[2022] KEHC 11802 (KLR)

Jubilee Insurance Company Limited v Matwere (Civil Appeal E363 of 2022) [2022] KEHC 11802 (KLR) (Civ) (21 July 2022) (Ruling)

Neutral citation: [2022] KEHC 11802 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E363 of 2022

JN Njagi, J

July 21, 2022

Between

Jubilee Insurance Company Limited

Applicant

and

Zachary Mandere Matwere

Respondent

Ruling

1. The Appellant/Applicant has filed a notice of motion dated 1st June 2022 seeking for orders that:1. Spent.2. Spent.3. There be interim stay of execution of the Judgment and Decree entered against the Appellant/Applicant on 10th May, 2022 and all consequential orders emanating therefrom pending the inter partes hearing of this Application.4. There be stay of execution of the Judgment and Decree entered against the Appellant/Applicant on 10th May, 2022 and all consequential orders emanating therefrom pending the hearing and determination of this Appeal.5. The Respondent to bear the Costs of this Application.

2. The application was supported by both the grounds laid out on the body of the application and facts stated in the sworn affidavit of the Legal Claims Officer of the Applicant company, M/s Beatrice Muriithi. Prayers 3 of the notice of motion was granted by this court pending the hearing of the application inter partes. The Applicant is now seeking for orders as per prayer 4 which is stay of execution pending the hearing and determination of the appeal filed herein.

3. The application is bought under Order 42 Rule 6(2) of the Civil Procedure Rules that provides that:“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; andb)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.”

4. Arising from this rule, an applicant for stay of execution needs to satisfy the court on the following conditions before they can be granted stay orders:(a)The application has been made without unreasonable delay,(b)Substantial loss may result to the applicant unless the order is made, and(c)Such security as the court orders for the due performance of the decree or order as may ultimately be binding on the applicant has been given by the applicant.

5. On the first condition the exparte judgment which is the subject of the appeal in this matter was entered on 10th May 2022. The application herein was filed on the 2nd June 2022 after it was declined by the trial court. The application was thereby filed without unreasonable delay. That condition has therefore been met.

6. The second condition is that the applicant has to show that it will suffer substantial loss unless the prayers sought are granted. The applicant submits that the amount awarded by the trial court is in excess of Ksh.2,000,000/= which is a substantial amount. That if the decretal amount is paid to the respondent he may not be in a position to refund the same in the event that the appeal is successful. Therefore, that the applicant will suffer substantial loss should execution be allowed to continue. The applicant relied on the case of Rhoda Mukuma v John Abuoga (1988)eKLR where the court emphasized the centrality of substantial loss thus:“…the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”

7. The applicant urged the court to grant the stay orders in order to prevent a situation where the applicant suffers substantial loss that is not likely to be recovered from the respondent.

8. The respondent on the other hand submitted that execution as is being sought in the case is a lawful process as was emphasized by the Court of Appeal in Machira t/a Machira & Co. Advocates v East African Standard (No.2)(2002) KLR that:“In this kind of application for stay, it is not enough for the application to merely state that substantial loss will result. He must prove specific details and particulars… where no pecuniary or tangible loss is shown to the satisfaction of the court; the court will not grant stay…This legal burden does not shift to the Respondent to prove he is possessed of the means to make a refund.

9. Also cited was the case of James Wangalwa & Another V Agnes Naliaka Cheseto (2012) eKLR where the court held the following on the issue of substantial loss:“No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself, does not amount to substantial loss. Even when execution has been levied and completed, that is to say, the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process. The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the applicant as the successful party in the appeal ... the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”

10. The Legal Claims Officer of the applicant deposed in her affidavit that the respondent is a man of straw and that payments to him will not be recoverable. It is the duty of the respondent where it is alleged that he is not in a position to refund money paid to him to show that he is capable of doing so. The respondent in his replying affidavit did not make a response to this very crucial issue. The conclusion therefore is that the respondent is a man of straw and may not be able to refund any money paid to him. In the premises, the applicant has shown that they will suffer substantial loss if the decretal sum is paid to the respondent and the appeal is eventually successful.

11. The third ground is provision of security for the due performance of the decree. The applicant is offering to deposit the decretal sum or to abide by any conditions as may be imposed by this court pending the hearing and determination of the appeal. They contend that the judgment entered against them was irregular as it was issued in complete disregard of the Civil Procedure Rules as the respondent did not serve the applicant with notification of entry of judgment. That the warrants of attachment are erroneous and irregular.

12. The respondent on the other hand submitted that even if the applicant is of means, the respondent is entitled to equal treatment before the law and that the fact that the applicant is of means should not be used to trample on the respondent`s rights. That the appeal has no chance of success and therefore that the instant application should be dismissed. However, that in the event that the court finds merit in the application, the court to order the applicant to deposit the full decretal sum in a fixed joint account in the name of both advocates as security.

13. In Focin Motorcycle Co. Limited vs. Ann Wambui Wangui & another (2018) eKLR, it was stated that:“Where the applicant proposes to provide security as the Applicant has done, it is a mark of good faith that the application for stay is not just meant to deny the respondent the fruits of judgment. My view is that it is sufficient for the applicant to state that he is ready to provide security or to propose the kind of security but it is the discretion of the Court to determine the security. The Applicant has offered to provide security and has therefore satisfied this ground for stay.”

14. I have considered the issue of security. The duty of the court at this stage is to balance the interests of the two parties which are that the respondent has on the one hand a lawful judgment in his favour and he should therefore not be denied the fruits of the judgment and the appellant on the other hand who has a right of appeal against the said judgment. Since the applicant is offering to deposit the decretal sum and to comply with any conditions that may be set by the court, I find no good reason to deny it the right to exercise its right of appeal. The order that commends itself to me is for the decretal sum to be deposited in a fixed interest earning account to be opened between the advocates for both parties. In that case the decretal sum will be readily available to the respondent in the event that the appeal is unsuccessful. Parties are given a period of one month in which to open the account at a bank to be agreed upon by themselves.

15. Consequently, the application for stay of execution pending the hearing and determination of the appeal filed herein is allowed on the condition above stated.

16. Costs of the application to be in the cause.

DELIVERED, DATED AND SIGNED AT NAIROBI THIS 21ST DAY OF JULY 2022. J. N. NJAGIJUDGEIn the presence of:Miss Gatune holding brief Miss Kirimi for AppellantNo appearance for RespondentCourt Assistant: Sarah14 Days Right of Appeal.