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Court of AppealDismissedCivil Appli 114 of 2009 (UR 73/09)

NYANZA FISH PROCESSORS LIMITED v BARCLAYS BANK OF KENYA LIMITED [2009] KECA 198 (KLR)

Court of Appeal of Kenya
3 July 2009
Philip Kiptoo TunoiP.K. TunoiSBS.E.O. BosireEGE.M. Githinji
1,460 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to stop Barclays selling Nyanza Fish Processors' charged land because money damages could compensate the company.

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 on a single application expressed to be brought under rule 5(2)(b) of the Court of Appeal Rules, in which Nyanza Fish Processors Limited sought an injunction restraining Barclays Bank of Kenya Limited from advertising, offering for sale or alienating Kisumu Municipality/Block 3/123 pending an intended appeal against the High Court (Kimaru, J.) refusal of an interim injunction in H.C.C.C. No. 40 of 2005. The applicant had charged its property to secure a borrowing by its sister company, Afro Meat Company Limited, which defaulted; the bank moved to realise the security. The court restated the two-pronged rule 5(2)(b) test: the applicant must show the intended appeal is arguable and that, if successful, the appeal would be rendered nugatory without the orders sought, and both limbs must be satisfied. On arguability the court found at least one arguable point, namely the legal effect of the charge not being drawn in the standard R.L. 9 form prescribed under the Registered Land Act, and whether the borrowing was for the direct benefit of the proprietor. On the nugatory limb, however, the court held that any loss from a sale would be financial; the property's value, though unique, is ascertainable, the applicant itself had offered it as security, and the respondent bank could satisfy any award of damages. The application therefore failed the second limb and was dismissed with costs to the respondent. The decision below was not disturbed; this was an exercise of the court's original jurisdiction under rule 5(2)(b).

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, if the injunction is not granted and the intended appeal succeeds, that success would be rendered nugatory

Key legal issues

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01

Whether the intended appeal is arguable

Holding

It was arguable: the charge over the suit property was not in the standard form under the Registered Land Act, and the legal effect of that failure, as well as whether the borrowing was for the direct benefit of the proprietor, were arguable points.

Reasoning

The court noted there is no dispute that the bank lent money to Afro Meat Company Ltd and that the charge was not in the standard R.L. 9 form under Section 65(1) of the Registered Land Act. The legal effect of that failure is an arguable point, as is whether the borrowing was for the direct benefit of the proprietor. Only one arguable point is needed and it need not be likely to succeed.

p. 2
02

Whether the success of the intended appeal would be rendered nugatory if the injunction is not granted

Holding

It would not: any loss to the applicant would be financial, the value of the property is ascertainable, and the respondent, a bank, would be able to satisfy damages.

Reasoning

The applicant itself offered the property as security; its factory had ceased operations and it had no income from the property. Although the property may be unique, its value is ascertainable. The applicant's loss would be financial and compensable in damages, which the respondent bank can pay, so success on appeal would not be rendered nugatory.

p. 3

Legal principles established

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  • On a rule 5(2)(b) application an applicant must establish both that the appeal or intended appeal is arguable and that, if successful, the appeal would be rendered nugatory without the orders sought.
  • An applicant need only establish a single arguable point, and that point need not be one likely to succeed; the court is concerned only with whether arguable points exist.

Court orders

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  1. 1.Dismissal of the applicant's application dated 22nd April, 2009 for an injunction pending appeal
  2. 2.Costs of the application to the respondent

The bench

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

Philip Kiptoo Tunoi
majority
SB
majority
EG
majority
On appeal from
High Court of Kenya at Milimani Commercial Courts
H.C.C.C. No. 40 of 2005
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Relief refused

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Injunction restraining the respondent from advertising, offering for sale or alienating Kisumu Municipality/Block 3/123 pending the intended appeal

One arguable point was established, but the applicant failed to show that success of the intended appeal would be rendered nugatory since the loss would be financial, the property's value is ascertainable, and the respondent bank can satisfy damages

p. 3

Costs

The application dated 22nd April, 2009 is dismissed with costs to the respondent.

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.

In applications of this nature this Court exercises original jurisdiction and in exercise of that jurisdiction the Court is guided by two well established principles
p. 2Rule 5(2)(b) principles and original jurisdiction
an applicant needs to establish both these aspects for it to be successful in its application
p. 2Dual test - arguability and nugatory aspects both required
In an application like the one before us an applicant need not show more than one arguable point
p. 2Single arguable point sufficient
Consequently, the application dated 22nd April, 2009 is dismissed with costs. We so order.
p. 3Final orders - dismissal with costs

Issues in the judgment

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minor

Internal date contradiction: the ruling of Kimaru, J. is stated as dated 17th April, 2009 but later described as 'delivered on 17th April, 2008'.

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, "NYANZA FISH PROCESSORS LIMITED v BARCLAYS BANK OF KENYA LIMITED [2009] KECA 198 (KLR)", Case Analysis (2009). Civil Appli 114 of 2009 (UR 73/09). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/198/eng@2009-07-03

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