26th February 2026 in HCCOMM No. E398 of 2019. 2.The application is premised on the grounds on its face plus the affidavit of the applicant’s valuation director, Simon Oruka Orwa, sworn on even date. He deponed that the respondent initiated the trial suit in 2019 leading to a judgment on 26th February, 2026, which awarded it a sum of Kshs. 534,500,000/= plus interest and costs. He further deponed that the applicant being dissatisfied with that decision lodged a Notice of Appeal and still intends to file an appeal challenging the judgment in its entirety. 3.He attested that the intended appeal raises bona fide and arguable grounds as follows: no duty of care existed between the parties, they were not liable for loses arising from a borrowers default and finally damages were wrongly awarded without proof of the actual debt, nor exhaustion of other recovery mechanisms. 4.He deponed that he feared that the applicant would cease operations due to inability to pay or deposit the decretal sum as security as there were threats of execution. He thus averred that closure of business in the circumstances would render their constitutional right of appeal nugatory. It was therefore in the interest of justice that the prayer for stay of execution be granted. 5.He further deponed that they had applied for certified copies of the proceedings to facilitate the appeal and that this application was brought in good faith to preserve the subject matter of the intended appeal. He added that it is in the interest of justice for this Court to grant stay of execution orders to ensure that the ends of justice are met and the integrity of the appellate process is safeguarded. 6.The respondent opposed the application through its replying affidavit sworn by its Head of Legal services, Stephen Atenya, on 19th March 2026. He averred that the applicant had omitted crucial documents which would demonstrate to this Court the gist of the proceedings before the High Court. He further averred that the dispute before the trial court was breach of contract and professional negligence by a valuer in conducting a professional report which was relied upon by the bank to its detriment. He informed the court that they had annexed the said documents for ease of reference. 7.He deponed that the reason of producing the applicant’s insurer’s letter was to demonstrate that it was professionally covered for any claim arising from breach of professional negligence. He added that the applicant had therefore come to Court with unclean hands since it did not inform the respondent that its insurers had repudiated the claim. Further, that even if the professional indemnity cover was only up to a certain limit, that limit can be paid. He, however, added that the respondent is agreeable to a conditional stay if the applicant deposits a security of Kshs.200, 000,000/= in a joint escrow account or provides a bank guarantee of a similar value. 8.In response, the applicant filed a further affidavit sworn by its valuation director, Simon Oruka Orwa, on 23rd March 2026. He averred that the respondent’s reference to correspondence with Heritage Insurance was irrelevant and inadmissible. That the applicant was not privy to those communications and the insurer was not a party to the proceedings. 9.Regarding the provision of security under Rule 5(2) (b), he averred that the decretal sum of Kshs. 534,500,000/= was "colossal" and that requiring such a deposit would effectively stifle their right of appeal. He averred that the applicant could not furnish such security without suffering severe financial prejudice, which would lead to the collapse and closure of its business. He reiterated his earlier averments on the need for stay of execution orders. 10.When the application came up for hearing on 24th March 2026, learned counsel Ms. Chitechi appeared for the applicant, while learned Senior Counsel Mr. Gichuhi represented the respondent. Counsel for the applicant relied on their written submissions, whereas counsel for the respondent relied on the replying affidavit. In addition, both counsel made oral highlights at the plenary. 11.The applicant’s submissions are dated 20th March 2026 and were filed through the firm of MNO Advocates LLP. Learned counsel submitted that immediate execution of the colossal sum Kshs.534,500,000/= would gravely destabilize their operations and potentially lead to the closure of their business. On the principles for grant of stay of execution under Rule 5(2)(b) of the Court of Appeal Rules, counsel relied on the case of Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 Others [2013] eKLR. 12.Regarding the arguability of the appeal, counsel stressed the applicant’s averments on this in respect of contract, imposition of liability on the applicant for losses from borrower’s default and lastly awarding damages without strict proof with reliance on contested valuation evidence. 13.Regarding the nugatory aspect, counsel cited the case of Oraro & Rachier Advocates v Co-operative Bank of Kenya Ltd [1999] eKLR and submitted that the question was not just the respondent’s ability to refund the money, but whether the appeal would be rendered hollow. He contended that the immediate payment of over half a billion shillings would cause irreversible damage to their business. Additionally, that it was publicly known that the respondent’s business was undergoing a sale or had already been sold. That the stay was meant to preserve the subject matter and balance both parties interests. 14.Learned senior counsel for the respondent opposed the application, relying on the replying affidavit dated 10th February 2026. He submitted that the valuation report was prepared at the instance of the respondent and was duly signed by the applicant’s directors for the respondent’s benefit. He rejected the applicant’s assertion that no instructions had been issued to undertake the valuation, and referred the court to page 39 of the exhibit, particularly paragraph 9(i)–(iii). 15.Learned counsel further contended that the applicant had omitted critical documents that would have aided the court in determining the application. He referred to paragraph 6 of the replying affidavit which had not been contested by the applicant. He further submitted that the applicant holds a professional indemnity cover but has declined to disclose the extent of that cover, whether liability has been repudiated, and whether any amount thereunder could secure the decretal sum. He argued that the applicant had not raised any meaningful defence before the trial court. That it had failed to show it had an arguable appeal. 16.He added, that no evidence was presented to establish the applicant’s assets or liabilities. He maintained that the respondent, being a Tier One bank, is financially capable of refunding any sums paid should the appeal succeed. He further contended that the issue of negligence, as outlined in paragraph 13 of the replying affidavit, remains unchallenged. As a demonstration of good faith, he proposed that a stay of execution be granted on condition that the applicant deposits at least one-third (1/3) of the decretal sum, which he estimates to be approximately Kshs. 200,000,000/=. In the alternative, should the court decline to grant the stay, he urged that the application be dismissed. 17.In a rejoinder, Ms. Chitechi submitted that paragraph 13 of the replying affidavit contains varying valuation figures, which form the basis of the appeal. She argued that the trial court relied on those discrepancies without interrogating in detail whether the respondent had in fact proved the existence of a debt. She further submitted that the documents relied upon by the respondent support the applicant’s ground of appeal, namely that the burden of proving the alleged debt was not discharged, particularly in light of the inconsistent valuation reports. She also contended that the indemnity cover letter constituted private correspondence written on a “without prejudice” basis and should not be relied upon in court proceedings. 18.We have considered the application, the submissions on record, as well as the respective averments by the parties. The application before us requires exercise of this Court’s discretion under Rule 5(2) (b) of the Rules which provides as follows:“Subject to sub-rule (1), the institution of an appeal shall not operate to suspend any sentence or to stay execution, but the Court may- in any civil proceedings where a notice of appeal has been lodged in accordance with rule 77, order a stay of execution, an injunction or a stay of any further proceedings on such terms as the Court may think just.” 19.In Trust Bank Limited and Another v. Investech Bank Limited & 3 Others [2000] eKLR, the Court delineated the jurisdiction as follows:“The jurisdiction of the Court under Rule 5(2)(b) is original and discretionary and it is trite law that to succeed an Applicant has to show firstly that his appeal or intended appeal is arguable, to put another way, it is not frivolous and secondly that unless he is granted a stay the appeal or intended appeal, if successful will be rendered nugatory. These are the guiding principles but these principles must be considered against facts and circumstances of each case...” 20.The application before us seeks a stay of execution of the judgment and decree of Nairobi HCCOMM Cause No. E398 of 2019. In light of the governing rule and case law cited above, it is trite that for an applicant to succeed under the said Rule, he/she must satisfy the court on two principles. First, that the appeal or intended appeal is arguable, that is, that it is not frivolous; and, second, that in the absence stay of execution, the appeal, if successful, will be rendered nugatory. 21.Regarding the first limb, counsel for the applicant contended that the intended appeal is arguable and not frivolous. It faulted the trial judge’s finding that a duty of care existed in the absence of a contractual relationship or formal instructions. It further challenged the imposition of liability on the applicant for losses arising from borrower default without proof of proximate causation, as well as the award of damages in the absence of strict proof of actual loss. 22.Additionally, learned counsel argued that the court failed to consider whether the respondent ought to have first exhausted alternative recovery mechanisms such as realizing the primary debenture securities before pursuing a claim against the valuer. Lastly, it criticized the court’s reliance on contested valuation evidence, including unsigned reports. 23.The respondent, on its part contended that the intended appeal is not arguable but frivolous. It pointed to the applicant’s prior conduct, noting that it had recently been found liable for professional negligence in Guaranty Trust Bank Kenya Limited v NW Realite Limited [2025] KEHC 12495 (KLR), where the court awarded damages of Kshs. 29,750,000/= for authorising a valuation report that occasioned loss to the bank. According to the respondent, that prior finding underscored a pattern of professional negligence and the same diminishes the credibility of the applicant’s present case. 24.From the applicant’s submissions and the draft Memorandum of Appeal, it is evident that they are particularly aggrieved by the learned trial judge’s finding that a duty of care existed between the parties notwithstanding the absence of any contractual relationship or formal instructions. The applicant further disputes the imposition of liability for losses arising from borrower default without a clear and established nexus of proximate causation. The question whether, in such circumstances, a legal duty can properly be implied particularly in the context of professional valuation and the imposition of liability, raises a substantial and arguable point of law in our considered view. 25.The applicant also raises an arguable issue regarding the award of damages in the absence of strict proof of actual loss. The requirement that damages, particularly special damages, be specifically pleaded and strictly proved is a settled principle, and whether the trial court adhered to this standard is in our view a proper matter for review. 26.Additionally, the contention that the respondent failed to exhaust alternative recovery mechanisms such as the realization of primary debenture securities before instituting proceedings introduces a legitimate question relating to mitigation of loss and the propriety of the respondent’s course of action. This, we agree with the applicant, is an arguable point that merits consideration. Lastly, the applicant’s criticism of the trial court’s reliance on contested valuation evidence, including unsigned reports, raises a further arguable issue as to the evidentiary basis of the decision and the weight accorded to such material. 27.The second limb is whether the appeal will be rendered nugatory if the orders of the trial court are not stayed. It is the applicant’s case that an immediate payment of the decretal sum of Kshs. 534,500,000/= would occasion irreparable harm to it’s business which was already going through challenges well known to the public. It therefore prayed for grant of stay of execution. 28.The respondent, on it’s part, maintained that the intended appeal will not be rendered nugatory if the orders sought are declined. It argued that the applicant has failed to demonstrate that it will suffer substantial loss incapable of compensation by way of damages, even in the event that the appeal ultimately succeeds. In particular, the respondent contended that no sufficient evidence has been tendered to establish any inability on its part to refund the decretal sum. 29.However, the respondent expressed willingness to accommodate a conditional stay and proposed that, should the Court be inclined to grant such stay, the same ought to be subject to the applicant depositing security in the sum of Kshs. 200,000,000/= in a joint escrow account, or in the alternative, the provision of a bank guarantee of an equivalent amount. 30.The applicant has, in our view, sufficiently demonstrated that it stands to suffer substantial loss unless an order of stay is granted. It is not disputed that the decretal sum exceeds half a billion shillings. The immediate payment of the decretal amount, before the determination of the intended appeal, would inevitably exert severe financial strain on the applicant’s business and may occasion irreparable or irreversible damage. This is evident from the magnitude of the sum involved. 31.Moreover, the applicant has raised a credible concern regarding the respondent’s ability to refund the decretal sum should the appeal ultimately succeed. It has been asserted, without satisfactory rebuttal, that the respondent’s business is in the process of being sold or has already been sold. Such circumstances need to be considered by the court. 32.The purpose of a stay is precisely to preserve the subject matter of litigation so that the rights of the parties are not prejudiced pending the hearing and determination of the appeal. Balancing the competing interests, it is evident that granting a stay would not unduly prejudice the respondent, who can be adequately safeguarded by appropriate conditions, including the provision of security. On the other hand, denying the stay would expose the applicant to a real risk of substantial loss. 33.For the reasons cited above, this court allows prayer 3 of the applicant’s application dated 11th March 2026 staying execution of the Judgment and decree in Nairobi HCC< no. E398 of 2019 on condition that the applicant furnishes the respondent with a bank guarantee of an amount of Kshs. 200,000,000/= within ten (10) days from today. 34.Costs of the application shall abide the outcome of the appeal. 35.Orders accordingly. DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JULY, 2026.S. GATEMBU KAIRU, FCIArb, C.Arb…………………………JUDGE OF APPEALG. V. ODUNGA……………………………JUDGE OF APPEALG. I. ONG’UDI…………………………JUDGE OF APPEALI certify that this is the true copy of the originalsignedDEPUTY REGISTRAR