Sololo Outlets Ltd. & 3 others v National Social Security Fund & 4 others [1994] KECA 76 (KLR)
The bottom line
#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 plaintiffs/applicants had an arguable appeal from the High Court ruling dismissing their application for temporary injunctions and striking out/staying their suit
- 2.Whether, if the intended appeal succeeded, it would be rendered nugatory if the interim orders of injunction sought were not granted
Key legal issues
#The test for relief under rule 5(2)(b) pending an intended appeal
The application was dismissed because the applicants failed both limbs of the test.
The court applied the settled Githunguri test: the applicant must demonstrate an arguable appeal and that its success would be rendered nugatory if interim relief is denied. Despite extensive submissions attacking the judge's treatment of the allegations of coercion and duress and his interpretation of sections 228 and 35, the court expressed no concluded view on those issues and held it was far from satisfied the test was met.
Whether a statutory liquidator under section 35 of the Banking Act may step into the shoes of the institution in liquidation and appoint receivers under a debenture
Provisionally, the judge below may well be right that the Board could do so.
The court only gave a provisional view, as befits a rule 5(2)(b) application. Section 36 creates the Deposit Protection Fund Board as a statutory liquidator with the powers of an ordinary liquidator under Part VI of the Companies Act, and the court's provisional consideration of the statutory provisions and the securities suggested the judge's conclusion that the Board validly appointed the Receivers could stand.
Timing of an application for leave to sue a company in liquidation under section 228 of the Companies Act
Provisionally, the applicants' contention that leave may be sought at any time and in any manner may be incorrect; the judge held leave must be obtained before instituting the suit.
The judge below struck out the claims against Post Bank, the Board and the Receivers for want of prior leave. The Court of Appeal examined sections 35 and 228 and provisionally favoured the judge's view, but expressly declined to make a concluded determination on an interlocutory rule 5(2)(b) application.
Whether a court may grant relief in respect of charges over properties owned by persons not before the court
It cannot; order 1 rule 9 confines the court to the rights of parties actually before it.
The applicants sought injunctions over 23 properties without any evidence of who owned them, most belonging to persons not party to the suit. Relying on order 1 rule 9 and Lord Diplock's statement in Gouriet, the court held declarations and relief cannot be made in respect of the rights of persons not represented in the litigation.
Whether the judge below erred in making final adverse findings on allegations of coercion and duress at an interlocutory stage
The court could not express a concluded view, but noted that once the allegations were rejected nothing on the face of the debentures supported invalidity.
The judge had found no contemporaneous protest over nearly a year, that Jirongo was represented by advocates who never complained, and that the debenture was executed under seal before an advocate. The Court of Appeal held the judge had little choice faced with such allegations in an inter partes application and could not say on an interlocutory application whether he erred.
Legal principles established
#- An applicant under rule 5(2)(b) must show an arguable appeal and that, if successful, it would be rendered nugatory absent interim relief.
- A court's jurisdiction to grant declarations is confined to the legal rights of parties actually before it, not those of absent third parties.
- Under section 228 of the Companies Act, leave of the court must be obtained before commencing an action against a company in liquidation.
Court orders
#- 1.The application under rule 5(2)(b) of the Court of Appeal Rules is dismissed
- 2.Costs of the application are awarded to the respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya
- Not stated (suit instituted 8th March 1994; ruling of 5th September 1994)
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Temporary injunction restraining Post Bank, the Board and the Receivers from selling, alienating or dealing with 23 specified properties pending the intended appeal
Applicants failed to establish an arguable appeal whose success would be rendered nugatory
Injunction restraining the Fund from selling or interfering with plots LR No 209/9101 and LR No 209/9103
The judge below found the Fund had paid Sololo far more than the value of the plots and any loss could be met by damages
Injunction restraining the Receivers from remaining on Cyperr Enterprises' premises at Anniversary Towers
The Receivers were entitled to occupy premises used to run the operations of Sololo and Cyperr Projects
Costs
The application is dismissed with costs to the respondents.
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.
They must first show that they have an arguable appeal, and then go on to show that their appeal, if successful, would be rendered nugatory, if the interim relief is denied.
Accordingly, this application fails and it is dismissed with costs.
it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else
no action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the Court may impose.
No suit shall be defeated by reason of the misjoinder or non-joinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it
He refrained from taking the drastic step of striking out the plaint but instead he adopted the course taken by Bennet, J in the case of Yowana Kahara & Others v Lunyo Estates Ltd [1959] EA 319, and ordered the suit stayed with leave to the plaintiffs to file proper separate suits and awarded the defendants the costs of the suit.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Sololo Outlets Ltd. & 3 others v National Social Security Fund & 4 others [1994] KECA 76 (KLR)", Case Analysis (1994). Civil Application (Rule 5(2)(b)) — intended appeal from High Court ruling of 5th September 1994. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1994/76/eng@1994-11-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.