[2017] KEHC 3267 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KISII

CIVIL APPEAL NO. 20 OF 2017

FIDELITY SHIELD INSURANCE CO. LTD...APPLICANT/APPELLANT

VERSUS

GEORGE OLOLA……..............................................1ST RESPONDENT

COOPERATIVE BANK OF KENYA LTD.…….........2ND RESPONDENT

THE DIRECTOR OF PUBLIC PROSECUTIONS on behalf of District

Criminal Investigation Officer (Migori)….….......3RD RESPONDENT

(An appeal from the judgment and decree of Hon. J.M. NJOROGE (Chief

Magistrate) dated and delivered on the 21st day of March 2017 in the

Original Kisii CMCC No. 293 of 2012)

RULING

1. Through an amended Notice of Motion dated 31stMay 2017 brought under Order 42 Rule 6 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act, the applicant seeks, inter alia, orders of stay of execution of the chief magistrate’s judgment delivered on 21st March 2017 in Kisii CMCC No. 293 of 2012 pending the hearing of the applicant’s appeal lodged herein.

2. The application is premised on the grounds on the face of the application and on the affidavit of one SAMMY KAMAU the Applicant’s claims manager wherein he deposes that the applicant was aggrieved by the said judgment of the Chief Magistrate who entered a judgment in favour of the 1st respondent, for a substantial sum of Kshs. 2,000,000 being damages for malicious prosecution, against the appellant and the 2nd and 3rd respondents.

3. The applicant’s deponent avers that it is apprehensive that the 1st respondent might commence execution proceedings against it thereby rendering the pending appeal nugatory should it eventually succeed considering that the 1st respondent’s financial status and ability to refund the decretal sum should the appeal succeed is unknown. The applicant states that it is ready, able and willing to offer a bank guarantee or in the alternative deposit half the decretal sum in an interest earning account as security for costs for the due performance of the decree pending hearing and determination of the appeal.

4. The 1st respondent opposed the application through the grounds of opposition dated 19th April 2017 wherein he listed the following grounds:

1. The appellant has not placed before the court enough material to prove that the respondent would not be able to refund the decretal sums if the appeal were to succeed.

2. The respondent has no objection to the decretal sums being deposited in an interest-bearing account in the joint names of the advocates on record.

5. At the hearing of the application, Mr. Ngethe learned counsel for the applicants submitted that the applicant had satisfied the conditions set under order 42 Rule 6 of the Civil Procedure Rules for granting of orders of stay of execution in view of the fact that the appeal and the application had been filed without unreasonable delay and that substantial loss will be suffered by the applicant if the stay sought was not granted. According to Mr. Ngethe, the 1st respondent’s financial status was not known as he had not filed any replying affidavit showing his financial standing and therefore, there was a possibility that he will not be able to refund the decretal sum should the same be paid to him only for the appeal to succeed thereby rendering the appeal nugatory. The applicant implored the court to allow it to deposit only part of the decretal sum as security in view of the substantial amount in question. Mr. Mwendwa further argued that the respondent had not shown that he was a person of means who would be capable of refunding the decretal sum should the appeal succeed.

6. Mr. Jura, learned counsel for the respondent, opposed the application by expounding on the grounds of opposition filed on 19th April 2017. He submitted that the applicant had not proved that the 1st respondent would not be in a position to refund the decretal sum if the appeal was to succeed after the same had been paid to him. According to the 1st respondent, the case has been pending in court for a long time and it was only fair and just that he be allowed to enjoy the fruits of his judgment. The 1st respondent however maintained that he would not be opposed to the orders of stay of execution pending appeal if the full decretal sum was deposited in a joint interest earning account held by advocates for both parties as security for the due performance of the decree.

7. I have considered the pleadings filed by the parties herein and their rival submissions on the application. I note that the application is premised on order 42 Role 6 of the Civil Procedure Rules which stipulates as follows:

“[Order 42, rule 6. ] Stay in case of appeal.

6. (1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except appeal case of in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stayof 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 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.

(3) Notwithstanding anything contained in sub rule (2), the court shall have power, without formal application made, to order upon such terms as it may deem fit a stay of execution pending the hearing of a formal application.

(4) For the purposes of this rule an appeal to the Court of Appeal shall be deemed to have been filed when under the Rules of that Court notice of appeal has been given.

(5) An application for stay of execution may be made informally immediately following the delivery of judgment or ruling.

(6) Notwithstanding anything contained in sub rule (1) of this rule the High Court shall have power in the exercise of its appellate jurisdiction to grant a temporary injunction on such terms as it thinks just provided the procedure for instituting an appeal from a subordinate court or tribunal has been complied with.”

8. In the instant case, I find that the applicant has satisfied the conditions set in Order 42 Rule 6 and the only issue to be determined by this court is the form of security to be provided by the applicant for the due performance of the decree. In any event, the 1st respondent intimated to the court that he was not opposed to the application as long as the full decretal sum was deposited in a joint interest earning account in the names of advocates for both parties.

9. Before I tackle the issue of security to be provided by the applicant for the due performance of the decree, I feel obliged to deal with the issue of whose responsibility it is to establish the financial standing a decree holder in order to determine his ability to refund the decretal sum in the event that the appeal succeeds. While the applicant contended that it was the responsibility of the 1st respondent to disclose to the court his financial standing, through an affidavit, the 1st respondent on his part, maintained that it was the applicant to prove that he will not be able to refund the decretal sum should the same be paid to him and the appeal succeeds.

10. In HCC Misc Appl 42/2011 at BGM in James Wangalwa & another Vs Agnes Naliaka Cheseto, [2012] eKLR the Court stated 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…”

11. The Court in the above case went further to emphasize that, at paragraph 13 of its ruling: -

“[13] so the applicant must show that he will be totally ruined in relation to the appeal if he pays over the decretal sum to the respondent. In other words, he will be reduced to a mere explorer in the judicial process if he does what the decree commands him to do without any prospects of recovering his money should the appeal succeed. Therefore, in a money decree, like in the case here, substantial loss lies in the ability of the respondent to refund the decretal sum should the appeal succeed. It matters not the amount involved as long as the respondent cannot pay back. The onus of proving substantial loss and in effect that the respondent cannot repay the decretal sum if the appeal is successful lies with the applicant, following after the long age legal adage that he who alleges must prove. Real and cogent evidence must be placed before the Court to show that the respondent is not able to refund the decretal sum should the appeal succeed. It is not therefore enough for a party to just allege as is the case here that the respondent resides out of Kenya and his means is unknown.”

12. In the case of John Gachanja Mundia v Francis Muriira Alias Francis Muthika & another [2016] eKLR Gikonyo J. held that stay of execution is a matter of the discretion of the Court, but for the court to postpone the right of the judgment holder to immediate enjoyment of the fruits of his judgment, the Applicant must show that the Respondent cannot make a refund of the decretal sum; as that would certainly reduce a successful appellant to merely a holder of a barren success, thus, a pious explorer in the judicial process. The court added that the onus of proving substantial loss would occur falls on the shoulders of the Applicant who must not throw or shift it to the Respondent to state his financial ability before the Applicant has shown a prima facie case on reasonable facts that there is some financial limitation on the part of the Respondent. It is only after the legal burden is discharged by the Applicant that the Respondent will be called upon to discharge his evidential burden or provide affidavit of means. This subject was further discussed in the case of Winfred Nyawira Maina vs. Peterson Onyiego Gichana [2014] eKLRin which many cases on the subject were analyzed. In the instant case however, the Applicant reversed the legal burden when he submitted that: -

“The burden is on the Respondent to show that he has the financial capability to refund the decretal sum. The respondent has not sworn an affidavit to state his financial resources to refund the amount.’’.

13. And as the court stated inEsther Nyawira case(ibid) so I shall restate again that: -

I think the foregoing justifies a little rendition on evidential burden for a fuller understanding of the decision of the court in this matter. The way I understand the law, the term Burden of proof, entails the Legal burden of proof and evidential burden. The two terminologies are most of the time misunderstood; albeit distinct. I am concerned mostly with the evidential burden which initially rests upon the party bearing the legal burden, but as the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence. See HALSBURY’S Laws of England, 4th Edition, vol. 17. Therefore, the Applicant must first lay prima facie evidence against the Respondent if evidential burden is to be created on the shoulders of the Respondent. In simple terms see what the Supreme Court said in the case of Raila Odinga vs. IEEBC & 3 Others [2013] eKLR that: -

‘’…a Petitioner should be under obligation to discharge the initial burden of proof, before the Respondents are invited to bear the evidential burden’’.

14. I therefore find that, in the instant case, the Applicant completely missed the point and misdirected his attention by failing to lay prima facie evidence that would then have the effect of shifting the burden of proof to the 1st respondent to establish his financial standing. In the circumstances, there is absolutely nothing which has been placed in the hands of the court to show that substantial loss would occur unless stay of execution is granted. There is doubt the Applicant has shown that substantial loss would occur unless stay is granted.

15. In this case, I find that even though the applicant has not demonstrated substantial loss that is likely to be occasioned to it should execution issue, it has nonetheless offered and proposed that it be allowed to deposit a half of the decretal sum in a fixed interest earning account to secure the performance of the decree. The respondent on the other hand insisted on the provision of the entire decretal sum as security. On this point, I note that Order 42 Rule 6 (2)(b) provides that the security to be provided should be“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.”

16. My understanding of the above sub rule and indeed the interpretation adopted by most costs has been to order that the entire decretal sum be deposited as security as only then can such a security can be said to be truly and ultimately binding on the party. In any event, my humble view is that the decree holder in this case is for all intents and purposes entitled to the payment of the entire amount on the decree save that for the purposes of the appeal not being rendered nugatory, the said amount ought to be secured in the event that the appeal succeeds. My take is that in order to balance the interests of a successful party who is entitled to the fruits of his judgment and the appellant’s right of appeal, it would be fair to order that the entire decretal sum be deposited in a joint interest bearing account so that it can be easily available to the party who will eventually be successful in the appeal in which case it will also provide an impetus for both parties to expedite the hearing of the appeal. I would in the circumstances of this case exercise my unfettered discretion and grant a conditional stay of execution of decree made in Kisii CMCC 293 of 2012 on 21stMarch 2017 in the following terms:

1. There shall be stay of execution of decree in Kisii CMCC 293/2012 pending hearing and determination of this appealbut on condition that the applicant/appellant shall within thirty (30) days of today deposit full decretal sum awarded by the lower court in a financial institution in good standing in an interest-bearing account in the joint names of the parties’ advocates. Such financial institution to be agreed upon by counsel and in default of agreement the Court to appoint such financial institution.

2. In the alternative to the order contained in (1) hereinabove, the applicant may provide a bank bond for the full decretal sum from any reputable bank other than the 2nd respondent herein as a guarantee for the due performance of the decree within 30 days from the date thereof.

3. In default of making the deposit or bank guarantee within the appointed time, the order of stay shall automatically stand vacated and be discharged unless such orders are enlarged by the court.

4. The costs of this application shall be in the appeal.

5. The order herein shall apply to the related case being Kisii HCCA No. 18 of 2017.

17. It is so ordered.

Dated, signed and delivered in open court this 3rd day of October 2017

HON. W. A. OKWANY

JUDGE

In the presence of:

N/A for the Appellant

N/A for the Respondent

- Omwoyo court clerk