https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11966

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT ELDORET** **CIVIL SUIT NO. 13 OF 2019** **CORRUGATED SHEETS LIMITED…………..PLAINTIFF/APPLICANT** **VERSUS** **VARSANI MERCHANDISE LIMITED…...DEFENDANT/RESPONDENT** **RULING** 1. By way of Notice of Motion dated 3rd September 2025, the Applicant seeks the following orders; 2. **Spent** 3. **Spent** 4. **That this Honourable Court be pleased to stay execution of the judgment/decision delivered on the 21st day of May 2025, the decree thereof, and all consequential orders arising therefrom, pending the hearing and determination of the Applicant’s appeal to the Court of Appeal.** 5. **That the cost of this application be provided for.** 6. The Application is expressed to be brought under **Sections 1A, 1B, 3, 3 A & 63 (e) of the Civil Procedure Act, Order 42 Rule 6, Order 51 Rule 1 of the Civil Procedure Rules 2010** and all enabling provisions of the law. The Application is premised on the grounds on the face of it and the averments of Harish Patel who described himself as one of the directors of the Applicant’s Company. 7. The deponent averred that being aggrieved by the judgment of this Honourable Court delivered on 21st May 2025, they filed a Notice of Appeal to the Court of Appeal and duly served the Respondent. He Annexed and marked as "HP-1 (a) & (b)” copies of the Notice of Appeal and an email extract evidencing service. That the Respondent has taxed the Party and Party costs, obtained a certificate of costs, and execution is imminent unless stayed by this Court. He Annexed and marked as “HP-2” a copy of the certificate of costs. He deposed that if the taxed sum is paid out to the Respondent in execution of the decree, the Applicant stands to suffer substantial loss, as the Respondent/Decree Holder closed its business several years ago and is incapable of refunding the sum of Kshs. 633,086.57/= should the appeal succeed. 8. The deponent averred that the Applicant is ready and willing to provide security, and in that regard proposes to deposit the entire taxed amount in a joint interest-earning account in the names of the respective advocates on record, in a reputable local bank, as this Court may be pleased to direct. Further, that the Applicant has an arguable appeal with very high chances of success as evidenced by the annexed draft memorandum of appeal marked as “HP-3”. Additionally, that if stay is not granted the decree may be executed at any time and therefore the application and the appeal will be rendered nugatory. He stated that the Application has been brought without inordinate delay and granting the orders sought will serve the interest of justice. 9. The Respondents replied to the application vide a replying affidavit dated 8th September 2025 sworn by Devshi Karsan Varsani who described himself as a Director of the Defendant. He deposed that he opposes the Application as it is incompetent, unmerited, an abuse of the court process and should be dismissed forthwith. He confirmed that this court delivered its judgment on 21st May, 2025 dismissing the plaintiffs' suit with costs to the Defendant and as such the judgment in substance and form is a negative order incapable of being stayed. 10. That the sums indicated in the certificate of costs is a liquidated sum which if it were paid to the Defendant and the Appeal succeeds at the Court of Appeal, the said sum is quantifiable and can be refunded to the Plaintiff. He deposed that the Plaintiff's assertion that the Defendant's business was closed a long time ago and therefore the Defendant may not be able to refund the costs is without any basis and no such evidence has been laid down to prove the said allegation. 11. The deponent averred that for the instant application to succeed, the Plaintiff must demonstrate that it will suffer substantial loss if stay is not granted and since the costs is a liquidated sum, no such substantial loss is likely to be suffered by the Plaintiff. Further, that the Plaintiff should demonstrate sufficient cause in the nature of an arguable appeal and a perusal of the memorandum of appeal clearly points to the position that the plaintiff has not done so but intends to rehash its dismissed case at the Court of Appeal. He urged the court to dismiss the Application with costs to the Defendant. **Applicants’ submissions** 1. Counsel urged that the conditions which a party must establish in order for this court to order stay of execution pending appeal are provided for under **Order 42 Rule 6(2) of the Civil Procedure Rules.** 1. **That substantial loss may result to the applicant unless the order is made;** 2. **That the application has been made without unreasonable delay; and** 3. **That the applicant has given such security as the court orders for the due performance of such decree or order as may ultimately be binding on him.** 2. That this position was clearly brought out in the case of **Tassam Logistics Ltd v David Macharia & another (2018) eKLR,** where the court held that the three (3) prerequisite conditions set out in the said **Order 42 Rule 6 of the Civil Procedure Rules, 2010** cannot be severed. The key word is “and” which connotes that all three (3) conditions must be met simultaneously. 1. Counsel urged that substantial loss is the cornerstone in an application for stay of execution. That the Applicant has demonstrated that the Respondent has already taxed its costs and obtained a certificate of costs, making execution imminent. If execution proceeds, the Applicant will be compelled to pay Kshs. 633,086.57/= to the Respondent and will suffer substantial loss, given that the Respondent closed its business several years ago and there is genuine apprehension that it will not be in a position to refund the said sum should the intended appeal to the Court of Appeal succeed. 2. That this inability to make restitution presents a real and imminent risk of irreparable prejudice to the Applicant because any payment made in execution would be unrecoverable. Counsel urged that the Respondent has not placed before this Honourable Court any evidence of financial means to rebut that concern. Once the Applicant raised the genuine and reasonable apprehension that the Respondent’s business has been closed for years and that it is therefore unlikely to refund the taxed amount, the evidential burden shifted to the Respondent to produce evidence of solvency, assets, or financial standing. 3. That the least the Respondent ought to have done was to place before this Court evidence of means to demonstrate ability to refund in the event the appeal succeeds. No such evidence has been tendered. Counsel placed reliance on the decision of the court in **National Industrial Credit Bank Ltd vs. Aquinas Francis Wasike & another (2006) KECA 333 (KLR), Ann Wanjiru Waigwa & Another vs. Joseph Kiragu Kibarua [2009] KEHC 611 (KLR) and Watulatsu Samuel & 2 Others v Zirimu Haruna (2010) UGHC 186.** 4. Counsel urged that the Respondent has argued that the taxed costs constitutes a liquidated sum which, if paid, can easily be refunded in the event of a successful appeal and further, that because costs are a liquidated sum, no substantial loss will arise. Counsel urged that substantial loss is not determined by whether the sum is quantifiable, but by whether, in the circumstances of the case, the Applicant stands to suffer irreparable prejudice if execution proceeds. He cited the case of **James Wangalwa & Another v Agnes Naliaka Cheseto (2012) eKLR,** where the court held that an applicant need only to show that execution would “create a state of affairs that irreparably affects or negates the very core of the appeal.” Counsel submitted that making payment to a party with no continuing business operations creates a real risk of non-recovery and would make the intended appeal an exercise in futility. 5. Counsel urged that the Applicant has raised weighty grounds of appeal, among them being that the trial court relied on matters not pleaded, disregarded clear documentary evidence, and failed to properly analyse the admitted payment of Kshs. 4,100,000/=. These grounds are arguable and demonstrate that the intended appeal is not frivolous. He cited the case of **Butt - Vs- Rent Restriction Tribunal (1982) eKLR** and the case of **Nduhiu Gitahi and Another -Vs- Anna Wambui Warugongo (1988) 2 KAR**, urging the Court to find that the requirement of substantial loss has been fully satisfied. 6. Counsel urged that the second statutory condition under **Order 42 Rule 6(2) (b) of the Civil Procedure Rules** is that an applicant seeking stay of execution must furnish security for the due performance of the decree as may ultimately be binding upon them. That in the present case, the Applicant has expressly undertaken to provide security. The Applicant proposes to deposit the entire taxed amount of Kshs. 633,086.57/= in a joint interest-earning account in the names of the respective advocates on record at a reputable local bank. This proposal is practical, and has frequently been adopted by courts in balancing the competing rights of parties. In the event the appeal fails, the decretal sum, together with any accrued interest, will be readily available for immediate payment to the Respondent without the need for fresh execution proceedings. Counsel cited the decision in **Focin Motorcycle Co. Limited vs. Ann Wambui Wangui & Another (2018) eKLR,** and urged that the Applicant has satisfied the second statutory requirement by offering adequate security for the due performance of the decree. 7. Counsel submitted that Judgment was delivered on 21st May 2025 wherein a temporary stay of execution was issued for 30 days which orders lapsed on the 21st June, 2025.The Applicant promptly filed a Notice of Appeal and thereafter filed the present application immediately execution became imminent and therefore no unreasonable delay has been demonstrated. Accordingly, the third statutory requirement under **Order 42 Rule 6(2)** has been satisfied. Counsel urged the Court to grant an order for stay of execution of the taxed costs pending the hearing and determination of the appeal. **Respondents’ submissions** 1. Learned Counsel for the Respondent submitted that since the judgment was in the nature of dismissal of the suit, the same is a negative order incapable of being stayed. He urged that the Court of Appeal in the case of **Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo, Muthomi & Co. Advocates & 2 others (Civil Appeal (Application) E383of 2021) [2022] KECA 491 (KLR) (18 February 2022) (Ruling)** reiterated this position where it held that "Negative Orders cannot be stayed." Further, that it is also common ground that no Decree has been issued in this matter and therefore no stay can be granted in respect of a non-existent Decree. 2. That the Applicant has to satisfy the following requirements for the Application to be allowed: * + 1. **Substantial loss shall result to the Applicant if stay order is not granted;** 2. **The Application has been made without unreasonable delay;** 3. **The Applicant has given security to court for due performance of such decree that may be ultimately binding on them.** 3. As regards the condition of substantial loss, Counsel submitted that it is trite law that the issue of substantial loss is a fundamental condition in an application for stay of execution pending appeal. That this Court in the case of **Antoine Ndiaye Vs African Virtual University (2025) eKLR** discussed the issue of substantial loss and as per the holding therein, it is upon the Plaintiff/Applicant to lead cogent evidence that the Respondent shall not be in a position to refund any sums paid if the appeal were to succeed. That the Applicant has only alleged that the Defendant closed its business in 2016 but no evidence was adduced to' support this position. That it is also a matter of record that the Defendant/Respondent paid Kshs. 4,100,000/= during the pendency of the suit yet the Plaintiff alleges that the Defendant closed its business in 2016. 4. Counsel urged that the Plaintiff interestingly seeks to have the Court of Appeal set aside this court's judgment of 21st May, 2025 and have the suit allowed a situation that may then entitle the Plaintiff/Applicant to payment of more than Ksh. 17,000,000/= by the Defendant. If the Defendant's business has closed down, how then does the Plaintiff expect to recover the said Kshs.17, 000,000/=? Additionally, even if the only aspect of the judgment being sought to be stayed is the issue of costs in the sum of Kshs.633, 086.57 which is a liquidated sum, the same can easily be refunded if the appeal were to succeed. Counsel placed reliance on the decision of the court in **Cedar Hospital Limited Vs- Sedco Consultants and Another (2023) KEELC 877(KLR).** 5. On whether the intended appeal shall be rendered nugatory if stay orders are issued, Counsel urged that it is undisputed that this court dismissed the Plaintiff's claim with costs to the Defendant. There is therefore no positive action required of the plaintiff save for payment of costs and thus even if the appeal were to succeed, the Plaintiff would have to pursue execution as provided for under the rules. Failure to grant to the stay orders will not render the appeal nugatory as the Plaintiff is not required to pay any substantial sums to the Defendant. Counsel urged that the appeal as drafted in the draft Memorandum of Appeal does not raise any serious grounds that the appellate court may reverse this court's Judgment of 21st May, 2025. 6. On whether the Application has been made without unreasonable delay, Counsel urged that it is common ground that the judgment was delivered on 21st May, 2025 and the Application made on 3rd September, 2025, a period of more than Three (3) months. He urged that therefore the Application has been made after unreasonable delay. 7. As regards security, Counsel urged that the wording of **Order 42 rule 6(2) of the Civil Procedure Rules, 2010** is worded to the effect that “has given security". It is the expectation of the rules that at the time of making the application for stay, the Applicant must have offered security. The Applicant herein has not offered any security. He urged that the application lacks merit and should be dismissed. **Analysis & Determination** 1. Having considered the Application and the appurtenant submissions, it is my considered opinion that the following issue arises for determination; **Whether the Application for stay of execution is merited** 1. The principles guiding the grant of a stay of execution pending appeal are well settled. These principles are provided for under **Order 42 rule 6(2) of the Civil Procedure Rules** which provides: **“No order for stay of execution shall be made under sub rule (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.** 1. The Court of Appeal in **Butt Vs Rent Restriction Tribunal [1979]** stated what ought to be considered in determining whether to grant or refuse a stay of execution pending appeal. The court stated that: - 2. **The power of the court to grant or refuse an application for a stay of execution is discretionary, and the discretion should be exercised in such a way as not to prevent an appeal.** 3. **Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.** 4. **Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.** 5. **Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its motion. Failure to put security of costs as ordered will cause the order for stay of execution to lapse** 6. The court, in **RWW v EKW [2019] eKLR**, considered the purpose of a stay of execution order pending appeal, in the following words: **“The purpose of an application for stay of execution pending an appeal is to preserve the subject matter in dispute so that the rights of the appellant who is exercising the undoubted right of appeal are safeguarded and the appeal if successful, is not rendered nugatory. However, in doing so, the court should weigh this right against the success of a litigant who should not be deprived of the fruits of his/her judgment. The court is also called upon to ensure that no party suffers prejudice that cannot be compensated by an award of costs.** **Indeed, to grant or refuse an application for stay of execution pending appeal is discretionary. The Court when granting the stay however, must balance the interests of the Appellant with those of the Respondent.”** 1. The above said, it is to be noted that this is an order wherein the Appellants suit was dismissed in its entirety with costs to the Respondents. In this regard, this is an order where there is no decree issued that is intended to be executed and hence the need for the issuance of an order of stay of execution. This therefore is a negative order which as has been rightly submitted by Counsel for the Respondents cannot be stayed. In reaching this conclusion, I stand guided by the holding in the above cited case of **Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo in this regard.** TheCourt of Appeal in the case of **Muthomi & Co. Advocates & 2 others (Civil Appeal (Application) E383of 2021) [2022] KECA 491 (KLR) (18 February 2022) (Ruling)** reiterated this position when it held that "Negative Orders cannot be stayed." 2. On the order for costs that is consequential to the judgement of the court, I have considered the fact that this Application was filed three months after the judgement was delivered and in my considered opinion, this amounts to inordinate delay more particularly because no reasons for the delay have been advanced. 1. Further to the above, on the issue that if the stay sought is not granted, the Applicant will suffer substantial loss and the appeal will be rendered nugatory, the courts finds the holding in **James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR, to be persuasive and shall therefore be guided by it. Therein, the court described what amounts to substantial loss as follows;** **“No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself, does not amount to substantial loss. Even when execution has been levied and completed, that is to say, the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process. 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 ... the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”** 1. Also, the court in the case of **G. N. Muema P/A (sic) Mt. View Maternity & Nursing Home v Miriam Maalim Bishar & Another [2018] eKLR**, went ahead to expound on this issue of subsdtantial loss as follows; **“It was the considered view of this court that substantial loss does not have to be a lot of money. It was sufficient if an applicant seeking a stay of execution demonstrated that it would have to go through hardship such as instituting legal proceedings to recover the decretal sum if paid to a respondent in the event his or her appeal was successful. Failure to recover such decretal sum would render his appeal nugatory if he or she was successful.”** 1. Kimaru, J (as he then was) in **Century Oil Trading Company Ltd vs. Kenya Shell Limited Nairobi (Milimani) HCMCA No. 1561 of 2007** stated that: **“The word “substantial” cannot mean the ordinary loss to which every judgement debtor is necessarily subjected when he loses his case and is deprived of his property in consequence. That is an element which must occur in every case and since the Code expressly prohibits stay of execution as an ordinary rule it is clear the words “substantial loss” must mean something in addition to all different from that…Where execution of a money decree is sought to be stayed, in considering whether the applicant will suffer substantial loss, the financial position of the applicant and that of the respondent becomes an issue. The court cannot shut its eyes where it appears the possibility is doubtful of the respondent refunding the decretal sum in the event that the applicant is successful in his appeal. The court has to balance the interest of the applicant who is seeking to preserve the status quo pending the hearing of the appeal also that his appeal is not rendered nugatory and the interest of the respondent who is seeking to enjoy the fruits of his judgement.** 1. All these above authorities considered, the bottom line is that the issue all boils down to the financial position of the Applicant versus that of the Respondent. In this case, the Applicant states that the Respondents closed their business already and it is therefore doubtful that they will be able to pay back the taxed costs if the orders of stay of execution sought are not issued. On the same vein, they state that there is an amount of Ksh. 4,100,000/= that the Respondents paid as part of the amount claimed during the pendency of the hearing which matter the court did not appropriately analyse hence the Appeal. Yet again, they have appealed against the decision of this court seeking that the Court of Appeal overturns this court’s order of dismissal and find in their favour that an amount of approximately Ksh. 7,000,000/- is due and owing to them from the Respondents. 2. This act of approbating and reprobating on the financial ability of the Respondents by the Applicants has only gone to weaken their position by negating their assertion that the Respondent will not be able to pay back the taxed costs of Ksh. 633, 086.57 in the event that the order of stay is not granted thus rendering the appeal nugatory. In the circumstances it is my finding that the Applicant has not sufficiently demonstrated that they will suffer substantial loss and/or that their appeal will be rendered nugatory. 3. Having determined as above on these three issues, I do not find it necessary to delve into the issue of security for the due performance of the decree for reasons that it has now been rendered mute by these findings. The essence of my above conclusions then is that the Application lacks merit. Accordingly, the same is now hereby dismissed in its entirety with costs to the Respondents. **Read dated and Signed Virtually at BUNGOMA on 30th July 2026** **E. OMINDE** **JUDGE**