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Court of AppealPartially AllowedCivil Appeal (Application) No. 86 of 2003 (UR. 49/03)

ISAAC AWUONDO v SURGIPHARM LIMITED & ANOTHER [2007] KECA 346 (KLR)

Court of Appeal of Kenya
3 May 2007
Philip Kiptoo TunoiP.K. TunoiPWP.N. WakiWDW.S. Deverell
1,090 words in judgment
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The bottom line

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Kenya's Court of Appeal paused execution of an Shs.8 million judgment, but only because the appellant offered a bank guarantee as security within 30 days.

What this practically means

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Executive summary

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This is a single-judgment ruling of a three-judge bench of the Court of Appeal at Nairobi (Tunoi, Waki and Devereell, JJA) on an application under rule 5(2)(b) of the Court of Appeal Rules by Isaac Awuondo, Managing Director of Commercial Bank of Africa, seeking stay of execution of the ruling of Nyamu, J dated 21st March 2003 in HCCC No. 1522 of 2001. The underlying suit was brought by Surgipharm Limited on a continuing guarantee dated 26th August 1997 given by the applicant and the second respondent for goods supplied on credit to Pharma Med Limited worth Shs.8,243,407/=. By the ruling below, the learned judge held that the guarantee was continuing and unlimited, found no triable issue, and entered summary judgment for the full sum claimed. Before the Court of Appeal, counsel for the applicant argued the intended appeals (Nairobi Civil Appeals Nos. 104 and 209 of 2003, already lodged) were arguable on the grounds that triable issues existed, that the judge decided issues on conflicting affidavit evidence and materially altered documents, and that the defence did raise triable issues. Counsel for the respondent conceded openness to a joint deposit of the decretal amount or suitable security. Applying the twin rule 5(2)(b) test, the Court assumed without deciding that the appeals were arguable, and, weighing the interests of both sides and the respondent's position on security, granted a stay conditional on the applicant providing a bank guarantee of Shs.8,000,000/= within thirty days, failing which the application would stand dismissed with costs. Costs of the motion were made costs in the appeal. The decision below was not disturbed; the merits remain for the substantive appeals. The judgment cites no case authorities.

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 appeals against the summary judgment of Nyamu, J are arguable
  2. 2.Whether the appeals would be rendered nugatory if a stay of execution is not granted
  3. 3.On what conditions, if any, a stay of execution pending appeal should issue

Key legal issues

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01

Arguability of the intended appeals

Holding

The Court assumed, without deciding, that the appeals raising triable issues on the guarantee were arguable and not frivolous.

Reasoning

The applicant advanced three grounds contending the judge erred in finding no triable issue, in deciding issues on conflicting affidavit evidence and altered documents, and in holding the defence disclosed no reasonable triable issues. The Court perused the grounds, which were to be canvassed in the appeals already lodged, and was prepared to assume arguability without resolving the merits, which is sufficient at the interlocutory stage under rule 5(2)(b).

p. 2
02

Nugatory value and conditional stay

Holding

Taking account of the respondent's stated willingness to have the decretal amount deposited or security offered, the Court granted a stay conditional on a bank guarantee of Shs.8,000,000/= within thirty days.

Reasoning

The nugatory test was addressed by balancing the interests of each side. The respondent was not averse to a joint deposit of the decretal amount or suitable security, which signalled that a conditioned stay would preserve both parties' positions pending appeal. The Court therefore granted the stay on condition of a bank guarantee, failing which the application would stand dismissed with costs.

p. 2

Legal principles established

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  • Under rule 5(2)(b), the applicant must satisfy the twin test that the intended appeal is arguable and that it will be rendered nugatory unless a stay is granted; the Court may assume arguability without deciding it and may condition a stay on security.
  • Where the decree-holder offers to accept security or a deposit of the decretal amount, a stay may properly be granted subject to such security as a condition protecting the respondent's interests.

Court orders

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  1. 1.Stay of execution of the ruling and execution in HCCC No. 1522 of 2001 granted on condition that the applicant provides a Bank Guarantee in the sum of Shs.8,000,000/= within thirty (30) days
  2. 2.If the Bank Guarantee is not provided within the stated period, the application for stay shall stand dismissed with costs
  3. 3.If the Bank Guarantee is provided, stay of execution to remain until the hearing and determination of the intended appeal
  4. 4.Costs of the motion to be in the appeal

The bench

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

Philip Kiptoo Tunoi
majority
PW
majority
WD
majority
On appeal from
High Court of Kenya at Nairobi, Milimani Commercial Court
H.C.C.C. No. 1522 of 2001
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Relief refused

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Unconditional stay of execution without security

The Court conditioned the stay on provision of a bank guarantee, weighing the interests of both sides and the respondent's willingness to accept security or a joint deposit

p. 2

Costs

Costs of the motion shall be in the appeal; if the Bank Guarantee is not provided within thirty days, the application for stay shall stand 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 are prepared to assume without considering the issues therein that the appeals are arguable and not frivolous.
p. 2Arguability limb of rule 5(2)(b) test
Weighing the interest of each side, we grant an order of stay on condition that the applicant shall, within thirty (30) days of the date hereof provide a Bank Guarantee in the sum of Shs.8,000,000/=.
p. 2Conditional stay of execution
If that is not done within the stated period the application for stay shall stand dismissed with costs, but, if the Bank Guarantee is provided as aforesaid there shall be a stay of execution until the hearing and determination of the intended appeal.
p. 2Final orders - consequence of non-compliance and scope of stay
The costs of the motion shall be in the appeal. Those are our orders.
p. 3Costs of the motion

Issues in the judgment

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minor

The plaint is stated to have agreed interest at 30% per annum, but the claim as pleaded in the judgment describes interest at 30% per month - an internal inconsistency in the judgment's account of the claim

minor

The applicant's defence dates his discharge from the guarantee as 28th August, 1992, yet the guarantee is dated 26th August, 1997 - a chronological contradiction on the face of the judgment

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, "ISAAC AWUONDO v SURGIPHARM LIMITED & ANOTHER [2007] KECA 346 (KLR)", Case Analysis (2007). Civil Appeal (Application) No. 86 of 2003 (UR. 49/03). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/346/eng@2007-05-03

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