https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7044

**REPUBLIC OF KENYA** **IN THE HIGH COURT AT MAKUENI** **CIVIL APPEAL NO. 32 OF 2019** **KEY FREIGHT LTD……………………………………APPELLANT/JUDGMENT DEBTOR** **-VERSUS-** **MOHAMMED ABDI ………………………................RESPONDENT/DECREE HOLDER** **AND** **MIDDLE EAST BANK KENYA LTD………………………….……APPLICANT/OBJECTOR** **RULING** **Introduction** 1. The Application for determination is dated 19/01/2026 filed under Certificate of Urgency. It is brought under **Order 42 Rule 6**, **Order 51 Rules 1 & 2** of the **Civil Procedure Rules 2010**, **Sections 1A, 1B 3A, 63 (c),** **(e)**of the **Civil Procedure Act**, **Article 50 (1), 40 (1), 159 (2) (b)** of the **Constitution** and all other enabling provisions of the law. It seeks the following orders; 2. Spent. 3. Spent. 4. **THAT** this Honorable Court be pleased to issue stay of execution proceedings herein pending the hearing and determination of the intended Appeal to the Court of Appeal. 5. **THAT** this Honorable Court be pleased to make any other order or such further orders as it may deem fit and just to meet the ends of justice. 6. **THAT** the costs of this Application be provided for. 7. The Application is supported by the grounds stated on its face and the Affidavit of Elizabeth Ong’are sworn on the same day and a further affidavit sworn on 29/01/2026. She deposed that she is the Credit Manager of the Applicant hence fully instructed and mandated to swear the affidavit on its behalf. That, on 22/12/2025, this court dismissed the Applicant’s objection Application hence allowing execution to proceed. That, the Applicant is aggrieved by the said ruling and has instructed its advocates to file an Appeal at the Court of Appeal. 8. She deposed that the Applicant holds a duly registered debenture dated 06/01/2022 securing a facility of USD 500,000 over the Judgment Debtor’s assets including motor vehicles, machinery and movable assets. A copy of the debenture is exhibited as **E0-3.** That, the Respondent has applied for re-issuance of Warrants of Attachment and Sale of the charged assets. A copy of the letter dated 14/01/2026 is exhibited as **E0-4.** That, the proclaimed assets constitute the Applicant’s secured collateral and once sold, the intended Appeal shall be rendered nugatory. 9. She deposed that the Applicant stands to suffer substantial loss as the proprietary and security interests under the debenture will be irreversibly defeated. That, the Intended Appeal raises arguable points of law on crystallization of floating charges, priority of secured creditors and the scope of objection proceedings under **Order 22 Rule 51** of the **Civil Procedure Rules**. That, the balance of convenience is in favor of restraining the Respondent, his servants and/or agents from auctioning, selling and/or otherwise disposing off motor vehicles and other assets charged in its favor pending the hearing and determination of this application and appeal. 10. She deposed that, the Application has been made without unreasonable delay upon receipt of instructions to appeal. That, the current state of affairs continues to unfairly prejudice the commercial and legitimate legal and business interests of the Applicant. 11. The Application is opposed through the Replying Affidavit sworn by Jane Wairimu on 23/01/2026 where she deposed that she is the Legal Officer at Kenya Alliance Insurance Co. Ltd - the insurer of the Respondent/Decree Holder hence duly authorized to swear the affidavit. That, this matter arises from a subrogation suit stemming from a material damage claim in which Kenya Alliance Insurance Company Limited duly indemnified the Respondent/Decree Holder and, by operation of law and the doctrine of subrogation, pursued recovery from the Judgment Debtor. That, judgment was entered in favor of the Respondent/Decree Holder culminating into an appeal, leading to the decree and execution proceedings. 12. That, in the ruling delivered by this court on 22/12/2025, the court made firm findings that the debenture’s crystallization provisions could not lawfully be invoked in isolation from events of default provisions; that the Judgment Debtor’s failure to comply with the court decree triggered the said events of default clause; that notwithstanding that contractual trigger, the Applicant/Objector failed and/or neglected to take steps required of it under the debenture; and that by reason of that failure, the debenture was rendered unenforceable as against the Judgment Debtor. 13. It was further averred that, notwithstanding the clear judicial findings, the Applicant/Objector has chosen yet again to approach court not to pursue its remedies against the debtor under the debenture, but to seek orders whose practical effect is to shield the Judgment Debtor from execution, which conduct reasonably suggests a coordinated strategy to defeat the ends of justice. That, the present application for stay is therefore a disguised attempt to obtain, through a different procedural path, what the Applicant/Objector failed to obtain when its objection was dismissed on merit. 14. She deposed that the Applicant/Objector’s own narrative has consistently been that, it stands to suffer irreparable loss if attachment proceeds, yet the court’s record shows that what is at stake is execution of a monetary decree and the Applicant’s alleged interests are founded on a private security instrument between itself and the Judgment Debtor. That, equity and justice do not permit a secured creditor to allow a company to continue trading and obtain credit, yet later deploy a security instrument selectively to prevent lawful creditors from being paid, particularly where the secured creditor had earlier failed to trigger its own contractual remedies when default arose. 15. She deposed that the Applicant/Objector’s proper recourse, if any, lies in enforcing its security and contractual rights directly against the Judgment Debtor under the debenture, rather than repeatedly dragging the Decree Holder through collateral proceedings to delay realization of a lawful decree. That the decree herein is a money decree and stay of execution being a discretionary and equitable remedy is not granted as a matter of course. That, this Honourable Court ought not to grant stay in a manner that will leave the Decree Holder exposed and indefinitely deprived of the fruits of judgment. 16. She further deposed that the Kenyan Alliance Insurance Company is a regulated and reputable Insurance Company with the financial capacity to refund the decretal sum in the unlikely event that the intended Appeal succeeds hence the Applicant should not plausibly claim that payment to the Decree Holder would occasion irreparable prejudice. That, unless the Application is dismissed, the Decree Holder will suffer grave prejudice through continued denial of a lawful recovery, continued litigation costs and undue delay, yet the Applicant retains full liberty to pursue its borrower directly under the debenture remedies. 17. In her rejoinder, Ms. Elizabeth Ong’are deposed that; the Applicant is a secured creditor of the Appellant by virtue of a duly registered debenture creating both fixed and floating charges over the Appellant’s assets as security for substantial banking facilities advanced to the Appellant. That, the Applicant is not a party to the primary dispute between the Appellant and Respondent and is not a Judgment Debtor in respect of the decree issued herein. That, the Applicant has no interest in shielding the Appellant from lawful execution save for protecting its proprietary and contractual rights over assets charged in its favor under the said debenture. 18. She deposed that the Respondent improperly treats the Applicant as though it were the Appellant yet in law, a secured creditor under a debenture enjoys priority over execution creditors in respect of charged assets. That, the execution threatened by the Respondents is directed at assets already encumbered in favor of the Applicant and which constitute the only security available to secure payment of substantial banking facilities advanced to the Appellant. 19. She deposed that the Respondent remains at liberty to execute against any free and unencumbered assets of the Appellant and is not prejudiced from enjoying the fruits of the judgment outside the charged debenture assets. 20. The Application was canvassed through written submissions. **The Applicant’s Submissions** 1. The issues for determination were identified to be; 2. Whether the Applicant has satisfied the legal threshold for grant of stay of execution of the decree as against the specific properties held under debenture in favor of the Applicant pending hearing and determination of its appeal. 3. Whether the Respondent’s Replying Affidavit is properly on record. 4. On whether the Applicant has satisfied the legal threshold for grant of stay of execution, it was submitted That in **Butt -vs- Rent Restriction Tribunal (1979) KECA 22 (KLR)**, the Court of Appeal held that the discretion to grant stay should be exercised so as to preserve an appeal. That in **RWW -vs- EKW (2019) eKLR**, the Court reiterated that the purpose of stay is to preserve the subject matter so that the appeal is not rendered nugatory. Reference was also made to **Order 42** **Rule 6(2)** of the **Civil Procedure Rules** for the submission that; for an order of stay to be issued, the court must be satisfied that; substantial loss may occur, that the application has been made without unreasonable delay and such security as the court orders has been given. It was submitted that these principles must be applied in a manner that respects the Applicant’s position as a Third-Party Objector and not Judgment Debtor. 5. It was further submitted that execution in this matter is directed at assets over which the Applicant holds security by way of a debenture. That, the facilities have not been paid by the Appellant and if attachment and sale proceeds, the Applicant’s proprietary and priority rights will be extinguished irreversibly. That, such loss is not compensable by damages because security rights are not merely monetary but proprietary in nature. That, the Respondent remains at liberty to execute against any free and unencumbered assets of the Judgment Debtor. 6. It was submitted that the Applicant moved the court promptly on 21/01/2026 upon delivery of the impugned ruling on 22/12/2025 hence no delay, indolence or abuse of court process. That, the Applicant has approached the court in good faith to preserve the substratum of the appeal. 7. Reliance was placed on the case of **Focin Motorcycle Co. Ltd -vs-Ann Wambui Wangui (2018) eKLR** for the submission that the requirement to furnish security is neither automatic nor punitive and must serve a rational and proportional purpose of preserving the subject matter of the appeal and balancing the rights of the parties. It was contended that the Applicant herein cannot logically be required to provide security for the decretal sum since it does not owe the Respondent any money under the decree. That, to require the Applicant to deposit money as security for the decretal sum would be to add to the existing debt burden which the Applicant is striving to preserve. That, this will render the Applicant’s existing security commercially insufficient thereby exposing it to irreparable loss without ultimate recourse. 8. It was submitted that the Respondent appears to proceed on the misapprehension that any security for the decretal sum provided by the Applicant would become payable to the Respondent as Judgment Creditor. It was contended that such approach misconceives the scope of an objector’s rights and improperly converts the Applicant into a Judgment Debtor. It was further contended that since the decree does not lie against the Applicant, monetary security would be punitive rather than protective. Without prejudice to the forgoing, it was submitted that the Applicant remains ready to abide by any reasonable and proportionate conditions that the court may impose in the interests of justice. 9. It was submitted that on a balance of convenience, the court must balance the right of the Respondent to enjoy the fruits of judgment with the Applicant’s right to Appeal without destruction of the subject matter. Reliance was placed on the case of **Absalom Dova -vs Tarbo Transporters (2013) eKLR** where the Court stated; **“The discretionary relief of stay of execution pending appeal is designed on the basis that no one would be worse off by virtue of an order of the court; as each order does not introduce any disadvantage but administers the justice that the case deserves. This is a recognition that both parties have rights, the appellant to this appeal which includes the prospects that the appeal will not be rendered nugatory and the decree holder to the decree which includes full benefits under the decree. The court in balancing the two competing rights, focuses on reconciliation.”** 1. It was submitted that granting stay causes no prejudice to the Respondent because execution may still proceed against unencumbered assets of the Judgment Debtor and interest continues to accrue. 2. As to whether the Replying Affidavit is properly on record, it was submitted that the affidavit has not confined itself to the statutory test under **Order 42 Rule 6** but attempts to argue matters which are reserved for the appeal itself. Reliance was placed on the case of **Stanley Kang’ethe Kinyanjui -vs- Tony Ketter & 5 Others (2013) eKLR** where the Court of Appeal stated; **“In considering the application for stay, the court must not make definitive findings on the merits of the Appeal.”** 1. It was contended that the Replying Affidavit is of no assistance to the court. That, the court should strike it out or ignore the portions which improperly argue the Appeal by the back door. **The Respondent’s Submissions** 1. The issues for determination were identified to be; 2. Whether the Applicant/Objector has met the threshold for stay pending Appeal under **Order 42 Rule 6** of the **Civil Procedure Rules**. 1. Whether the Applicant/Objector has demonstrated any legally protectable prejudice warranting stay. 2. As to whether the threshold for stay pending appeal has been met, it was submitted that an appeal does not operate as an automatic stay and that stay is only available upon “sufficient cause” and subject to strict conditions. Reliance was placed *inter alia* on the case of **James Wangalwa & Another -vs- Agnes Naliaka Cheseto [2012] eKLR** for the submission that the fact that the process of execution has been put in motion does not amount to substantial loss. It was submitted that execution is a lawful process hence the Applicant must show other factors demonstrating an irreparable state of affairs. It was contended that the Applicant/Objector has not discharged the burden of proving substantial loss in the legal sense and has not placed before court a concrete basis to justify restraint of execution on terms that safeguard the Decree Holder, including appropriate security. 3. As to whether prejudice has been demonstrated, it was submitted that the Applicant/Objector is not the Judgment Debtor and the prejudice it asserts is therefore not the ordinary prejudice of a party whose own property is being sold in satisfaction of its own decree debt. That, the alleged prejudice is derivative, resting entirely on a claimed debenture priority. That, the Applicant/Objector was required to place clear evidence of a specific, immediate and legally protectable loss to itself if execution proceeds, including evidence that its security rights had been properly perfected, enforced, or otherwise placed in a position capable of displacing execution but has not done so. 4. It was submitted that the Applicant has presented a broad invitation to treat the mere existence of a debenture as an automatic bar to execution. That, to accept that proposition would unduly elevate a debenture holder into a *defacto* gatekeeper over decree enforcement, even where the Judgment Debtor remains in default and execution is lawfully underway. That, such an approach would undermine the integrity of execution proceedings, prejudice decree holders and create a perverse incentive for Judgment Debtors to shelter behind unactivated or selectively invoked debenture rights instead of satisfying lawful decrees. 5. It was submitted that the proper recourse for a debenture holder lies, first, in the remedies provided in the debenture instrument and the law governing its enforcement. That, where those remedies are not pursued or shown to have been lawfully invoked, the resulting exposure cannot be recast as “prejudice” warranting stay against a decree holder. That, this is not merely a matter of argument but of principle, consistently affirmed by the courts. Reliance was placed on the case of **Douglas D. Watson -vs- Kenya Cold Storage (foods) Ltd & Kenya Commercial Bank Ltd [2001] KEHC 652 (KLR)** where the Court stated; **“Without such steps, a floating security remains just that and cannot be used to prevent an attaching decree holder…”** 1. It was submitted that in the event that the Applicant/Objector has shown some interest capable of consideration, this court’s discretion cannot be exercised in a vacuum. That, the prejudice analysis must be balanced against the prejudice to the Respondent/Decree Holder, which is concrete, continuing and severe. That, the material damage claim herein arose from loss suffered many years ago and the Decree Holder has already been kept out of compensation for an extended period despite having a lawful decree. That, each further interruption of execution compounds that prejudice through continued non-payment, added execution costs and further litigation expense. Consequently, it was submitted that the Applicant/Objector has failed to demonstrate any legally protectable prejudice warranting stay. 2. Having looked at the application, the response and rival submissions, the only issue for determination is whether the application is merited; **Analysis** 1. According to **Order 42 Rule 6** of the **Civil Procedure Rules**, the conditions which should guide the court in determining whether to grant stay pending appeal are; whether substantial loss will occur if stay is not granted, whether the application has been filed without unreasonable delay and furnishing security for the due performance of the decree. 1. It is indeed true that the Applicant’s objection application was dismissed by this court *(Matheka J)* on 22/12/2025. The objection application just like the application herein was hinged on the debenture dated 06/01/2022 between Hacienda Logistics Ltd, the Applicant/Objector and the Appellant. It is stated that the debenture secures a facility of USD 500,000 over the Judgment Debtor’s assets including motor vehicles, machinery and movable assets. It was argued that the Respondent has applied for re-issuance of Warrants of Attachment and Sale of the charged assets which constitute the Applicant’s secured collateral and once sold, the Applicant will suffer substantial loss as the proprietary and security interests under the debenture will be irreversibly defeated. 2. This court analyzed the relevant provisions of the debenture as follows; **“These clauses provide which assets are charged and what would trigger crystallization. It is not in dispute that one of the events that would trigger crystallization is the event of an execution of a decree such as the decree in this case. It says that the floating charge created by Clause 2:1(b) shall automatically and without notice be converted into a fixed charge in respect of any charged asset subject to the floating charge *inter alia*…if and when any person levies or notifies the company that it intends to levy a distress, execution, sequestration or other process against these charged assets. I have perused the proclamation by Moran Auctioneers. It lists 10 m/vehicles in the schedule of movable property. According to this clause, the moment the proclamation was made, the floating charge became a fixed charge over these motor vehicles.** **On the other hand, Clause 6 of the debenture provides for EVENTS OF DEFAULT. At 6:1 it says…my plain reading of 6:1 is that there are certain events that trigger the situation where the objector, the bank shall cease to be under any further commitment to the company in respect of any facilities that may be made available to the company or otherwise and the secured obligations shall immediately become due and payable on demand…in effect the end of the debenture where the bank calls out for what is due to it from the company. It’s not something that the bank has a choice about……** **In the circumstances, I am in agreement with the submissions that while the objector enjoyed protection under clauses 2:1 as read with 2:4 of the debenture, the failure by the objector to act in accordance with clause 6:1 as read with 6(1)(e) in the first instance rendered the debenture unenforceable vis-à-vis the Appellant.”** 1. Evidently, this court has already made a finding that the debenture is unenforceable *vis-à-vis* the Appellant but the Applicant has come back asking the court to base a finding of substantial loss on existence of the same debenture. In my view, this is contradictory and tantamount to this court sitting on appeal in its own decision. Consequently, it is my considered view that substantial loss has not demonstrated. 2. I am in agreement with the persuasive finding in **Kariuki -vs- Gikandu & 3 Others (Environment and Land Appeal E037 of 2026) [2026] KEELC 2185 (KLR) (21 April 2026) (Ruling)** where the court *(E.K Wabwoto J)* stated; **“28. This Court has exercised its discretion judiciously in accordance with the clear and mandatory provisions of Order 42 Rule 6(2) of the Civil Procedure Rules, 2010, which requires all three conjunctive conditions to be satisfied before a stay of execution pending appeal may be granted.** **29. The Applicant has failed on the critical limb of substantial loss rendering the Application for stay fatally defective.”** 1. Similarly, the Applicant herein has failed on the critical limb of substantial loss. As to whether the application was filed in time, there is no dispute. As to the likelihood of the appeal succeeding, that is for the Appellate Court to determine. Regarding security, in my view it is not necessary as the Kenya Alliance Limited is a reputable company who can refund any amount realized from the sale of the subject property should the appeal succeed. To that extent, I do not find any merit in the application hence dismissed with costs to the respondent. Dated, signed and delivered virtually this **15th** day of **May 2026** **………………** **J. N. ONYIEGO** **JUDGE**