Son Hardware Limited v Development Bank of Kenya Limited [2019] KECA 53 (KLR)
The bottom line
#The Court of Appeal ruled that you cannot stop a bank from selling charged property by simply disputing the debt—you must also deposit security and prove real, compensable loss.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable
- 2.Whether the intended appeal would be rendered nugatory if stay or injunction is not granted
- 3.Whether a stay can issue in respect of a negative order dismissing an application for injunction
Key legal issues
#Whether the intended appeal was arguable
Whether the respondent's statutory power of sale had arisen is an arguable matter, satisfying the first limb of the Rule 5(2)(b) test
The court accepted that whether the statutory power of sale had crystallised was a bona fide question fit for full argument in the intended appeal. Citing Mandavia and Gachau, it held that a single bona fide arguable ground suffices and an arguable appeal need not succeed, only be non-frivolous. The first limb was therefore met.
Whether the intended appeal would be rendered nugatory
The applicant failed to demonstrate nugatory-ness; it did not deposit sums due and did not show loss uncompensatable by damages
Citing Wasike, the court held the duty of proving nugatory-ness rests on the applicant, and mere assertion is insufficient. The applicant also failed to comply with the High Court's conditional order to deposit Ksh. 10,000,000/=, making the court reluctant to exercise equitable discretion in its favour. The second limb failed.
Whether a negative order can be stayed
The High Court's dismissal of the injunction application was a negative order incapable of execution and therefore incapable of stay
Following Kanwal Sarjit Singh Dhiman and Western College of Arts & Applied Sciences v Oranga, the court reasoned that a dismissal order directs no party to do or refrain from doing anything, so there is nothing capable of being stayed. The refusal simply leaves the applicant in its pre-litigation position, so substantial loss and nugatory-ness do not arise.
Legal principles established
#- An application under Rule 5(2)(b) must satisfy the twin tests of an arguable appeal and nugatory-ness, and only one bona fide arguable ground suffices
- A negative order, being incapable of execution, is incapable of being stayed
- A mortgagee will not be restrained from exercising the statutory power of sale solely because the amount due is in dispute
- Once property is given as security it becomes a commodity for sale and sentimental attachment is inconsequential
- The burden lies on the applicant to demonstrate that the appeal would be rendered nugatory; mere assertion does not suffice
Court orders
#- 1.Dismissal of the Notice of Motion dated 7th January 2019
- 2.Costs of the application to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya at Kajiado
- Kajiado HCCC No. 44 of 2018
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Injunctive order restraining exercise of the statutory power of sale
The applicant failed to deposit the sum ordered by the High Court and did not demonstrate the appeal would be rendered nugatory
Stay of the High Court ruling dismissing the injunction application
A negative order dismissing an application is incapable of execution and therefore incapable of being stayed
Stay of proceedings in Kajiado HCCC No. 44 of 2018
The Notice of Motion lacked merit and was dismissed in its entirety
Costs
The Notice of Motion dated 7th January 2019 is dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Whether or not the respondents’ statutory power of sale has arisen is an arguable matter.
Mere assertion that an appeal shall be rendered nugatory does not suffice.
a negative order is one that is incapable of execution, and thus, incapable of being stayed
The upshot is that the Notice of Motion dated 7th January 2019 has no merit and is hereby dismissed with costs.
Issues in the judgment
#Inconsistent dates for the High Court ruling: the notice of motion section refers to a ruling delivered on 18th December 2018 while the analysis refers to 'the ruling and order of the High Court dated 19th December 2018'.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Son Hardware Limited v Development Bank of Kenya Limited [2019] KECA 53 (KLR)", Case Analysis (2019). Civil Application No. 3 of 2019 (UR 3/19). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/53/eng@2019-10-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.