[2006] KEHC 899 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Misc Appli 751 of 2004

AHMEDNASIR ABDIKADIR & CO. ADVOCATES…………………………….RESPONDENT

VERSUS

NATIONAL BANK OF KENYA LTD……..................................................…………..APPLICANT

R U L I N G

The applicant has sought leave to appeal against the decision made on 8th May 2006. It has also sought an order for stay of further proceedings pending the hearing and determination of the intended appeal.

As the respondent had no objection to the applicant being granted leave to appeal, I do hereby grant the same.

As regards the application for stay of proceedings, the applicant submits that it would be in the interests of justice to grant the order sought. But the respondent holds the very opposite view.

However, it is significant to note that the respondent readily conceded that the intended appeal was arguable. And what is it that the said intended appeal is about?

The ruling in question held that the reference which had been filed by the applicant, was filed way outside the prescribed period. For that reason, the court proceeded to dismiss the reference.

The applicant believes that the court was mistaken in arriving at the conclusion that the reference was filed late. It believes that the time prescribed should be calculable from the date when the ruling was provided to the applicant, as opposed to the date when the ruling on the taxation was pronounced by the learned taxing officer.

Secondly, the applicant holds the view that even if the reference had been filed late, the court should have had it struck out, instead of dismissing it.

Being of that mind, the applicant lodged its Notice of Appeal on 19th May 2006. In other words, the Notice was filed timeously.

Having done so, the applicant now asks that there be a stay of any further proceedings pending the hearing and determination of its intended appeal. At this point, it is perhaps appropriate to note that the respondent herein had filed an application for summary judgement, pursuant to the provisions of Section 51 (2) of the Advocates Act. That application was filed on 30th January 2006, and it had been set down for hearing on 6th July 2006. The application was however adjourned, at the behest of the applicant. And, by this application, the applicant now wishes to have the application for summary judgement put on hold until the intended appeal is heard and determined.

It is said that if the summary judgement application was heard and determined before the intended appeal, the court is likely to award judgement in favour of the respondent, for the taxed costs, amounting to Kshs. 2,964,560/=. If that happened, the applicant would be compelled to pay out the said sum, instead of paying out no more than KShs. 200,000/= which the applicant would have had to pay out if the court had enforced the Agreement which the parties had, on the issue of costs.

If thereafter, the applicant’s intended appeal was successful, it is contended that, a suit would have to be instituted for the recovery of the money already paid out.

But, the respondent feels that there would be no need for the applicant to file suit, for the recovery of any sums which it may have paid out to the respondent in satisfaction of the judgement founded on the certificate of taxation. The reason for that contention is that the respondent is ready to provided on undertaking to the applicant, to refund any such money as may ultimately be found to have been paid out wrongfully.

Furthermore, the respondent emphasized the fact that the applicant had not as much as suggested, that the respondent lacked capacity to reimburse the costs, if it should become necessary so to do.

If anything, the respondent points out that this case is about Advocate/Client costs, which he describes as the lifeline of an advocate. Therefore, to deprive the respondent of its costs for the duration of the intended appeal would be more prejudicial than the process which the applicant may have to go through in order to reclaim the costs, in the event that its intended appeal was successful: that is the respondent’s position.

The respondent placed reliance on the decision in HOUSING FINANCE COMPANY of KENYA LIMITED V EMBAKASI YOUTH DEVELOPMENT PROJECT, HCCC No. 1068 of 2001as authority for the proposition that if an advocate gave an undertaking to reimburse costs, the court should not restrain it from enforcing an order for costs.

In that case, the court declined an application for stay pending appeal. Instead, it accepted the undertaking of the respondent’s advocate to refund the costs if the appeal was successful against their client.

In arriving at that decision the learned judge found guidance from the following excerpt, from MORGAN & ELFORD C.A. 1876 CD Vol IV page 352:

“A party to whom costs have been ordered to be paid will not be restrained from enforcing the order pending an appeal to the House of Lords, if his solicitors undertake to refund if the order should be reversed.”

In both the authority relied upon as well as in the case HCCC No. 1068 of 2001, the issue involved party and party costs. To that extent, that case is distinguishable from the one before me. Secondly, the persons who were required to give undertakings were the advocates for the parties, whereas in this case the person offering to give an undertaking is actually a party to the proceedings.

In G. R. MANDAVIA V THE COMMISSIONER of INCOME TAX [1957] E.A. 1 at page 2, the Court of Appeal unanimously said:

“It is contrary to the usual practice, on an application of this nature, to stay any direction for the payment of costs, provided that the solicitor who is to receive the costs gives an undertaking to refund them if called upon to do so.”

Once again, that case involved party and party costs; and the undertaking was to be given by the solicitor for one of the parties.

But then, the respondent herein is a firm of advocates. Therefore, it is conceiveable that they could be required to give their professional undertaking, in their capacity as advocates. In principle, I find nothing objectionable about that course of action. However, that still begs the question as to whether the interests of justice would be best served by the grant or the refusal of the order for stay.

In GLOBAL TOURS & TRAVELS LIMITED – WINDING –UP CAUSE NO. 43 of 2000, the HON. RINGERA J. (as he then was) expressed himself thus, on the principles governing applications for stay of proceedings;

“As I understand the law, whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interests of justice. Such discretion is unlimited save that by virtue of its character as a judicial discretion it should be exercised rationally and not capriciously or whimsically. The sole question is whether it is in the interest of justice to order a stay of proceedings and, if it is, on what terms it should be granted. In deciding whether to order a stay the court should essentially weigh the pros and cons of granting the order. And in considering those matters it should bear in mind such factors as the need for expeditious disposal of cases, the prima facie merits of the intended appeal, in the sense of not whether it will probably succeed or not but whether it is an arguable one, the scarcity and optimum utilization of judicial time and whether the application has been brought expeditiously.”

I do share the above-cited views, and wholly adopt the same.

And in applying the principles, I first note the respondent’s concession that the intended appeal was arguable. Secondly, I note that even though the costs have been taxed, the court has not yet granted judgement in respect thereof. It is after the court grants judgement that the applicant would be obliged to pay the costs to the respondent. For now, the applicant does not yet have to pay the costs.

So, I ask myself if it is best to allow the respondent to proceed and get judgement, in the knowledge that the intended appeal against the order which lead to the application for summary judgement, may upset such judgement. To my mind, the answer is in the negative, as that would not constitute an optimum utilisation of the limited judicial time.

Of course, by keeping the respondent from prosecuting the summary judgement application implies that the advocates are kept away from the benefit of the costs. That is certainly prejudicial to their interests. However, after weighing the pros and cons of granting the order, I am satisfied that justice will be best served by the grant of an order for stay of proceedings.

However, when it is borne in mind that the applicant’s case is that the costs payable to the respondent should be in the sum of KShs. 200,000/=, it is evident that the respondent is entitled to at least the said sum. Accordingly, I direct the applicant to pay to the respondent the sum of KShs. 200,000/= within the next 30 days from today.

Meanwhile, there shall be a stay of any further proceedings in this case until the intended appeal is heard and determined, if the applicant complies with the order to pay KShs. 200,000/=.

The costs of this application shall abide the outcome of the intended appeal.

Dated and Delivered at Nairobi, this 18th day of October 2006.

FRED A. OCHIENG

JUDGE