[2024] KEHC 16254 (KLR)

Kiletu v Katumo (Civil Appeal E020 of 2020) [2024] KEHC 16254 (KLR) (18 December 2024) (Ruling)

Neutral citation: [2024] KEHC 16254 (KLR)

Republic of Kenya

In the High Court at Machakos

Civil Appeal E020 of 2020

MW Muigai, J

December 18, 2024

Between

Stephen Kioko Kiletu

Appellant

and

Mutua Katumo

Respondent

Ruling

1. Vide application dated 26/02/2024 brought under Section 3A, 79G and 95 of the Civil Procedure Act, Order 22 Rule 22, Order 42 Rule 6 , Order 50 Rule 6 and Order 51 Rules 1 and 3 of the Civil Procedure Rules, 2010 the Applicant sought the following orders, that;a.Spentb.That this Honourable Court be pleased to order a stay of execution of the judgement of Machakos CMCC E543 of 2021 delivered by the Honourable Mbati on 8th January 2024 pending the hearing and determination of this applicationc.That this Honourable Court be pleased to order a stay of execution of the judgement of Machakos CMCC E543 of 2021 delivered by the Honourable Mbati on 8th January 2024 pending the hearing and determination of this appeald.This court allows the Appellant/Applicant to furnish the Court with security in the form of a bank guarantee from a reputable Bank pending the hearing and determination of this Application.e.The costs of the application abide the outcome of the appeal

2. The Application is supported by an affidavit sworn by Stephen Kioko Kiletu the Applicant herein sworn on 26th February, 2024 stating as follows; that the Applicant being dissatisfied with the judgment of the Trial Court delivered on 8/01/2024 which found him liable 50% intends to appeal the decision and has in this regard lodged a Memorandum of Appeal to that effect; that the intended Appeal has high chances of success; that the Respondent may proceed and levy execution against the Applicant after the lapsing of 30 days stay granted by the Trial Court hence rendering the Applicant’s Appeal nugatory and the Applicant will suffer irreparable loss and damages; that if the Respondent is paid the decretal amount and in the event the appeal is successful, the Applicant might not be able to recover the same from the Respondent since the Respondent has not disclosed nor furnished the Court with any documentary evidence to prove her financial standing; that the Applicant insurance is ready, willing and able to furnish the Court with a Bank Guarantee as security to the Court and that the entire decretal sum be settled through a bank guarantee.

Replying Affidavit 3. The Respondent opposed the Application through a Replying Affidavit sworn on 8th march 2024 deposed by Mutua Katumo in which he stated as follows; that the threshold for stay of execution has not been met and that the bank guarantee cannot be used as a security as it has been used as security in the entire country and the same must have been exhausted by other judgements and is unenforceable, that the respondent is a man of means and he will be able to refund the sums.

4. The Application was canvassed by way of written submissions.

Appellant’s Submissions Dated 20. 11. 2024 5. On behalf of the appellant it was submitted that the memorandum of appeal was arguable and raised serious points of law. Reliance was placed on the case of Kenya revenue Authority vs Sidney Keitany Changole & 3 others 2015 eKLR

6. On substantial loss it was submitted that the respondent’s means was unknown and it was highly unlikely that he will be able to refund the decretal sum in the event that the appeal succeeds since he had not disclosed nor furnished the court with any documentary evidence to prove her financial standing. Reliance was placed on the case of Edward Kamau & anor v Hannah Mukui Gichuki & anor (2015) e KLR.

7. On the application being filed without unreasonable delay it was submitted that there was no inordinate delay on the part of the applicant

8. On security it was submitted that the appellant was willing to furnish security in form of a bank guarantee and relied on the case of Gianfranco Manenthi &another vs Africa Merchant Assurance Company Ltd [2019]

9. It was their final submission that the applicant had satisfied all the conditions set out in order 42 Rule 6 and thus stay of execution should be granted.

Respondent’s Submissions Dated 17. 10. 2024 10. On behalf of the Respondent, reliance was placed on the case of Jeny Luesby vs Standard Group Limited (2014) eKLR that the prerequisite for granting stay should be proved simultaneously as pronounced in the case of Magnate Ventures v Simon Mutua Muatha & another[2018] eKLR

11. On substantial loss it is submitted the alleged substantial loss is self implicated and has not been proved. Reliance is made in the cases of James Wangalwa & Another vs Agnes Naliaka Cheseto

12. On unreasonable delay, it was submitted that the application was filed one month three weeks later and the applicant had not offered any explanation for the delay, he relied on the case of Congress Rental South Africa v Kenyatta International Convention Centre, Co-operative Bank of Kenya Limited & another (Garnishee) [2019] eKLR

13. On security it was submitted that the security offered by the applicant is not with respect to the payment of the decretal sum and not binding, and it expires on 14. 6.2024 and is unenforceable. The court was urged to order the applicant to release half of the decretal sum to the respondent and the balance be deposited in court

14. Reliance was made to the case of Mwaura Karuga t/a Limit Enterprise vs Kenya Bus Services Ltd & 4 others [2015] and Gianfranco Manenthi & another vs Africa Merchant Assurance Company Ltd [2019] eKLR

15. On whether the court should exercise inherent powers, reliance was placed on the case of Kenya Power & Lighting Company Limited vs Benzene holdings Limited [2016] eKLR and the case of Equity Bank Limited vs West Link MBO Limited

16. It was finally submitted that the applicant had failed to raise sufficient cause for grant of the orders sought.

Determination 17. The Court has considered the Application, the Response thereto and the submissions on record and the issue for determination is whether the Applicant should be granted an order of stay of execution pending appeal.

18. Stay of Execution is provided by the proviso under Order 42 Rule 6 of the Civil Procedure Rules 2010 as follows;1. No appeal or second appeal shall operate as a stay of execution or proceeding 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.2. No order for stay of execution shall be made under subrule (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.”

19. The three conditions to be fulfilled can therefore be summarized as follows;that substantial loss may result to the applicant unless the order is made application has been made without unreasonable delay security as the court orders for the due performance

20. These principles were enunciated in Butt vs Rent Restriction Tribunal [1979] the Court of Appeal stated what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court said that:-a.The power of the court to grant or refuse an application for a stay of execution is discretionary; and the discretion should be exercised in such a way as not to prevent an appeal.b.Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.c.Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.d.Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security of costs as ordered will cause the order for stay of execution to lapse.

Substantial Loss 21. On the issue of substantial loss, Ogolla, J gave stated as follows in Tropical Commodities Suppliers Ltd & Others vs. International Credit Bank Ltd (in liquidation) [2004] 2 EA 331 that:“Substantial loss does not represent any particular mathematical formula. Rather, it is a qualitative concept. It refers to any loss, great or small, that is of real worth or value as distinguished from a loss without value or a loss that is merely nominal.’

22. In the case of James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR the court expressed itself as hereunder:“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.”

23. The Applicant contends that the appeal shall be rendered nugatory if the orders sought herein are not granted as the Respondent may proceed to execute the decree and that the respondent had not demonstrated that he was a person of means capable of refunding the decretal sum.

Arguable Appeal 24. The Applicant has submitted that it has a strong arguable appeal which has high chances of access that will be rendered nugatory if the orders sought are not granted.

Undue Delay 25. As to whether the Application has been filed without undue delay, judgment was entered on 8. 1.2024 and this application was filed on 29. 02. 2024, almost two months later. The court finds that the Application has not been filed without undue delay.

Security 26. As regards deposit of security, the court observed in the case of Gianfranco Manenthi & Another vs Africa merchant Assurance Co. Ltd [2019] eKLR it was held that:-“The applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition, a party who seeks the right of appeal from a money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under Order 42 Rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the decree in order to enjoy the fruits of his judgment in case the appeal falls.Further Order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal….Thus the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine. Counsel for the applicant submitted that he is ready to provide a bank guarantee as security for due performance of the decree.”

27. The Applicant contended that he is willing and ready to abide by any reasonable condition set forth by the Court in due performance of the decree pending the hearing and determination of the appeal and proposed furnishing security in terms of a bank guarantee, a proposal which was vehemently opposed by the Respondent terming the bank Guarantee as a general one thus unbinding.

28. This Court is persuaded that the Applicant has demonstrated that he has met the threshold for grant of stay of execution.

DISPOSITION 29. In balancing the rights of the parties and in exercise of the court’s discretion, I direct as follows;a.Stay of execution pending Appeal of Machakos CMCC No. E543 of 2022 is granted on condition that the Applicant deposits half of the decretal amount in a joint interest earning account of both Advocates on record and other half in a bank guarantee issued within 90 days from the date hereof and in default, the application for stay shall stand dismissed.b.The costs of this application abide the outcome of the appeal.

It so ordered.

RULING DELIVERED DATED & SIGNED IN OPEN COURT ON 18/12/2024 IN MACHAKOS HIGH COURT (VIRTUAL/ PHYSICAL CONFERENCE).M.W. MUIGAIJUDGE