https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10907

KCB Bank Kenya Ltd v Bao & another (Civil Appeal E067 of 2026) [2026] KEHC 10907 (KLR) (15 July 2026) (Ruling) Neutral citation: [2026] KEHC 10907 (KLR) Republic of Kenya In the High Court at Malindi Civil Appeal E067 of 2026 C Akaigwa, J July 15, 2026 Between KCB Bank Kenya Ltd Applicant and Levis Lewa Bao 1st Respondent Trident Insurance Company Ltd 2nd Respondent Ruling A. Introduction 1.The Appellant, by a Notice of Motion dated 16th June, 2026, brought under Sections 1A, 1B, and 3A of the Civil Procedure Act (Cap 21), Order 22 Rule 22, Order 23 Rule 5, and Order 51 Rule 1 of the Civil Procedure Rules, 2010, and Section 67C(10) of the Insurance Act (Cap 487), seeks an order of stay of execution of the Warrant of Attachment of Movable Property, the Warrant of Sale issued on 12th June, 2026, and the Proclamation of Attachment dated 13th June, 2026, pending the hearing and determination of its appeal. 2.As noted in the pleadings this Court issued directions ex-parte on 18th June, 2026, ordering that the application be canvassed by way of written submissions. The 1st Respondent filed a Replying Affidavit sworn on 22ndJune, 2026, opposing the Application in its entirety, this was further reinforced by the submissions dated 1st July, 2026 which was met by the Applicant's rejoining submissions dated 30th June, 2026. B. Brief Summary Of Facts 3.The 1st Respondent holds a decree against the 2nd Respondent (Trident Insurance Co. Ltd) in Kilifi MCCC No. E167 of 2025 for Kshs. 513,188/=, and instituted garnishee proceedings against the Appellant as the bank holding the 2nd Respondent's accounts. The garnishee application was listed for hearing on 19th November 2025 where the Appellant's Counsel did not attend court and a Garnishee Order Absolute issued in its absence. 4.The Appellants made an application dated 28th November 2025 to set aside the Garnishee Order Absolute and attached a certified Certificates of Balance and a Letter of Offer and Acceptance dated 9th October 2023 evidencing a Kshs. 100,000,000/= facility and an overdrawn position of Kshs. 98,939,292.05 . This application was dismissed by the Ruling of 10th June 2026, which upheld the Garnishee Order Absolute. 5.Separately, the 2nd Respondent was placed under Statutory Management by the Commissioner of Insurance on 10th March 2026, with a Moratorium declared under Section 67C(10) of the Insurance Act. Following the Ruling, the 1st Respondent procured Warrants of Attachment and Sale dated 12th June 2026) and a Proclamation of Attachment dated 13th June 2026) against the Appellant's own banking-hall furniture, office equipment and tools of trade. T 6.The Appellant lodged the present Appeal together with the instant stay Application on 16th June 2026. The Court declined interim orders on 18th June 2026 and directed the Application be canvassed by written submissions. The 1st Respondent's Replying Affidavit dated 22nd June 2026 opposes the Application in its entirety. C. Submissions By Parties 7.The Appellant's case is in two fold. On the merits of the Appeal, it contends that the 2nd Respondent's accounts were substantially overdrawn such that no debt was due or accruing from the Appellant capable of garnishee attachment; that the Trial Magistrate improperly reversed the burden of proof contrary to Sections 107–109 of the Evidence Act; and, most significantly, that the Garnishee Order Absolute and resulting execution offend a subsisting statutory Moratorium under Section 67C(10) of the Insurance Act, of which the trial court ought to have taken judicial notice as a supervening matter of public record. 8.On the stay Application itself, the Appellant submits it has satisfied Order 42 Rule 6(2) of the Civil Procedure Rules, that it will suffer substantial loss through disruption of its banking operations and reputational harm if its operational assets are attached and sold, that it moved the court without unreasonable delay, and the Appeal raises serious, arguable issues that would be rendered nugatory in the absence of a stay. 9.The 1st Respondent opposes the Application in its entirety, contending it is brought in bad faith, is bad in law, and discloses no likelihood of success. 10.He argues that an overdraft, once drawn down and reflected as a credit in the account, constitutes money belonging to the Judgment Debtor and is attachable under Order 23 Rules 1 and 2 of the Civil Procedure Rules, and that the Appellant, being conflicted as a beneficiary of the account relationship failed to make full and frank disclosure. 11.He further contends that the Statutory Management/Moratorium point is a new issue never canvassed before the trial court and cannot properly be raised for the first time on appeal, that the Appellant has not proved it will suffer substantial loss, and that he himself would be gravely prejudiced by further delay, being capable in any event of refunding the decretal sum should the Appeal succeed. 12.He prays that the Application be dismissed with costs. D. Legal Analysis 13.Order 42 Rule 6(2) of the Civil Procedure Rules, 2010 imposes a conjunctive threshold: no stay may issue unless the Court is satisfied that substantial loss may result in the absence the order, that the application was made without unreasonable delay, and that security for due performance of the decree has been given. The discretion is thereafter to be exercised so as to preserve the substratum of the appeal without needlessly depriving a decree-holder of the fruits of judgment. On the question whether there was unreasonable delay 14.Delay is not seriously contested. The Ruling was issued on 10th June 2026, the Warrants and Proclamation followed on 12th–13th June 2026, and the Appellant moved to court on 16th June 2026. This limb is satisfied. Substantial loss may result in the absence the order 15.This limb is thinly supported. The decretal sum, Kshs. 513,188/=, is in my opinion modest measured against a national bank’s asset base. Beyond generalized assertions by the Appellant of "disruption" and "reputational harm," no evidence quantifies the value of the specific assets under threat, or shows which branch would in fact cease operating, or that any loss would be irrecoverable particularly where the 1st Respondent has deposed to being able to refund the sum if the Appeal succeeds. Attachment of replaceable chattels to satisfy a modest money decree does not, without more, meet the substantial-loss threshold as established in the case of Machira t/a Machira & Co. Advocates v East African Standard [2002] KEHC 1167 (KLR). On the issue Security for due performance. 16.This is the most significant gap. Order 42 Rule 6(2)(b) is mandatory and conjunctive with substantial loss, yet neither the Notice of Motion nor the submissions offer any security, deposit or guarantee to secure due performance of the decree. This precondition is not met as there is no evidence placed before this Court. Argueability of the Appeal. 17.The overdrawn-account and burden-of-proof grounds raise genuine, non-frivolous questions but are not independently dispositive of the stay Application. The Moratorium ground is the most substantial, but there are two issues first, whether it may be raised for the first time on appeal, given the 1st Respondent's contention that it was never canvassed at trial and Second, and more fundamentally, the Moratorium under Section 67C(10) of the Insurance Act protects the assets and funds of the 2nd Respondent, the insurer under Statutory Management. 18.The Warrants of Attachment and Sale and the Proclamation of Attachment now under challenge, however, are not directed at the 2nd Respondent's assets. They are directed at the Applicant's own banking-hall furniture and equipment, issued because the Applicant, as Garnishee, failed to comply with the Garnishee Order Absolute. 19.This is accordingly not execution against the insurer's estate, but execution against the Garnishee for its own default. Whether the Moratorium can nonetheless be relied upon by the Applicant in these circumstances is a question better left for determination at the hearing of the substantive Appeal. E. Conclusion And Final Orders 20.On the material before the Court, the Application does not satisfy the three conditions required under Order 42 Rule 6(2). 21.Ultimately, while this Court remains unconvinced by the Applicant’s bare claims of substantial loss, it recognizes that the supervening statutory moratorium under Section 67C(10) of the Insurance Act introduces profound, non-frivolous legal questions regarding the validity of the execution process itself. 22.To deny a stay outrightly would risk rendering the final determination of this novel legal point entirely nugatory. 23.Accordingly, the Court hereby issues the following Final Orders:a.The Applicant’s Notice of Motion dated 16th June 2026 is partially allowed to the extent that a Conditional Stay of Execution of the Garnishee Order Absolute and the resulting Warrants and Proclamations of Attachment is hereby granted pending the hearing and determination of the main Appeal.b.The condition precedent for the operation of the stay in Order (1) above is that the Appellant/Applicant shall deposit the exact decretal sum of Kshs. 513,188/= into the Court’s Account, within seven (7) days from the date of this Ruling.c.The Applicant shall, upon making the deposit specified in Order (2) above, immediately file the official Judiciary receipt in court and serve a copy of the same upon the 1st Respondent’s Advocates as proof of compliance.d.In default of payment and compliance with Orders (2) and (3) within the stipulated Seven (7) days, the Conditional Stay of Execution shall automatically lapse and stand vacated, and the 1st Respondent shall be at immediate liberty to proceed with execution without further reference to this Court.e.For the expeditious resolution of this dispute, the Appeal pending before this Court is set for mention for directions 22/07/2026.f.The costs of this application shall abide by the outcome of the substantive Appeal. DATED, SIGNED AND DELIVERED AT MALINDI THIS 15th DAY OF JULY, 2026.C.AKAIGWAJUDGE