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Court of AppealDismissedCivil Application Nos. 4 & 5 of 2007

MBARAKI BULK TERMINAL LTD v EAST AFRICAN BULKING SERVICES LTD & 2 OTHERS [2007] KECA 120 (KLR)

Court of Appeal of Kenya
16 March 2007
2,429 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that winning a stay of execution requires proving both an arguable appeal and irreparable harm—money losses don't count.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal (Bosire JA, with Deverell JA concurring) on two consolidated rule 5(2)(b) applications by Mbaraki Bulk Terminal Ltd seeking stay of execution of a ruling of Sergon J (High Court, Mombasa, 15 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 impugning the subsequent consolidation of the plots and transfer of the resultant title to the applicant. The dispute arose from the 3rd respondent's resale of the same property to the applicant while a sale agreement with the 1st respondent was allegedly still in force. The court restated the twin test under rule 5(2)(b): the applicant must show the intended appeal is arguable and that, absent a stay, its success would be rendered nugatory; establishing one limb only is fatal. Arguability was conceded, so the court examined only nugatory-ness. It held that the superior court's orders merely restored the register to its prior state; the property would revert to the 3rd respondent, which no longer claimed interest, and the 1st respondent could not deal with it while cautions subsisted. Any loss to the applicant would be quantifiable economic loss for which the respondents were not shown to be unable to compensate it. Denying a stay would also preserve the 1st respondent's right to the fruits of its judgment. Both applications were dismissed with costs. This ruling binds subordinate courts and the High Court on the rule 5(2)(b) twin test and on the principle that quantifiable, compensable loss does not render an appeal nugatory.

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 by the respondents)
  2. 2.Whether, unless stay of execution is granted, the intended appeal, if successful, will be rendered nugatory

Key legal issues

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01

The twin test for stay under rule 5(2)(b) of the Court of Appeal Rules

Holding

Both limbs must be satisfied; arguability alone is insufficient

Reasoning

The court restated that rule 5(2)(b) jurisdiction is original and discretionary, requiring the applicant to show (i) arguable grounds of appeal and (ii) that without the stay the appeal would be rendered nugatory. The 1st respondent conceded arguability, so only the nugatory limb was contested; failure on that limb alone mandated dismissal.

p. 1
02

Whether reversing the transfer, consolidation and discharge of cautions would render the applicant's intended appeal nugatory

Holding

No — the loss was quantifiable economic loss and the property would remain recoverable if the appeal succeeded

Reasoning

The court examined the substance of the superior court's orders: they merely restored the cautions and the register to their prior state. The property would revert to the 3rd respondent, which no longer claimed any interest, and the 1st respondent could not deal in it while cautions were in place. Any loss of profits or expenses was quantifiable, and the respondents were not shown incapable of compensating the applicant.

p. 4
03

Balancing the applicant's economic claims against the 1st respondent's right to enjoy the fruits of its judgment

Holding

There must be just cause for denying a successful litigant the fruits of its decision; the applicant could deal freely with the property if a stay were granted, potentially placing it beyond the reach of the 1st respondent

Reasoning

The court weighed the applicant's alleged economic loss and job losses against the 1st respondent's purchaser's interest under a caution and its judgment in its favour. Granting a stay would let the applicant deal with the property as it wished, possibly defeating the 1st respondent, whereas refusal left the applicant with a compensable, quantifiable claim.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy two cumulative tests: that the appeal or intended appeal is arguable, and that unless the order sought is granted the appeal, if successful, will be rendered nugatory; satisfying only one limb is fatal
  • Economic or financial loss that is quantifiable and compensable by a solvent counterparty does not render the success of an intended appeal nugatory

Court orders

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  1. 1.Civil Application Nos. 4 and 5 of 2007 (consolidated) dismissed
  2. 2.Costs of the applications to the respondents (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 (original and discretionary jurisdiction of the Court of Appeal)
Consolidated with
Civil Application No. 5 of 2007 (consolidated with Civil Application No. 4 of 2007)

Relief refused

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Stay of execution of the ruling and orders of Sergon J delivered on 15th December 2006

The applicant satisfied only the arguability test and failed to demonstrate that the intended appeals, if successful, would be rendered nugatory; any loss was held to be quantifiable and compensable

p. 4

Costs

The consolidated applications were dismissed with costs — costs awarded against the applicant in favour of 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) twin test
In view of this I see no possibility of the applicant’s intended appeals being rendered nugatory.
p. 4Nugatory-ness assessed
If there will be any loss, it will be economic, which I think is quantifiable, and the court will be entitled to make appropriate orders to remedy any such loss.
p. 4Quantifiable loss not nugatory
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 judgment inconsistently refers to the superior court decision as Miscellaneous Civil Application No. 946 of 2005 in the heading and No. 967 of 2005 in the body

minor

The rule under which the applications were dismissed is variously cited as rule 5(2)(b) and 'rule 5(2) (b)(e)'

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 120 (KLR)", Case Analysis (2007). Civil Application Nos. 4 & 5 of 2007. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/120/eng@2007-03-16

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