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Court of AppealDismissedCivil Application No. NAI 131 of 2011 (UR 86/2011)

Francis M. Mutua v Southern Credit Banking Corporation [2011] KECA 100 (KLR)

Court of Appeal of Kenya
7 September 2011
SBS.E.O. BosireEGE.M. GithinjiJNJ.G. Nyamu
682 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to stop a bank from selling a charged property, holding damages would adequately compensate the borrower.

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 (Bosire, Githinji and Nyamu, JJ.A.) dismissing a Rule 5(2)(b) application by Francis M. Mutua seeking an injunction to restrain Southern Credit Banking Corporation from selling Nairobi/Block 82/1970 pending the hearing of Nairobi Civil Appeal No. 272 of 2010, an appeal from a decision of Njagi, J. in HCCC No. 81 of 2010 dated 8th July 2010. The applicant, an advocate acting in person, claimed he had guaranteed an overdraft of Kshs. 3 million to Wamco Petroleum Company Limited but that the limit was fraudulently increased to Kshs. 10 million; he contended that without an injunction the sale would proceed and render the intended appeal nugatory. The High Court had previously declined a similar injunction, finding that although the applicant appeared not to have executed the Kshs. 3 million charge, he had executed a Kshs. 10 million charge over the same property, that damages would be an adequate remedy given the bank's means, and that the plaint contained no prayer for an injunction. Counsel for the bank relied on paragraph 7 of the applicant's affidavit as an admission that he executed the Kshs. 10 million charge, and that default, and hence the statutory power of sale, had arisen. The Court applied the Rule 5(2)(b) twin test and held the applicant failed both limbs: no arguable appeal was demonstrated and the appeal would not be rendered nugatory since damages would be an adequate remedy. It further agreed that no injunction may ordinarily be granted where none is sought in the plaint. The application was dismissed with costs to the respondent.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the applicant demonstrated an arguable appeal under Rule 5(2)(b)
  2. 2.Whether the intended appeal might be rendered nugatory in the absence of a restraining order
  3. 3.Whether an injunction could be granted where none was sought in the plaint

Key legal issues

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01

Whether the Rule 5(2)(b) threshold was met

Holding

The application failed both limbs: no arguable appeal was demonstrated and the nugatory test was not satisfied because damages would be an adequate remedy, the bank having the means to pay.

Reasoning

The court applied the established twin test under Rule 5(2)(b). It found the applicant had, in his affidavit, admitted executing a charge for Kshs. 10 million over the property, and default had not been denied, so the statutory power of sale had arisen. Given the property's known commercial value and the bank's ability to pay damages, an award of damages would be adequate, so the appeal could not be rendered nugatory.

p. 2
02

Whether an injunction can be granted where none is pleaded

Holding

No injunction may ordinarily be granted where the plaint contains no prayer for an injunction; relief first raised in a chamber application is impermissible.

Reasoning

The High Court had declined an injunction partly because the plaint in HCCC No. 81 of 2010 contained no prayer for an injunction, the relief being raised for the first time in the chamber application. The Court of Appeal agreed with the learned Judge that, in the special circumstances of the case, an injunction could not ordinarily be granted where none was sought in the plaint.

p. 2

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 absent a restraining order; damages being an adequate remedy defeats the nugatory limb.
  • An injunction order may not ordinarily be granted where no injunction is sought in the plaint.

Court orders

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  1. 1.The application for an injunction pending appeal is dismissed with costs to the respondent

The bench

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

SB
majority
EG
majority
JN
majority
On appeal from
High Court of Kenya at Nairobi
H.C.C. No. 81 of 2010
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for injunction pending appeal)

Relief refused

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Injunction restraining the sale of Nairobi/Block 82/1970 pending the hearing and determination of Nairobi Civil Appeal No. 272 of 2010

The applicant failed to demonstrate an arguable appeal and failed to show the appeal would be rendered nugatory since damages would be an adequate remedy; additionally no injunction was sought in the plaint

p. 2

Costs

The application 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.

we consider that the applicant has not demonstrated an arguable appeal and has further failed to demonstrate that the intended appeal might be rendered nugatory since damages would be an adequate remedy in any event
p. 2Rule 5(2)(b) twin test not satisfied
as no injunction was sought in the plaint we agree with the learned Judge that no injunction order may ordinarily be granted
p. 2Relief must be pleaded in the plaint
In the result, the application is dismissed with costs to the respondent. It is so ordered.
p. 2Final orders and costs

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Francis M. Mutua v Southern Credit Banking Corporation [2011] KECA 100 (KLR)", Case Analysis (2011). Civil Application No. NAI 131 of 2011 (UR 86/2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2011/100/eng@2011-09-07

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