Zingo Investment Ltd v National Bank of Kenya Ltd (Civil Application E164 of 2024) [2025] KECA 101 (KLR)
The bottom line
#The Court of Appeal refused to stop the bank from selling Zingo's charged properties because pledged assets can be sold on default without ruining an appeal.
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, if the stay is not granted, the intended appeal, if successful, will be rendered nugatory
- 3.Whether the alleged financial distress and sale of the Bank renders the appeal nugatory
Key legal issues
#Twin principles for stay under Rule 5(2)(b)
The court restated the settled test: arguability and nugatory-ness, assessed on the facts of each case.
The court adopted the long-standing formulation in Trust Bank Limited v Investech Bank Ltd, confirming that the Rule 5(2)(b) jurisdiction is original and discretionary, and that both limbs must be satisfied before stay can issue.
Whether sale of charged security renders an appeal nugatory
No. By offering the properties as security, Zingo exposed them to sale on default; their sale cannot imperil the appeal even if it succeeds.
The court reasoned that the very purpose of charging assets as security is to permit their realization on default, so a sale pursuant to that charge does not create the irreversibility that the nugatory limb is designed to prevent. The applicant also adduced no evidence that the Bank could not repay the value of the assets if the sale were later held wrongful.
Effect of the Bank's alleged financial distress and imminent sale
Although an allegation of financial inability ordinarily calls for rebuttal evidence by the Bank, Zingo's own evidence of the sale to Access Bank PLC (a financially sound purchaser) extricated the Bank, and section 9 of the Banking Act preserves securities and obligations on transfer.
The court accepted the shift-of-evidence principle from National Industrial Credit Bank v Wasike and Kenya Hotel Properties, but found the applicant's own evidence undermined its case: the Kshs.13.2 billion sale to Access Bank PLC showed no weakness, and the Banking Act protects creditors' securities on transfer, allaying any nugatory fears.
Legal principles established
#- To succeed on an application for stay under Rule 5(2)(b), an applicant must show the appeal or intended appeal is arguable and that, if stay is not granted, the appeal will be rendered nugatory; these principles are considered against the facts of each case.
- A borrower who has offered properties and assets as security for a loan opens those assets to sale upon default, so their sale cannot of itself render an appeal nugatory.
- Where an applicant alleges that a respondent lacks financial ability to satisfy a judgment, the evidential burden shifts to the respondent to rebut that allegation.
- Under section 9 of the Banking Act, upon an approved transfer of assets and liabilities, the receiving institution assumes the same rights and obligations as the transferor, and existing securities and guarantees remain in full force, so a bank's sale or amalgamation does not defeat claims against it.
Court orders
#- 1.Dismissal of the notice of motion dated 5th April 2024
- 2.Costs of the application to the Bank
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules, 2022 (stay of execution pending intended appeal)
Relief refused
#Injunction restraining the Bank from exercising statutory power of sale over LR No. 9363/98 (IR No. 14628/98), LR Nos. 209/8628 and related chattels/debentures pending the intended appeal
The applicant failed to demonstrate that the appeal would be rendered nugatory if the charged properties and chattels were sold; having offered the assets as security, their sale could not imperil the outcome of the intended appeal, and fears arising from the Bank's sale were allayed by section 9 of the Banking Act and absence of evidence of the purchaser's financial weakness.
Costs
Application dismissed with costs to the Bank.
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.
Ultimately, we dismiss the notice of motion dated 5th April 2024 with costs to the Bank.
to succeed an applicant has to show firstly, that his appeal or intended appeal is arguable, or put another way, it is not frivolous; and secondly, that unless he is granted a stay the appeal or intended appeal, if successful, will be rendered nugatory
having offered the properties and other assets as security for borrowing, Zingo opened up those assets to the possibility of sale in the event of default
once his client had made an allegation questioning the financial ability of the Bank, then ordinarily, the Bank ought to have led some evidence to debunk that allegation
Issues in the judgment
#The judgment states the notice of appeal is dated 10th March 2024 while the impugned judgment was delivered on 14th March 2023; the application is dated 5th April 2024 yet refers to a 45 days' auction notice issued on 20th June 2024, an internal chronological inconsistency in the dates as printed.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Zingo Investment Ltd v National Bank of Kenya Ltd (Civil Application E164 of 2024) [2025] KECA 101 (KLR)", Case Analysis (2025). Not stated in judgment (notice of motion dated 5th April 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/101/eng@2025-01-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.