Bananahill Investment Ltd v Panafrican Bank Ltd & 2 others [1987] KECA 78 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that judges must weigh the balance of convenience before refusing an injunction protecting property from sale.
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 ex parte interim injunction had lapsed at the date of the inter partes hearing and, if so, whether that vitiated the hearing
- 2.Whether the learned judge correctly applied the three Giella v Cassman Brown principles in refusing an interlocutory injunction
- 3.Whether the learned judge erred in failing to consider the balance of convenience
- 4.Whether the Court of Appeal should interfere with the exercise of the High Court's discretion
Key legal issues
#Application of the three Giella principles to an interlocutory injunction
The learned judge erred by considering only the first two principles (prima facie case and irreparable harm) and failing to consider the balance of convenience where the value of the property was disputed and damages might be inadequate.
Gachuhi JA accepted that the judge was entitled to find no tangible proof of fraud or negligence at the interlocutory stage, but held that the disputed market value of the city-centre property meant the applicant might lose it in a way damages could not restore. Where the court is in doubt, the balance of convenience must decide the application. Failing to reach the third principle was an error warranting appellate interference.
Effect of lapse of an ex parte injunction on the inter partes hearing
Any lapse of the ex parte order did not invalidate the subsequent inter partes hearing and dismissal, since the appeal was from that dismissal and the Court of Appeal itself later granted an injunction pending appeal.
Order XXXIX rule 3 permits ex parte orders for a limited period of 14 days, extendable by court order, often by consent. The record could not show further extension beyond April 22, 1986, but the application was heard and determined inter partes on April 28, 1986, so the hearing stood independently of the interim order's validity.
Status of Giella principles and the American Cyanamid approach (dissent)
Platt JA held this Court is bound by the Giella principles but observed that American Cyanamid's approach may be superior and that the Court may soon need to reconsider Giella, through proper procedure not invoked here.
Platt JA traced the overlap between Giella's third principle and Lord Diplock's approach in American Cyanamid, noting that the gist of the latter is to treat interlocutory matters as ones of convenience. He declined to effect any change of direction absent a proper call for it, and decided the case on existing law.
Protection of a bank dealing with a company under the rule in Royal British Bank v Turquand (dissent)
Platt JA held the bank could act on the company's board resolution signed by two directors and appeared protected under the rule in Royal British Bank v Turquand.
The Shahs were registered directors, the company was entitled to borrow under its memorandum, a resolution supported the loan, and the bank was already dealing with the company on unsecured facilities. The plaint itself pleaded service of a notice of sale, and non-payment of capital and interest was undisputed; no one had come forward to redeem.
Legal principles established
#- Where the court is in doubt on the first two principles for an interlocutory injunction, the application must be decided on the balance of convenience; the judge must consider all three Giella principles before refusing an injunction
- Whether or not an ex parte injunction order has lapsed does not invalidate the hearing of the application inter partes
- An ex parte injunction under Order XXXIX rule 3 lasts a limited period, though the court may extend it, ordinarily by consent, to accommodate the parties and the court
- Affidavit evidence on an interlocutory injunction application is not complete; pleadings merely point out the issues to be determined at trial
- Loss of immovable property is a hardship for which damages are usually not a suitable compensation (per Platt JA, dissenting in result)
- A court will not normally interfere with a discretion exercised judicially according to law (per Platt JA)
Court orders
#- 1.Appeal allowed with costs
- 2.Order of the High Court dismissing the injunction application set aside
- 3.Perpetual injunction substituted restraining the first defendant, its agents or representatives, from selling, disposing of or auctioning LR 209/572 Moi Avenue Nairobi till the determination of the suit
- 4.Appellant to give a written undertaking guaranteed by a bank or an insurance company in damages
- 5.Parties to return to the High Court and seek directions to proceed with the hearing of the suit expeditiously
The bench
#Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.
Wrote the judgment
Gachuhi JA wrote the lead majority judgment. He held that the lapse, if any, of the ex parte injunction did not invalidate the inter partes hearing; that the learned judge erred in stopping at the first two Giella principles without considering the balance of convenience; and that, given the disputed value of the city-centre property, damages might not adequately compensate. He would allow the appeal, set aside the dismissal, and substitute an injunction restraining sale until determination of the suit, subject to an undertaking in damages.
For this reason I feel that the learned judge ought to have considered the third ground that in the case of doubt the application should have been decided on a balance of convenience.p. 4
Wrote the judgment
Platt JA dissented. He held that Schofield J had exercised his discretion judicially on the first Giella principle, finding no tangible evidence of fraud or negligence and no probability of success, so the balance of convenience did not arise. He noted, however, that the judge erred on the second principle since damages are usually inadequate for loss of immovable property. Relying on the company's documented indebtedness, the Royal British Bank v Turquand protection of the bank, and the failure to redeem, he would have dismissed the appeal with costs.
In the light of the facts put before the learned judge, it is my opinion that he acted under the first principle, within the law, reasonably and that therefore he exercised his discretion judicially.p. 7
- On appeal from
- High Court of Kenya
- null
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over an appeal from the High Court (interlocutory appeal against refusal of an injunction)
Relief refused
#Determination of the substantive dispute (fraud, negligence, liability on the loan) at the interlocutory stage
Affidavit evidence on an interlocutory application is not complete; the issues must be determined at trial
Platt JA (dissenting) would have refused the appeal in its entirety
The learned judge exercised his discretion judicially on the first principle; no probability of success was shown
Costs
The appeal is allowed with costs (both the majority and the dissent would have awarded costs to the successful party).
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.
I would set aside the order of the High Court of dismissal of the application and substitute thereof with an order of perpetual injunction restraining the first defendant, its agent or representatives, from selling, disposing off or auctioning the property known as LR 209/572 Moi Avenue Nairobi till the determination of the suit.
The applicant will give a written undertaking guaranteed by a bank or an insurance company in damages. The parties should now go to the High Court and seek representation to proceed with the hearing of the suit expeditiously.
If the court is in doubt, it will decide an application on the balance of convenience.
The appeal is allowed with costs and it is ordered in terms proposed by Gachuhi JA.
Whether or not the ex parte injunction order had lapsed at the time the hearing took place, does not invalidate the hearing of the application inter partes.
In the light of the facts put before the learned judge, it is my opinion that he acted under the first principle, within the law, reasonably and that therefore he exercised his discretion judicially.
Issues in the judgment
#The judgment records the sale price as Kshs 22,000,000 in the pleading section but later as Kshs 24,000,000 in counsel's submissions, an internal inconsistency on the record.
The majority judgment, though delivered on an interlocutory appeal, substitutes what it labels a 'perpetual injunction' operating only 'till the determination of the suit'.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Bananahill Investment Ltd v Panafrican Bank Ltd & 2 others [1987] KECA 78 (KLR)", Case Analysis (1987). Civil Appeal (from dismissal of injunction application; related application Civil Application No 69 of 1986). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1987/78/eng@1987-07-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.