A bitter financing dispute over a Mercedes-Benz has suffered an unexpected legal twist.
Nyali Late Night Chemist and Medical Services Limited had challenged ABSA Bank Kenya PLC.
The company wanted protection against repossession of its Mercedes-Benz vehicle.
Instead, its appeal has collapsed before the High Court could examine those arguments.
Justice Ngaah Jairus struck out the appeal over one missing document: the formal court order.
The decision was delivered on August 7, 2026, at the Mombasa High Court.
Crucially, the judge did not rule that ABSA could repossess the vehicle.
He also did not determine whether the company had actually defaulted.
Instead, the court found that the appeal itself was improperly constituted.
Two Facilities
The dispute traces back to two separate financing arrangements signed during 2022.
ABSA financed the Mercedes under a July 28, 2022, letter of offer.
That facility was later varied through another agreement dated September 12, 2022.
Separately, ABSA advanced the company a KSh4.5 million term loan.
That second facility arose under a September 6, 2022, letter of offer.
The distinction between those facilities eventually became central to the dispute.
Nyali Late Night Chemist said it sought restructuring of both facilities.
It made that request through a letter dated February 27, 2023.
According to the company, ABSA neither accepted nor rejected the proposal.
The company then proceeded with payments based upon its proposed restructuring terms.
ABSA rejected that interpretation and maintained that no restructuring occurred.
The bank further maintained that the company remained in default under existing agreements.
It argued that contractual provisions permitted it to consolidate the company’s accounts.
ABSA also argued that default entitled it to recall both financing facilities.
Mercedes Fight
The looming repossession pushed Nyali Late Night Chemist into the magistrates’ court.
The company filed an application dated August 3, 2023, seeking temporary injunctive protection.
It wanted ABSA restrained from repossessing the Mercedes pending determination of the lawsuit.
Principal Magistrate Lucy Khahendi Sindani dismissed that application on June 6, 2024.
She found that the company remained in default, even under its proposed restructuring terms.
The magistrate also accepted ABSA’s contractual and legal right to consolidate accounts.
She consequently found that the company had failed to establish a prima facie case.
The company then appealed against that ruling before the High Court.
Its six grounds attacked the magistrate’s interpretation of the financing arrangements.
It argued that the two facilities remained separate contractual arrangements.
It further challenged the finding that it was actually in default.
But those substantive arguments never received their day before Justice Ngaah.
Instead, the High Court found a fundamental defect within the appeal record.
Missing Order
The problem appeared simple but carried significant legal consequences.
The company had included the magistrate’s ruling within its appellate record.
However, it had not extracted the formal order arising from that ruling.
Justice Ngaah found that omission fatal to the appeal before him.
The judge drew an important distinction between a ruling and its resulting order.
A ruling contains the court’s reasoning and decision concerning the parties’ dispute.
An order is the formal instrument giving legal effect to that decision.
An appellate court therefore needs the actual order before exercising appellate powers.
As Justice Ngaah reasoned, the court cannot reverse an order that remains absent.
The judge said compiling a proper record remains the appellant’s responsibility.
Filing a memorandum of appeal does not, by itself, complete the appellate process.
The challenged order must also appear within the properly constituted appellate record.
No Merits Ruling
The company could potentially have invoked Article 159 of the Constitution.
That provision discourages courts from elevating procedural technicalities above substantive justice.
Justice Ngaah, however, found this particular defect too fundamental for that argument.
He noted that some authorities have treated missing orders as curable procedural irregularities.
But he stressed that Article 159 cannot cure defects going to an appeal’s foundation.
The judge cited the Supreme Court’s warning against treating Article 159 as an automatic remedy.
He consequently concluded that the appeal lacked its essential legal foundation.
That finding brought the substantive dispute to an abrupt stop.
Justice Ngaah invoked the famous Lillian S principle that “jurisdiction is everything.”
Once the appeal was found incompetent, the court could not examine its substantive grounds.
The appeal was therefore struck out, with costs awarded against Nyali Late Night Chemist.
Yet the judgement did not finally settle the dispute between the company and ABSA.
The judge expressly stated that the court had made no determination concerning the appeal’s merits.
He also observed that the missing order could still be extracted and placed properly.
If timing becomes an issue, the company may seek relief under section 79G.
That leaves open the possibility of another properly constituted appeal.
The earlier proceedings had already shown the Mercedes remained central to the dispute.
In September 2024, Justice J.K. Ng’arng’ar had temporarily restrained ABSA’s repossession.
That protection was conditional upon a KSh3.575 million security deposit.
The latest judgement therefore represents a procedural setback, rather than a substantive victory.
ABSA has won this round, but the underlying financing questions remain unresolved.
The real battle still concerns default, restructuring and account consolidation between both parties.
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