Samuel Kamau Macharia & 6 others v Family Bank Ltd & 5 others
The bottom line
#Kenya's Court of Appeal refused to pause High Court orders managing an insurer, ruling that a stay only preserves things, not reverses them.
What this practically means
#Executive summary
#Key legal issues
#Scope of rule 5(2)(b) jurisdiction
The jurisdiction under rule 5(2)(b) is original, independent and discretionary, and is essentially a tool of preservation of the subject matter of an appeal or intended appeal.
The Court restated the settled principles, citing Githunguri v Jimba Credit Corporation, Equity Bank v West Link Mbo and the Supreme Court's decision in the TSC case, that the rule illuminates the Court's inherent discretionary jurisdiction to preserve the substratum of an appeal, and that it arises only where a notice of appeal or appeal has been lodged.
Competence of a receiver-manager prayer within a stay application
A prayer for appointment of receiver managers that does not arise from the ruling intended to be appealed against cannot be granted in a rule 5(2)(b) application.
The Court held that the purpose of a stay application is preservation of the subject matter so that a successful appeal is not nugatory. Because the receiver-manager prayer does not arise from the ruling to be appealed against, it is substantive in nature and outside the purview of rule 5(2)(b), and the Court declined it.
Arguability of the intended appeal
The intended appeal is arguable because the shareholding of the 1st respondent, which the applicants contend was finally determined at the interlocutory stage, is a non-frivolous issue.
The Court emphasised that at the stay stage it must not make definitive findings of fact or law, only a prima facie view. Although the respondents argued that shareholding was the subject of other suits, the Court found the issue central to the proceedings and not frivolous, hence arguable, without tying the hands of the bench that will hear the appeal.
Nugatory-ness and the public interest in insurance regulation
The applicants failed to show the intended appeal would be rendered nugatory; and the public interest in the orderly management of an insurer covering mandatory third-party liability weighed against a stay.
The Court noted the interim board was appointed only pending the suit and a forensic audit ordered, and the applicants could still approach the trial court if mismanagement occurred. Applying the overriding objective and proportionality, and citing Munya, the Court held that staying the orders would not serve the public interest, given the incessant changes in the insurer's management before determination of the real controversy.
Legal principles established
#- Rule 5(2)(b) is a preservation jurisdiction that safeguards the substratum of an appeal; a stay does not reverse, annul or undo what has already been done, but merely suspends performance to preserve the status quo pending appeal.
- A substantive prayer that does not arise from the ruling intended to be appealed against, and that is not directed at preserving the subject matter of the appeal, cannot be granted under rule 5(2)(b).
- In exercising its discretionary jurisdiction under rule 5(2)(b), the Court must apply proportionality and may take into account the interests of the public, including persons not directly represented in the litigation, when deciding whether to stay orders.
Court orders
#- 1.Prayer (2) of the Motion seeking appointment of receiver managers is declined as falling outside rule 5(2)(b)
- 2.The Notice of Motion dated 20th November 2024 is dismissed
- 3.Costs of the application to be in the intended appeal
- On appeal from
- High Court of Kenya (Commercial and Tax Division)
- HCCC No E328 of 2024
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules, 2010 (derived from Article 164(3) of the Constitution) and section 63 of the Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Samuel Kamau Macharia & 6 others v Family Bank Ltd & 5 others", Case Analysis (2025). Notice of Motion dated 20th November 2024 (intended appeal from High Court Commercial and Tax Division Case No E328 of 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/697/eng@2025-04-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.