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Court of AppealDismissedCivil Application No. 79 of 2010

Superiorfones Communications Limited v Piedmont Investments Limited & 2 others [2010] KECA 119 (KLR)

Court of Appeal
24 September 2010
1,803 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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The Court of Appeal refused to suspend a judge's decision cancelling a suspicious property sale, finding the planned appeal had no realistic chance of success.

What this practically means

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Executive summary

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This was an application under rule 5(2)(b) of the Court of Appeal Rules by Superiorfones Communications Limited seeking stay of the ruling of Kimaru, J. delivered on 25th March 2010 in H.C.C.C. No. 806 of 2003, pending an intended appeal. The dispute centred on LR No. 209/2582 in Nairobi, originally owned by Piedmont and charged to Standard Assurance. The High Court had ordered status quo as at 2nd June 2004; Standard Assurance was placed under statutory management on 11th March 2009; yet on 23rd February 2010 the property was sold to Ufanisi for Kshs.20.5 million and re-sold the same day to the applicant for Kshs.145 million. Kimaru, J. cancelled all the transactions and reverted ownership to Standard Assurance. The applicant argued that the Court of Appeal's stay of proceedings of 14th October 2009 deprived the superior court of jurisdiction, and that it stood to lose Kshs.145 million. The respondents contended the sale was fraudulent, in breach of the status quo order, and that the October 2009 order was obtained by counsel without authority and without disclosing the statutory management. The Court, comprising O'Kubasu, Visram and Nyamu, JJ.A, applied the settled twin test in Ishmael Kagunyi Thande vs Housing Finance of Kenya Ltd. It held the superior court retained jurisdiction to protect the integrity of its own orders; that the appellate stay could not authorize the sale; and that counsel's assumed authority and non-disclosure were not arguable. Finding the appeal not arguable, it declined to consider the nugatory limb, dismissed the motion with costs to the 1st and 2nd respondents, and directed that the decision apply equally to the consolidated Civil Application No. 231 of 2008.

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 under rule 5(2)(b) of the Court of Appeal Rules
  2. 2.Whether the appeal would be rendered nugatory if stay is not granted

Key legal issues

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01

Whether the intended appeal was arguable

Holding

The court found the appeal not arguable, noting the sale was in defiance of the superior court's order of 1st July 2008, that the Court of Appeal's stay of proceedings could not authorize such a sale, and that counsel had no authority and failed to disclose statutory management

Reasoning

The court examined the jurisdictional argument based on the 14th October 2009 stay of proceedings and rejected it: the sale occurred in breach of the earlier status quo order, which empowered the superior court to protect the integrity of its own order. The Court of Appeal order could not license defiance of the superior court. Counsel's assumed ostensible authority after statutory management, and his non-disclosure of it when obtaining the stay, made the intended appeal unarguable.

p. 3
02

Whether the nugatory limb needed determination

Holding

Having found the appeal not arguable, the court declined to consider the second limb

Reasoning

The rule 5(2)(b) test is conjunctive; once the applicant fails on the arguability limb, the court need not address whether the appeal would be rendered nugatory. The court accordingly did not decide the question of the Kshs.145 million purchase price or the applicant's bona fides as purchaser.

p. 3

Legal principles established

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  • A ruling as such cannot be stayed; rule 5(2)(b) relief operates only against execution or implementation of the orders contained in it
  • To succeed under rule 5(2)(b) an applicant must satisfy the twin tests of an arguable appeal and nugatory disposition
  • A superior court retains jurisdiction to protect the integrity of its own orders and of the court process notwithstanding a stay of proceedings
  • A stay of proceedings issued by an appellate court does not authorize a party to dispose of property in defiance of the orders of the superior court
  • Counsel continuing to act for a party placed under statutory management without the statutory manager's knowledge or approval lacks authority, and has a duty to disclose the statutory management to the court

Court orders

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  1. 1.Dismissal of the motion dated 13th April 2010
  2. 2.Costs of the application to the 1st and 2nd respondents
  3. 3.The decision to apply to both the present application and the consolidated Civil Application No. 231 of 2008

The bench

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

majority
majority
majority
On appeal from
High Court of Kenya at Milimani Commercial Courts, Nairobi
H.C.C.C. No. 806 of 2003
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay pending intended appeal)
Consolidated with
Civil Application No. 231 of 2008

Relief refused

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Stay of the Ruling and Orders of Kimaru, J. dated 25th March 2010 pending the intended appeal

The intended appeal was not shown to be arguable; the superior court had jurisdiction to protect the integrity of its own orders, and the order of 14th October 2009 was obtained by counsel without authority and without disclosure of statutory management

p. 3

Costs

Costs of the application awarded to the 1st and 2nd respondents (costs in the intended appeal was sought but the motion was dismissed with costs to the 1st and 2nd 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.

The Jurisdiction of the Court under rule 5 (2) (b) is not only original but also discretionary.
p. 3Rule 5(2)(b) jurisdiction
That alone gave the superior court the jurisdiction to deal with the matter to protect the integrity of its own order, and of the process of the court.
p. 3Superior court's power to protect integrity of its orders
In the result, we dismiss the motion dated 13th April, 2010 with costs to the 1st and 2nd respondents.
p. 4Final orders - dismissal
As this application has been consolidated with Civil Application No. 231 of 2008, this decision shall apply to both applications before this Court.
p. 4Consolidated applications

Issues in the judgment

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minor

The Insurance Act provision cited is rendered irregularly in the judgment text as 'section 67 (c) (2) (1)', which does not correspond to a standard subsection format

minor

The judgment refers to Mr. Peter Simani as counsel for 'the appellant' although at that stage the applicant was not yet an appellant and the intended appeal had not been filed

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, "Superiorfones Communications Limited v Piedmont Investments Limited & 2 others [2010] KECA 119 (KLR)", Case Analysis (2010). Civil Application No. 79 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2010/119/eng@2010-09-24

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