[2022] KEHC 12125 (KLR)

Gichuhi & another v Onani ((Suing through Mother and Next Friend Pouline Masista Kitui)) (Civil Appeal E387 of 2021) [2022] KEHC 12125 (KLR) (Civ) (21 July 2022) (Ruling)

Neutral citation: [2022] KEHC 12125 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E387 of 2021

CW Meoli, J

July 21, 2022

Between

Stephen Mwangi Gichuhi

1st Applicant

Makarious Wahome Nyoya

2nd Applicant

and

Joel Onani

Respondent

(Suing through Mother and Next Friend Pouline Masista Kitui)

Ruling

1. Before the court are two motions filed by Stephen Mwangi Gichuhi and Makarious Wahome Nyoya (hereafter the 1st and 2nd applicant/applicants) dated July 6, 2021 and July 23, 2021 respectively. The motion dated July 6, 2021 seeks among others that this honorable court be pleased to order stay of execution of the judgment or decree issued on June 4, 2021 the court in Nairobi Milimani CMCC No 5893 of 2019 pending hearing and determination of the instant appeal. The motion is expressed to be brought under section 3 & 3A of the Civil Procedure Act and order 42 rules 4 & 7 of the Civil Procedure Rules, inter alia, on grounds on the face of the motion and amplified in the supporting affidavit sworn by 1st applicant, on his own behalf and on behalf of his co-applicant.

2. The gist of the affidavit is that the applicants are aggrieved with the judgment entered in Nairobi Milimani CMCC No 5893 of 2019 on June 4, 2021 in favour of Pouline Masitsa Kitui (hereafter the respondent) against them and have preferred an appeal which has a high chance of success; that the applicants have a reasonable apprehension if the decretal amount is paid over to the respondent , she may be unable to refund the it if the appeal were to succeed, thus rendering the appeal nugatory. That the respondent has not demonstrated her financial means and the applicants might suffer substantial loss. He expresses the applicants’ willingness to provide security by way of a bank guarantee for the entire decretal sum.

3. The respondent opposes the motion through the replying affidavit dated July 19, 2021. She attacks the grounds of the motion by asserting that the appeal lacks merit and has no chance of success; and that the motion is a tactic to deny her the fruits of her judgment. She further points out that by the time of filing her replying affidavit, the applicants had not complied with the ex parte court order directing them to deposit kshs 400,000/- within fourteen days and that the court should reject the offer of security by way of bank guarantee but instead order that the balance of the decretal sum be released to the respondent. In her view, the applicants have not proved that they would suffer substantial loss if the orders sought are not granted and their motion should be dismissed with costs.

4. The applicants had subsequently moved the court by a motion dated July 23, 2021 seeking enlargement of time within which to comply with the order to deposit the sum of shs 400,000/- as a condition for the initial ex parte stay of execution issued by this court on July 7, 2021. The said motion includes a prayer for stay of execution pending appeal which is also contained in the first motion. For this reason and the fact that the substantive motion has been heard, the second motion is spent, and the court will proceed to determine the motion dated July 6, 2021 only. Save to note that the applicants had demonstrated in the second motion that they had complied with the order for deposit albeit out of time and desired enlargement of time for purposes of regularizing the late deposit.

5. Regarding the motion dated July 6, 2021 counsel for the applicants founded his submissions on the provisions of order 42 rule 6 of the Civil Procedure Rules. He reiterated the likelihood of substantial loss and he placed reliance on several decisions including Focin Motorcycle Co Limited v Ann Wambui Wangui & Another [2018] eKLR and National Industrial Credit Bank Limited v Aquinas Francis Wasike – Court of Appeal Civil Application No 238 of 2005. He asserted that in the absence of an affidavit of means to demonstrate the respondent’s financial status there is a likelihood that if the appeal were to succeed, the respondent would not be able to refund the decretal sums paid out to her and the motion ought to be allowed.

6. The respondent’s counsel citing M/S Portreitz Maternity v James Karanja Kabia Civil Appeal No 3 of 1997 as cited with approval in Mohamed Salim t/a Choice Butchery v Nasserpuria Memon Jamat[2013] eKLR urged the court to balance the competing rights of the respective litigants while conceding the court’s discretion in determining the form of security. Recalling the decision in Richard Muthusi v Patrick Gituma Ngomo & Another[2017] eKLR counsel emphasized the applicants’ failure to comply in a timely fashion with the initial order for deposit. Counsel proposed that the applicants be ordered to deposit half of the decretal sum and release the balance to the respondent pending hearing and determination of the appeal.

7. The court has considered all the matters canvassed in respect of the motion dated July 6, 2021. First, it is pertinent to state that at this stage, the court is not concerned with the merits of the appeal. It is trite that the power of the court to grant stay of execution of a decree pending appeal is discretionary, however the discretion should be exercised judicially. See Butt v Rent Restriction Tribunal [1982] KLR 417. The Applicants prayer for stay of execution pending appeal, is brought under Order 42 Rule 6 of the Civil Procedure Rules which provides that:“(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 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”.

8. The cornerstone consideration in the exercise of the discretion is whether the applicants have demonstrated the likelihood of suffering substantial loss if stay is denied. One of the most enduring legal authorities on the issue of substantial loss is the case of Kenya Shell Ltd v Kibiru & Another [1986] KLR 410. The principles enunciated in this authority have been applied in countless decisions of superior courts, including those cited by the parties herein. Holdings 2, 3 and 4 of the Shell case are especially pertinent. These are that:“1. …..2. In considering an application for stay, the court doing so must address its collective mind to the question of whether to refuse it would render the appeal nugatory.3. In applications for stay, the Court should balance two parallel propositions, first that a litigant, if successful should not be deprived of the fruits of a judgment in his favour without just cause and secondly that execution would render the proposed appeal nugatory.4. In this case, the refusal of a stay of execution would not render the appeal nugatory, as the case involved a money decree capable of being repaid.”

9. The decision of Platt Ag JA, in the Shell case, in my humble view set out two different circumstances when substantial loss could arise, and therefore giving context to the 4th holding above. The Platt Ag JA (as he then was) stated inter alia that:“The appeal is to be taken against a judgment in which it was held that the present respondents were entitled to claim damages…It is a money decree. An intended appeal does not operate as a stay. The application for stay made in the High Court failed because the gist of the conditions set out in Order XLI Rule 4 (now Order 42 Rule 6(2)) of the Civil Procedure Rules was not met. There was no evidence of substantial loss to the applicant, either in the matter of paying the damages awarded which would cause difficulty to the applicant itself, or because it would lose its money, if payment was made, since the Respondents would be unable to repay the decretal sum plus costs in two courts… (emphasis added)”

10. The learned Judge continued to observe that: -“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 cornerstone of both jurisdictions for granting 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.” (Emphasis added).

11. Earlier on, Hancox JA in his ruling observed that“It is true to say that in consideration [sic] an application for stay, the court doing so must address its collective mind to the question of whether to refuse it would,... render the appeal nugatory. This is shown by the following passage of Cotton L J in Wilson Vs Church (No 2) (1879) 12ChD 454 at page 458 where he said:-“I will state my opinion that when a party is appealing, exercising his undoubted right of appeal, this court ought to see that the appeal, if successful, is not rendered nugatory.”As I said, I accept the proposition that if it is shown that execution or enforcement would render a proposed appeal nugatory, then a stay can properly be given. Parallel with that is the equally important proposition that a litigant, if successful, should not be deprived of the fruits of a judgment in his favour without just cause.”

12. The applicants have expressed apprehension concerning the respondent’s ability to refund any sums paid out, in the event the appeal succeed and asserted that the respondent has not disclosed her financial means hence the likelihood of substantial loss. The respondent’s answer is that her social status is not a relevant factor and cannot be a basis to deny an innocent litigant the fruits of successful litigation. In the case of National Industrial Credit Bank Ltd v Aquinas Francis Wasike and Another[2006] eKLR the Court of Appeal stated that:“This court has said before and it would bear repeating that while the legal duty is on an applicants 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 applicants 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 – see for example section 112 of the Evidence Act, chapter 80 Laws of Kenya.”

13. The decree in the lower court was for a sum of kshs 1,118,560/- with costs & interest. This is a substantial sum as rightly asserted by the applicants. Upon the applicants expressing apprehension about the respondent’s capacity to repay, the burden shifted on her to controvert the assertion by proving her own means. She has not tendered evidence of her means. In the circumstances, it seems likely that the applicants stand to suffer substantial loss and the appeal rendered nugatory if stay is not granted. As stated in the Shell case, substantial loss in its various forms, is the cornerstone of the court’s jurisdiction for granting stay, and what has to be prevented.

14. The applicants have expressed willingness to provide security by way bank guarantee for the entire decretal sum. The respondent has rejected the proposed form of security and urged that court to order the applicants to pay her half of the decretal sum while depositing the balance as security. In opposing the motion, the respondent has emphasized the applicants’ failure to comply with the initial order of deposit. It is true that upon presentation of the motion under certificate of urgency, the court considered it ex parte in the first instance on July 7, 2021 and granted interim orders to stay execution pending inter partes hearing, conditional upon the applicants depositing into court the sum of kshs 400,000/- within fourteen (14) days. A perusal of the court record indicates that the deposit was made a day late, on July 22, 2021. The applicants ought to have complied within the time limits given but so far as the substantive motion is concerned, the court would not be justified to penalize the applicants for the delay, especially since they also promptly filed another motion to regularize the late deposit.

15. That said, the court must balance the competing interests of the parties so as not to prejudice the matter pending appeal. In that regard, the observations made in Nduhiu Gitahi & Another v Anna Wambui Warugongo [1988] 2 KAR, citing the decision of Sir John Donaldson M R in Rosengrens vs Safe Deposit Centres Limited [1984] 3 ALLER 198 and others, apply to the instant motion:“We are faced with a situation where a judgment has been given. It may be affirmed, or it may be set aside. We are concerned with preserving the rights of both parties pending that appeal. It is not our function to disadvantage the defendant while giving no legitimate advantage to the plaintiff……It is our duty to hold the ring even-handedly without prejudicing the issue pending the appeal…”

16. In view of all the foregoing, the court is persuaded to grant the motion dated July 6, 2021. The order to stay execution is granted on condition that the applicants deposit the entire decretal sum into an interest earning account in the joint names of the parties’ advocates within 45 (forty-five) days of today’s date. For that purpose, the sum of shs 400,000/- deposited into court is to be released to the depositor. Costs will be in the cause.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 21ST DAY OF JULY 2022C MEOLIJUDGEIn the presence of:For the applicants: Ms GichohiFor the respondent: Mr Mwangi h/b for Ms NyamburaC/A: Carol