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Court of AppealDismissedCivil Application (Notice of Motion dated 21st January 2021) arising from HCCC No. 4077 of 1994 (consolidated with HCCC No. 388 of 1998)

United Airlines Limited & 2 others v Kenya Commercial Bank Limited (Civil Application E016 of 2021) [2025] KECA 806 (KLR)

Court of Appeal
9 May 2025
3,486 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal refused to pause execution of a Kshs. 33 million judgment because the applicants never showed the bank couldn't refund the money if their appeal succeeded.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Musinga, Ngugi and Odunga, JJA) on a Notice of Motion dated 21st January 2021 in which United Airlines Limited and two guarantors sought a stay of execution of a High Court judgment in consolidated suits (Civil Suit No. 4077 of 1994 and HCCC No. 388 of 1998). The High Court had dismissed United Airlines' claim against Kenya Commercial Bank and entered judgment for the Bank against all applicants jointly and severally for Kshs. 33,480,950.70 with compound interest at 13.75%, with costs. The applicants' application was governed by rule 5(2)(b) of the Court of Appeal Rules, whose twin tests are arguability and nugatory-ness. On the first limb, the Court accepted that the role and status of the Royal Bank of Canada in the loan transaction - which the High Court had treated as the 1st applicant's agent - may well be crucial, making the appeal arguable. On the second limb, however, the applicants failed. The Court held that a decree-holder's mere intention to execute cannot without more render an appeal nugatory, and that allegations of asset attachment, insolvency risk, breach of contractual obligations and loss of livelihood, raised only in written submissions, should have been deposed to in the supporting affidavit. The applicants never alleged that the Bank would be unable to refund the decretal sum or that payment would be onerous on their commercial viability. Applying Caneland Ltd v Delphis Bank Ltd, the Court found the nugatory onus undischarged and dismissed the application with costs to the respondent. The intended appeal remains pending before the Court of Appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the intended appeal is arguable
  2. 2.Whether the intended appeal will be rendered nugatory if stay of execution is not granted

Key legal issues

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01

Arguability of the intended appeal

Holding

The Court found the intended appeal arguable on the single ground concerning the status and role of the Royal Bank of Canada in the transaction, holding that a single bona fide arguable ground suffices and no further grounds need be sought.

Reasoning

The applicants contended that the learned Judge erred in finding that the Royal Bank of Canada was the 1st applicant's agent without probative evidence, when the record showed it was simply the aircraft supplier's bank. The Court agreed that the status and role of that bank may well be crucial to the appeal. On the settled principle that a single bona fide arguable ground suffices, the Court did not need to look for further grounds.

p. 5
02

Whether the intended appeal would be rendered nugatory absent stay

Holding

The applicants failed on this limb. Their affidavit only deposed to apprehension that the respondent would execute the decree before the appeal was determined; they never alleged the respondent would be unable to refund the decretal sum or that payment would be onerous on them.

Reasoning

The Court held that a decree-holder's intention to execute is a legal right which cannot, without more, render an appeal nugatory. Allegations of asset attachment, insolvency risk, breach of contractual obligations and loss of livelihood were raised only in written submissions, not in the affidavit, and could not avail the applicants. Following Caneland Ltd v Delphis Bank Ltd, the onus of showing inability to refund lies on the applicant and was not discharged.

Legal principles established

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  • To succeed on a rule 5(2)(b) application, an applicant must satisfy the court on both twin principles: that the appeal is arguable and that it will be rendered nugatory absent stay.
  • The mere fact that a decree-holder intends to execute a decree, being a right bestowed by law, cannot by itself render an intended appeal nugatory; the applicant must establish other factors showing execution will irreparably negative its rights as the successful party in the appeal.
  • Where an applicant alleges that an appeal will be rendered nugatory because the respondent cannot refund the decretal sum, the burden lies on the applicant to lay a basis for that contention, and such factual allegations must be deposed to in a supporting affidavit, not raised for the first time in submissions.
  • An applicant need not investigate the respondent's bank accounts; it suffices to swear, upon reasonable grounds, that the respondent will not be in a position to refund the decretal sum.

Court orders

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  1. 1.Dismissal of the applicants' Notice of Motion dated 21st January 2021 seeking stay of execution pending appeal
  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
Civil Suit No. 4077 of 1994 (consolidated with HCCC No. 388 of 1998)
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules - stay of execution pending intended appeal
Consolidated with
HCCC No. 388 of 1998 (consolidated in the High Court with Civil Suit No. 4077 of 1994)

Relief refused

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Stay of execution of the High Court judgment and decree pending the hearing and determination of the intended appeal

The applicants failed to satisfy the second limb of the rule 5(2)(b) test - they did not demonstrate, by affidavit evidence, that the intended appeal would be rendered nugatory if execution proceeded, as they did not allege that the respondent would be unable to refund the decretal sum or that payment would be onerous on them

p. 7

Costs

Costs of the application awarded 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.

Consequently, as the applicants have failed to meet the threshold for grant of stay of execution pending an appeal under rule 5(2)(b) of this Court’s Rules, we dismiss the Notice of Motion dated January 21, 2021 with costs to the respondent.
p. 7Final orders - dismissal of stay application with costs
It is so ordered.
p. 7Disposition
the mere fact that the respondent intends to execute the decree, which is a right bestowed upon it by law, cannot, by itself and without more, be said to render an intended appeal nugatory.
p. 6Nugatory test - execution alone is insufficient
Where the allegation is that the respondent will not be able to refund the decretal sum if paid in satisfaction of the decree, the burden is upon the applicant to lay a basis for that contention.
p. 5Burden of proof on impecunity allegations
We therefore find that the intended appeal is arguable and we do not have to look for further grounds.
p. 5Arguability - single bona fide ground suffices

Issues in the judgment

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minor

The ruling refers to the supporting affidavit as sworn by Elkana Mugala Aluvale, the 1st applicant's director, but later quotes averments attributed to 'the 2nd applicant', an inconsistency in the record of who deponed to the nugatory averments.

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, "United Airlines Limited & 2 others v Kenya Commercial Bank Limited (Civil Application E016 of 2021) [2025] KECA 806 (KLR)", Case Analysis (2025). Civil Application (Notice of Motion dated 21st January 2021) arising from HCCC No. 4077 of 1994 (consolidated with HCCC No. 388 of 1998). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/806/eng@2025-05-09

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