Strategic Utility of Cross-Appeals in Appellate Litigation
Spotlight on “Smith & another v Kenya Deposit Insurance Corporation (As receiver of Chase Bank Limited) & another (Civil Appeal E022 of 2022) [2025] KECA 294 (KLR) (21 February 2025) (Judgment).”
AJS Advocates recently secured an important win at the Court of Appeal for Kenya Deposit Insurance Corporation in Smith & another v Kenya Deposit Insurance Corporation (As receiver of Chase Bank Limited) & another (Civil Appeal E022 of 2022) [2025] KECA 294 (KLR) (21 February 2025) (Judgment). In its judgment, the Court of Appeal re-affirmed that the Environment and Land Court (ELC) does not have jurisdiction to determine matters in which an injunction is sought to restrain the realization of securities like debentures or charges. The decision also endorsed that the ELC lacks jurisdiction to determine suits where the “dominant issue” in dispute is not related or is only peripherally related to the environment or occupation and use of, and title to, land.
This publication, shines a spotlight on the subtle strategic utility of cross-appeals in appellate litigation. Briefly, in the ELC suit, the Appellants (as Plaintiffs) had sought a declaration that they were not indebted to the Respondents, and a declaration that they were entitled to the equity of redemption of the Charge over its properties Gede/Kirepwe/B56 and Gede/Kirepwe/B57 (the suit properties). The Appellants also sought a permanent injunction restraining the sale or transfer of the suit properties; an order compelling the Respondents to execute a Discharge of the Charge and to release the said duly executed discharge of charge and the original title to the suit properties to the Appellants; USD 1,000,000 held by Chase Bank (Kenya) Limited together with accrued interest on the said amount; general damages for breach of contract; costs of the suit and interests.
The Appellants (as Plaintiffs) had also filed an interlocutory application before the ELC seeking interim injunction orders restraining any sale, transfer or alienation of the suit properties during the pendency of the suit.
On behalf of the Respondent, we filed a Notice of Preliminary Objection impugning the suit to be fatally incompetent since it was filed without leave of the court contrary to Section 56(2) of the Kenya Deposit Insurance Act. We also raised an objection on account of misjoinder as it was a suit against a statutory agent of a known principal Bank. The preliminary objection further challenged the ELC’s jurisdiction to entertain the suit, which we contended was commercial in nature suited for determination by the High Court.
In a Ruling delivered on 27th January 2022, the Judge of the superior court held that the ELC had jurisdiction to hear the suit because the Respondents (as Defendants) had in their filed statement of defence put the Appellants to strict proof of the use of the suit properties indicated in the Plaint. The trial judge disallowed all other grounds raised in the notice of preliminary objection save for the one on the suit being defective for having been filed without leave of the court. In the end, the judge struck out the suit for having been filed without first obtaining leave of the court.
Aggrieved, the Appellants moved the Court of Appeal to set aside the Judgment.. The Appellants contended on appeal that the necessity for leave was overblown as the failure to obtain leave was merely a procedural and not substantive error, which could be rectified by granting leave to correct the anomaly during the proceedings. The Appellants also faulted the ELC’s construction of the Kenya Deposit Insurance Act’s provisions with respect to the necessity of leave and its interpretation of what constitute an institution’s assets under the act.
Beyond the demerits of the appeal, we preferred a cross-appeal faulting the ELC judge’s finding that he had jurisdiction to determine the suit, and trivializing the Respondent’s objection on misjoinder.
At the hearing, we urged that the question of jurisdiction was so important that if the Court of Appeal was inclined to agree with our submissions and allow our cross-appeal that the ELC lacked the same, then it would not be necessary for the court to consider the issues raised by the Appellants in their appeal. The Court of Appeal, from the outset in its judgment, gave centrality to the issue of jurisdiction and, upon agreeing with our submissions that the ELC lacked the same, allowed our cross-appeal without delving much into other questions on issues of necessity of leave and impact of the misjoinder.
This decision illustrates the hallmarks of a well-executed cross-appeal. A cross-appeal filed in an appellate court serves several important and even strategic functions. Firstly is the function of the “preservation of rights”. A cross-appeal is in essence a suit where the respondent files their own appeal against the decision of a lower court, seeking a “better” outcome (as opposed to being content with a “good/okay” outcome) or additional relief. A cross-appeal allows a respondent to challenge specific parts of a judgment that they find unfavorable, even if they are generally satisfied with the overall outcome. In the suit under consideration, the Respondents had “won” before the ELC but the “win” before the Court of Appeal cements the ELC further.
Secondly, cross-appeals facilitate “comprehensive review” of the decision appealed from. A cross-appeal allows a party to ensure that the appellate court reviews all relevant issues, not just those raised by the original appellant, leading to a more comprehensive examination of the case and a possibly more favorable outcome. In the absence of a cross-appeal, the only grounds/issues the appellate court would concern itself with are those raised in the Memorandum of Appeal.
Thirdly, cross-appeals offer “protection against unfavorable outcomes”. A cross-appeal may be the only thing that mitigates the adverse impact of the appellate court deciding in favour of the Appellant on the appeal thereby overturning or modifying a decision that was initially favorable to the Respondent. This is true even for the suit under consideration. Had the court of appeal overturned the ELC’s ruling on the question of leave, the Appellants would have emerged victorious in the absence of the cross-appeal that also introduced the question of jurisdiction which earned the respondents a favorable outcome overall. The unique circumstances of each appeal ultimately determine the utility of a cross-appeal. As illustrated in preceding paragraphs, however, where appropriate, a cross-appeal begets the preservation of the respondent’s rights, a comprehensive review of the decision appealed from, and protection against unfavorable outcomes in high stakes cases where even the most infinitesimal advantage determines the suit in one’s favour.
