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Court of AppealDismissedCivil Application No. 159 of 2007

DANIEL KAMITA GICHUHI & another v CONSOLIDATED BANK OF KENYA LTD [2007] KECA 171 (KLR)

Court of Appeal of Kenya
9 November 2007
EGE. M. GithinjiJOJ. W. Onyango OtienoWDW. S. Deverell
1,590 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Court of Appeal let a bank auction borrowers' property because they failed to prove the bank couldn't compensate them if their appeal succeeded.

What this practically means

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Executive summary

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The applicants, Daniel Kamita Gichuhi and Josephine Kabura Gichuhi, moved the Court of Appeal under rule 5(2)(b) of the Court of Appeal Rules seeking an injunction restraining Consolidated Bank of Kenya Ltd from selling by public auction their property known as L.R. No. 7660/114 (I.R. No. 38645) Tigoni, Kiambu, pending their intended appeal. The intended appeal challenges a ruling of Warsame J delivered on 26 June 2007 in H.C.C.C. No. 500 of 2006, in which the High Court dismissed both an injunction application under Order 39 of the Civil Procedure Code and the entire suit, holding the suit res judicata and an abuse of the judicial process in light of earlier suits (HCCC No. 466/2002, HCCC No. 5056/92 and HCCC No. 4520/94). The applicants' dispute arose from a loan of Kshs.1.3 million originally advanced by Home Savings & Mortgages Limited, whose assets and liabilities had been transferred to the respondent bank, with the bank now claiming Kshs.8,803,343.30 based on interest rates the applicants contend were unlawful. The Court of Appeal found the intended appeal arguable but held the applicants had failed to demonstrate that the appeal would be rendered nugatory if the injunction were refused, since the bank was not shown to be financially incapable of compensating them. The application was accordingly dismissed with costs in 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
  2. 2.Whether the intended appeal would be rendered nugatory if the injunction pending appeal is not granted

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The Court found the intended appeal raised sufficient arguable issues and was not frivolous, but this alone was insufficient.

Reasoning

The Court accepted that the intended appeal challenging the dismissal of the injunction application and the entire suit raised arguable issues. However, under rule 5(2)(b) arguability is only the first limb; the applicant must also demonstrate that the appeal would be rendered nugatory if the injunction is refused. The applicants failed on the second limb.

p. 3
02

Whether the intended appeal would be rendered nugatory without the injunction

Holding

The Court held the appeal would not be rendered nugatory because the respondent bank is financially capable of compensating the applicants if the appeal succeeds.

Reasoning

Applying the established nugatory test from Reliance Bank, Githunguri v Jimba Credit and J.K. Industries, the Court considered the applicants' financial-loss claim. It found no demonstration that the respondent bank would be unable to fully compensate the applicants were the appeal to succeed, so refusal of the injunction would not render the appeal nugatory.

p. 4

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy the twin requirements of an arguable appeal and that the appeal would be rendered nugatory if the order sought is not granted; the nugatory limb requires proof that the respondent cannot compensate the applicant if the appeal ultimately succeeds.

Court orders

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  1. 1.The application for an injunction pending appeal is dismissed
  2. 2.The costs of the application shall be in the intended appeal

The bench

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

EG
majority
JO
majority
WD
majority
On appeal from
High Court of Kenya at Nairobi, Milimani Commercial Court
H.C.C.C. No. 500 of 2006
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Relief refused

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Injunction restraining the respondent from selling the suit premises pending the intended appeal

The applicants failed to show that the appeal would be rendered nugatory because the respondent is financially capable of compensating them

p. 4

Costs of the application

Costs were not awarded to either party forthwith but made costs in the intended appeal

p. 4

Costs

The costs of the application shall be in the 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.

We consider that the intended appeal raises sufficient arguable issues and the appeal cannot be considered to be frivolous.
p. 3Arguability limb of rule 5(2)(b)
We are not therefore satisfied that, unless the order of injunction is granted, the intended appeal would be rendered nugatory.
p. 4Nugatory limb of rule 5(2)(b)
We therefore dismiss this application. The costs of the application shall be in the intended appeal.
p. 4Final orders and costs

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, "DANIEL KAMITA GICHUHI & another v CONSOLIDATED BANK OF KENYA LTD [2007] KECA 171 (KLR)", Case Analysis (2007). Civil Application No. 159 of 2007. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/171/eng@2007-11-09

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