[2022] KEHC 14091 (KLR)

Bonito Hotels v OBG Security Limited (Miscellaneous Case E061 of 2022) [2022] KEHC 14091 (KLR) (17 October 2022) (Ruling)

Neutral citation: [2022] KEHC 14091 (KLR)

Republic of Kenya

In the High Court at Bungoma

Miscellaneous Case E061 of 2022

DK Kemei, J

October 17, 2022

Between

Bonito Hotels

Applicant

and

OBG Security Limited

Respondent

Ruling

1. By a notice of motion dated July 11, 2022 the applicant herein substantially seeks stay of execution of the warrant of attachment and sale issued in Bungoma CMCC No 109 of 2019 pending the hearing and determination of this application and the intended appeal. He further seeks an order for leave to file an appeal out of time.

2. The said application is supported by the affidavit sworn on July 11, 2022 by Alfred Agengo, the General Manager of Applicant herein. According to him, the trial court set a date for judgement on September 14, 2021 but that the same was rescheduled for September 23, 2021. On September 23, 2021 the trial court directed that the judgement would be delivered on September 30, 2021 but was subsequently postponed to November 12, 2021 then to December 3, 2021. On December 3, 2021 the trial court deferred the judgement to January 17, 2021 but still failed to deliver its judgement and further directed that the same will be delivered on notice. It was averred that the applicant did not receive any notice of delivery of judgement. On July 1, 2022 the Applicant was served with proclamation notice from the firm of Kuronya & Kuronya Auctioneers threatening to attach its motor vehicle registration number xxxx and tools of trade including the furniture and assorted utensils.

3. It was further deposed that the delay to file the appeal within time was occasioned by the failure of service of judgement notice upon it’s Advocates on record by the trial court.

4. The Applicant disclosed that it plans to file an appeal out of time against the judgement delivered on March 28, 2022 and that the delay was not deliberated.

5. In opposing the application, the Respondent swore an affidavit on July 18, 2022 in which it was deponed inter alia; that the application is an afterthought by the applicant meant to frustrate the respondent from enjoying the fruits of the judgement; that the applicant had earlier promised to settle the decree only to turn around and lodge the present application; that the applicant has not given proper reason for the delay in lodging the appeal in time; that the applicant has not satisfied the conditions imposed by Order 42 Rule 6(2) of the Civil Procedure Rules; that the applicant has not furnished security for the due performance of the decree; that the order of stay of execution, if granted, then it ought to be conditional with terms that the Applicant pays the Respondent half of the decretal sum together with costs and the balance be deposited in an interest earning joint account in the names of both counsel within a reasonable period pending the outcome of the appeal.

6. Parties canvassed the application by way of written submissions. The parties duly filed and exchanged the same.

7. I have considered the application, the supporting affidavit, the grounds of opposition and the submissions filed as well as the authorities relied upon. The two issues for determination are: whether these court should grant the applicant leave to appeal out of time and whether this court should grant an order of stay of execution pending determination of the intended appeal.

8. On the first issue, section 79G of the Civil Procedure Act provides that:Every appeal from a subordinate court to the High Court shall be filed within a period of thirty days from the date of the decree or order appealed against, excluding from such period any time which the lower court may certify as having been requisite for the preparation and delivery to the appellant of a copy of the decree or order:Provided that an appeal may be admitted out of time if the appellant satisfies the court that he had good and sufficient cause for not filing the appeal in time.

9. Therefore, an applicant seeking enlargement of time to file an appeal or admission of an already filed appeal must show that he has a good cause for doing so, since as was held in Feroz Begum Qureshi and Another v Maganbhai Patel and Others [1964] EA 633, there is no difference between the words 'sufficient cause' and 'good cause'. It was therefore held in Daphne Parry v Murray Alexander Carson [1963] EA 546 that though the provision for extension of time requiring 'sufficient reason' should receive a liberal construction, so as to advance substantial justice, when no negligence, nor inaction, nor want of bona fides, is imputed to the appellant, its interpretation must be in accordance with judicial principles. If the appellant had a good case on the merits but is out of time and has no valid excuse for the delay, the court must guard itself against the danger of being led away by sympathy, and the appeal should be dismissed as time-barred, even at the risk of injustice and hardship to the appellant.

10. As to the principles to be considered in exercising the discretion whether or not to enlarge time in First American Bank of Kenya Ltd v Gulab P Shah & 2 Others Nairobi (Milimani) HCCC NO 2255 of 2000 [2002] 1 EA 65 the court set out the factors to be considered in deciding whether or not to grant such an application and these are (i). the explanation if any for the delay; (ii). the merits of the contemplated action, whether the matter is arguable one deserving a day in court or whether it is a frivolous one which would only result in the delay of the course of justice; (iii). Whether or not the Respondent can adequately be compensated in costs for any prejudice that he may suffer as a result of a favourable exercise of discretion in favour of the applicant.

11. In this case the court notes that the Appellant’s memorandum of appeal was filed on May 16, 2022 yet the judgement appealed from was delivered by the lower court on August 16, 2021, which was six months after the judgement. By any standards six months in rectifying a default is not inordinate delay. In an application for extension of time, where the court is being asked to exercise discretion, there must be some material before the court to enable its discretion to be so exercised. Once there is non-compliance, the burden is upon the party seeking indulgence to satisfy the court why the discretion should nevertheless be exercised in his favour and the rule is that where there is no explanation, there shall be no indulgence. See Ratman vs Cumarasamy [1964] 3 All ER 933; Savill vs Southend Health Authority [1995] 1 WLR 1254 at 1259.

12. Section 79G of the Civil Procedure Act requires that before the court enlarges the time for appealing, the Applicant must satisfy the court that he had good and sufficient cause for not filing the appeal in time. In Alibhhai Musajee vs. Shariff Mohammed Al-Bet Civil Appeal No 283 of 1998, the Court of Appeal held that whereas the Civil Procedure Act allows for extension of time for filing appeal, if good and sufficient cause shown, failure to act does not constitute a good or sufficient cause.

13. In this case the Applicant claims that the trial court after several postponement of delivery of judgement, directed on January 17, 2022 that judgement shall be delivered on notice. The Applicant contended that its Advocates never received any notice that judgement would be delivered on March 28, 2022 and hence the delay to file the appeal was not deliberate as the same judgement was delivered in the absence of parties.

14. Article 48 of theConstitution guarantees every person access to justice, in addition, under Article 50(1) of theConstitution, every person has the right to have any dispute that can be resolved by the application of law decided in a fair and public hearing before a court or, if appropriate, another independent and impartial tribunal or body.

15. The ultimate goal and purpose of the justice system is to hear and determine disputes fully. It follows that no person who has approached the court seeking an opportunity to ventilate their grievances fully should be locked out. In the instant case, the applicant filed the appeal one day late and has approached this court for extension of time as stipulated in section 79G of the Civil Procedure Act, the proviso thereof. Reasons or no reasons for that delay, it is before the court seeking to be granted a chance to agitate its appeal challenging the judgment of the lower Court.

16. There is no evidence that the application is an afterthought or how the same is intended to abuse court process. Further, it is not uncommon for judgement to be delivered in the absence of parties as was the alleged case herein. The Applicant alleges that its Advocates never received the requisite notice of delivery of judgement and they only learnt of the same when the Respondent served them with warrants of sale and attachment. As per the time the Applicant became aware of the judgement and the swift action to file this application, it is clear that the applicant is desirous of pursuing an appeal. There is no evidence to demonstrate what prejudice the Respondent will suffer if the applicant is granted extension of time since costs can adequately compensate the respondent in any event.

17. No doubt, the discretion of this court to enlarge time for filing of a late appeal is unfettered. However, that discretion must be exercised judiciously and not capriciously. On the material placed before me and supported by the above decisions, I am satisfied that the six months’ delay is not inordinate or unreasonable and therefore failure to establish sufficient cause or reason is not a reason for this court to fetter its discretion to lock the door of justice to the Applicant. This is not to say that this court would condone or forgive inordinate delays but that it must do whatever is necessary to rectify mistakes where it serves the interests of justice.

18. For all the above reasons, I find and hold that the application for enlargement of time to file its memorandum of appeal is hereby allowed. The Applicant to have the same filed and served to the respective parties within 14 days from the date hereof challenging judgment in Bungoma CMCC No 109 of 2019.

19. On the 2nd issue, Order 42 rule 6(1) and (2) of the Civil Procedure Rules provides as follows:'(1)No appeal or second appeal shall operate as a stay of execution or proceeding under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.(2)No order for stay of execution shall be made under subrule (1) unless –(a)The court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; and(b)Such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant.'

20. In Vishram Ravji Halai v Thornton & Turpin Civil Application No Nai 15 of 1990 [1990] KLR 365, the Court of Appeal held that whereas the Court of Appeal’s power to grant a stay pending appeal is unfettered, the High Court’s jurisdiction to do so under Order 41 rule 6 of the Civil Procedure Rules is fettered by three conditions namely, establishment of a sufficient cause, satisfaction of substantial loss and the furnishing of security. Further the application must be made without unreasonable delay. To the foregoing I would add that the stay may only be granted for sufficient cause and that the court in deciding whether or not to grant the stay and that in light of the overriding objective stipulated in sections 1A and 1B of the Civil Procedure Act, the court is no longer limited to the foregoing provisions. The courts are now enjoined to give effect to the overriding objective in the exercise of its powers under the Civil Procedure Act or in the interpretation of any of its provisions. According to section 1A (2) of the Civil Procedure Act:'The court shall, in the exercise of its powers under this Act or the interpretation of any of its provisions, seek to give effect to the overriding objective.'

21. Under section 1B some of the aims of the said objective are; the just determination of the proceedings; the efficient disposal of the business of the court; the efficient use of the available judicial and administrative resources; and the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

22. In Stephen Boro Gitiha v Family Finance Building Society & 3 Others Civil Application No Nai 263 of 2009, Nyamu, JA on 20/11/09 held inter alia that the overriding objective overshadows all technicalities, precedents, rules and actions which are in conflict with it and whatever is in conflict with it must give way

23. It therefore follows that all the pre-Overriding Objective decisions must now be looked at in the light of the said provisions. This does not necessarily imply that all precedents are ignored but that the same must be interpreted in a manner that gives effect to the said objective. What is expected of the court is to ensure that the aims and intendment of the overriding objective as stipulated in section 1A as read with section 1B of the Civil Procedure Act are attained. It is therefore important that the court takes into consideration the likely effect of granting the stay on the proceedings in question. In other words, the court ought to weigh the likely consequences of granting the stay or not doing so and lean towards a determination which is unlikely to lead to an undesirable or absurd outcome. What the court ought to do when confronted with such circumstances is to consider the twin overriding principles of proportionality and equality of arms which are aimed at placing the parties before the court on equal footing and see where the scales of justice lie considering the fact that it is the business of the court, so far as possible, to secure that any transitional motions before the court do not render nugatory the ultimate end of justice. The court, in exercising its discretion, should therefore always opt for the lower rather than the higher risk of injustice. See Suleiman v Amboseli Resort Limited [2004] 2 KLR 589.

24. On the first principle, Platt, Ag JA (as he then was) in Kenya Shell Limited v Kibiru [1986] KLR 410, at page 416 expressed himself as follows:'It is usually a good rule to see if Order XLI Rule 4 of the Civil Procedure Rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the corner stone of both jurisdictions for granting a stay. That is what has to be prevented. Therefore, without this evidence it is difficult to see why the respondents should be kept out of their money'.

25. On the part of Gachuhi, Ag JA (as he then was) at 417 held:'It is not sufficient by merely stating that the sum of Kshs 20,380. 00 is a lot of money and the applicant would suffer loss if the money is paid. What sort of loss would this be? In an application of this nature, the applicant should show the damages it would suffer if the order for stay is not granted. By granting a stay would mean that status quo should remain as it were before judgement. What assurance can there be of appeal succeeding? On the other hand, granting the stay would be denying a successful litigant of the fruits of his judgement.'

26. Dealing with the contention that there was no evidence that the Respondent would be able to refund the decretal sum if paid over to the Respondent, Hancox, JA (as he then was) in the above cited case when he expressed himself as follows:'I therefore think in the circumstances that these comments were unfortunate. Nevertheless, having considered the matter to the full, and with anxious care, there is in my judgement no justification whatsoever for holding that there is a likelihood that the respondents will not repay the decretal sum if the appeal is successful and that the appeal will thereby be rendered nugatory. The first respondent is a man of substance, with a good position and prospects. It is true his house was, in his words, reduced to ashes, but I do not take that against him. Both seem to me to be respectable people and there is no evidence that either will cease to be so, in particular that the first respondent will not remain in his job until pensionable age.'

27. Therefore, the mere fact that the decree holder is not a man of means does not necessarily justify him from benefiting from the fruits of his judgement. On the other hand, the general rule is that the court ought not to deny a successful litigant of the fruits of his judgement save in exceptional circumstances where to decline to do so may well amount to stifling the right of the unsuccessful party to challenge the decision in the higher court. In Machira T/A Machira & Co Advocates v East African Standard (No 2) [2002] KLR 63 it was held that:'To be obsessed with the protection of an appellant or intending appellant in total disregard or flitting mention of the so far successful opposite party is to flirt with one party as crocodile tears are shed for the other, contrary to sound principle for the exercise of a judicial discretion. The ordinary principle is that a successful party is entitled to the fruits of his judgement or of any decision of the court giving him success at any stage. That is trite knowledge and is one of the fundamental procedural values which is acknowledged and normally must be put into effect by the way applications for stay of further proceedings or execution, pending appeal are handled. In the application of that ordinary principle, the court must have its sight firmly fixed on upholding the overriding objective of the rules of procedure for handling civil cases in courts, which is to do justice in accordance with the law and to prevent abuse of the process of the court.'

28. Where the allegation is that the Respondent will not be able to refund the decretal sum, the burden is upon the Applicant to prove that the Respondent will not be able to refund to the applicant any sums paid in satisfaction of the decree. See Caneland Ltd & 2 Others v Delphis Bank Ltd Civil Application No Nai 344 of 1999.

29. The law, however appreciates that it may not be possible for the Applicant to know the Respondent’s financial means. The law is therefore that all an Applicant can reasonably be expected to do, is to swear, upon reasonable grounds, that the Respondent will not be in a position to refund the decretal sum if it is paid over to him and the pending appeal was to succeed but is not expected to go into the bank accounts, if any, operated by the Respondent to see if there is any money there. The property a man has is a matter so peculiarly within his knowledge that an applicant may not reasonably be expected to know them. In those circumstances, the legal burden still remains on the applicant, but the evidential burden would then, in those circumstances, where the applicant has reasonable grounds which grounds must be disclosed in the application that the Respondent will not be in a position to refund the decretal sum if the appeal succeeds, have shifted to the Respondent to show that he would be in a position to refund the decretal sum. See Kenya Posts & Telecommunications Corporation v Paul Gachanga Ndarua Civil Application No Nai 367 of 2001; ABN Amro Bank, NK v Le Monde Foods Limited Civil Application No 15 of 2002.

30. What amounts to reasonable grounds for believing that the Respondent will not be able to refund the decretal sum is a matter of fact which depends on the facts of a particular case. In my view even if it were shown that the Respondent is a man of lesser means, that would not necessarily justify a stay of execution as poverty is not a ground for denial of a person’s right to enjoy the fruits of his success. Suffice to say as was held in Stephen Wanjohi v Central Glass Industries Ltd Nairobi HCCC No 6726 of 1991, financial ability of a decree holder solely is not a reason for allowing stay; it is enough that the decree holder is not a dishonourable miscreant without any form of income.

31. In an application for stay, the court must consider the overriding objective and balance the interest of the parties to the suit since the court is enjoined place the parties on equal footing. Since the overriding objective aims, inter alia, to facilitate the just, expeditious, proportionate and affordable resolution of the civil disputes governed by the Act, the balancing of the parties’ interest is paramount in an application for stay of execution pending appeal.

32. However, the law still remains that where the Applicant intends to exercise its undoubted right of appeal, and in the event it was eventually to succeed, it should not be faced with a situation in which it would find itself unable to get back its money. Likewise, the Respondent who has a decree in his favour should not, if the Applicant were eventually to be unsuccessful in its intended appeal, find it difficult or impossible to realize the decree. This is the cornerstone of the requirement for security, and it is trite that once the security provided is adequate its form is a matter of discretion of the court. SeeNduhiu Gitahi v Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100.

33. I therefore agree with the opinion expressed in Bungoma High Court Misc Application No 42 of 2011 - James Wangalwa & Another v Agnes Naliaka Cheseto that:'The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the Applicant as the successful party in the appeal. This is what substantial loss would entail.'

34. It is not sufficient to merely state that the decretal sum is a lot of money and the Applicant would suffer loss if the money is paid. In an application of this nature, the Applicant should show the damage it would suffer if the order for stay is not granted since by granting stay would mean that the status quo would remain as it were before the judgement and that would be denying a successful litigant of the fruits of his judgement which should not be the case if the Applicant has not given to this court sufficient cause to enable it to exercise its discretion in granting the order of stay.

35. In this application, it has not been alleged that the payment of the said sum may adversely affect the financial position of the Applicant. Accordingly, had the Respondent disclosed his means I would have been very reluctant to grant this application.

36. The next issue for consideration is the issue of security. It is true that under Order 42 rule 6 aforesaid, the Applicant is required to offer security for the due performance of the decree and the Court is entitled to take into account the fact that no such security has been offered in deciding an application thereunder. I agree with the position in Mwaura Karuga t/a Limit Enterprises v Kenya Bus Services Ltd & 4 Others [2015] eKLR, where it was held that:'The security must be one which shall achieve due performance of the decree which might ultimately be binding on the applicant. The rule does not, therefore, envisage just any security. The words ‘’ultimately be binding’ are deliberately used and are useful here, for they refer to the entire decree as will be payable at the time the appeal is lost. That is the presumption of law here. Therefore, the ultimate decree envisaged under order 42 rule 6 (2) (b) of the Civil Procedure Rules includes costs and interest on the judgment sum unless the latter two were not granted-which is seldom. The security to be given is measured on that yardstick.'

37. The law is that where the Applicant intends to exercise its undoubted right of appeal, and in the event it was eventually to succeed it should not be faced with a situation in which it would find itself unable to get back its money. Likewise, the Respondent who has a decree in his favour should not, if the Applicant were eventually to be unsuccessful in its intended appeal, find it difficult or impossible to realize the decree. This is the cornerstone of the requirement for security. The issue of adequacy of security was dealt with by the Court of Appeal in Nduhiu Gitahi v Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100 where the Court of Appeal expressed itself as follows:'The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so. The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed, in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it'.

38. The court is of the view that the security is not necessarily bound by what is offered by the Applicant. In this case, I cannot deliberate on whether the appeal is on liability or quantum as the record shows that the memorandum of appeal is not attached.

39. In view of the foregoing observations, the applicant’s application dated July 11, 2022 is allowed in the following terms'a. The Applicant is granted leave to file and serve its memorandum of appeal within ten (10) days from the date of this ruling.b. An order of stay of execution of decree in Bungoma CMMC No 109 of 2019 is hereby granted upon the applicant depositing the entire decretal sums into a joint interest earning account in the names of both Advocates for the parties within fourty five (45) from the date of this ruling failing which the stay shall lapse.c. The costs of the application shall abide in the intended appeal.It is so ordered.

DATED AND DELIVERED AT BUNGOMA THIS 17TH DAY OF OCTOBER, 2022D.KEMEIJudgeIn the presence of :Miss Owuor for Agutu for ApplicantMasigu for Gacathi for RespondentKizito Court Assistant