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Court of AppealPartially AllowedCivil Application No. NAI. 280 of 2010 (UR. 197/2010)

Yellow Horse Inns Ltd v Nduachi Company Limited & 2 others [2011] KECA 366 (KLR)

Court of Appeal
4 March 2011
3,156 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal allowed Yellow Horse Inns to keep possession of disputed Nairobi land pending its appeal, because a judge had made an order no party asked for.

What this practically means

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Executive summary

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This was an application under rules 5(2)(b) and 42 of the Court of Appeal Rules by Yellow Horse Inns Ltd. seeking a stay of execution and injunctions pending an intended appeal against a High Court ruling (Mbogholi Msagha, J., 30th November 2010) which dismissed the applicant's application for interim injunctions in a dispute over L.R. No. 209/11803/2, Nairobi, and ordered preservation of the suit property in the name of the City Council of Nairobi although no such order had been sought. The applicant, a registered proprietor in possession since 1996 and a rateable owner under a title issued under the Registration of Titles Act, alleged that the respondents had purported to allocate the land to the 1st respondent and had altered the rate records. Applying the settled twin principles - arguability and nugatory prejudice - the court found the intended appeal arguable, particularly whether the judge could grant an unsought preservation order and treat the applicant's title as forged without trial, and held the appeal would be rendered nugatory if the orders were refused. It rejected the argument that the dismissal below barred relief, reaffirming that rule 5(2)(b) applications invoke the court's original jurisdiction exercised de novo. The court granted the application in terms of prayers 2 (with the preservation order in negative form), 3 and 4, with costs to abide the outcome of the intended appeal. The decision below was not disturbed; the interim orders preserve the status quo pending 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 and not frivolous
  2. 2.Whether, if the orders sought are not granted, the success of the intended appeal will be rendered nugatory

Key legal issues

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01

Whether the twin principles under rule 5(2)(b) were satisfied

Holding

Both limbs satisfied: the intended appeal was arguable and would be rendered nugatory if the injunction was refused.

Reasoning

The court noted the applicant had been in possession of the suit property since 1996, held a title under the Registration of Titles Act, and had documents showing it was a rateable owner paying rates. It found it arguable whether the learned judge was entitled to order preservation of the property in the name of the 2nd respondent when no counterclaim or such prayer had been made, and considered that refusal would render the intended appeal nugatory.

p. 5
02

Whether the Court of Appeal had jurisdiction to grant an injunction notwithstanding the dismissal of the injunction application below

Holding

Yes - the court exercises original jurisdiction on rule 5(2)(b) applications and applies its mind de novo; the dismissal below did not oust that jurisdiction.

Reasoning

Responding to the 1st respondent's argument that the court could not issue orders after the superior court had dismissed the injunction application, the court held that the application before it was for an injunction on an intended appeal, and that under rule 5(2)(b) it exercises original jurisdiction, considering the matter anew rather than as an appeal from the judge's discretion.

p. 5
03

Whether it was arguable that the judge erred in granting a preservation order not sought by any party and in finding the applicant's title forged

Holding

It was arguable whether the judge was entitled to order that the property be in the name of the 2nd respondent; the forgery allegation was a matter for trial.

Reasoning

The court observed that the applicant had been in possession since 1996 with a registered title and rate-paying records, and that a dispute arose because respondents were purporting to allocate the premises to the 1st respondent. In those circumstances the grant of a preservation order in the 2nd respondent's name, unsought by any party, was an arguable point for the intended appeal.

p. 5

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy the court both that the intended appeal is arguable and not frivolous, and that it will be rendered nugatory if the orders sought are not granted.
  • In dealing with rule 5(2)(b) applications the Court of Appeal exercises original jurisdiction and is not conducting an appeal from the trial judge's discretion.

Court orders

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  1. 1.Application granted in terms of prayers 2 (except as regards the part concerning the preservation order which is put in negative form), 3 and 4 of the application dated 6th December, 2010
  2. 2.Costs of the application to abide the outcome of the intended appeal

The bench

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

majority
majority
On appeal from
High Court of Kenya at Nairobi
H.C.ELC. CO. 347 of 2009
Jurisdiction invoked
Rule 5(2)(b) and Rule 42 of the Court of Appeal Rules

Relief refused

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Prayer 2 insofar as it concerned the preservation order in its original positive form

The preservation order component was granted in negative form only

p. 5

Costs

Costs of the application shall abide the outcome of 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.

The Court will grant a stay or an injunction, as the case may be if satisfied, firstly, that the applicant has demonstrated that his appeal or intended appeal is arguable; and secondly, that unless a stay or injunction is granted his appeal or intended appeal, if successful, will be rendered nugatory.
p. 4Rule 5(2)(b) twin principles
Once an applicant has properly come before the Court, the Court has jurisdiction to grant an injunction or make an order for a stay on such terms as the Court may think just.
p. 5Original jurisdiction on rule 5(2)(b) applications
Accordingly, we order that this application is granted in terms of prayers 2 (except as regards the part concerning the preservation order which is put in negative form) 3 and 4 of the application dated 6th December, 2010. Costs of the application shall abide the outcome of the intended appeal.
p. 5Final 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, "Yellow Horse Inns Ltd v Nduachi Company Limited & 2 others [2011] KECA 366 (KLR)", Case Analysis (2011). Civil Application No. NAI. 280 of 2010 (UR. 197/2010). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2011/366/eng@2011-03-04

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