[2020] KECA 215 (KLR)
The Court found that while the applicant had demonstrated an arguable appeal, it failed to show that the appeal would be rendered nugatory if the injunction was not granted. The applicant did not allege or provide evidence that the 1st respondent, a bank, would be incapable of compensating it in damages should the...
Source-derived case information.
- Citation
- [2020] KECA 215 (KLR)
- Parties
- Applicant: Palmy Company Limited; Respondent: Consolidated Bank of Kenya Limited; Respondent: Josrick Merchants Auctioneers
- Court
- Court of Appeal
- Court Station
- Court of Appeal at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Civil Application 33 of 2020
- Procedural Posture
- Civil Application / Application for Injunction Pending Appeal
- Outcome
- application dismissed
- Judges
- DK Musinga
- Legal Topics
- Interlocutory Injunctions, Statutory Power of Sale, Loan Default, Nugatory Appeal, Undervaluation of Property
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Palmy Company Limited
Applicant
Consolidated Bank of Kenya Limited
Respondent
Josrick Merchants Auctioneers
Respondent
Procedural Posture
Civil Application / Application for Injunction Pending Appeal
Legal Issues
- 1 Whether the applicant has demonstrated an arguable appeal warranting the grant of an interlocutory injunction.
- 2 Whether the appeal, if successful, would be rendered nugatory if the injunction is not granted.
- 3 Whether the 1st respondent's capacity to compensate the applicant negates the need for an injunction.
Ratio Decidendi
The Court found that while the applicant had demonstrated an arguable appeal, it failed to show that the appeal would be rendered nugatory if the injunction was not granted. The applicant did not allege or provide evidence that the 1st respondent, a bank, would be incapable of compensating it in damages should the appeal succeed after the sale of the property. The absence of such an allegation or evidence meant that the risk of the appeal being rendered nugatory was not established. Consequently, the application for an interlocutory injunction failed on the second limb of the test under rule 5(2)(b) of the Court of Appeal Rules.
Court Disposition
application dismissed
Orders
- The application for injunction is dismissed in its entirety.
- No order as to costs.
Full Case Text
Judgment text and source record
35 paragraphs
IN THE COURT OF APPEAL
AT NAIROBI
(CORAM: OUKO (P), MUSINGA & GATEMBU, JJ.A.)
CIVIL APPLICATION NO.33 OF 2020
BETWEEN
PALMY COMPANY LIMITED...............................................................................APPLICANT
AND
CONSOLIDATED BANK OF KENYA LIMITED................................1STRESPONDENT
JOSRICK MERCHANTS AUCTIONEERS........................................2NDRESPONDENT
(Being an application for injunction pending the hearing and determination of an appeal against the
Ruling of the High Court of Kenya (Maureen A. Odero, J.) dated 29th November 2019
in
H.C.C. Case No. 527 of 2013. )
**********************
RULING OF THE COURT
1. This is an application brought under rule 5(2)(b) of this Court’s Rules. The applicant sought an interlocutory injunction to restrain the 1st and 2nd respondents from disposing of a property known as L.R. No. 209/11043 (the suit property) pending hearing and determination of an intended appeal. The applicant also sought an interlocutory order of injunction to restrain the 2nd respondent from further advertising for sale the suit property until the application is heard and determined. There are several declaratory orders that were also sought but which we have no jurisdiction to deal with in a rule 5(2)(b) application.
2. The applicant borrowed from the 1st respondent a sum of Kshs.35,000,000 to develop the suit property but defaulted in servicing the loan. As a result, the 1st respondent issued a statutory notice of sale of the suit property and the 2nd respondent advertised it for sale by public auction.
3. The applicant filed a suit in the High Court to challenge the intended sale, stating inter alia, that the respondent had undervalued the suit property and was likely to sell it at a throw away price, unless the court granted an interlocutory injunction to restrain the respondents from selling the suit property.
4. The said application was dismissed vide a ruling that was delivered on 29th November 2019. Being aggrieved by that ruling, the applicant preferred an appeal to this Court. In its application, the applicant argues that it has an arguable appeal; that unless the orders sought are granted the suit property will be sold at a throw away price and it will not be able to repay the loan balance and the bank will keep on pursuing it thereafter for repayment of the balance; and that unless the orders sought are granted the appeal, if successful, shall be rendered nugatory. On those grounds, the applicant urged us to grant the orders sought.
5. We have carefully considered this uncontested application, bearing in mind the principles that guide this Court in its determination of rule 5(2)(b) applications as summarized inStanley Kangethe Kinyanjui v Tony Keter & 5 Others[2013] eKLR.
6. Having perused the record of appeal and considered the applicant’s submissions, we are satisfied that the intended appeal is arguable. However, the applicant has not demonstrated how the appeal, if successful, shall be rendered nugatory. There is no contention that the 1st respondent would be incapable of paying any damages that may be awarded in the event that the suit property is sold and the appeal is decided in the applicant’s favour thereafter. The 1st respondent is a bank and though it did not file any replying affidavit to the applicant’s affidavit in support of the application, the applicant did not allege that the respondent would be incapable of compensating it if the appeal is successful.
7. Consequently, this application fails and is hereby dismissed in its entirety. As the application was not opposed, we make no order as to costs.
Dated and delivered at Nairobi this 6thday of November, 2020.
W. OUKO, (P)
...................................
JUDGE OF APPEAL
D. K. MUSINGA
...................................
JUDGE OF APPEAL
S. GATEMBU KAIRU, FCIArb
...................................
JUDGE OF APPEAL
I certify that this is a truecopy of the original.
Signed
DEPUTY REGISTRAR