Gachoki & another v Njeri (Civil Appeal E131 of 2025) [2026] KEHC 9345 (KLR) (30 June 2026) (Ruling)

Gachoki & another v Njeri (Civil Appeal E131 of 2025) [2026] KEHC 9345 (KLR) (30 June 2026) (Ruling) Neutral citation: [2026] KEHC 9345 (KLR) Republic of Kenya In the High Court at Kerugoya Civil Appeal E131 of 2025 EM Muriithi, J June 30, 2026 Between Benson Muthii Gachoki 1st Appellant Esther Wanjugu Muthii 2nd Appellant and Beatrice Mitchelle Njeri Respondent Ruling 1.The applicant filed a Notice of Motion dated 24th February, 2026 seeking the following orders:1.Spent.2.Spent.3.The court be pleased to grant stay of execution in Kerugoya CMCC No. E079 of 2024 — Beatrice Mitchelle Njeri vs Benson Muthii Gachoki & Anor pending the hearing and determination of the appeal filed herein.4.The costs of this application be provided for.5.The court grants any other orders that this court may deem fit and just. 2.The application is based on the grounds on the face of the application and the supporting affidavit of Paul Kiranga, the applicant’s Counsel setting out the facts releid upon that the ruling was delivered on 29th October, 2025 by Hon. Grace Waithira-Resident Magistrate in Kerugoya CMCC No. E079 of 2024 -Beatrice Mitchelle Njeri vs Benson Muthii Gachoki & Anor dismissing the Appellants’ Notice of Motion Application dated 19th June, 2025. The Appellants/Applicants aver that the learned Trial Magistrate erred in law by failing to correctly interpret Section 67C (11) of the Insurance Act in findig that the Appellants as judgment debtors and/or policy holders are not protected by the moratorium placed on their insurer. 3.Further, the appellants aver that the Respondent has commenced execution against the Appellants/Applicants. The Warrants of Execution were served upon the Applicants on 19th February, 2026. If stay of execution is not granted, substantial loss and inconvenience may result to the Appellants considering the Respondent is a person of no means and will not be able to pay back the amount in case the appeal succeeds. 4.Further, the appellants aver that the appeal herein has a reasonable chance of success and if execution is carried out, it will render the appeal nugatory and a mere academic exercise. The application has been made without unreasonable delay. The appellant is willing to abide by any conditions and terms as to security as the court may deem fit to impose. Lastly, the respondent will not suffer any prejudice should this application be allowed. Response 5.The respondent filed a Replying Affidavit objecting that the judgment in this matter was delivered on 14th May 2024. The Applicants never raised to issue that the insurer would be unable to meet the Judgment, which it considers that the Appeal herein is an issue that relates to the Applicants and their Insurance Company. The respondent urge that in seeking stay of execution, the Applicants are only wasting the court’s precious time and frustrating the respondent enjoying fruits of the Judgment. The respondent avers that the Applicant has not shown any willingness and readiness to provide any form of security which is clear indication that they are out to frustrate her. Lastly, she avers that she continues to suffer prejudice as the applicants continue seeking stay for an issue that is between them as a Policy Holder and their Insurance Company. Issue 6.The issue for determination is whether the Applicants have satisfied the conditions for grant of stay pending appeal. Analysis 7.Under Order 42 Rule 6 (1) and (2), the Court may order stay of execution where:a.The applicant demonstrates substantial loss may result unless the order is made;b.The application has been made without unreasonable delay; andc.The applicant provides such security as the court may order for due performance of the decree. 8.On whether the Applicants are likely to suffer substantial loss, the Applicants have deponed that execution has already commenced and that the Respondent may not be able to refund the decretal sum in the event the appeal succeeds. The Respondent has not placed before the Court any material demonstrating her financial ability to refund the decretal amount to rebut the allegation in paragraph 8 of the supporting affidavit of Counsel Paul Kiranga on behalf of theappellants that “if stay of execution is not granted, substantial loss and inconvinence may result to the appellants considering the Respondent is a person of no means and will not be able to pay back the amount in case the appela succeeds.” In the present case, the Respondent merely denied the Applicants’ assertions without tendering evidence of means. 9.However, as part of establishing whether substantial loss may result the court must consider whether there exists an arguable appeal, in terminology of the Court of Appeal standard on a Rule 5 (2) (b) application for stay of execution pending appeal. If no arguable appeal is shown, the applicant may not be said to stand to suffer substantial loss within the meaning of the Order 42 Rule 6 of the Civil Procedure Rules as the appeal is not likely to succeed upon hearing and determination. The frivolity of the appeal denies the basis for a finding of substantial loss. Arguable appeal 10.There cannot be substantial loss where the appeal is frivolous. In its ruling of 29/10/2025, which is the subject of teh appeal, the trial court herein made a determination on the question of stay of its judgment as follows:“Issues, Analysis and Determination6.The sole issue for determination is whether there should be stay of execution in this matter, pending the outcome of the Statutory Management and the Moratorium issued by the Insurance Regulatory Authority against the applicant's insurer, Invesco Assurance Company Limited.7.Judgment in this matter was entered against the defendants way back in-May 2025.8.The defendants / applicants assert that at the material time, the subject vehicle was insured by their insurer, Invesco Assurance Company Limited, which was subsequently placed under statutory management. Amoratorium was thereafter put in place, barring payment from being made to policy holders or any other creditors by the insurer.9.Undeniably, under the Insurance (Motor Vehicles Third Party Risks) Act (herein "the Act") an insurer is required to settle decretal sums where judgment is entered against its policy holder for third party risks, arising out of the use of the insured motor vehicle. If the defendant had a valid policy at the material time, his insurer would have to settle the decretal sum provided that the requirements set out under the Act were met.10.The applicant has not presented before this court a declaratory order compelling his insurer to settle the decretal sums arising out of this suit. It is therefore not clear whether the conditions set out in the Act have been met.11.However, even where a valid insurance policy exists and an insurer is contractually required to cover an award, the duty to settle a decretal sum does not shift from the judgment debtor. That was the finding of the court inOdhiambo v Monarch Insurance Co Lid, Senge IX another (Interested Parties) (Civil Case E002 of 2022) (2022J KEHC 15610 (KLR) (23 November 2022) (Ruling) where the court held;I must however state that the primary obligation of settling the decree falls squarely on the plaintiff and in the event that the Defendant as his insurer fails to satisfy the decree, the plaintiff will still be called upon to satisfy the same. In other words, the mere fact that the Defendant is bound both contractually and statutorily to satisfy the decree does not absolve the plaintiff from meeting his obligations under the tort of negligence."12.Similarly, the court in Kivuu v Moki (Civil Appeal E53 of 2021) (2024J KEHC 2204 (KLR) (5 March 2024) (judqment) held;The question between the appellant and his insurer was something between the two parties. Without a 3rd party notice, the insurance Company was a stranger in the proceedings and the appellant could not place reliance on moratorium for failure to pay up. The question of moratorium in any event was only raised after N.T.S.C. had been issued."13.The applicants' insurer is also not a party to these proceedings and has made no undertaking to settle the decretal sum arising in the matter. As the decision of the court has not been set aside or reviewed, the plaintiff is entitled to the fruits of her judgment. The plaintiff can not be held in limbo as the applicants pursue their insurers' Statutory Manager. As held in the foregoing authorities, the duty to settle the decretal sum squarely rests upon the applicants. Nothing bars them from settling the decretal sum and pursuing their insurer for reimbursement. They therefore stand to suffer no injustice if the plaintiff proceeds with execution.14.Consequently, this court finds no merit in the application dated 19th June 2025 and dismisses it with costs to the plaintiff/respondent.Dated, Signed and Delivered at Kerugoya this 29th Day of October 2025.Hon. GraceWaithira(RM)” 11.The fact of failure of the insured to settle a judgment against the insured is no reason for stay of execution of the decree against the Insured. The Court of Appeal has taken this position in Luxury Suttles Touurs & Travel case [Luxury Suttles Tours & Travel Ltd & another v Njoroge & another (Civil Application E148 of 2025) [2026] KECA 206 (KLR) (6 February 2026) (Ruling)] when declining an application for stay pending appeal under Rule 5(2) (b) of the Court of Appeal Rules observed, the liability to satisfy the decree lies with the insured, as follows:“18.As regards whether the intended appeal is arguable, we note that although the applicants’ intended appeal is against the decision of the High Court that set aside the earlier order of stay of execution granted by the subordinate court, the appellants have neither challenged nor appealed against the decree. We agree with the respondents that in law the liability is primarily that of the applicants as the insured parties. We therefore are not persuaded that the applicants have demonstrated that they have an arguable appeal.” 12.As regards the intreptation of section 67C (11) of the Insurance Act this Court has had in Maitima v Muchui (Civil Appeal E226 of 2023) [2024] KEHC 696 (KLR) (1 February 2024) (Ruling), the opportunity to consider the effect of moratorium under section 67C as follows:“6.The Insurance (Amendment) Act No. 28 of 2019 amended the provisions of section 67 of the principal Act to insert subsection 11 which provides as follows:11.For the purpose of this section, where a moratorium is declared under subsection (10), a policyholder shall not be liable to pay any claim not payable by the insurer due to the moratorium.”7.The amendment and moratorium the statutory manager declared a moratorium dated 3/11/2017 does not bar civil proceedings against insured persons or policy holders.8.The applicant’s argument High Court Winding-up Cause No. 238 of 2017 has not been concluded and the statutory management has not been otherwise terminated by the Court. In the existence of the moratorium, the payment by policyholders, and therefore execution thereof, is put on hold by virtue of the 2019 amendment to the Insurance Act.9.The respondent was content to oppose the application on the basis of the tests arguable appeal, substantial prejudice and provision of security in the grant of stay of execution pending appeal.Pre-2019 caselaw10.The court notes the argument of courts in pre-2019 decisions on the matter when consensus appears to have been that a moratorium by a statutory manager of an insurer did not affect the rights of a plaintiff to recover from an insured. For instance, in Muthuri Ntara & another v Francis Mworia Igweta [2016] eKLR of 26th day of May 2016, the Court (F.Gikonyo J) ruled as follows:I reckon that the Respondent is neither a policy holder nor a creditor of Blueshield Insurance Company. He is merely a decree-holder against the Appellants jointly and severally. Therefore, a moratorium issued to protect the Insurance Company whose fortunes have now dwindled; leading to statutory management does not operate as stay of execution of decrees against the insured. A moratorium is declared by the Statutory Manager under Section 67C (10) of the Insurance Act and it protects the insurer against claims by the policyholders and creditors of the insurer. Accordingly, mere declaration of a moratorium does mean an automatic stay of execution against the insured; the insured must prove before the trial court upon lawful grounds that a stay of execution is merited. Courts have had opportunity to consider the effect of a moratorium on third parties’ suits and decrees. I am particularly concerned that In The Matter of: Blueshield Limited (Under Statutory Management) Civil Suit 465 of 2011 (O.S.) Justice H.P.G Waweru said the following about the third party in the suit:……Her suit is against a tortfeasor in negligence. She has no direct connection, as policy holder or creditor, to Blue Shield.10.The moratorium declared by the Statutory Manager, in so far as it extended to the interested party’s suit, was clearly ultra vires subsection (10) of section 67C of Cap 487.Justice Waweru also stated in the same case thus:Similarly, the order of this court of 28th October, 2011, in so far as it affected the 1st interested party’s case ……was made without jurisdiction. The order was made ex parte without the 1st interested party being given an opportunity to be heard on the matter. Now that she has been heard, the order is clearly unlawful and was made in error. It must be set aside in so far as it affects her suit to enable her to pursue the tortfeasor. The obligations of Blue Shield to the 2nd and 3rd interested parties (policy holders) under their contract of insurance cannot concern the 1st interested party.(9)It should be appreciated that the Respondent’s suit and decree is not a declaratory suit or decree against the insurer. It is a decree against the tortfeasor.”11.The Court is also aware of the decision of 20th day of December, 2019 Stephen Kilonzo Matiliku v Premier Industries Limited [2019] eKLR (C. Kariuki J.) citing F. Gikonyo, J. in HCC No. 88 of 2012 in the matter of Concord Insurance Company Limited [2014] eKLR, that a claim for payment of the judgment debt from the insured is not covered by the moratorium on the payments by the Insurer to his insured policy holders and creditors, as follows:47.In this respect, section 67C (10) of the Insurance Act provides in part that a declaration of a moratorium by a statutory manager relates to “payment by the insurer of its policyholders and other creditors.”48.The appellant in this case was neither a policyholder nor creditor of the insurer as he did not fall within neither of the two classes of persons therefore, the moratorium did not apply to him.49.This position regarding person of the class of the appellant was addressed in HCC No. 88 of 2012 in the matter of Concord Insurance Company Limited [2014] eKLR where Gikonyo J stated:As a good beginning point, I can pronounce with ease that the interested parties herein are not policyholders of or creditors to Concord Insurance Company.... Section 67C (10) of the Insurance Act was not intended to deny legitimate suitors of their right to institute proceedings for relief against an insured of an insurance company under receivership for tortious acts of or breaches by the insured. The said section is intended to allow the manager to discharge his duties in relation to the revival of the insurance company. In my own view, I think, the protection offered by the moratorium and court orders attendant thereto is to the company from payments by the insurer (company) of its policyholders and other creditors, and not necessarily to the policyholders or other creditors against liability from third parties. Therefore, in so far as the interested parties have cases against the insured, there is nothing to stop them from pursuing the claims to logical conclusion.”50.It is apparent from the foregoing, that the respondent’s claim herein cannot lawfully be subjected to the moratorium which only applies to payments by the insurer, which is under statutory management, to its policyholders and other creditors. That much is also clear from the terms of the Kenya Gazette notice.”12.The latter decision was made on 20/12/2019 and although both were correct at the time they were made, they cannot be of precedent value today following the amendment to the Insurance Act cap. 487 by the Insurance (Amendment) Act NO. 28 of 2019, whose Date of Assent was 13th December, 2019 and Date of Commencement 31st December, 2019.13.The Court must, of course, observe the presumption of constitutional validity of the amendment until the question is determined in a proper suit in that behalf. It is the interpretation of the law that will determines the decision of the court in this interlocutory application. Subsection 11 provides as follows:11.For the purpose of this section, where a moratorium is declared under subsection (10), a policyholder shall not be liable to pay any claim not payable by the insurer due to the moratorium.”14.The question remains whether the payment of the decretal sum in the negligence claim herein is “a claim not payable by the insurer due to the moratorium”? Section 67 C on power to declare moratorium is given as follows:10.For the purposes of discharging his duties, a manager shall have power to declare a moratorium on the payment by the insurer of its policy holders and other creditors….”15.With respect, the amendment to section 67C inserting subsection 11 does not appear, in my view, to offer the insured the protection against payment of decretal sum in negligence suits as claimed by the statutory manager. The subsection is, with respect, redundant. It purports to protect the insured from making payments stopped by the moratorium which only affects the payments to themselves, the insured (policyholders in the language of the Act), and creditors. The creditors referred to in the subsection are creditors of the Insurer. This not being a declaratory suit, the respondent successful party is not a creditor of the Insurer for [whom] a moratorium has been declared.16.This court has not been able to find a binding authority on the issue post 2019 amendment but has noted a persuasive decision of 2021, Wycliffe Otieno Onyango v Statutory Manager Blueshield Insurance Co. Ltd & 2 others [2021] eKLR where the Court (S. N Riechi J,) held as follows:If there is a moratorium in force as well as subsisting court orders barring the levying of any execution against the policyholders of Blueshield, that should be placed before the trial court.”17.The declaration of extension of the moratorium herein dated 3/11/2017 read in part that:Now take further notice that in exercise of powers conferred by section 67 C (10) of the Insurance Act, the Statutory Manager extends the Moratorium on payments by the said Insurer to its Policyholders and all other creditors with effect from the date of this notice pending hearing and determination of the said winding up cause or otherwise terminated by the court.”It is clear that nothing in the moratorium that bars a third party from executing a decree against a tortfeasor which is the case herein, during the pendency of the moratorium against the insurer. The amendment by subsection 67 C (11) of the Insurance Act covers the insured only to the extent of “any claim not payable by the insurer due to the moratorium.”18.The matter, therefore, falls to be considered as a pure stay of execution pending appeal application without the purported fetters of limitation of execution against an insured by virtue of the 2019 amendment to the Insurance Act.19.The law concerning applications for stay of execution of a Judgment and/or Ruling is well espoused in the provisions of Order 42 Rule 6 of the Civil Procedure Rules, as follows: -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 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 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.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.This court respectfully agrees with the court of Appeal in Butt v Rent Restriction Tribunal [1982] KLR 417 that the power to grant stay is discretionary and such discretion should be exercised in such a way as not to prevent an appeal.” 13.This Court does not find an arguable case in the matter and, consequently, the applicant cannot demonstrate substantial loss to warrant the grant of stay of execution pending appeal. Delay 14.On delay, the impugned ruling was delivered on 29th October, 2025 while the present application was filed on 24th February, 2026. The delay is not inordinate. Security for due prformance of the decree 15.On security for due performance of the decree, the Applicants have indicated willingness to comply with any reasonable conditions imposed by the Court. The purpose of security is to balance the competing interests of the parties so as to safeguard the rights of the decree holder while preserving the right of appeal. The Court must, therefore, balance the Applicants’ right of appeal against the Respondent’s right to enjoy the fruits of her judgment. Conclusion 16.Having considered all the circumstances of this case, the Court is not satisfied that the appellant has an arguable appeal and, consequently, there is no likelihood of suffering a substantial loss within the meaning of the Order 42 rule 6 of the Civil Procedure Rules. However, in exercise of teh discretion of the Court, as the appellant has not urged his appeal on the merit and may not have considered the decisions of the Court set out above, the Court finds it appropriate to balance the interests of the parties in the case to grant opportunity for the appellant to pursue his appeal while the decreee holder enjoys part of his fruits of judgment, and shall make an order for part payment of the decretal sum while the balance is depositied into an interest earning account awaiting the hearing and determination of the appeal. Orders 17.Accordingly, for the reasons set out above, the Court makes the following orders:1.The application for stay of execution pending appeal is granted on the conditions that the appellant shall pay to the Respondnet the sum equivalent to one third (1/3) of the Decretal sum awarded by the trial court and deposit the balance into joint interest earning account in the names of the Counsel for the parties, within thirty (30) days.2.In default, the order for stay of execution shall lapse and be of no effect.3.The Record of Appeal shall be filed within sixty (60) days.4.Directions as the hearing of the appeal on 17/9/2026. 18.The costs of the applicatrion will be costs in the appeal.Order accordingly. DATED AND DELIVERED THIS 30TH DAY OF JUNE 2026.EDWARD M. MURIITHIJUDGEAppearances:Mr. Kiranga for Appellant.Mr. Maringa for Respondent.