https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12690

Kahenya & another v NRS Sacco Society Limited (Tax Appeal E046 of 2025) [2026] KEHC 12690 (KLR) (Civ) (30 July 2026) (Ruling) Neutral citation: [2026] KEHC 12690 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Tax Appeal E046 of 2025 WA Okwany, J July 30, 2026 Between Titus Kuria Kahenya 1st Appellant Jane Nyambura Kahenya 2nd Appellant and NRS Sacco Society Limited Respondent Ruling Background 1.The Applicants herein obtained a loan facility from the Respondent in the sum of Kshs. 6,500,000 secured by a legal charge over the suit property. Following default in repayment, the Respondent commenced the process of exercising its statutory power of sale. Aggrieved by the intended realization of the security, the Applicants instituted proceedings before the Co-operative Tribunal seeking, inter alia, orders restraining the Respondent from selling the charged property. 2.Upon hearing the dispute, the Tribunal dismissed the Applicants' claim with costs, thereby paving the way for the Respondent to proceed with realization of the security. It is that decision that prompted the present appeal and the accompanying application for stay pending appeal. 3.This ruling therefore concerns the Applicants’ Notice of Motion dated 27th August 2025 in which they seek an order of stay of execution of the Judgment of the Co-operative Tribunal delivered on 26th June 2025 in Tribunal Case No. 877/E964 of 2022 pending the hearing and determination of their appeal. They also seek preservation of the status quo in respect of land parcel Muguga/Kanyariri/1383, which was charged to the Respondent as security for a loan facility. The Applicants' Case 3.The application is supported by the affidavit of the 1st Applicant, Titus Kuria Kahenya, who deposes that the Applicants have lodged an appeal raising arguable questions of law and fact. He states that although the approved loan facility was Kshs. 6,500,000, only Kshs. 4,773,980 was actually disbursed, yet the Respondent levied interest, penalties and charges on the entire approved amount. 4.According to the Applicants, the intended appeal challenges the legality of that computation and has overwhelming chances of success. They contend that unless stay is granted, the Respondent will proceed to sell the charged property thereby rendering the appeal nugatory and occasioning irreparable loss that cannot adequately be compensated by damages. The Applicants further state that they are willing to abide by any conditions, including the provision of security, that the Court may impose. 5.In their written submissions, the Applicants submit that they have satisfied the requirements under Order 42 Rule 6 of the Civil Procedure Rules. They argue that the intended appeal is arguable and rely on Stanley Kang'ethe Kinyanjui vs. Tony Ketter & 5 Others [2013] eKLR, where the Court of Appeal held that an arguable appeal is not one that must necessarily succeed but one deserving judicial consideration. They further rely on RWW v EKW [2019] eKLR, in which the Court observed that the purpose of an order of stay pending appeal is to preserve the subject matter so that a successful appeal is not rendered nugatory. Counsel for the Applicants urged the Court to preserve the charged property pending the hearing of the appeal. The Respondent's Case 5.The Respondent opposed the application through the Replying Affidavit sworn by Ann Ndungu, the Respondent's Loan Recovery Officer. She deposes that the Applicants borrowed Kshs. 6,500,000 from the Respondent and voluntarily charged the suit property as security for the loan. She states that the Applicants persistently defaulted in servicing the facility, with the outstanding balance standing at Kshs. 5,563,467.60 as at 5th March 2025. 6.The Respondent’s deponent further avers that after a full hearing, the Co-operative Tribunal dismissed the Applicants' claim, thereby entitling the Respondent to exercise its statutory power of sale. According to the Respondent, the Applicants have neither demonstrated substantial loss nor disclosed how they intend to liquidate the outstanding debt. It is further contended that the application is an abuse of the court process, particularly because a similar application for stay had earlier been declined by the Tribunal. 7.In its written submissions, the Respondent submits that the Applicants have failed to satisfy the threshold set for stay of execution under Order 42 Rule 6(2) of the Civil Procedure Rules, which requires proof of substantial loss, prompt filing of the application and provision of security for the due performance of the decree. 8.The Respondent argues that the Applicants do not deny their indebtedness and that the charged property was voluntarily offered as security for the loan. The Respondent therefore urges the Court to dismiss the application or, in the alternative, order the Applicants to deposit the outstanding loan balance of Kshs. 5,563,467.60 as security before any stay can issue. Issues for Determination 7.Having considered the application, the affidavits, the rival submissions and the authorities cited, I find that the sole issue for determination is whether the Applicants have satisfied the conditions for the grant of an order of stay of execution pending appeal under Order 42 Rule 6(2) of the Civil Procedure Rules. Analysis and Determination 8.The principles governing applications for stay of execution pending appeal are settled. Under Order 42 Rule 6(2) of the Civil Procedure Rules, an applicant must establish that substantial loss may result unless the order is granted, that the application has been brought without unreasonable delay and that such security as the Court may order has been provided. 9.In Butt vs. Rent Restriction Tribunal [1982] KLR 417, the Court of Appeal held that the discretion to grant stay should be exercised in a manner that preserves the subject matter of the appeal without unjustly depriving the successful litigant of the fruits of his judgment. Similarly, in Kenya Shell Ltd vs. Kibiru & Another [1986] KLR 410, the Court emphasized that substantial loss is the cornerstone of an application for stay, while in RWW vs. EKW [2019] eKLR, the Court reiterated that the objective of stay is to ensure that an appeal is not rendered nugatory. 10.It is not disputed that the present application was filed without undue delay. The Applicants also raise an arguable issue concerning the computation of the loan, interest and penalties. At this stage, the Court is not called upon to determine the merits of the appeal but only to ascertain whether it is frivolous. I am satisfied that the intended appeal raises bona fide issues deserving consideration by the appellate court. 11.The Applicants have also demonstrated that unless execution is stayed, the Respondent may proceed with the sale of the charged property. While a chargor is ordinarily deemed to have contemplated realization of the security upon default, the sale of the property before determination of the appeal may render the appeal nugatory if the impugned computation of the outstanding debt is ultimately found to have been erroneous. 12.On security, however, the Applicants merely expressed willingness to comply with such conditions as the Court may impose. Bearing in mind that the Respondent holds a money decree and has demonstrated that substantial sums remain outstanding, it is only fair that stay be granted upon appropriate terms that balance the competing rights of both parties. Disposition 13.Consequently, I find merit in the Notice of Motion dated 27th August 2025 and make the following orders:a.There shall be a stay of execution of the Judgment and decree of the Co-operative Tribunal delivered on 26th June 2025 pending the hearing and determination of the appeal.b.The order of stay is conditional upon the Applicants depositing Kshs. 2,500,000 in an interest-earning joint account in the names of the parties' advocates within forty-five (45) days from the date hereof.c.In default of compliance with order (b) above, the stay granted herein shall automatically lapse without further order of the Court.d.Costs of this application shall abide the outcome of the appeal.It is so ordered. DATED, SIGNED AND DELIVERED VIRTUALLY THIS 30TH DAY OF JULY 2026HON W A OKWANYJUDGE