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Court of AppealAllowedCivil Application No. NAI. 223 of 1999 (89/99UR)

INDUSTRIAL & COMMERCIAL DEVELOPMENT CORPORATION vs DABER ENTERPRISES LIMITED [1999] KECA 146 (KLR)

Court of Appeal
7 September 1999
1,295 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal stopped enforcement of a Shs. 11.8 million judgment, confirming money decrees can be paused pending appeal when circumstances justify it.

What this practically means

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Executive summary

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This is a single-judgment ruling of the Court of Appeal at Nairobi (Omolo, Shah and Owuor, JJ.A.) on an application under rule 5(2)(b) for stay of execution pending an intended appeal. The dispute arose from a public auction in September 1997 in which Daber Enterprises Limited, as highest bidder, paid 25% of the bid price for land in Mombasa sold by the Industrial and Commercial Development Corporation in exercise of its statutory power of sale. Negotiations over payment of the balance broke down; the Corporation returned the deposit and resold the property to a third party. The High Court (Commissioner Gacheche) struck out the plaint and entered summary judgment against the Corporation for Shs. 11,800,000, with formal proof to follow for general and exemplary damages. The Court of Appeal applied the two-limb rule 5(2)(b) test. It found the intended appeal arguable on whether the respondent's request for an extension of time varied the contract, whether the offer of sale was revoked, and whether the special damages, founded on a third party's offer to purchase, were strictly provable under Order VI rule 9(4). On the nugatory limb, the amount at stake exceeded Shs. 12,000,000, the respondent was not shown to be a company of means, and the Corporation was substantial enough to repay any decretal amount. The court also held that the Kenya Shell authority against stay of money decrees had been modified by Kenindia Assurance and Nairobi Duluxe Services. The application succeeded: stay of execution was granted until determination of the intended appeal, with costs in the intended appeal. The ruling does not disturb the High Court decision, which remains subject to the intended appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the intended appeal is arguable (not frivolous)
  2. 2.Whether the success of the appeal would be rendered nugatory if stay of execution is not granted

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The appeal was arguable: whether the respondent's request for extension of time amounted to a variation of the contract, whether the offer of sale was revoked, and whether special damages of Shs. 11,800,000 were strictly provable were all matters fit for trial.

Reasoning

The court found it arguable that the respondent's request for more time to pay the balance sought to vary the contract terms, and that what was agreed between Mr. Mbai and the Deputy Corporation Secretary was a matter for trial. It was also arguable whether the offer of sale was revoked. On damages, the judgment rested on a third party's offer to purchase, which would require cross-examination.

p. 2
02

Whether the appeal would be rendered nugatory absent a stay

Holding

Yes - the amount at stake exceeded Shs. 12,000,000, the respondent was not shown to be a company of means, and the applicant corporation was substantial enough to repay if the respondent ultimately succeeded.

Reasoning

The onus lay on the applicant to show that money paid would not be recoverable. The respondent had needed time to raise Shs. 2.4 million and did not rebut the applicant's statement of 'no known assets'. Counsel for the respondent did not seek time to file a replying affidavit. The court was satisfied the applicant could pay any decretal amount if the appeal failed.

p. 2
03

Whether stay of a money decree can be granted

Holding

The general rule against stay of money decrees has been modified; a stay may be granted in respect of money decrees where the circumstances demand.

Reasoning

Counsel for the respondent relied on Kenya Shell Limited v Karuga & Another for the proposition that stay of a money decree is not normally granted. The court held that this authority had at the very least been modified by Kenindia Assurance and Nairobi Duluxe Services, which permit stay of money decrees where circumstances demand.

p. 3

Legal principles established

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  • On a rule 5(2)(b) application the applicant must show an arguable appeal and that the appeal would be rendered nugatory if the order sought is not granted.
  • Special damages must be strictly proved and are deemed traversed unless specifically admitted.
  • A stay of execution may be granted even in respect of money decrees if the circumstances of the case so demand.

Court orders

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  1. 1.Stay of execution of the decree in the High Court granted until the determination of the intended appeal
  2. 2.Costs of the application to be in the intended appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
High Court of Kenya at Nairobi, Milimani
H.C.C.C. No. 113 of 1999
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay of execution pending intended appeal)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

At this stage we are only bound to inquire as to whether or not there is an arguable appeal and if so, would the success of the appeal be rendered nugatory if the order sought is not granted?
p. 2Test for stay pending appeal under rule 5(2)(b)
Special damages have to be strictly proved. The applicant had not admitted any damages which are always in issue unless admitted.
p. 2Proof of special damages
if the circumstances of the case so demand a stay order can be granted even in respect of money decrees
p. 3Stay of money decrees
The upshot of all this is that we hereby grant a stay of execution of the decree in the High Court in this matter until the determination of the intended appeal. Costs of this application shall be in the intended appeal.
p. 3Final orders

Issues in the judgment

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minor

The judgment header dates the High Court ruling as 5th August, 1989 while the proceedings described (auction of September 1997, suit No. 113 of 1999) indicate the ruling must be of 1999; the year appears to be a typographical error.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "INDUSTRIAL & COMMERCIAL DEVELOPMENT CORPORATION vs DABER ENTERPRISES LIMITED [1999] KECA 146 (KLR)", Case Analysis (1999). Civil Application No. NAI. 223 of 1999 (89/99UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1999/146/eng@1999-09-07

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.