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Court of AppealDismissedCivil Application Nai 4 & 5 of 2007 (Consolidated)

MBARAKI BULK TERMINAL LTD v EAST AFRICAN BULKING SERVICES LTD & 2 others [2007] KECA 50 (KLR)

Court of Appeal of Kenya
16 March 2007
2,433 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause a High Court order because money could compensate the company for any loss during the appeal.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi in two consolidated applications, Civil Application Nai 4 and 5 of 2007, by Mbaraki Bulk Terminal Ltd seeking a stay of execution of the ruling of Sergon J of the High Court at Mombasa delivered on 15th December 2006, which granted judicial review orders quashing the District Land Registrar's discharge of cautions lodged by East African Bulking Services Ltd over four Mombasa plots, and reversing the consolidation of the titles and the transfer of the consolidated parcel to the applicant. The applications were brought under rule 5(2)(b) of the Court of Appeal Rules. The dispute arose from a double sale: the 3rd respondent agreed in May 2005 to sell the four plots and its business to the 1st respondent for about US$4 million, but on 10th November 2005 resold the same property to the applicant while the first contract was still in force and cautions were registered. The Registrar discharged the cautions on 9th December 2005, consolidated the plots and transferred the resulting title to the applicant the same day. The court restated the two-limb test for rule 5(2)(b) relief: arguability and the nugatory aspect, both of which must be satisfied. Arguability being conceded, the court held the applicant failed the nugatory limb, since refusal of a stay merely restored the status quo, the property would revert to a party disclaiming interest, cautions would prevent dealings, and any economic loss would be quantifiable and compensable. The consolidated applications were dismissed with costs, with Deverell JA concurring.

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 raises arguable points (conceded/common ground)
  2. 2.Whether, unless the stay of execution is granted, the success of the intended appeal would be rendered nugatory

Key legal issues

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01

The two-limb test for stay of execution under rule 5(2)(b) of the Court of Appeal Rules

Holding

The applicant must show the appeal is arguable AND that it will be rendered nugatory without a stay; only the nugatory limb was in dispute since arguability was conceded.

Reasoning

The court restated that rule 5(2)(b) jurisdiction is original and discretionary. Arguability was common ground, so the court confined itself to the nugatory question. It examined the effect of the order sought to be stayed, noting it merely restored the position before the cautions were discharged, and that the applicant's losses would be quantifiable and capable of remedy by the court, so no nugatory effect arose.

p. 1
02

Whether reversing the transfer, de-consolidation and restoration of cautions would render the applicant's appeal nugatory

Holding

No: the property would revert to the 3rd respondent who disclaimed interest, cautions would prevent dealings, and if the appeal succeeded the property could be restored to the applicant; economic loss would be quantifiable.

Reasoning

The court analysed the nature of the reliefs granted by Sergon J, concluding they were designed only to restore the status quo ante the discharge of cautions. Refusal of a stay would leave the property with the 3rd respondent and the cautions in place, preventing dealings by any party, whereas the 1st respondent - holding a decision in its favour as a purchaser - might lose the property if a stay were granted. Balancing the positions, no nugatory risk to the applicant was established.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must establish both arguability and nugatory aspect; satisfying one limb alone is insufficient.
  • Where a refusal of stay merely restores the parties to their prior positions and any resulting loss is quantifiable and compensable in damages, the nugatory test is not met.
  • There must be just cause for denying a litigant the fruits of a decision in its favour.

Court orders

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  1. 1.Civil Application Nos. 4 and 5 of 2007 (consolidated) dismissed with costs

The bench

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

majority

Wrote the judgment

majority
On appeal from
High Court of Kenya at Mombasa
H.C. Miscellaneous Civil Appl. No. 946 of 2005
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules
Consolidated with
Civil Application Nai 5 of 2007

Relief refused

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Stay of execution of the ruling and order of Sergon J of 15th December 2006

The applicant failed to satisfy the second limb of the rule 5(2)(b) test: the intended appeal would not be rendered nugatory because any loss would be quantifiable and compensable

p. 4

Costs

The consolidated applications were dismissed with costs to the respondents.

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.

If an applicant does establish one issue but not the other, his application must fail.
p. 2rule 5(2)(b) two-limb test
There must be just cause for denying it the fruits of the decision in its favour.
p. 4fruits of judgment
As Deverell JA is also of the same view, it is hereby ordered that Civil Application Nos.4 and 5 be and are hereby dismissed with costs.
p. 4final orders

Issues in the judgment

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minor

The ruling header cites the High Court decision as H.C. Miscellaneous Civil Appl. No.946 of 2005 but later refers to the decision as delivered in 'Mombasa High Court Miscellanous Civil Application No.967 of 2005', an internal inconsistency in the case number.

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, "MBARAKI BULK TERMINAL LTD v EAST AFRICAN BULKING SERVICES LTD & 2 others [2007] KECA 50 (KLR)", Case Analysis (2007). Civil Application Nai 4 & 5 of 2007 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/50/eng@2007-03-16

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