Policyholders Compensation Fund v Insurance Regulatory Authority & another
The bottom line
#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 under the first limb of the Rule 5(2)(b) test
- 2.Whether the success of the intended appeal would be rendered nugatory if stay is not granted (second limb)
- 3.What conditions, if any, should attach to a stay of execution
Key legal issues
#Arguability of the intended appeal
The first limb was satisfied: the tension between the Statutory Manager's expense powers under the Insurance Act and the absolute divestment of asset control under the Insolvency Act raises a novel legal conflict, and the liquidator's capacity under Section 464 deserves appellate scrutiny.
The court applied the settled twin-pronged Rule 5(2)(b) test. It found a single bona fide triable issue sufficient, identifying a novel conflict between the Insurance Act (Section 67F expense settlement) and the Insolvency Act (Sections 429 and 464 divestment and liquidator capacity), which merited substantive appellate consideration.
Nugatory aspect
The second limb was satisfied because payment to a liquidator would place the funds into the general pool for immediate distribution, making recovery impossible if the appeal succeeds.
Taking judicial notice that the 2nd respondent is in liquidation, the court reasoned that the decretal sum, if paid to the Interim Liquidator, would enter the general pool for winding-up claims and vanish into the liquidation process, rendering a successful appeal nugatory.
Form of relief - conditional stay
Stay was granted on condition that the applicant deposit the entire decretal sum into a joint interest-earning account within 60 days, failing which the stay lapses automatically.
Balancing competing interests, the court preserved the subject matter of the appeal by adopting its standard practice of a conditional security deposit, guaranteeing funds remain safe, traceable and ready for release to the successful party, with automatic lapse on default.
Legal principles established
#- An applicant under Rule 5(2)(b) must establish that the intended appeal is arguable and that, absent stay, its success will be rendered nugatory.
- An arguable appeal need not succeed; a single triable issue suffices.
- The Court's standard practice is to grant conditional stay by directing disputed decretal sums be secured in a neutral interest-bearing escrow repository.
Court orders
#- 1.Stay of execution of the High Court ruling and orders of 25th February 2025 granted pending hearing and determination of the intended appeal
- 2.Stay conditional upon the applicant depositing Kshs.36,074,952.40 into a joint, interest-earning bank account in the names of the Advocates for both parties within sixty (60) days
- 3.In default of compliance, the stay shall automatically lapse and stand dismissed, leaving the 2nd respondent at liberty to execute
- 4.Costs of the application to abide the outcome of the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya (Commercial and Tax Division) at Nairobi
- HCCC Insolvency Petition No. E077 of 2023
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules, 2022
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.
Consequently, the applicant's Notice of Motion dated 18th March 2025 is hereby allowed on the following terms:
An order of stay of execution of the ruling and orders of the High Court delivered on 25th February 2025 is hereby granted pending the hearing and determination of the applicant's intended appeal.
In default of compliance with the condition set out in condition (2), the stay of execution order shall automatically lapse and stand dismissed, leaving the 2nd respondent at liberty to execute the decree and orders of the High Court.
The costs of this application shall abide the outcome of the intended appeal.
an arguable appeal is not one that must necessarily succeed; it is sufcient if it raises a single triable issue
Issues in the judgment
#Judge name inconsistency between coram and signature block
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Policyholders Compensation Fund v Insurance Regulatory Authority & another", Case Analysis (2026). Civil Appeal (Application) E201 of 2025. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1747/eng@2026-09-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.