[2022] KEHC 10069 (KLR)

Jubilee Insurance Co Ltd v Nyamu (Civil Appeal E576 of 2021) [2022] KEHC 10069 (KLR) (Civ) (21 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10069 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E576 of 2021

CW Meoli, J

July 21, 2022

Between

Jubilee Insurance Co Ltd

Applicant

and

Mercy Wanja Nyamu

Respondent

Ruling

1. The motion dated 13th September 2021 by Jubilee Insurance Co. Ltd (hereafter the Applicant) seeks to stay execution of the ruling in Nairobi Milimani CMCC No. 849 of 2020 delivered on 12th August 2021, the default judgment entered on 17th September 2020 and any resultant decree pending hearing and determination of this appeal. The motion is expressed to be brought under Order 42 Rules 6 of the Civil Procedure Rules, inter alia. The grounds on the face of the motion are amplified in the supporting affidavit sworn by Bracxides Ongola, who a Legal Officer in the Applicant Company and accordingly authorized.

2. She deposes that the Applicant’s motion in the lower court seeking to set aside the default judgment entered against the Applicant and in favour of Mercy Wanja Nyamu (hereafter the Respondent) in Nairobi Milimani CmccNo. 849 of 2020 was dismissed on 12th August 2021. She asserts that the Applicant was aggrieved by the ruling of lower court and preferred the instant appeal and that stay of execution ought to be granted so that the Applicant’s meritorious appeal is not rendered nugatory and to avert substantial loss to the Applicant. She further expresses the Applicant’s willingness to provide appropriate security and states that the Respondent will not suffer any prejudice that cannot be compensated by an award of costs.

3. The Respondent opposes the motion through a replying affidavit dated 23rd October 2021. She asserts that the application has not met the threshold set out in Order 42 Rule 6(2) of the Civil Procedure Rules as the Applicant has not demonstrated how it will suffer substantial loss and or the Respondent’s inability to refund the decretal sum if the motion is not allowed. She points out that the judgment in the lower court constitutes a money decree and she has means to refund the decretal sum if the appeal succeeds, and hence the Applicant will not suffer substantial loss. She views the application as frivolous, and a delaying tactic aimed at denying or delaying the realization of her entitlement to the decretal sum.

4. The motion was canvassed by way of written submissions. As regards the applicable principles, the Applicant anchored its submissions on the provisions of Order 42 Rule 6 of the Civil Procedure Rules. Counsel cited several decisions were cited including, Chris Munga N. Bichange v Richard Nyagaka Tongi & 2 Others [2013] eKLR and Moses Mwicigi & 14 Others v Independent Electoral and Boundaries Commission & 5 Others [2016] eKLR in submitting that the appeal herein is arguable and with a high chance of success. Regarding substantial loss counsel relied on the decisions in National Industrial Credit Bank Limited v Aquinas Francis Wasike [2006] eKLRand Equity Bank Limited v Taiga Adams Company Limited [2006] eKLR to argue that the Respondent has not demonstrated financial ability and there is reasonable ground for apprehension that if the appeal were to be successful the Respondent would not be in a position to refund the decretal sum. Rereferring to the Respondent’s meagre earnings in light of the decretal sum, counsel asserted that she would not be able to repay the decretal sum should the appeal be successful.

5. He relied on the English decision in Rosengrens Ltd v Safe Deposit Centers Ltd [1984] 3 All ER to reiterate the Applicant’s willingness to provide security for the decretal sum either in the form of a suitable bank guarantee or deposit in a joint interest earning account pending determination of the appeal. In conclusion counsel relied on the case of Butt v Rent Restriction Tribunal [1982] KLR 417, Section 27 of the Civil Procedure Act and Halsbury’s Law of England 4th Ed. Vol. 37 at pg. 552 to reiterate that the granting of orders to stay execution pending appeal is a matter of judicial discretion.

6. On behalf of the Respondent, it was generally contended that the appeal is without merit. Citing the decision in 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 counsel contended that the motion represents an abuse of the court process as it seeks to deny the Respondent the fruits of her judgment. The court was urged to dismiss the motion with costs.

7. The court has considered the material canvassed in respect of the motion. The parties erroneously expended some energy in urging matters touching on the substantive appeal. However, 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 (Supra).

8. The Applicant’s 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”.

9. The cornerstone consideration in the exercise of the discretion is whether the Applicant has 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.”

10. The decision of Platt Ag JA, in the Shell Case, in my humble view sets out two (2) different circumstances when substantial loss could arise, and therefore giving context to the 4th holding above. 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)”

11. 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)

12. 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.”

13. In an application of this nature, the successful applicant ought to depose expressly as to how substantial loss will arise, whether due the hardship resulting from making payments towards the decree, or the impossibility or difficulty in recovery of sums paid out, in the event the appeal succeeds. Here, the Applicant’s ground (g) on the face of the motion and submissions refer to the Applicant’s apprehension of substantial loss through inability to recover any sums paid out in the event of the appeal succeeding. But the supporting affidavit appeared only to make tangential reference thereto at paragraph 14 where it is merely deposed that the appeal may be rendered nugatory and substantial loss suffered if the orders sought are denied. The Respondent’s answer at paragraphs 10,11 and 12 of the replying affidavit was that the Applicant had not demonstrated that she is a person without means, and exhibited her pay slip (annexure MWN-1) as evidence of her capacity to refund the decretal sum in the event that the appeal was to succeed.

14. From this response, it appears that the Respondent understood the implied challenge in the Applicant’s material regarding her financial ability to refund the decretal sums if the appeal succeeds. As stated in the Shell case, without a demonstration of substantial loss, it would be rare that any other event would render the appeal nugatory and justify keeping the decree holder out of her money. While the Applicant made a poor presentation of their apprehension of substantial loss, it cannot be said that they completely failed to demonstrate the likelihood of substantial loss. Moreover, looking at the material proffered by the Respondent in that regard, the court agrees with the Applicant that the Respondent’s demonstrated net earnings (Shs.75,000/- p.m.) appear low, relative to the amount in the decree (Shs.571,000/- odd). Difficulty in the recovery of decretal sums upon a successful appeal, not just the impossibility of recovery, is a relevant factor in considering the likelihood of substantial loss to an applicant. Or in the alternative, and in proper cases, such demonstrated difficulty would qualify as sufficient reason (as anticipated in Order 42 Rule 6(1) of the Civil Procedure Rules) to be considered by the court.

15. Whatever the case, in the exercise of its discretion, 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 v 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 part of the prayer in the motion dated 13th September 2021 that relates to stay of execution of the judgment of the lower court pending appeal. The other part of the prayer that seeks to stay the dismissed ruling of the lower court is of no consequence. No authority is required for the proposition that a dismissal order cannot be stayed and that such prayer is not efficacious. The order to stay execution of the judgment pending appeal is granted on condition that the Applicant deposits 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. 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. MutuaFor the Respondent: Ms Mouti