[2025] KEELC 3132 (KLR)

Kangethe & Co Advocate v Nathe Holdings Limited (Civil Appeal E185 of 2024) [2025] KEELC 3132 (KLR) (26 March 2025) (Ruling)

Neutral citation: [2025] KEELC 3132 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Civil Appeal E185 of 2024

TW Murigi, J

March 26, 2025

Between

Kangethe & Co Advocate

Appellant

and

Nathe Holdings Limited

Respondent

Ruling

1. This ruling is in respect of the Notice of Motion application dated 21st January 2025 in which the Applicant seeks the following orders:-i)Spent.ii)That this Honourable Court be pleased to grant a stay of execution of the judgement dated 18th October 2024 pending the hearing and determination of the appeal herein.iii)That the costs of the application be in the cause.

2. The application is premised on the grounds appearing on its face together with the supporting affidavit of Kang’ethe George Joseph sworn on even date.

The Applicant’s Case 3. The Applicant averred that by a judgement delivered on 18th October 2024, the trial court compelled him to pay the Respondent unclear rental dues within 60 days from the date thereof. That the Respondent subsequently instructed the firm of Mbusera Auctioneers to serve him with a Proclamation Notice dated 14th January 2025. He deposed that the rental arrears of Kshs. 990,000/= indicated in the Proclamation Notice were fraudulently inflated and added that the notice was served before the expiry of 60 days.

4. The Applicant is apprehensive that the Respondent will sell the proclaimed assets which will in turn cripple his financial stability as well as the operations of his law firm. He contended that the proclaimed assets constitute his tools of trade to wit office computers, furniture and desks contrary to Section 44 of the Civil Procedure Code.

5. He further contended that he will suffer irreparable loss which cannot be compensated by way of damages. He asserted that his appeal raises triable issues, has overwhelming chances of success and will be rendered an academic exercise if the orders sought are not granted. He contended that that the Respondent will not suffer any prejudice if the orders sought are granted.

6. In conclusion, the Applicant urged the court to consider the current state of the economy in addressing the issue of security for costs.

7. On 23rd January 2025, this court considered the Applicant’s Notice of Motion dated 21st January 2025 and granted the Applicant interim orders of stay of execution of the judgement dated 18th October 2024. Following this development, the Respondent filed a Notice of Motion application dated 3rd February 2025 seeking the following orders:-i)Spent.ii)That this court be pleased to set aside the interim orders of stay of execution of the judgment dated 18th October 2024. iii)That this Honourable Court be pleased to allow the Respondent to proceed with distress for rent arrears owed by the Applicant.iv)That the costs of the application be provided for.

8. The application is premised on the grounds appearing on its face together the supporting affidavit of Jesse Theuri Njoka, the Respondent’s Director.

The Applicant’s Case 9. The deponent averred that the Appellant’s application dated 21st January 2025 was not certified urgent and was given a hearing dated of 23rd January 2025. He further averred that the Appellant served the directions upon the 1st Respondent Advocate on 28th January 2025. The deponent contended that the Appellant took advantage of their Advocate’s absence in court to obtain stay orders knowing very well that he owes the Respondent rent arrears of Kshs. 990, 000/= as at 31st January 2025.

10. He deposed that by a judgement delivered on 18th October 2024, the Appellant was ordered to clear the outstanding rent within 60 days of the date thereof. He further deposed, that the directions issued on 7th November 2024 clearly stated that the amount payable was rent arrears of 8 months at a monthly rent of Kshs.90, 000/=; that the outstanding amount then was Kshs. 810, 000/= and the 60 days given lapsed on 18th December 2024. He deposed that the Respondent was granted leave to distress for rent if the Appellant failed to pay the rent due and payable. The deponent contended that the application was made with the sole purpose of denying the Respondent rent due to it.

The Respondent’s Case 11. In opposing the application, the Respondent filed grounds of opposition dated 11th February 2025 raising the following grounds:-i.That the application is irredeemably defective, frivolous and vexatious hence void in situ.ii.The application offends the provisions of Order 51 Rule 4 of the Civil Procedure Rules and thus a misnomer.iii.The application is an abuse of the court process as it seeks to circumvent the existing orders issued by this court.iv.The application contravenes the oxygen principle and amounts to forum shopping.v.That the application is an attempt to arm twist the court into issuing orders that will determine the entire appeal at the interlocutory stage.

12. The applications were canvassed by way of written submissions.

The Appellant’s Submission 13. The Appellant filed his submissions dated 11th February 2025.

14. On his behalf, Counsel submitted that the only issue for determination is whether the application seeking stay of execution is merited. Counsel submitted that the Applicant has met the threshold set out in Order 42 Rule 6 (2) of the Civil Procedure Rules. Counsel submitted that the Appellant’s appeal is arguable as it raises weighty grounds of appeal. To buttress this point Counsel relied on the case of JRS v JVS [2013] KEHC 4306 (KLR) [2013] eKLR, and on the case of Ndambuki & anotherv National Land Commission & 2 others (Civil Application E092 OF 2024) [2024]KECA 534 (KLR)

15. Counsel further submitted that the application has been filed without undue delay.

16. On substantial loss, Counsel submitted that if the proclaimed goods are sold, the operations of Applicant’s law firm will be crippled. To buttress this point, Counsel relied on the case of Tropical Commodities Supplies Ltd & others v International Credit Bank Ltd (In liquidation) [2004]2 EA 331.

The Respondent’s Submissions 17. The Respondent filed its submissions dated 6th March 2025.

18. On its behalf, Counsel outlined the following issues for the court’s determination:-i.Whether the Appellant is deserving of orders of stay of execution pending appeal?ii)Who should bear the costs of the application?

19. On the first issue, Counsel submitted that the Distress for Rent Act gives the landlord the right to levy distress where a tenant fails to pay rent altogether. Counsel submitted that the issue at hand is related to the issue of whether the Respondent’s right to levy for rent crystalized due to failure by the Appellant to pay rent. Counsel further submitted that the Appellant has not satisfied the conditions set out in Order 42 Rule 6(2) of the Civil Procedure Rules for the grant of stay of execution pending appeal.

20. On substantial loss, Counsel relied on the case of Central Watch Company Ltd & another v Embu Gaturi Housing Co-operative Limited (2023) KEELC 18684 (KLR) where the court defined substantial loss as follows:-“The word “substantial loss” cannot mean the ordinary loss to which every judgment debtor is necessarily subjected when he losses his case and is deprived of his property in consequence…”

21. Counsel submitted that the Appellant has not demonstrated that he will suffer substantial loss if the order of stay is not granted. Counsel relied on the case of Andrew Wanjohi Kaburu v Kaburu Muteti & Co. (2016) eKLR to submit that substantial loss is the core of any order for stay of execution pending appeal. Counsel contended that the Respondent will be denied the fruits of its judgment if the orders sought are granted.

22. Counsel submitted that the Appellant is not deserving of the orders sought on account of the notorious breach of his obligation to pay rent. Counsel further submitted that if the application is allowed, the Appellant will not pay rent during the pendency of the appeal which will further add to the Respondent’s loss and suffering.

23. It was submitted that the Appellant was in possession of the Respondent’s premises as at the time when the judgment of the Business Rent Tribunal restrained the Respondent from evicting/disturbing the Appellant’s quiet possession of the suit premises on condition that he would pay rent within 60 days of judgment.

24. Counsel argued that since the Appellant remains in possession of the suit premises, it cannot be said that he will suffer loss if he pays rent that is due and owing as he has a duty to pay rent. To buttress this point, Counsel relied on the case of Jack & Jill Supermarket v Viktar Maina Ngunjiri [2010] eKLR. Counsel contended that the Respondent is capable of refunding the rent distrained in the event that the appeal succeeds. It was further contended that the Appellant has not offered any security for the due performance of the decree.

25. In conclusion, Counsel urged the court to dismiss the application with costs.

Analysis And Determination 26. Having considered the application, the respective affidavits and the rival submissions, the following issues fall for determination:-i)Whether the interim orders of stay of execution should be set aside.ii)Whether the Applicant has satisfied the conditions set out in Order 42 Rule 6 of the Civil Procedure Rules for the grant of stay of execution pending Appeal.

27. On the first issue, the Respondent contends that the Applicant took advantage of its Advocate’s absence in court to obtain the interim orders. The Respondent further contended that the interim orders restrained it from distressing for rent which it is entitled to. It was further contended that the Respondent continues to suffer since the Appellant has not paid rent for more than 2 years.

28. The Applicant has disputed the amount indicated in the proclamation notice. He contended that the application is an abuse of the court process and amounts to forum shopping.

29. The purpose of stay of execution is to preserve the substratum of the case. The court was persuaded to issue interim orders to preserve the substratum of the case pending the hearing and determination of the application. From the foregoing, I find that the application dated 3rd February 2025 is devoid of merit and the same is hereby dismissed with costs.

30. On the second issue, Order 42 Rule 6(1) and (2) of the Civil Procedure Rules outlines the guiding principles to be met for the grant of stay and provides that;6(1) 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 order set aside.6(2) 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 and such security of costs for the performance of such decree or order as may ultimately be binding on him has been given by Applicant.

31. The grant of an order of stay of execution is a discretionary one. In the case of Butt vs Rent Restriction Tribunal (1982) KLR 417 the Court of Appeal gave the following guidelines on how a court should exercise its discretion as follows:-“The power of the court to grant or refuse an application for stay of execution is a discretionary power. The discretion should be exercised in such a way as not to prevent an appeal. The general principle in granting or refusing a stay is; if there is no overwhelming hindrance, stay must be granted so that an appeal may not be rendered nugatory should that appeal court reverse the judge’s decision. A judge should not refuse stay if there are good grounds for granting it merely because in his opinion a better remedy may become available to the Applicants at the end of the proceedings. The court in exercise of its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirements.”

32. Similarly, in the case of RWW vs EKW (2019) eKLR the Court held that:-“…the purpose of an application for stay of execution pending an appeal is to preserve the subject in dispute so that the rights of the appellant who is exercising the undoubted right of appeal are safeguarded and the appeal if successful is not rendered nugatory. However, in doing so the court should weigh the right against the success of a litigant who should not be deprived of the fruits of his/her judgment. The court is also called upon to ensure that no party suffers prejudice that cannot be compensated by an award of damages.”

33. This Court is therefore called upon to balance both the rights of the successful party so as not to hinder it from enjoying the fruits of judgment and those of the Appellant whose Appeal may succeed and be rendered nugatory if stay of execution is not granted.

34. The purpose of stay of execution is to preserve the substratum of the case. In the case of Consolidated Marine vs Nampijja & Another Civil App No. 93 of 1989 (Nairobi) the Court held that;“The purpose of the application for stay of execution pending appeal is to preserve the subject matter in dispute so that the right of the appellant who is exercising his undoubted right of appeal are safeguarded and the appeal if successful is not rendered nugatory.”

35. The Court will now determine whether the Applicant has satisfied the conditions upon which the orders can be granted.

36. On the first condition of proving that substantial loss may result unless stay orders are granted, the Applicant should not only state that he is likely to suffer substantial loss, he must prove that he will suffer substantial loss if stay orders are not granted.

37. In the case of Charles Wahome Gethi vs Angela Wairimu Gethi (2008) eKLR the Court of Appeal held that:-“….it is not enough for the Applicants to say that they live or reside on the suit land and they will suffer substantial loss. The Applicants must go further and show the substantial loss that the Applicants stand to suffer if the Respondent execute the decree in this suit against them.”

38. In the case of Mukuma vs Abuoga (1988) KLR the Court of Appeal held that:-“Substantial loss is what has to be prevented by preserving the status quo because such loss would render the Appeal nugatory.

39. Discussing substantial loss, Platt, JA in the case of Kenya Shell Ltd v Benjamin Keruga Kibiru and others 1982-85 1 KAR 1018 observed as follows:-“Substantial loss in its various forms is the cornerstone of both jurisdictions for granting stay. That is what has to be prevented.”

40. The Applicant contends that the Respondent will sell the proclaimed goods if stay of execution is not granted. He further contended that he will suffer substantial loss if the proclaimed goods are sold since they comprise of his tools of trade, hence the operations of his law firm will be crippled.

41. The Respondent on the other hand contended that the Applicant has not satisfied the conditions for the grant of stay pending appeal. It was argued that the Appellant has not demonstrated that he will suffer substantial loss if distress for rent were to proceed.

42. From the material placed before me, I find that the Applicant has demonstrated that he will suffer substantial loss if the proclaimed goods are sold.

43. In an application for stay of execution pending Appeal, an Applicant must also satisfy the Court that the application has been made without unreasonable delay. The ruling against which the appeal lies was delivered on 18th October 2024. The instant application was filed on 21st January 2025. I find that the application was filed without undue delay.

44. On the last condition as to the provision of security for costs, Order 42 Rule 6 (2) (b) of the Civil Procedure Rules is couched in mandatory terms to the effect that the Applicant must furnish security for the performance of the order or decree. In the case of Arun C Sharma Vs Ashana Raikundalia T/A Raikundalia & Co. Advocates & 2 Others (2014) eKLR, the court held that;“The purpose of the security under Order 42 is to guarantee 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 applicant 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 a security for the 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.”

45. The Applicant has expressed his willingness to provide security for the due performance of the decree.

46. From the foregoing, I find that the Applicant has met the threshold for the grant of stay of execution pending appeal.

47. The upshot of the foregoing is that the application dated 21st January 2025 is merited and the same is hereby allowed in the following terms:-a)Stay of execution of the judgment delivered on 18th October 2024 is granted pending the hearing and determination of the Appeal.b)The Appellant shall deposit Kshs 600,000/= in a joint interest earning account in the names of both Advocates within 21 days from the date of this ruling.c)In default of order (b) above, the order of stay of execution shall lapse automatically

RULING DATED, SIGNED AND DELIVERED VIA MICROSOFT TEAMS THIS 26THDAY OF MARCH, 2025. ..............................T. MURIGIJUDGEin the presence ofMbatha for the ApplicantHilda – Court assistant