[2022] KEHC 1845 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NYERI

CIVIL APPEAL NO. E030 OF 2021

JAMII BORA BANK LIMITED.........................................1ST APPELLANT/APPLICANT

ELIUD C. WAMBU T/A CHADOR AUCTIONEERS.....2ND APPELLANT/APPLICANT

VERSUS

SAMUEL WAMBUGU NDIRANGU.............................................................RESPONDENT

RULING

Brief facts

1. The application for determination dated 26th July 2021 brought under Articles 50 & 159 of the Constitution of Kenya, Sections 1A, 1B, 3A & 65 of the Civil Procedure Act and Orders 40, 42 Rule 6, Order 51 Rule 1 of the Civil Procedure Rules seeks for orders for stay of execution of the judgment and decree in Nyeri Chief Magistrate Court CMCC No. 265 of 2017 pending the hearing and determination of the application and the appeal.

2. In opposition of the said application, the respondent filed a Replying Affidavit dated 20th August 2021.

The Applicants’ Case

3. It is the applicants’ case that judgement was delivered on 28/06/2021 and the trial court granted thirty (30) days stay of execution. Being aggrieved by the decision of the trial court, the applicants sought to appeal the judgment and also applied for certified copies of the typed proceedings.

4. The applicants contend that the appeal raises arguable issues with high chances of success and if stay of execution is denied it shall render the intended appeal nugatory and the applicants will suffer irreparable harm as they will have to pay the decretal sum. Furthermore, it is contended that if the decretal sum is paid, the applicant may not recover the sum from the respondent as he is not in a financial position to refund the sum if the appeal succeeds. Moreover, the applicants state that the respondent does not stand to suffer any loss or injustice that cannot be adequately compensated by way of costs.

The Respondent’s Case

5. It is the respondent’s case that the application is frivolous, vexatious, an abuse of the court process and has no substance as the threshold for granting the orders has not been satisfied. He states that the appeal does not raise triable issues with high chances of success.

6. The respondent contends that he is not a man of straw and he will be able to refund the decretal sum if the appeal is decided against him. He further states that the appellants should be ordered to deposit the decretal sum as security for the due performance of the decree in an interest earning joint account with the respondent in the event stay is granted.

7. The respondent argues that the applicants’ intention is to deny him the fruits of his litigation. As such, he prays that the application is dismissed with costs.

8. Parties hereby disposed of the application by way of written submissions.

The Applicants’ Submissions

9. The applicants rely on Order 42 Rule 6 and submit that they have met the threshold for the grant of orders for stay of execution pending appeal. The 1st applicant submits that it is a banking institution with branches all over the country and execution by the respondent will injure the 1st applicant’s image and reputation which will result to substantial loss of income and faith by its clients.

10. The 1st applicant further submits that it stands to suffer substantial loss in the form of monetary loss as the decretal sum if paid to the respondent will not be recovered back. To demonstrate this point the applicants rely on the case of Century Oil Trading Company Ltd vs Kenya Shell Limited Nairobi (Milimani) HCMCA No. 1561 of 2001. The 1st applicant contends that it is not clear on the respondent’s financial position while on the other hand the 1st applicant contends that if the appeal fails, it is financially stable with a well-established asset base and is capable of settling the judgment sum without any difficulty. Moreover, the applicants submit that the respondent stands to suffer no prejudice if stay pending appeal is granted since he will still be entitled to his judgment if the appeal does not succeed and further any delay occasioned may be compensated to him by way of costs.

11. The applicants further submit that their appeal is meritious and worthy to be canvassed to its final conclusion. The applicants contend that the trial court erred by awarding the respondent Kshs. 200,000/- as general damages, though the respondent did not seek that relief in his plaint. Further, the trial court awarded special damages was awarded though the same was never proven as required by law. As such, unless stay is granted, the applicants state that the respondent will be free to execute the judgment which will render them to be condemned unheard resulting to the instant appeal been rendered nugatory.

12. The applicants further submit that they have filed their application timeously as judgment was delivered on 28/6/2021 and on 29/6/2021, they filed for a copy of the judgment and typed proceedings. They add that they filed their Memorandum of Appeal on 14th July 2021 and brought the instant application on 26th July 2021.

13. The applicants state that they are willing to provide security for the decretal sum if called upon by the court to do so. They further state that the respondent stands to suffer no prejudice in the event no security is given and the application for stay is allowed.

14. The applicants submit that they are entitled to costs as the respondent dragged them to court for exercising their right of recovery of loan amounts accruing from a hire purchase facility advanced to the respondent who defaulted in payment of the monthly sums. In summation, the applicants urge the court to exercise its judicial discretion and allow their application with costs.

The Respondent’s Submissions

15. The respondent reiterates what he deponed in his affidavit and relies on the case of Michael Ntouthi Mitheu vs Abraham Kivondo Musau [2021] eKLR and urges the court to order the applicants to deposit the decretal sum as security for the due performance of the decree in an interest earning joint account with the respondent , if stay is allowed.

Issues for determination

16. After careful analysis, the issue for determination is whether the applicants have met the prerequisite for grant of stay of execution pending appeal.

The Law

Whether the applicants have met the perquisite for grant of stay of execution pending appeal.

17. The principles upon which the court may stay the execution of orders appealed from are well settled. Order 42 Rule 6 of the Civil Procedure Rules stipulates:-

“No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except 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 orders set aside.

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 1st 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.

18. Thus under Order 42 Rule 6(2) of the Civil Procedure Rules, an Applicant should satisfy the court that:

1. Substantial loss may result to him unless the order is made;

2. That the application has been made without unreasonable delay; and

3. The applicant has given such security as the court orders for the due performance of such decree or order as may ultimately be binding on him.

19. These principles were enunciated in Butt vs Rent Restriction Tribunal [1979] the Court of Appeal stated what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court said that:-

a. The power of the court to grant or refuse an application for a stay of execution is discretionary; and the discretion should be exercised in such a way as not to prevent an appeal.

b. Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.

c. Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.

d. Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security of costs as ordered will cause the order for stay of execution to lapse.

Substantial loss

20. Under this head, an applicant must clearly state what loss, if any, they stand to suffer. This principle was enunciated in the case of Shell Ltd vs Kibiru andAnother [1986]KLR 410 Platt JA set out two different circumstances when substantial loss could arise as follows:-

“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 this 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….”

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.

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 LJ in Wilson vs Church (No.2) (1879) 12 ChD 454 at page 458 where he said:-

“I wish to state my opinion that when a party is appealing, exercising his undoubtedly right of appeal, this court ought to see 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.”

21. The applicants state that they stand to suffer substantial loss as they do not know the financial position of the respondent and as such they are apprehensive that if he is paid the decretal sum, he will not be in a position to refund the same if the appeal succeeds. The respondent on the other hand states that he is not a man of straw and he is financially capable to repay back the decretal sum in the event the appeal succeeds. It is trite law that a mere claim that the respondent cannot refund the decretal sum is not efficient. There must be reasonable grounds provided by the applicants to show that the respondent cannot make refund of the decretal sum after which the respondent will be called upon to discharge his evidential burden. Though the respondent in the instant case did not provide evidence to show his financial capabilities nor did he swear an affidavit of means. In that regard, I do find that the applicants have not demonstrated substantial loss.

The application has been made without unreasonable delay.

22. Judgment herein was delivered on 28/6/2021 and stay was granted for a period of thirty days. The instant application was filed on 26/7/2021 which was within the period of stay given by the trial court. As such, the application has been filed timeously.

Security of costs.

23. The applicant ought to satisfy the condition of security. In the persuasive decision of Gianfranco Manenthi & Another vs Africa merchant Assurance Co. Ltd [2019] eKLRthe 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 a 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 decree in order to enjoy the fruits of his judgment in case the appeal falls.

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….

Thus 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. Counsel for the applicant submitted that he is ready to provide a bank guarantee as security for due performance of the decree.”

24. Similarly in Arun C. Sharma vs Ashana Raikundalia t/a Rairundalia & Co. Advocates & 2 Others [2014] eKLR the court stated:-

“The purpose of the security needed under Order 42 is to guarantee the due performance of such decree or order as may ultimately be binding on the applicant. It is not to punish the judgment debtor….Civil process is quite different because in civil process the judgment is like a debt hence the applicants become and are judgment debtors in relation to the respondent. That is why any security given under Order 42 Rule 6 of the Civil Procedure Rules acts as security for the due performance of such decree or order as may ultimately be binding on the applicants. I presume the security must be one which can serve that purpose.”

25. From the above persuasive decisions, it is clear that the issue of security is discretionary and it is upon the court to determine the same. Notably, in their submissions, the applicants stated that they are willing to offer security if called upon by this Honourable Court to do so. The respondent on the other hand prays that if stay is granted, the court should order the applicants to deposit the decretal sum in a joint interest earning account in the names of both parties.

26. It is worth noting that the right of appeal must be balanced against an equally weighty rigid right of the plaintiff to enjoy the fruits of the judgment delivered in his favour. In the case of Mohammed Salim t/a Choice Butchery vs Nasserpuria Memon Jamat (2013) eKLR where the court upheld the decision of Portreitz Maternity vs James Karanga Kabia Civil Appeal No. 63 of 1991 and stated that:-

“That right of appeal must be balanced against an equally weighty rigid right of the plaintiff to enjoy the fruits of the judgment delivered in his favour. There must be a just cause for depriving the plaintiff of that right.”

27. It is my considered view that on a balance of interests, since the applicants are willing to deposit the decretal sum and the respondent is amenable to the same being deposited. I am convinced that the fair balance would be for the applicants to deposit the decretal amount as this court may deem fit.

28. Consequently, I find this application merited and allow it in the following terms:-

a. That stay of execution against the judgement of delivered on 28th June 2021 in CMCC No. 265 of 2017 is hereby granted.

b. That the applicant do deposit the full decretal amount in an interest earning account in the joint names of the advocates on record for the parties within 30 days.

c. That in default of compliance with the deposit of the decretal amount, the orders for stay will be automatically vacated.

d. That the applicant will meet the costs of this application

29. It is hereby so ordered.

DELIVERED, DATED AND SIGNED AT NYERI THIS 3RD DAY OF MARCH, 2022.

F. MUCHEMI

JUDGE

RULING DELIVERED THROUGH VIDEOLINK THIS 3RD DAY OF MARCH, 2022