https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10512

Mhasibu Sacco Society Limited v Irura & another (Miscellaneous Application E189 of 2025) [2026] KEHC 10512 (KLR) (Civ) (15 July 2026) (Ruling) Neutral citation: [2026] KEHC 10512 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Miscellaneous Application E189 of 2025 AC Mrima, J July 15, 2026 Between Mhasibu Sacco Society Limited Applicant and David Mugweru Irura 1st Respondent Cleofa Maria Mnene 2nd Respondent Ruling Background: 1.On 24th July 2025, the Co-operative Tribunal (hereinafter referred to as ‘the Tribunal’) at Nairobi in Cause No. CTC/E429/2023 delivered a judgment in favour of David Mugweru Irura, the 1st Respondent herein. It ordered Mhasibu Sacco Society Limited, the Applicant herein, to refund the 1st Respondent Kshs. 4,456,501 along with interest at Tribunal rates. 2.Aggrieved, the Applicant sought to appeal the entire judgment and all consequential orders hence the application, which was heard by way of written submissions thereby resulting into this ruling. The Application: 3.By a Notice of Motion dated 23rd August 2025, brought under Sections 1A, 1B, 3A, 79G, and 95 of the Civil Procedure Act, Order 42 rule 6(1) and Order 51 rule 1 of the Civil Procedure Rules 2010, and Articles 50 and 159 of the Constitution of Kenya 2010, the Applicant prayed for the following orders:1.Spent.2.Spent.3.That this Honourable court be pleased to extend time and grant leave to the Applicant to lodge its memorandum of appeal out of time against the judgement and/or decree entered by the Co-operative Tribunal at Nairobi, Hon. Janet Mwatsama dated and delivered on 24th July 2025 in Co-operative Tribunal cause No. CTC/E429/2023;4.That Pending the hearing and determination of the intended appeal, the Honourable Court do issue an order staying the execution of the Judgement and decree of Hon. Janet Mwatsama dated and delivered on 24th July 2025 in Co-operative Tribunal cause No. CTC/E429/2023.5.That upon leave to appeal out of time being granted, the Memorandum of Appeal attached herewith be deemed as duly filed and properly on record.6.That the cost of this Application be provided for. 4.The application was grounded on the premise that the Tribunal erred in finding the Applicant negligent for failing to register a formal charge against title number LR.12715/4058 IR. 98968 belonging to the 2nd Respondent, while ignoring the existence of a valid informal charge. Further, the Applicant averred that the Tribunal failed to appreciate that the 1st Respondent willingly executed a personal guarantee for Kshs. 4,485,537, rendering him immediately liable upon the 2nd Respondent’s default without requirement of prior notice. 5.The Applicant maintained that the delay in filing was caused by recurrent CTS system downtime after uploading the documents on 7th August 2025, and that unless a stay was granted, the 1st Respondent would commence execution against the main security of the defaulted loan, rendering the arguable appeal nugatory and causing substantial loss. 6.In the supporting affidavit sworn on 23rd August 2025, Josephine Mumbe Maingi, the Applicant’s Loan Recovery Manager, deposed that the Applicant was dissatisfied with the Tribunal’s judgment and attached a draft Memorandum of Appeal (marked JMM-1). She swore that the intended appeal was uploaded to the CTS on 7th August 2025. She referred to the annexed screenshot and invoice, marked JMM-2, as proof of the system’s recurrent downtime that delayed the payment of fees. She reiterated that the intended appeal raised substantial questions, that the Applicant was willing to abide by Court-imposed conditions, and that proceeding with execution would cause substantial loss as the 1st Respondent’s deposits were the primary security for the Kshs. 19,431,000 defaulted loan. The Submissions 7.In its submissions dated 5th November 2025, the Applicant argued that it had demonstrated reasonable grounds for the extension of time. It was its case that the Memorandum of Appeal was uploaded in time but filing fees were delayed by an intermittent system downtime, a factor beyond its control. The Applicant contended it acted swiftly upon noticing the delay, causing no prejudice to the 1st Respondent. In reference to the Court of Appeal decision in Edith Gichugu Koine -vs- Stephen Njagi Thoithi [2014] eKLR it urged this Court to find that it had satisfied the principles guiding the extension of time. 8.On the requirement of an arguable appeal, the Applicant submitted that the Tribunal erred by failing to consider Machakos OS No. 5 of 2021, Mhasibu Sacco DT Society TD -vs- Ceofa Maria Mnene regarding the informal charge, and by disregarding the 1st Respondent’s personal guarantee. It drew support from the case of Kenya Commercial Bank Limited -vs- Nicholas Ombija [2009] eKLR and Stanley Kangethe Kinyanjui -vs- Tony Ketter & 5 Others [2013] eKLR to establish that an arguable appeal need only raise a single bona fide ground. 9.Finally, on the conditions for stay, the Applicant argued it would suffer substantial loss if the 1st Respondent executed against the guaranteed deposits, as selling the 2nd Respondent’s informally charged property would not sufficiently cover the liabilities. It relied on Samvir Trustee Limited -vs- Guardian Bank Limited Nairobi (Milimani) HCCC 795 of 1997 to urge the Court to balance the scales of justice and prevent the appeal from being rendered nugatory. 10.The Applicant prayed that the application be allowed as prayed. The 1st Respondent’s case: 11.David Mugweru Irura opposed the application through his Replying Affidavit sworn on 13th October 2025. He deposed that the application was frivolous, misguided, and without merit. He asserted that the Applicant failed to demonstrate that the appeal was arguable, that it would be rendered nugatory, or how substantial loss would be occasioned if the stay was denied. 12.It was his case that the Applicant failed to indicate any willingness to provide security for the due performance of the decree, thereby failing to meet the threshold required to deprive a successful litigant of the fruits of their judgment. The Submissions 13.In his submissions dated 11th March 2025, the 1st Respondent conceded to the prayer for leave to file the appeal out of time, but strictly opposed the grant of an unconditional stay of execution. Relying on Order 42 rule 6(1) and (2) of the Civil Procedure Rules and the holding in Vishram Ravji Halai -vs- Thornton & Turpin Civil Application No. Nai. 15 of 1990 [1990] KLR 365, the 1st Respondent argued that the Court’s jurisdiction to grant a stay is fettered by three conditions: sufficient cause, substantial loss, and the furnishing of security. 14.The 1st Respondent submitted that the overriding objective under Sections 1A and 1B of the Civil Procedure Act must guide the Court. It bolstered its position based on the decision in Stephen Boro Gitiha -vs- Family Finance Building Society & 3 Others Civil Application No. Nai. 263 of 2009 and Kenya Commercial Bank Limited -vs- Kenya Planters Co-operative Union Civil Application No. Nai. 85 of 2010. 15.Drawing heavily on Samvir Trustee Limited -vs- Guardian Bank Limited case [supra], Kenya Shell Limited -vs- Kibiru [1986] KLR 410, and Machira t/a Machira & Co Advocates -vs- East African Standard (No 2) [2002] KLR 63, the 1st Respondent contended that mere assertions of substantial loss without empirical evidence were insufficient, and that the Court ought not to deny a successful litigant the fruits of their judgment. He proposed that if the Court is inclined to grant the stay, it should order the decretal amount of Kshs. 5,704,321.61 be deposited into an escrow account and costs of Kshs. 231,873 be paid directly to his Advocates to ensure a level playing field. 16.In a nutshell, the 1st Respondent acceded to the prayer for leave to appeal out of time, but routed for a conditional stay, if at all any be granted. Analysis & Determination: 17.Having carefully considered the application, the affidavits on record, and the rival submissions, the following two issues emerge for determination: -i.Whether the application meets the threshold for leave to appeal out of time.ii.Whether the application satisfies the threshold for the grant of an order of stay of execution pending appeal. 18.Following is a discussion on the issues. Whether the application meets the threshold for leave to appeal out of time: 19.The jurisdiction of this Court to consider applications for extension of time is created by Section 81[1] of the Cooperative Societies Act in the following terms: -81.Appeal to High Court(1)Any party to the proceedings before the Tribunal who is aggrieved by any order of the Tribunal may, within thirty days of such order, appeal against such order to the High Court: Provided that the High Court may, where it is satisfied that there is sufficient reason for so doing, extend the said period of thirty days upon such conditions, if any, as it may think fit. 20.The jurisdictional significance of filing an appeal within the prescribed timelines was exemplified by the Supreme Court in the case of Nick Salat -vs- Independent Electoral and Boundaries Commission & 7 others (Application 16 of 2014) [2014] KESC 12 (KLR). In the case, the learned Judges approvingly made reference to the decision of the Supreme Court of California in the case of Silverbrand -vs- County of Los Angeles [2009] 46 Cal. 4th 106 where the following was said;As noted by the Court of Appeal, the filing of a timely notice of appeal is a jurisdictional prerequisite.“Unless the notice is actually or constructively filed within the appropriate filing period, an appellate court is without jurisdiction to determine the merits of the appeal and must dismiss the appeal.”(Sic) The purpose of this requirement is to promote the finality of judgements by forcing the losing party to take an appeal expeditiously or not at all.” 21.Therefore, the Cooperative Societies Act anticipates extension of time within a prescribed circumscription namely, sufficient reason being preferred upon which it will impose conditions the Court thinks fit. As such, a look at the circumstances surrounding this matter is imperative. The judgment sought to be appealed against was rendered on 24th July 2025. The Applicant had until 25th August 2025 to lodge its appeal. The application in issue is dated 23rd August 2025, well within the statutory timelines. 22.The foregoing notwithstanding, there is documentary evidence from the CTS, (annexure JMM-2), proving that the intended appeal was uploaded on 7th August 2025, but the completion of filing was frustrated by a system downtime. Since there was no delay in the first place, but the delay on payment attributed to the system and not the Applicant, the quest for leave to extension time was not necessary. Therefore, the Memorandum of Appeal annexed was timeously filed and is hereby found to be regularly filed. Whether the application satisfies the threshold for the grant of an order of stay of execution pending appeal: 23.Order 42 Rule 6(2) of the Civil Procedure Rules provides for stay of execution and attaches three conditions thereto. They are proof of substantial loss to the Applicant, that the application be made without any undue delay and lastly, that 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. 24.In Civil Application Nai 6 of 1979, Butt -vs- Rent Restriction Tribunal [1979] eKLR, the Court of Appeal crystallized the conditions for grant of stay as hereunder: -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. 25.This Court will now consider the requirements in turn. Delay: 26.The analysis of the preceding issue resolved this limb. There was no delay in the institution of the instant application. Substantial loss: 27.In Andrew Kiplagat Chemaringo -vs- Paul Kipkorir Kibet [2017] KECA 240 (KLR) the Court of Appeal referred to the decision in Mukuma -vs- Abuoga [1988] KLR 645, where substantial loss was discussed inter alia: -….. Substantial loss is what has to be prevented by preserving the status quo because such loss would render it nugatory. 28.The Applicant founded his appeal on the Tribunal’s legal interpretation of the informal charge mechanism and the immediate liability attaching to the 1st Respondent’s personal guarantee of Kshs. 4,485,537. The Applicant asserted that substantial loss would occur because the 1st Respondent intended to execute against the guaranteed deposits. 29.Substantial loss in the context of stay of execution encompasses not only the financial inability of a Respondent to refund a decretal sum, but also the irreversible destruction of the litigation’s substratum. By executing the decree, the 1st Respondent would effectively extract and dissipate the core collateral holding the financial matrix of the defaulted loan together. If the appellate Court ultimately finds in favour of the Applicant, its victory would be rendered entirely hollow. The guaranteed funds would have already been released and potentially placed beyond the Applicant’s reach, while the secondary security, the 2nd Respondent’s informally charged property, is demonstrably inadequate to cure the financial deficit. 30.In the circumstance, it is fair to preserve the status quo pending the outcome of the appeal. Security: 31.To halt execution without securing the 1st Respondent’s matured rights would tilt the scales of justice unfairly against him. The Applicant indicated willingness to abide by the condition of this Court. In Civil Appeal (Application) 38 of 2013 Gatirau Peter Munya -vs- Dickson Mwenda Kithinji & 2 others [2014] eKLR, the Court laid down the basis ordering for security. It stated as follows;The rationale for security for costs is to ensure firstly, that a party is not left without recompense for costs that might be awarded to him in the event that the unsuccessful party is unable to pay the same due to poverty; secondly, it ensures that a litigant who by reason of his financial ability is unable to pay costs of the litigation if he loses, is disabled from carrying on litigation indefinitely except on conditions that offer protection to the other party. In Noormohamed Abdulla -vs- Ranchhodbhal J. Patel & Another (1962) E.A. 448, it was held: -“The order for security for costs in such a case is not directed towards enforcing payment of the costs as such, but is designed to ensure that a litigant who by reason of near insolvency is unable to pay the costs of the litigation when he loses, is disabled from carrying on the litigation indefinitely except upon terms and conditions which afford some measure of protection to the other parties. 32.The Applicant disclosed that it filed Machakos OS No. 5 of 2021 against the 1st Respondent herein seeking declaratory orders relating to creation of informal charge so as to exercise statutory power of sale over the property known as LR No. 12715/4058, IR 98968. That notwithstanding, whereas this Court finds that an order for stay of execution is warranted, it ought to be subject to securing the decretal sum in order to balance the parties’ interests. Disposition: 33.Flowing from the foregoing analysis, this Court finds the Notice of Motion dated 23rd August 2025 to be meritorious and the following orders hereby issue: -(a)The Memorandum of Appeal already filed against the judgment of the Co-operative Tribunal delivered on 24th July 2025 in Tribunal Cause No. CTC/E429/2023 is hereby confirmed to be properly on filed.(b)An order of stay of execution of the judgment and decree of delivered on 24th July 2025 in Co-operative Tribunal Cause No. CTC/E429/2023 is hereby issued pending the hearing and determination of the intended appeal.(c)The stay order in [b] above is subject to the Applicant depositing a sum of Kshs. 5,500,000/= [Read: Kenya Shillings Five Million Five Hundred Thousand Only] in COURT within thirty (30) days of this order. For clarity, the deposit shall be made in the main appeal file.(d)In the event of default in order [c] above, the order of stay of execution shall automatically lapse, the Notice of Motion dated 23rd August 2025 shall stand dismissed with costs, and the 1st Respondent shall be at liberty to levy execution.(e)In the meantime, the costs of this application shall be in the appeal.(f)This file is hereby marked as closed.orders accordingly. DELIVERED, DATED AND SIGNED AT NAIROBI THIS 15TH DAY OF JULY, 2026.A. C. MRIMAJUDGERuling virtually delivered in the presence of:Miss Kariuki, Learned Counsel for the Respondent.Mr. Karuiya, Learned Counsel for the Applicant.Amina – Court Assistant.