[2022] KEHC 16429 (KLR)

Directline Assurance Company v Maina; Kilului (Suing as the Legal Representative of the Estate of Stephen Munyao - Deceased) (Interested Party) (Miscellaneous Civil Application E002 of 2022) [2022] KEHC 16429 (KLR) (8 November 2022) (Ruling)

Neutral citation: [2022] KEHC 16429 (KLR)

Republic of Kenya

In the High Court at Machakos

Miscellaneous Civil Application E002 of 2022

MW Muigai, J

November 8, 2022

Between

Directline Assurance Company

Applicant

and

Mary Nyambura Maina

Respondent

and

Kavutha Kilului (Suing as the Legal Representative of the Estate of Stephen Munyao - Deceased)

Interested Party

(Arising from the judgment of Hon A. Kibiru (CM) delivered on 16th February 2022 in Machakos CMCC Case No. E137 of 2021)

Ruling

Notice Of Motion 1. By a Notice of Motion dated March 24, 2022, brought under Certificate of urgency, the Applicant seeks the following orders:-(a)(Spent)(b)That pending the hearing and determination of this application, there’re be a stay of execution of the judgment, decree, execution order and all consequential orders in Machakos Civil Suit No E137 of 2021. (c)That this Court grant leave to the Applicant (proposed Appellants) to appeal out of time against the judgment made by the Hon A Kibiru (CM) on February 16, 2022 in Machakos Civil Suit No E137 of 2021. (d)That at the time of lodging an appeal against the judgment delivered by Hon A Kibiru (CM) on February 16, 2022 in Machakos Civil Suit No E137 of 2021 be extended/enlarged.(e)That the said leave do operate as a stay of all proceedings and/or execution of the judgment, decree, order and all consequential orders in Civil Case No E137 of 2021 pending the hearing and determination of the intended appeal.(f)That the draft annexed Memorandum of Appeal be deemed as filed upon leave being granted and time being enlarged/extended as per prayer 3 and 4 above and upon payment of the requisite fees thereto.(g)That consequently leave be granted to the Applicants to lodge a Record of Appeal upon payment of the fee subject of prayer 6 hereinabove.(h)That costs of this application and other costs incurred herein consequential to follow the events.

Replying Affidavit By The Respondent 2. The Respondent filed the Replying Affidavit sworn on May 4, 2022 deposing as follows; that the judgment in this matter was delivered on February 16, 2022 and 30 days stay of execution was granted. Upon delivery thereof, the Appellant went to sleep and has suddenly been woken up by the execution proceedings hence not deserving of the discretionary orders of this Court.

3. The proposed Appeal is unmerited for the following reasons; that the primary judgment was delivered for a sum of Kshs.2,937,734. 00 plus costs and interest. The Applicant has all along been aware of the judgment herein but refused to settle the same prompting the filing of the declaratory suit Machakos CMCCNo E137 of 2021. The judgment sum was within the limits provided by the provisions of section 5(b)(iv) of the Insurance (MotorVehiclesThird Party Risks) Act. The Applicant ignored the same leading to further costs and interest arising on the judgment sum. The Applicant is liable to pay costs and interest arising from the said judgment since the said awards were discretionary awarded by the court. The resultant judgment now is at Kshs 4,073,272/- and has escalated due to the applicant’s fault yet the Applicant should simply settle the same to avoid further interest and costs.

4. The applicant did not dispute that the respondent was their insured and to that end they should proceed to pay the claim herein. The applicant has not demonstrated what loss they will suffer if they settle the decretal amount since this is a money decree. The estate of the deceased herein continues to be highly prejudiced by the applicant’s refusal to settle this claim.

Replying Affidavit By The Interested Party 5. The Interested Party filed the Replying affidavit and deposed as follows; - that the judgment sought to be appealed against was delivered on February 16, 2022 in the presence of the Counsel for the Applicant Ms Kahiti Advocate, therefore the Applicant had the details of the judgment and the reasoning therein ever since. On February 21, 2022 all the parties in the suit were served by the Respondent’s Advocate with a draft decree and the Applicants’ lawyers further wrote requesting for tabulation of the decretal sum. 7 days after the delivery of judgment, the Interested party’s lawyers forwarded the extracted copy of the decree as well as bank details to the Applicant’s lawyers.Upon extracting of the Court decree the same was served on all the parties on March 21, 2022 five days after the expiry of the stay of execution granted by the Trial Court. The Applicant went quiet on the payment which necessitated extraction of the warrants of attachment which were served, received and acknowledged by the Applicant on March 23, 2022. This application was not filed until March 25, 2022, way after proclamation was carried out by the Auctioneers clearly disclosing that the application is an afterthought. A copy of the Trial Court judgment was obtained on February 23, 2022 barely one week after the judgment was delivered. Therefore, the Applicant’s lawyers had a whole three weeks to decide whether to appeal or not. The Trial Court matter PMCC No 313 of 2018 which gave rise to the declaratory suit and the judgment of February 16, 2022 is a 2018 matter and has been pending without settlement for the last four (4) years.

Supplementary Affidavit 6. Pauline Waruhiu, Directline Assurance Co Ltd Claims and Legal Officer swore a supplementary Affidavit on June 7, 2022 and deposed as follows:- that the correspondences after judgment on the issue of costs and/or seeking for Bank details do not curtail the Applicants rights to seek to appeal the judgment of the Trial Court where the Applicants are dissatisfied with the decision of the Trial Court. The Applicant’s Advocate on record could not proceed to issue an opinion to the Applicants and/or its insurers on the outcome of the Trial Court case in the absence of the judgment as they were unable to know the reasoning of the Trial Magistrate and/or how the Trial Magistrate applied his mind to enable him arrive at the decision as per the judgment in the Trial Court. The Applicants intended Appeal has merit and has chances of success as in the draft Memorandum of Appeal.

Written Submissions Applicant’s Submissions Dated June 8, 2022 7. On the issue of whether the Applicants may suffer substantial loss unless the Application is granted, it was submitted that that if the execution proceeds in compliance with the decree extracted on account of the judgment delivered on February 16, 2022 and the Applicants properties sold via public auction then the same will irreparably affect and/or negate the essential core of the Applicants appeal if the same were to succeed on appeal.

8. That the Respondent is not a person of means and has not in any way proved that they are capable of refunding the sum of Kshs.4,073,272 in the event the appeal succeeds.

9. Reliance is made in the case of Allan Ngala Mwendwa v Margaret Wilson & another [2017] eKLR the Court relied on the case of ABN Amro Bank, NVV Le Monde Foods Limited – Civil Appl No NAI 15 of 2002, where it was held that all an applicant is expected to do is to swear upon reasonable grounds that the Respondent will not be in a position to refund the decretal sum and the evidential burden would then have shifted to the Respondent to show that he would be in a position to refund the decretal sum if paid out by simply sowing what assets he has.

10. On whether the application has been made without undue delay it was submitted the delay was caused due to the failure of the courts registry to provide the applicants counsel with a copy of the judgment. That this application was filed promptly upon receiving instructions from the applicant’s insurer hence the delay was not inordinate.

11. On whether the security as to costs have been given by the Appellant it was submitted that the Applicants are willing to abide by any terms that may be imposed by this Court. Reliance is made in the case of Butt v Rent Restriction Tribunal Civil Application [1979] eKLR where the Court held that where there is no overwhelming, hinderance the courts as a general rule ought to exercise its best discretion in a way so as not to prevent the appeal, if successful from being rendered nugatory.

12. On leave to Appeal out of time the Applicant submitted that there are principles to be met when one seeks leave to appeal out of time as outlined in the case of APA Insurance Ltd v Michael Kinyanjui Muturi [2016] eKLR where the court quoted from the case of Mwangi v Kenya Airways Ltd where the Court of Appeal listed 4 factors that the Court ought to take into account in deciding whether or not to grant extension namely;(a)the length of the delay,(b)the reasons for the delay,(c)possibility, the chances of the appeal succeeding if the application is granted and(d)the degree of prejudice to the respondent if the application is granted.

13. On whether the respondent stand to suffer any prejudice it was submitted that the respondent would not be prejudiced as the applicants are willing and ready to provide security for due performance of the decree herein in form of a bank guarantee for the decretal amount. Reliance was made in the case of Waljees Ltd v Ranji Punjabhai Bugerere Tea Estate Ltd [1971] EA 188.

14. It was further submitted that the Applicants stand to suffer substantial loss as the 1st Respondent will not be able to reimburse the decretal amounts. Reliance was made in the case of Attorney General v Lucy Nduta Nganga [2017] eKLR.

Respondent’s Submissions Dated March 24, 2022 15. On whether the Applicant should be granted leave to appeal out of time, it was submitted that the Applicants must give justifiable reasons as to why they did not file the appeal on time. Stating that they received instructions from their client late is not good reason for this Court to exercise its discretion in their favour.

16. In the Court of Appeal Case of Vishva Stones Supplies Co Ltd v RSR Stone [2006] Ltd [2020] eKLR The Nambuye, JA quoted Supreme Court of Kenya case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others as follows;“(1)Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the court.(2)A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court.(3)Whether the Court should exercise the discretion to extend time, is a consideration to be made on a case to case basis.(4)Whether there is reasonable reason for the delay. The delay should be explained to the satisfaction of the court.(5)Whether there will be any prejudice suffered by the respondent of the extension is granted.(6)Whether the application has been brought without undue delay; and(7)Whether uncertain cases, like election petition, public interests should be a consideration for extending time.”

17. See also Machakos HCCA No 142 of 2013 where a similar application was made.

18. On the issue of stay of proceedings and execution pending the hearing and determination of the intended appeal, the Applicant is required to satisfy the conditions set out under order 42 rule 6 of the Civil Procedure Rules. The Applicant must demonstrate substantial loss, the application must be made without unreasonable delay and security for due performance of such orders ought to be provided see the case of Shell Ltd v Kabiru & another [1986] KLR 410.

19. In this case the applicant has not demonstrate that substantial loss they will if the same is paid to the interested party.

20. That the additional costs and interests that have accrued on the judgment sum which have now escalated from 2. 9 million to above 4 million has been caused by the Applicants acts of commission and or omission therefore the Applicant must be made to carry its cross by being penalized to settle the entire outstanding decretal sum with costs and interests.

21. On the allegation that the Respondent is not a person of means the same is not true as the Respondent is a business lady.

22. That the Applicant ought to settle the Kshs.3 million they believe is not contested and the contested amount be deposited in an interest earning account of the Advocates herein.

Interested Party’s Submissions Dated 2/07/2022 23. On the issue of whether the Applicant’s may suffer loss order 42 rule 6 CPR sets out the conditions precedent to granting orders of stay pending appeal. See Kenya Shell Ltd v KibiruCA 197 of 1986 Nai. It is incumbent upon the Applicant to establish the substantial loss to be suffered and the same has not been done in this matter.

24. On whether the Application has been made without undue delay the judgment sought to be appealed against was delivered on February 16, 2022 the Applicant took a period of over 30 days to file this application therefore there is inordinate delay in instituting the instant application.

25. On the issue of security as to costs the Applicant has not attached any evidence to show that they are ready to provide security. The interested party herein remains uncompensated for a period of over 7 years and still counting.

26. On the issue of leave to appeal out of time in the Civil Appl No 3 of 2016 County Executive of Kisumu v County Government of Kisumu & 7 others (Supreme Court) the Court held that;“.........[23] It is trite law that in an application for extension of time, the whole period of delay should be declared and explained satisfactorily to the Court. Further, this Court has settled the principles that are to guide it in the exercise of its discretion to extend time in the Nicholas Salat case to which all the parties herein have relied upon. The Court delineated the following as:“the under-lying principles that a Court should consider in exercise of such discretion: 1. Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the Court;

2. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;

3. Whether the court should exercise the discretion to extend time, is a consideration to be made on a case to case basis;

4. Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the Court;

5. .......”

27. Also, in the case of Civil Application No 10 of 2015 (UR 10/2015) Donald O Raballa v The Judicial Service Commission &anor.

Determination 28. The Court has considered the application for enlargement/extension of time to file appeal & grant of stay of execution, Replying Affidavits and submissions by parties through their respective advocates on record.

29. The issue of determination is whether stay of execution pending appeal ought to be granted or not.

30. Each party aggrieved by the Trial Court’s judgment, ruling, order or decree is entitled in law to exercise its right to appeal by Section 65 & the court’s jurisdiction by section 78 CPA. However, the appeal must be lodged in accordance with the prescribed law as outlined in order 42 rule 6 CPR 2010 and the conditions precedent thereunder.

Arguable Appeal 31. Appellants/Applicants deposed that they have an arguable Appeal that raises triable issues. As to what constitutes an arguable appeal, the Court of Appeal in Nairobi Women’s Hospital v Purity Kemunto [2018] eKLR:- stated;“To say that an appeal is arguable is another way of saying that it is not frivolous and that it raises a bona fide issue deserving full consideration by the Court. Even one bona fide issue will satisfy the requirement, for the law does not look for a multiplicity of arguable issues.”

32. The Court of Appeal in Kenya Revenue Authority v Sidney Keitany Changole & 3 others [2015] eKLR held that;“This Court has further held that the applicant need only prove or establish one arguable point nothing that an arguable appeal is not necessarily one that will succeed but one that is not frivolous.”

33. The memorandum of appeal filed raises grounds of appeal that include whether the Applicant/Appellant ought legally to settle the decretal amount as in the judgment of the Trial Court and decree drawn thereafter. This is a triable issue.

Unreasonable Delay 34. The Applicant/ Appellant filed the Memorandum of Appeal on 25/3/2022. The Judgment, the subject of the appeal was delivered on 16/2/2021 as per the attached copy to the Application and not on 16/3/2022 as pleaded, clearly beyond the statutory timeline for filing the appeal.

35. The Applicant/Appellant explained that the delay of more or less a year after the judgment was that the Applicant wrote to the Trial Court seeking the copies of typed and certified judgment and thereafter did an opinion to the client. The opinion was subjected to internal controls; discussions, procedures and approvals as is the protocol of the company to determine the way forward.

36. These facts were/ are challenged by the Respondent and interested party respectively on grounds that the application was unmerited an afterthought and an abuse of Court process. The application for stay of execution is an equitable relief and enlargement of time is discretionary as provided by order 50 rule 6 CPR 2010 as observed in Civil Appl No 3 of 2016 County Executive of Kisumu v County Government of Kisumu & 7 others (Supreme Court) supra.

37. This Court finds that the Applicant/Appellant has a legal right of appeal however, it must be in accordance with provisions of the law. To allow right of appeal, the subject matter ought to be preserved, if it is shown that execution or enforcement of the judgment and decree would render the proposed appeal nugatory. So to avert such an eventuality, this Court finds reasons advanced for the delay in filing the appeal to be plausible and the Court grants leave and/or extension of time to file the appeal.

Substantial Loss 38. The Applicant/Appellant contends that the judgment and decree in the subject matter therein is Kshs 4,075,772/- and if the execution of the decree in compliance with the Trial Court’s judgment, it would create a state of affairs that would irreparably affect/negate the very essential core of the Applicant’s appeal.

39. The Applicant’s core business is in the Insurance sector and execution of the said judgment would essentially cripple the day to day operations of the Applicant due to the substantial loss resultant from the execution of the decree.

40. The Respondent submitted that the primary judgment was delivered on 21/5/2021 for Kshs 2,937,374 in MHC CMCC 313 of 2018 and the Applicant failed to settle the claim and the Respondent filed a declaratory suit MHC CMCCE137 of 2021 which arrived at the instant and subject judgment. Failure to settle the judgment resulted in hefty interest and more costs.

41. . The Applicant deposed that if stay of execution is not granted, the Company through Respondent is apprehensive that unless the matter is stayed by orders of this Court the Respondent will swiftly move for execution of the judgment. The Applicant is apprehensive that execution will render the Appeal nugatory. The execution will cause substantial loss. The Respondent/Decree holder is a natural person whose means is unknown and not sure the amount maybe refunded in the event of successful appeal and hence he will suffer irreparable loss.

42. In National Industrial Credit Bank limited v Aquinas Francis Wasike, Court of Appeal Civil Application No 238 of 2005, the Court of Appeal held as follows: -“This Court has said before and it would bear repeating that while the legal duty is on an applicant to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it is unreasonable to expect such an applicant to know in detail the resources owned by a respondent or the lack of them. Once an applicant expresses a reasonable fear that a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly within his knowledge.”

43. The Respondent has not disclosed means that the amount if released to the Respondent, a refund would be possible after the appeal is heard and determined and the Appellant is successful. In the absence of provision of evidence of such financial ability then in such an eventuality, there would be substantial loss.

44. The Court considers that if stay of execution is granted, the status quo would remain that is no execution or enforcement of judgment and decree would ensue and, in the process, would hinder the successful client from enjoying fruits of the judgment. The Court’s discretion tilts in favor of granting stay of execution to facilitate hearing and determination of the instant appeal.

Furnish Security 45. The Applicant/ Appellant pleaded that the leave to file the appeal is deemed to operate as stay of execution pending hearing of the appeal.

46. The principles governing exercise of the judicial discretion are; there are no limits or restriction on the judge’s discretion, the discretion is intended so to be exercised to avoid injustice. In the case of Selestical limited v Global Development [2015] eKLR the Court stated that;“In my view, the rules give the court unfettered discretion to issue any orders as to preserve the subject matter pending the hearing of the Appeal. There is no doubt therefore that the court has powers to order such security for the due performance of decree or order, and that the Appellant did not have to furnish such security upfront before arguing the application for stay pending appeal.”

47. This Court has considered the rival submissions on the conditions of granting stay of execution pending appeal. The record confirms that the appeal was filed out of statutory period and leave to extend the time was sought. However, in order not to adversely affect the Appellant/Applicant’s right of appeal, the Record of Appeal will be deemed filed with leave from this Court to file appeal out of time.

48. With regard to furnishing security in compliance with order 42 rule 6 CPR, this Court considers the fact that the interested party submitted that the matter arose from an accident that occurred in 2015 and resulted in loss of life. The matter has been in Courts to date. The interested party has been denied fruits of the judgment, in the circumstances to ensure justice between parties, the Applicant shall pursue the appeal and stay of execution to remain in force pending hearing and determination of the appeal on condition that the Applicant furnishes security to safeguard the interested party’s interest by payment of Ksh 500,000/- to the interested party through the Interested Party’s advocate on record within 90 days from delivery of this ruling, and the balance be protected by a specific and personal bank guarantee in favor of the interested party for the period the appeal shall be heard and determined.

Disposition 49. The court orders security of Ksh 500,000/- to be paid to the interested party within 90 days from delivery of this ruling through interested party’s advocate on record.

50. Thereafter, stay of execution shall remain in force pending hearing and determination of the appeal.

51. The memorandum of appeal annexed to the application is deemed as filed as the court grants leave to file appeal out of time.

52. The appellant to file record of appeal.*

53. Deputy Registrar Machakos High Court to obtain original Trial Court File.

54. Further mention for directions shall be on February 20, 2023.

DELIVERED SIGNED & DATED IN OPEN COURT IN MACHAKOS ON 8TH NOVEMBER, 2022 (VIRTUAL/PHYSICAL CONFERENCE).MW MUIGAIJUDGEIN THE PRESENCE OF:MS KAVITA - FOR INTENDED APPELLANT – PRESENT ONLINE.MR LANGALANGA FOR GICHUKI – FOR THE RESPONDENT.MS MBILO H/B FOR INTERESTED PARTY.PATRICK/GEOFFREY - COURT ASSISTANT(S).