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Court of AppealDismissedCivil Application No. E003 of 2020 (arising from Mombasa High Court Case No. 11 of 2017)

Coast Development Authority v Endebess Development Co. Ltd (Civil Application E053 of 2021) [2021] KECA 315 (KLR)

Court of Appeal of Kenya
17 December 2021
1,529 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 refused to pause a Kshs 62 million judgment because the applicant ignored a court order to secure the money with a bank guarantee.

What this practically means

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Executive summary

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This was an interlocutory application before the Court of Appeal at Mombasa under Rule 5(2)(b) of the Court of Appeal Rules, in which the Applicant — a public body that had been ordered by the High Court in Mombasa Case No. 11 of 2017 to pay Kshs 62,000,000 as the purchase price for block cutting machines, with 10% interest from 14th April 2013 and costs — sought a stay of execution pending appeal. The Applicant argued it had an arguable appeal on limitation, procurement irregularities and contract-execution grounds, and that payment of the substantial decretal sum would suspend its services and might be irrecoverable given the Respondent's unknown financial position. The Respondent, appearing only by written submissions, contended the appeal was not arguable and that the Applicant, having failed to comply with a trial court order to provide a bank guarantee securing the decretal sum and having only moved the Court after garnishee proceedings commenced, was estopped from claiming irrecoverability. The Court applied the settled two-limb test, restated in Stanley Kangethe Kinyanjui vs Tony Ketter. It found the first limb satisfied: only one arguable ground is required and an arguable appeal need not succeed, and the Respondent's merits arguments were left for the appeal hearing. However, on the nugatory limb, the Court held the Applicant had had the opportunity to secure the decretal sum and chose not to comply, had not pleaded that the trial court's orders were varied or set aside, and that it would be inequitable to exercise discretion in its favour. The Court emphasised that both limbs must be demonstrated and that proving only one does not suffice. The application was dismissed with costs to the Respondent. The judgment is a single unanimous opinion of the three-Judge bench, delivered at Mombasa on 17th December 2021.

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 has an arguable appeal under Rule 5(2)(b)
  2. 2.Whether the appeal would be rendered nugatory unless a stay of execution is granted
  3. 3.Whether the Applicant has demonstrated both limbs of the Rule 5(2)(b) test so as to warrant the discretionary relief of stay

Key legal issues

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01

Arguable appeal

Holding

The Applicant established an arguable appeal because it raised multiple grounds, including on the procuring and contracting processes, capable of full argument.

Reasoning

The court examined the memorandum of appeal and noted multiple grounds faulting the trial court on the defence, limitation, procurement processes and contract principles. The court reiterated that only one arguable ground is needed and that an arguable appeal need not succeed; the merits of the Respondent's counter-arguments were left for the hearing of the appeal.

p. 2
02

Nugatory aspect / conduct of the applicant

Holding

The Applicant failed to demonstrate that the appeal would be rendered nugatory; its failure to comply with the trial court's bank guarantee order weighed against equitable exercise of discretion.

Reasoning

The court found the Applicant had the opportunity to secure the decretal sum under the trial court's ruling of 27th January 2021 but chose not to comply. It had not pleaded that the trial court's orders were varied or set aside. Given this conduct, exercising discretion in its favour would be inequitable, so the nugatory limb failed.

p. 3
03

Cumulative limbs under Rule 5(2)(b)

Holding

Both limbs of the Rule 5(2)(b) test must be satisfied; satisfaction of only the arguability limb does not warrant a stay.

Reasoning

The court stated the settled two-limb test: arguability and nugatory. Because the Applicant demonstrated only arguability and failed on nugatory, the application had to fail. This synthesises the principles restated in Stanley Kangethe Kinyanjui vs Tony Ketter & 5 others.

p. 3
04

Nature of Rule 5(2)(b) jurisdiction

Holding

Rule 5(2)(b) jurisdiction is original and discretionary and does not constitute an appeal from the trial judge's discretion.

Reasoning

The court acknowledged, citing Ruben & 9 Others vs Nderitu & Another, that its Rule 5(2)(b) jurisdiction is exercised originally and discretionarily, and is not an appeal against the trial judge's discretion. Nonetheless, equitable considerations arising from the Applicant's conduct were relevant to the exercise of that discretion.

p. 3

Legal principles established

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  • An applicant under Rule 5(2)(b) must demonstrate BOTH an arguable appeal and that the appeal would be rendered nugatory; establishing only one limb is insufficient.
  • For arguability, the applicant need only demonstrate a single arguable ground, and an arguable appeal is not necessarily one that will succeed.
  • A party who fails to comply with a trial court's security-for-decretal-sum orders, and who does not show those orders were varied or set aside, may be denied stay on grounds of equitable conduct.

Court orders

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  1. 1.The Notice of Motion dated 12th July 2021 seeking stay of execution 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
majority
On appeal from
High Court of Kenya
Mombasa High Court Case No. 11 of 2017
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Relief refused

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Stay of execution of the judgment of 9th June 2020 in Mombasa High Court Case No. 11 of 2017 (Kshs 62,000,000 decretal sum with 10% interest and costs) pending appeal

The Applicant failed the second limb of the Rule 5(2)(b) test: it had an opportunity to secure the decretal sum by bank guarantee as ordered by the trial court and chose not to comply, so its appeal would not be rendered nugatory; both limbs must be demonstrated and proving only one does not suffice

p. 3

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.

Firstly, an Applicant has to satisfy that he or she has an arguable appeal. Secondly, an Applicant has to demonstrate that unless an order of stay is granted the appeal or intended appeal would be rendered nugatory.
p. 2Rule 5(2)(b) test for stay
Lastly, an applicant needs to demonstrate both arguability and the nugatory aspect in an application under Rule 5(2)(b) of the Court of Appeal Rules, and proving only one limb will not sufice.
p. 3Cumulative limbs requirement
Having failed to demonstrate the nugatory aspect, the application herein fails, and is hereby dismissed with costs to the Respondent.
p. 3Final orders and disposition
the term ‘nugatory’ has to be given its full meaning. It does not only mean worthless, futile or invalid. It also means trifiing.
p. 3Meaning of 'nugatory'
it would be inequitable in the circumstances and arising from the conduct of the Applicant, to exercise our discretion in its favour.
p. 3Equity and applicant conduct

Issues in the judgment

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minor

The judgment contains typographical errors rendering words incorrectly ('fiouted' for flouted, 'ofier' for offer, 'sufiering' for suffering, 'sufice' for suffice, 'trifiing' for trifling), likely OCR/scan artifacts

minor

Chronological inconsistency in the narrative: the judgment refers to a trial court ruling of 9th June 2021 'after delivery of the judgment', but the judgment was delivered on 9th June 2020

minor

The caseTitle and parties are anonymised in the source as 'the Applicant' and 'the Respondent'; no party names beyond the Managing Director's affidavit deponent appear in the extract

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, "Coast Development Authority v Endebess Development Co. Ltd (Civil Application E053 of 2021) [2021] KECA 315 (KLR)", Case Analysis (2021). Civil Application No. E003 of 2020 (arising from Mombasa High Court Case No. 11 of 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/315/eng@2021-12-17

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