Thika School of Medical and Health Sciences Limited (Under Administration) & another v Rao & 2 others
The bottom line
#Kenya's Court of Appeal refused to stop a company administration, confirming that both parts of the stay test must be met, not just one.
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 application should be struck out for fusing two rulings from separate insolvency causes into one appeal and application
- 2.Whether the intended appeal is arguable
- 3.Whether the intended appeal would be rendered nugatory if the injunction/stay sought is not granted
Key legal issues
#Whether the fusing of two rulings from separate insolvency causes into one appeal and application rendered the process defective
The objection was rejected; the proper course was a formal striking-out application, not submissions
The 1st and 2nd respondents argued that combining rulings from Insolvency Cause Nos. E092 and E093 of 2021, which were never consolidated at trial, was incurably defective under Article 159(2)(d) of the Constitution. The Court held that no rule of procedure empowers it to vitiate a pleading on submissions alone; the respondents should have filed a striking-out application. The application was therefore sustained and the Court proceeded to its merits.
Whether the intended appeal is arguable
The intended appeal was found arguable, satisfying the first limb of the twin principle
Applying the crystallised Rule 5(2)(b) threshold, the Court distilled six clusters of grievance from the fourteen grounds of appeal, including the legality of the administrators' appointment under the debentures, the administrators' qualifications, the effect of the charges, the conduct of the administration, the excusability of default due to COVID-19, and the sums due. It held that even one bona fide arguable point suffices and that the appeal need not succeed.
Whether the appeal would be rendered nugatory absent the injunction
The nugatory limb failed; the application was dismissed
The Court held that what the applicants sought to restrain - the administration - had already taken effect, so the injunction sought would be a mandatory injunction alien to Rule 5(2)(b). Reversing the status quo could harm the parties' mutual financial interests, and the administrators are accountable to both the bank and the applicants, with any maladministration compensable in damages. Both limbs must be satisfied; only one was.
Legal principles established
#- Both limbs of the Rule 5(2)(b) test - arguability and nugatory-ness - must be satisfied before relief can be granted
- An injunction that would reverse an accomplished state of affairs is a mandatory injunction and is not available under Rule 5(2)(b)
- A court will not vitiate a pleading on the basis of submissions alone; the proper course is a formal application to strike out
Court orders
#- 1.The Applicant's Notice of Motion dated 5th January 2022 is dismissed
- 2.The costs of the application be costs in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Insolvency Cause No. E092 of 2021 as heard together with Insolvency Cause No. E093 of 2021
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Temporary injunction restraining the respondents from dealing with the applicants' operations and properties pending the intended appeal
The second limb of the Rule 5(2)(b) test was not satisfied; what is sought to be restrained has already taken effect and the relief sought would amount to a mandatory injunction not available under the rule
Costs
The costs of this application be costs in the appeal.
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.
we find and hold that the correct position in law is that both limbs must be satisfied before a party can be granted relief under the above rule. Since the applicants have succeeded only on one limb, the application therefore fails.
Granting an injunction in the manner sought for by the applicants would be tantamount to granting a mandatory injunction not provided in the rule as one of the reliefs falling both for consideration or grant under Rule 5(2) (b).
The Applicant's Notice of motion dated 5th January 2022 is hereby dismissed; and The costs of this application be costs in the appeal.
We know of no rule of procedure in this Court's rules that mandates us to act on submissions to vitiate a pleading.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kitonga & 2 others v Hashtag Biz Hub Co. Ltd[2022] KECA 1392 (KLR)16 Dec 2022applied
Cite this brief
#Cite this brief
Caselaw, "Thika School of Medical and Health Sciences Limited (Under Administration) & another v Rao & 2 others", Case Analysis (2022). Civil Application E004 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/382/eng@2022-03-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.