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Court of AppealDismissedCivil Application No. NAI 11 of 2001 (UR 7/2001)

GARRODA CORAL BEACH LIMITED vs KENYA COMMERCIAL BANK LIMITED & COMMISSIONER OF LANDS [2001] KECA 70 (KLR)

Court of Appeal
23 February 2001
JGJ. E. GicheruPhilip Kiptoo TunoiP. K. TunoiALA. A. Lakha
845 words in judgment
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The bottom line

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The Court of Appeal refused to halt a completed auction sale, ruling the owner's appeal could still succeed without freezing the property transfer.

What this practically means

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Executive summary

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This was a single-judge-panel ruling of the Court of Appeal at Mombasa on a motion under rule 5(2)(b) of the Court of Appeal Rules, in which Garroda Coral Beach Limited sought a restraining injunction and stay of orders made by the High Court at Mombasa (Khaminwa, Commissioner of Assize) on 10th May 2000, pending an intended appeal. The underlying dispute arose from a charge dated 7th October 1997 over two properties at Watamu Coral Beach securing loans of Shs. 80 million and U.S. $3 million. After the applicant defaulted, the bank called up the debt and threatened to exercise its statutory power of sale. The applicant sued, seeking a declaration that the charge was illegal, ineffective and inoperative on grounds including the absence of Presidential consent, vagueness of the charging clause, and the absence of a redemption date, together with an injunction. The High Court declined the injunction, holding the applicant did not dispute its indebtedness and could not rely on technicalities to restrain the statutory power of sale. By the time of the application, the property had been sold at public auction on 26th January 2001 and the purchaser had taken possession; it had also been gutted by fire. The Court accepted the intended appeal was arguable but held the applicant failed the nugatory-ness limb: the property could be physically repossessed if the appeal succeeded, and there was no suggestion the respondents could not pay damages. The application was dismissed with costs.

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
  2. 2.Whether the intended appeal would be rendered nugatory if a stay of execution is not granted

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The intended appeal was weighty and arguable, not frivolous.

Reasoning

Having heard rival submissions on the challenge to the charge (absence of Presidential consent, vagueness of the charging clause, absence of a redemption date), the court accepted the appeal was arguable. However, arguability alone is insufficient; the applicant also had to satisfy the nugatory-ness limb, which it failed.

p. 2
02

Whether the appeal would be rendered nugatory without a stay

Holding

No. The applicant had lost possession of the suit property, which had been sold at public auction, but the property could be physically repossessed if the appeal succeeded, and no allegation was made that the respondents could not pay damages.

Reasoning

The court noted the applicant was no longer in physical control or possession of the property and that the Court loathes making orders in vain. Since the property could be repossessed from the new purchaser and the respondents were not alleged to be entities of straw unable to pay damages, the success of the appeal would not be rendered nugatory. The application therefore failed on this limb.

p. 2

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy both limbs: an arguable appeal and that the appeal will be rendered nugatory absent the orders sought; failure on either limb is fatal.
  • The Court will not grant orders in vain; where the subject matter has passed to a third party who can be compelled to restore it, the nugatory-ness limb will generally fail.

Court orders

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  1. 1.The application for a restraining injunction/stay pending appeal is dismissed with costs

The bench

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

JG
majority
Philip Kiptoo Tunoi
majority
AL
majority
On appeal from
High Court of Kenya at Mombasa
H.C.C.C. No. 88 of 2000 [MSA]
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Relief refused

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Stay of the superior court's orders of 10th May 2000 pending the intended appeal

The applicant failed to demonstrate that the appeal would be rendered nugatory without a stay, having lost possession of the suit property which could be repossessed if the appeal succeeded

p. 2

Costs

The application is dismissed with costs.

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.

we think the intended appeal is indeed weighty and arguable. It cannot in any way be said to be frivolous.
p. 2Arguability limb of rule 5(2)(b)
the applicant has failed to show us in what manner the success of its appeal will be rendered nugatory if we do not grant to it a stay of execution
p. 2Nugatory-ness limb
The applicant having not satisfied us that unless we grant to it an order of stay, its appeal, if successful, will be rendered nugatory, it must follow that this application must fail and the same is hereby dismissed with costs.
p. 2Final orders and disposition

Issues in the judgment

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minor

The coram states the court is sitting at Mombasa but the delivery clause states the ruling was dated and delivered at Nairobi, an internal inconsistency in the judgment.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (19)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "GARRODA CORAL BEACH LIMITED vs KENYA COMMERCIAL BANK LIMITED & COMMISSIONER OF LANDS [2001] KECA 70 (KLR)", Case Analysis (2001). Civil Application No. NAI 11 of 2001 (UR 7/2001). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2001/70/eng@2001-02-23

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