[2022] KEHC 3227 (KLR)

Imonje v Mwananchi Credit Ltd (Civil Appeal E076 of 2021) [2022] KEHC 3227 (KLR) (Commercial and Tax) (8 July 2022) (Ruling)

Neutral citation: [2022] KEHC 3227 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Appeal E076 of 2021

A Mshila, J

July 8, 2022

Between

Praxidese Khatembi Imonje

Appellant

and

Mwananchi Credit Ltd

Respondent

Ruling

Background 1. The Applicant filed a Notice of Motion dated August 24, 2021 under Order 42 Rule 6 of the Civil Procedure Rules 2010 and sections 3A and 18 of the Civil Procedure Act; The Application was supported by the grounds on the face of it and the sworn affidavit of Praxidese Khatembi Imonje who sought for orders that;a.That pending the inter-parties hearing and determination of this Application, the Court to issue an Order of Stay of the ruling delivered on August 20, 2021 by Hon. E. Wanjala (Ms) Principal Magistrate in Chief Magistrate Court at Milimani Civil Suit No. E1447 of 2021. b.That pending the hearing and determination of this Application and this Appeal, the court to issue an order directing the Respondent to release motor vehicle registration number KCH 600B Yutong Bus to theapplicant.c.That pending the hearing and determination of this Application and this Appeal, the court to issue an order directing therespondent not to sell motor vehicle registration number KCH 600B Yutong Bus.d.That pending the hearing and determination of this Appeal, the court to issue an Order of Stay of the ruling delivered on August 20, 2021 Hon. E. Wanjala(Ms) Principal Magistrate in Milimani Civil Suit No. E1447 of 2021. e.The court to make such other orders as it may deem fit and just.f.Costs of this Application be provided for.

2. The applicant stated that the ruling handed down on August 20, 2021was deliberately misconstrued by the respondent to mean repossession of the said motor vehicle Registrations no. KCH 600B Yutong Bus hence detrimental to the Applicant as the registered owner of the same.

3. On 21st August 2021, the respondent through LAAR Auctioneers unlawfully repossessed motor vehicle Registrations no. KCH 600B Yutong Bus in execution of the said orders without the requisite 7 days' notice to the Applicant as per the provisions of the Auctioneers Act hence prejudicing her interests.

4. As per the Consumer Protection Act 2012, the respondent ought to have legally obtained an order through the leave of the High Court to effect the repossession of the motor vehicle registration no. KCH 600B Yutong bus.

5. The repossession done one day (August 21, 2021) after the ruling was handed down on August 20, 2021is illegal, malicious and done in bad faith with a view to destroying the subject matter of these proceedings and/or the sale and subsequently transfer to a third party will render this appeal nugatory.

6. The applicant is apprehensive that the respondent, through the said LAAR Auctioneers will auction motor vehicle registration no. KCH 600B and sell the same through an illegal process.

7. The main principles of granting a stay of execution pending appeal are well enumerated under Order 42 Rule 6(2) of the Civil Procedure Rules and the Applicant has demonstrated that she has met the conditions.

8. There has been no delay in filing of the Application herein since the impugned ruling of the court was delivered on 20th August 2021.

9. Unless orders sought for herein are so granted, as a matter of urgency, the Applicant's motor vehicle registration no. KCH 600B Yutong Bus stands to be unlawfully auctioned; the Applicant stands to suffer great and/or irreparable loss.

10. The Application herein will not occasion any prejudice to the respondent as a final and just determination of the issues between the parties will be made upon hearing of the appeal.

11. The Respondent filed a replying affidavit dated October 12, 2021and stated that looking at the Appellant's present Application for stay of execution pending appeal, it falls short of the essentials of Order 42 Rule 6 of the Civil Procedure Rules 2010in the sense that; -a.The appellant has not shown or demonstrated the loss she would suffer if the orders sought are declined; orb.The appellant has failed to offer any security or indicated her ability to offer any security if the court was to so direct.c.She has failed to demonstrate that she is a person of substance capable of paying the Respondent considering that she has utterly failed to repay the loan sum she had taken.

12. Moreover, looking at the Application and the intended grounds of appeal all are majorly matters of law and the subject matter being quantifiable in damages, a stay of execution pending appeal is not in the circumstances warranted.

13. The appellant also failed to show that the respondent is not capable of compensating her if damages were to issue which is a strong element that ought to be shown to warrant orders for stay pending appeal.

Applicant’s Case 14. It was theapplicant’s submission that the purpose of a stay of execution pending appeal was to preserve the subject matter so that the right of appeal can be exercised without prejudicing the applicant as the appeal would be rendered nugatory if there were no orders for stay, granted.

15. In Vishram Ravji Ilalai v Thornton & Turpin Civil Application No Nai 15 of 1990 [1990] KLR 365, the Court of Appeal held that whereas the Court of Appeal's power to grant a stay pending appeal is unfettered, the High Court's jurisdiction to do so under Order 42 Rule 6 of the Civil Procedure Rulesis fettered by three conditions namely; establishment of a sufficient cause, satisfaction of substantial loss and the furnishing of security.

16. The applicant contended that being aggrieved by the decision of the Magistrate made on August 20, 2021, the Applicant seeks protection of the court from illegal repossession of the subject matter and subsequent execution in favour of the Respondent. The Applicant further contended that if a stay order was not granted, then the object of this Application and the appeal would be rendered nugatory.

17. The repossession was done one day after the ruling was handed down and it was illegal, malicious and done in bad faith with a view to destroying the subject matter of these proceedings and/or the sale and subsequent transfer to a third party would hence render this appeal nugatory. Thus, the applicant cannot fully be compensated by an award of damages in these circumstances and if the order sought for stay pending appeal is not granted, theapplicant stands to suffer substantial loss.

18. The applicant argued that she has met the threshold for the grant of stay of execution pending appeal and in the circumstances, there is proof that the legal rights of the applicant have been infringed on and are likely to continue being infringed upon by an unlicensed money lender who carries on an illegal business of lending money to an unsuspecting public and charging uncontrolled interest rates.

Respondent’s Case 19. In response it was the respondent’s submission that the Application first failed to demonstrate what loss the appellant would suffer if the orders were denied. Secondly, the Appellant failed to offer any security or indicate her ability to offer any if the court so directed and lastly, she failed to demonstrate that she is a person of substance capable of paying costs of the appeal if at all she fails in the same.

20. Apart from allegations, the appellant has not demonstrated that the subject car is in the possession of the respondent for an order of release to issue as prayed.

21. This is a money claim where the respondent stated that it had not been paid as per the terms of the loan agreement and being a non-deposit taking entity which intermediates its own funds is at a risk of serious losses.

22. It was therefore the respondent's submission that the appellant's applicationis devoid of merit and should be dismissed.

Issues for Determination 23. After considering the Application, Response and the written submissions by the parties herein the court has framed only one issue for determination;a.Whether an Order of Stay of execution of the Ruling delivered on August 20, 2021should issue;

AnalysisWhether an Order of Stay of execution of the Ruling delivered on August 20, 2021should issue; 24. The legal basis for grant of stay pending appeal is set out under the provisions of Order 42 Rule 6 of the Civil Procedure Rules, 2010. And it reads as follows(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.

25. In the case of Antoine Ndiaye v African Virtual University [2015] eKLR, the court held inter alia that;“Stay of execution should only be granted where sufficient cause has been shown by the Applicant. And in determining whether sufficient cause has been shown, the court should be guided by the three prerequisites provided under Order 42 Rule 6 of the Civil Procedure Rules.”

26. The question of stay of execution pending appeal has been canvassed at length in various authorities, such as in the Court of Appeal decision in Chris Munga N. Bichange v Richard Nyagaka Tongi & 2others [2021] eKLR where the court stated the principles to be applied in considering an application for stay of execution as thus: -“The law as regards applications for stay of execution, stay of proceedings or injunction is now well settled. The applicant who would succeed upon such an application must persuade the court on two limbs, which are first, that his appeal or intended appeal is arguable, that is to say it is not frivolous. Secondly, that if the application is not granted, the success of the appeal, were it to succeed, would be rendered nugatory. These two limbs must both be demonstrated and it would not be enough that only one is demonstrated.”

27. Basically, the defendant/applicant is required to demonstrate- the following;

28. Substantial loss – The question is what substantial loss the Appellant will suffer if stay of enforcement of that order of the subordinate court is not made in her favour? The court must determine whether the applicant has demonstrated the likelihood of suffering substantial loss if stay is denied. The Applicant herein is apprehensive that the Respondent, through LAAR Auctioneers will auction motor vehicle registration no. KCH 600B and sell the same.

29. Delay – the impugned ruling was made on August 20, 2021and the present Application filed on August 24, 2021. This court is satisfied that there was no delay on the Applicant’s part in filing the instant application.

30. Security – Under the provisions of Order 42 Rule 6 (1)(2) of the Civil Procedure Rules, a party seeking a stay must offer such security for the due performance of the orders as may ultimately be binding on the appellant. The Applicant was silent on the issue of security and the same has therefore not been addressed.

31. In Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd [2019] eKLR, the court observed:“… the applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition a party who seeks the right of appeal from money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under order 42 rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the degree in order to enjoy the fruits of his judgment in case the appeal fails.Further, Order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal … This the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine.”

32. It was upon the applicant to provide the actual security for consideration by thecourt as to its sufficiency. In the case of Equity Bank Ltd v Taiga Adams Company Ltd[2006] eKLR it was held that: -“Of even greater impact is the fact that an applicant has not offered security at all, and this is one of the mandatory tenets under which the application is brought ...let me conclude by stressing that of all the four, not one or some, must be met before this court can grant an order of stay...”

33. The applicant raised a myriad of issues in the Application concerning the operations of the respondent. At this stage the Court is not concerned with the merits or otherwise of the appeal as the applicable considerations in Order 42 Rule 6(2) do not include such a requirement. Therefore, the applicant’s arguments as regards the Respondent being an unlicensed money lender is an arguable ground that should be canvassed accordingly in the intended appeal filed by the Applicant.

34. This court is satisfied that the appellant has an arguable appeal on the of the grounds of the respondents business and the act and manner of re-possession;.

Findings and Determination 35. In the light of the foregoing this court makes the following findings and determinations;i.This court finds that the application was brought without undue delay;ii.The application is found to have merit and it is hereby allowed; the Applicant is hereby granted an order for stay of execution pending the hearing and determination of the Appeal on the following conditions;iii.The applicant to deposit the sum of Kenya Shillings Five Hundred Thousand (KShs.500,000/-) within 30 days from the date hereof in an interest earning account in the joint names of the advocates for the appellant and respondent as security for due performance;iv.The court orders the respondent to release motor vehicle registration number KCH 600B Yutong Bus upon condition (iii) being fulfilled;v.The appellant to file and serve the Record of Appeal within 45 days and to also have it listed for admission within this specified timeline;vi.In default the respondent is at liberty to proceed to executing the decree for the recovery of the full decretal sum;vii.The applicant to bear the costs of application.

Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 8TH DAY OF JULY, 2022. HON. A. MSHILAJUDGEIn the presence of;Kuloba for the RespondentNo appearance for the ApplicantJasmin---------------Court Assistant