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Court of AppealDismissedCivil Application No. 41 of 2013

Michael Kimutai Ronoh & 2 others v Consolidated Bank of Kenya Ltd [2014] KECA 820 (KLR)

Court of Appeal
24 January 2014
2,212 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Court of Appeal refused to stop Consolidated Bank from selling charged land, because the borrowers failed to show their appeal was arguable and worth protecting.

What this practically means

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Executive summary

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The three applicants, chargors and guarantors for a loan advanced by Consolidated Bank of Kenya Ltd to Uday Patel & Company Limited, brought a Notice of Motion dated 30th October, 2013 under Rule 5 of the Court of Appeal Rules seeking injunctions restraining the bank from selling three land parcels offered as security, pending the hearing of the motion and of an intended appeal. The intended appeal challenged a ruling of Sila Munyao, J, of the High Court (Eldoret ELC No. 265 of 2013, delivered 24th September, 2013) dismissing their originating summons seeking postponement of the statutory power of sale. The applicants identified twelve grounds of appeal concerning the interpretation and application of sections 103, 104, 105 and 106 of the Land Act, 2012, Order 37 Rule 4 of the Civil Procedure Rules, matrimonial property claims and the judge's exercise of discretion. The Court presumed the application was brought under Rule 5(2)(b) and applied the settled twin test: the appeal must be arguable, and the appeal must be rendered nugatory if the order is not granted, citing Reliance Bank v Norlake Investments, Sivestein v Chesoni and Bob Morgan Systems v Jones. The Court held the questions raised would best be answered at the full hearing; it noted that no breach of covenant by the chargee was alleged, the recognized ground for interfering with a statutory power of sale, and declined to make conclusive findings on the judge's reasoning regarding redemption rights and matrimonial property. Concluding that neither limb of the Rule 5(2)(b) test was satisfied, the Court dismissed the application with costs on 24th January, 2014.

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 orders sought are not granted, the success of the intended appeal would be rendered nugatory

Key legal issues

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01

Whether the applicants met the twin test for relief under Rule 5(2)(b) of the Court of Appeal Rules

Holding

The applicants failed on both limbs; neither arguability nor nugatory-ness was demonstrated to the court's satisfaction

Reasoning

The court presumed the motion was brought under Rule 5(2)(b) and applied the settled principles from its prior decisions. It found the substantial arguable issues identified would best be answered at the full hearing, and concluded on the material and submissions before it that neither limb of the test was satisfied, so the injunction sought pending appeal could not issue.

p. 4
02

Whether the court should make conclusive findings on the chargee's conduct and matrimonial property claims at this interlocutory stage

Holding

No; those questions fall for determination at the full hearing of the appeal

Reasoning

The applicants did not allege breach of any covenant governing the charge, which is the recognized basis for interfering with a statutory power of sale. The High Court judge's views on the right of redemption and the absence of evidence of a matrimonial home were noted, but the Court of Appeal held it lacked jurisdiction to make conclusive decisions on them at this stage, reserving them for the full hearing.

p. 4

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy the court both that the appeal is arguable (not frivolous) and that, absent the order, the success of the appeal would be rendered nugatory
  • A court will interfere with a proposed sale through a statutory power of sale where it is shown that the chargee is guilty of breach of covenant

Court orders

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  1. 1.The Notice of Motion dated 30th October, 2013 is dismissed
  2. 2.Costs of the application awarded to the respondent

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 Kisii (Environment and Land Court, Eldoret)
Eldoret ELC No. 265 of 2013
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for injunction/stay pending appeal)

Relief refused

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Injunction restraining the respondent from selling or transferring the three land parcels pending hearing of the motion and of the intended appeal

The applicants failed to satisfy either limb of the Rule 5(2)(b) test - arguability and nugatory-ness

p. 4

Costs

Application 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.

For such an application to succeed an applicant has to satisfy the Court that the appeal is arguable which is the same as saying that it is not frivolous, and that if the order were not granted the success of the appeal, were it eventually to succeed, would be rendered nugatory.
p. 3Rule 5(2)(b) twin test
we are of the respectful opinion that the applicants have not satisfied either of the two limbs that would entitle them to an exercise of our discretion in their favour and the upshot is that the application has no merit and we dismiss it with costs.
p. 4Disposition - application dismissed with costs

Issues in the judgment

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minor

The supporting affidavit is sworn by 'Michael Kimutai Rotich' while the applicant's name throughout the cause title and motion is 'Michael Kimutai Ronoh', an apparent discrepancy in the deponent's name

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, "Michael Kimutai Ronoh & 2 others v Consolidated Bank of Kenya Ltd [2014] KECA 820 (KLR)", Case Analysis (2014). Civil Application No. 41 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/820/eng@2014-01-24

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