The Court of Appeal has rejected an application by Stanbic Bank seeking to suspend the hearing of a case in which an airline is seeking damages for losses allegedly suffered after its bank accounts were frozen about a decade ago.
Appellate judges Mumbi Ngugi, Pauline Nyamweya and Weldon Korir said while the lender had an arguable case, they were not persuaded that the intended appeal would be rendered futile if the proceedings at the High Court were not stopped.
Air Afrik sued the lender for damages after its plane leasing contract was allegedly cancelled by the South Sudan government following the freezing of its accounts in 2016.
The lender moved to the Court of Appeal after trial judge, Nixon Sifuna, dismissed its application for the judge to disqualify himself from the case.
“We are thus not persuaded that the applicant has established that should the intended appeal eventually succeed, it will be rendered nugatory,” said the judges.
The court noted that the proceedings before the High Court commenced in 2016, and were at an advanced stage.
The judges added that evidence put forth by the parties showed that various applications had been made before the trial court, contributing to the delay in the finalisation of the suit.
Justices Ngugi, Nyamweya, and Korir said the High Court’s doors would remain open to the parties if the appeal (by Stanbic) was successful.
“An order for rehearing of the matter is available as a remedy, saving the appeal from being futile or worthless,” said the judges.
The lender faulted Justice Sifuna for allegedly applying the wrong legal principles on recusal, review of a previous ruling and misrepresentation of facts.
According to the court, the issues raised in the intended appeal required a review and assessment of the ruling before affirming it or setting it aside.
In the dispute, the airline sued the bank, claiming that it suffered losses after a plane leasing contract of $20 million with the South Sudan government was terminated following the withholding of funds.
Air Afrik, through its managing director Eric Lugalia, accused Stanbic Bank of freezing its accounts and deducting money without authorisation after 14 months, resulting in the airline losing its lease.
The airline was a customer of the bank and operated an account at its Juba branch in South Sudan.
On February 5, 2016, the bank received a credit note from the Bank of South Sudan, advising it that the airline’s clearing and settlement account at the central bank had been credited with $7.22 million (about Sh931 million).
The lender went ahead and credited Air Afrik’s bank account with the amount.
According to Stanbic, the airline allegedly carried out high-value transactions on its account, withdrawing a total of $1.1 million (Sh141 million).
The lender said it later realised that no actual funds had been remitted by BoSS as alleged and reversed the funds to prevent further withdrawals since the funds ‘were paid in error”.
The parties had tried unsuccessfully to resolve the dispute before Air Afrik lodged a complaint with the Central Bank of Kenya (CBK) and later filed a case in the High Court.
