[2023] KEELC 21950 (KLR)

JBF Global Visions Limited & another v Hasmukh (Environment and Land Appeal E010 of 2023) [2023] KEELC 21950 (KLR) (30 November 2023) (Ruling)

Neutral citation: [2023] KEELC 21950 (KLR)

Republic of Kenya

In the Environment and Land Court at Bungoma

Environment and Land Appeal E010 of 2023

EC Cherono, J

November 30, 2023

Between

JBF Global Visions Limited

1st Appellant

Canon Medical Hospital Limited

2nd Appellant

and

Mulde Khumbar Hasmukh

Respondent

Ruling

1. The Appellants/Applicants moved this Honourable vide a Notice of Motion dated 13th September 2023 seeking the following orders;a)(spent)b)Pending the hearing and determination of this application inter parte, there be an order of temporary stay of execution of the Ruling delivered on 17th August 2023 together with the Decree thereto obtained in Bungoma Magistrate’s Court ELC Case No. E58 of 2023. c)Pending the hearing and determination of this substantive appeal herein, there be an order of stay of execution of the Ruling delivered on 17th August 2023 together with the Decree thereto obtained in Bungoma Magistrate’s Court ELC Case No. E58 of 2023d)Costs of this application be provided for.

2. The application is supported by the affidavit of the Tabitha Vivienne Njeri Numa and grounds on the face of the said application. The application is further supported by a Supplementary affidavit as well as annexures thereto.

3. The application is opposed by the Respondent through a Replying affidavit sworn of Mulde Kumbhar Hasmukh on 20th September, 2023. The said Replying affidavit is further supported by numerous annexures thereto.

Applicant’s Summary of Facts 4. The stated in her supporting affidavit stated that the 1st and 2nd appellants/applicants herein were impleaded by the Respondent in Bungoma CM-ELC Case NO. 58 of 2023 seeking both liquidated and un-liquidated orders.

5. She stated that before they could enter appearance and file defence, a non-suited party- one John Billyu Kuria entered appearance and filed defence in person.

6. She further stated that thereafter, the Respondent herein filed an application to strike out defence and Enter summary judgment against the Appellants herein on the strength of the defence filed by a party who was not sued. She stated that the said John Billyu Kuria opposed the application and the matter was reserved for Ruling on 15th August, 2023. The deponent also deposed that they then engaged the Firm of Wayong’o & Co. Advocates to Enter Appearance and file defence on their behalf and it is then that the said Firm of Advocates established that there was a defence by a non-suited party.

7. Their Advocates then filed an application to arrest the Ruling and to Amend the defence filed by John Billyu Kuria and the trial court disregarded the application and proceeded to set the Ruling for 15th August, 2023. She stated that upon carefully considering the record and the documents filed therein, they established that the appellants had not entered appearance and/or filed defence instructions that were acted on. She stated that on 15th August 2023, the Counsel now on record Mr. Anwar brought the confusion to the attention of the court about a non-suited party entering appearance and filing defence and the act of the appellants herein entering appearance and filing defence but the court insisted on delivering the Ruling o the application dated 12th June, 2023 on deferred it to 17th August, 2023.

8. She stated that they have been using the demised premises contained in all that land known as [particulars witheld] and [particulars witheld] as a hospital offering both outpatient and inpatient services and that there are people who are in need of medical care and attention and others who are in critical conditions in their facility and unless the decree is stayed, they stand to be affected and the attention given to them disrupted and might expose the Hospital to a myriad of claims from the patients.

9. She also stated that if the decree is executed and the appellants herein leave the premises and the applicant becomes successful on appeal, they will not be allowed back to the premises, an act that shows that is stay is not granted, the instant appeal will be rendered nugatory. She stated that even then, the eviction would damage the reputation of the applicants herein as a reputable Hospital and company and will occasion it massive losses. She further deposed that in addition to the losses referred hereinabove, the negative impact in terms of reputation the Appellants will have and the negative effect on the business, it stands to lose its monies that it has invested in the building which sums totals to Kshs. 32,000,000/ in terms of making the premises in a hospitable condition out of which sums about Kshs. 8,000,000/ or thereabout was expended in finishing parts of the building-an obligation of the landlord-Respondent herein.

10. The deponent also stated that the instant application has been made without undue delay and that the appellants/applicants herein are willing and ready to abide by any condition as to security that the court will find reasonable to impose including not moving its medical equipment from the demised premises and which equipment are worth over 30 million.

11. In conclusion, she deposed that granting the orders sought will not prejudice the Respondent in any manner but will go a long to ensure that the subject of the appeal is preserved so that the appeal is not rendered nugatory.

Respondent’s Summary of Facts. 12. In his replying affidavit in opposition to the said application, the respondent deposed that he is the registered proprietor of L.R NO. [particulars witheld] and [particulars witheld] where multi-storied commercial building is built hereinafter referred to as ‘’suit property’’.

13. He stated that on 18/11/2020, he entered into a written lease agreement with the 1st Appellant/Applicant over the suit property. He stated that the terms of the said lease agreement were that the 1st Appellant/Applicant would occupy the ground and 1st floor at a monthly rent of Kshs. 480,000/, (to be escalated after 2 years) exclusive of applicable Value Added Tax (VAT) payable quarterly in advance for a period of 10 years.

14. The Respondent further deposed that on 1/7/2021, he entered into another lease Agreement with the 1st Appellant/Applicant for additional space comprised in the Basement of the suit property measuring approximately 12,000 square feet at a monthly rent of Kshs. 25/= per square feet exclusive of Value Added Tax(VAT) adding to Kshs. 300,000/= commencing 1/7/2021. He stated that both lease agreements were executed on behalf of the 1st Appellant/Applicant by one John Billy Kuria as Director of the 1st Appellant/Applicant. The Respondent also contends that in both lease agreements, the parties agreed to a rent payment schedule which formed part of the agreement and that the said two Agreement were reduced into writing and constituted their entire agreement.

15. The Respondent further stated that the 1st Appellant/Applicant established a hospital in the rented premises in the name and style of Canon Medical Hospital Limited, the 2nd Appellant/Applicant herein. He deposed that under the tenancy agreement, the primary obligation of the 1st Applicant/Respondent was to pay rent promptly and any unpaid rent would attract interest at the rate of 2% per month until payment in full.

16. The Respondent also contends that from November 2020, the 1st Appellant/Applicant paid rent consistently until August 2022 when it stopped paying without any lawful excuse. He stated that on 4/2/2023, the defendants/applicants through its director John Billy Kuria made a written commitment to pay rent arrears which at the time stood at Kshs. 3,619,066/. He said that that followed a situation created where the 1st Defendant/Applicant through the said John Billy Kuria issued a bad cheque to him which cheque was returned for insufficiency of funds on 3/1/2023.

17. The respondent deposed that the 1st Appellant/Applicant and by extension the 2nd Appellant/Applicant have not paid a dime for the months between September 2022 to date save for Kshs. 530,000/= being proceeds of a public auction of distressed goods received from Crescent Auctioneers and that the current rent arrears now stand at Kshs. 11,101,520/ and the current accrued interests on rent arrears is Kshs. 4, 161,513. 60 bringing the Appellants/Applicants total indebtedness to Kshs. 15,263,033. 60.

18. The Respondent stated that when the proceeds of public auction of distressed goods is discounted from the total indebtedness, the amount due for payment is Kshs 14,733,033. 60. He deposed that in the month of October, 2023, rent arrears will increase by Kshs. 995,280/=, the interest on accrued rent arrears will increase by Kshs.406,166. 40 which will increase total indebtedness to Kshs.16,134,480/=.

19. He stated that at the time of filing the suit in the subordinate Court, rent arrears were at Kshs. 9, 734,880 while interest on the accrued rent arrears were at Kshs. 662,745/= bringing the total indebtedness to Kshs. 10,397,625/=.

20. He further deposed that during the pendency of the suit, total indebtedness of the Appellants/Applicants has grown by Kshs. 4,335,408. 60 and that it is obviously clear that as the clock ticks, it is becoming increasingly difficult for the Appellants/Applicants to honour their primary obligation under the lease agreement and settle the arrears.

21. The deponent stated that when the Appellants/Applicants filed their defence in the subordinate Court, they admitted to being indebted to him and have not made any effort to settle or even reduce the rent arrears and/or interests accrued. He stated that the appeal together with the instant application is a case of litigants who are hell-bent on abusing the court process to run away from their obligations under the law and to unfairly gain protection of the court. He stated that he leased the demised premises while in habitable condition ready for occupation and any remodelling done on the premises were purely for the convenience of the Appellants/Applicants and it was not a term of their agreement that costs incurred by the Appellants/Applicants in this aspect would be recoverable from rent.

22. It is the Respondent’s contention that he leased the demised premises to the 1st Appellant/Applicant for rent to be able to meet his loans obligations and that none of the lease agreements has a clause permitting the Appellants/Applicants to carry out any construction and renovation on the leased premises, let alone sharing of the costs attendant to such construction and renovation.

23. The Respondent further stated that he borrowed heavily to construct the rented premises and with refusal/failure by the Appellants/Applicants to pay rent, he stands the risk of losing the property which is charged in the bank and that the Kenya Revenue Authority is equally demanding payment of rental income tax and VAT for the period the appellants/applicants have been in occupation.

24. In conclusion, the Respondent stated that failure by the Appellants/Applicants to honour obligation to pay rent under agreement has earned him a bad name before by debtors as he has not been able to meet his obligations to them occasioning his business immense losses

25. In opposing the said application, counsel for the Respondent relied in the following cases; Japheth Nkubitu & Another v Regina Thirindi (1998) KLR.

Legal Analysis and Decision 26. I have considered the application, the supporting and Supplementary affidavits, the Replying affidavit, the rival submissions and the relevant law.

27. Order 42 Rule 6 of the Civil Procedure Rules, 2010 which is the relevant law provides that before an order for stay is granted, the court must be satisfied that the applicant has established sequentially the following three conditions;1)That the application has been brought without unreasonable delay.2)That the applicant will suffer substantial loss unless the order of stay of execution order is granted; and3)That the applicant has given security for the due performance of such decree as may ultimately be binding on him.

28. As regards the first condition for stay of execution, it is clear that the interlocutory application in which the trial court ordered the appellants’/applicants’ defence to be struck out and final judgment entered for the Respondent was delivered 17/8/2023. It took the appellants/applicants less than 30 days to file the appeal and the present application. Taking into consideration the period for perusing the pleadings proceedings and the impugned Order as well as preparing the Memorandum of appeal, a period of 30 days in my view is not inordinate. I therefore find that the application was brought without undue delay.

29. As regards the second condition for substantial loss, the applicants/appellants at paragraphs 14, 15, 16 17 and 18 of the supporting affidavit have enumerated what they consider as substantial loss they stand to suffer unless the present application for stay is granted. According to the appellants/applicants, they have been using the demised premises contained in all that land known as [particulars witheld] and [particulars witheld] as Hospital offering both outpatient and inpatient services to people who are in need of medical care and attention and others who are in critical condition are in their facility and therefore should the decree/order be executed, they stand to be affected and the attention given to them disrupted and might even expose the Hospital to a myriad of claims from the patients.

30. The Appellants/applicants also contend that if the decree/order is also executed and the appeal eventually succeed, they will not be allowed back to the demised premises and the appeal thereby rendered nugatory.

31. The appellants’/applicants’ further stated that should the decree/order be executed and they are evicted from the suit premises, their reputation as a Hospital would be damaged leading to massive losses.

32. The applicants/appellants also contend that in addition to the losses stipulated hereinabove, the negative impact in terms of reputation will have far reaching effect on the business and they stand to lose its monies that it invested in the building which comes to a total of Kshs. 32,000,000/ in terms of making the premises in a hospitable condition out of which sums about Kshs. 8,000,000/or thereabouts was expended in finishing parts of the building-an obligation of the Respondent herein.

33. It is trite law that substantial loss is the cornerstone consideration in the exercise of discretion whether to grant or not grant stay pending appeal. One of the most enduring legal authorities on the issue of substantial loss is the case of Kenya Shell Limited v Kibiru & Another (1986) eKLR 410 where the court set out the following principles;“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 its 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."

34. The subject of the appeal herein as well as the present application is a money decree/order arising from arrears of rent and interest/penalties from the rent arrears alleged to be amounting to Kshs. 15,134,480 as at the beginning of October, 2023. The appellants/applicants have not stated on oath that the Respondent would not be in a position to repay back the decretal sum should the appeal succeed.

35. As was held in the Shell case, substantial loss in its various forms is the cornerstone of both jurisdictions for granting stay pending appeal. That is what has to be prevented therefore, without this evidence, it is difficult to justify keeping the respondent out of the fruits of his judgment. It is trite that without a demonstration of substantial loss, it would be rare that any other event would render the appeal nugatory and to justify keeping the decree holder out of his money.

36. The upshot of the foregoing is that the Notice of Motion application dated 13th September, 2023 is devoid of merit and is hereby dismissed with costs to the respondent. The temporary stay orders issued in the first instance on 15/9/2023 are vacated forthwith.

37. Orders accordingly.

READ, DATED, DELIVERED AND SIGNED IN THE OPEN COURT/VIRTUALLY AT BUNGOMA THIS 30TH NOVEMBER, 2023HON. E.C CHERONOELC JUDGEIn the presence of;1. Maloba for the Respondent2. Anwar for the Appellants/Applicants3. Okwaro C/A