[2017] KEHC 10055 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 608 OF 2014

MISTRY JAVDA PARBAT & CO. LIMITED…………....PLAINTIFF

-VERSUS -

GOLDEN JUBILEE LIMITED........................................DEFENDANT

RULING NO.2

1. The application before me was brought pursuant to the provisions of Order 42 Rule 6 of the Civil Procedure Rules. It is an application for stay of execution pending the hearing and determination of the defendant’s appeal.

2. The appeal arose out of the decision which the court rendered on 8th June 2016, granting summary judgement in favour of the plaintiff.

3. The judgement was for the sum of Kshs. 32,913,396. 84 plus interest at the rate of 16% per annum, from 1st of September 2014.

4. When canvassing the application the defendant submitted that if execution was not stayed by the court, the defendant would suffer substantial loss.

5. According to the defendant, the decretal amount was colossal, and if it were paid out to the plaintiff, the prospect of recovery, (in the event that the appeal was successful), would be uncertain.

6. But the plaintiff responded by describing itself as an old and reputable company, which has substantial fixed and movable assets.

7. The defendant criticized the plaintiff for its failure to provide any evidence which could verify the assertion that the plaintiff has substantial fixed and movable assets.

8. It was the applicant’s case that the pending appeal was arguable. At any rate, the applicant holds the view that the said appeal cannot be deemed as frivolous.

9. Therefore, whilst the defendant was pursuing its appeal, it requested the court to order the plaintiff to stop the execution of the decree.

10. Meanwhile, the defendant offered to furnish security for the due performance of the Decree.

11. On its part, the plaintiff put up a spirited opposition to the application, because it believes that the defendant’s sole intention was to delay or to frustrate the plaintiff from getting what it is rightfully entitled to.

12. The plaintiff pointed at the fact that this court had already made a finding that the final certificate issued by the architect was the final and conclusive proof of the debt which the defendant owes the plaintiff.

13. As the plaintiff has pointed out, there has been no further evidence upon which a different conclusion could be derived by the court. However, it is equally true that after this court had made a determination in this case, it could not have been expected to receive further evidence in the matter.

14. Therefore, the absence of further evidence, which could possibly, lead the court to get to a different conclusion is not a basis upon which the application for stay of execution can be determined.

15. First, the justice system has created appellate structures, which are available to parties who feel aggrieved by determinations made by trial courts.

16. It is acknowledged, through the creation of the said appellate structures, that even though the trial courts would normally believe in the verdicts they had handed down, there was a possibility that human fallibility could lead to an injustice, sometimes.

17. It is now well established that when a party is exercising his right of appeal, the court may exercise its discretion, when called upon, to ensure that the appeal was not rendered a simple academic exercise.

18. When the subject matter of the appeal would have ceased to exist before the appeal was determined, the results of the said appeal would be incapable of having a real impact on the appellant.

19. For instance, if the subject matter of the appeal was a parcel of land, over which the parties were both claiming ownership, it would ordinarily be prudent to ensure that the said parcel of land did not get transferred to third parties, when the appeal was still pending.

20. If the parcel of land was placed beyond the reach of the two feuding parties, the result of the appeal may probably be hollow.

21. But if the court was unduly concerned only with the need to preserve the subject matter until the appeal was determined, that may imply that the party in whose favour the court had already granted judgement, would, nevertheless be kept waiting before it could enjoy the fruits of the judgement.

22. Therefore, the courts have formulated guidelines to assist them in the exercise of the delicate balance which has to be achieved between the successful Decree Holder and the party who was appealing to a higher court, to challenge the decree in issue.

23. First, as both parties have acknowledged, the application for stay of execution pending an appeal, ought to be brought without undue delay.

24. The question about what constitutes undue delay does not have an inflexible answer. The circumstances prevailing in the case must be taken into account when the court is answering the question. In other words, each case is to be determined on the basis of its own facts.

25. The length of time which may be deemed to constitute undue delay in one case, could possibly be deemed otherwise, in a different case.

26. The second issue to be taken into account is whether or not the applicant would suffer substantial loss unless the process of execution was stayed.

27. The burden of proof, as regards that issue, vests upon the applicant.

28. In the case of ALHYDER TRADING COMPANY LIMITED Vs LUCY JEPNGETICH MIBLE, CIVIL APPEAL No. 135 of 2014 (at Eldoret), Hon. Lady Justice C.W. Githua said;

“The law is that once an applicant expresses apprehension about the respondent’s ability to fully refund the decretal sum in the event that the appeal is successful, the burden shifts to the respondent to rebut that assertion. The Court of Appeal emphasized this position in ABN Amro Bank N.V. Vs. Le Monde Foods Limited Civil Application No. NAI 15 of 2002 where it stated as follows;

‘In those circumstances, the legal burden still remains on the applicant, but the evidential burden would then have shifted to the respondent to show that he would be in a position to refund the decretal sum if it is paid out to him and the pending appeal was to succeed’.

29. In my understanding, the applicant cannot be deemed to have discharged its legal burden by simply expressing his apprehension about the respondent’s ability to repay the decretal sum. If it were that simple, then every person who was seeking stay of execution pending appeal, would be deemed to have discharged the legal burden by expressing apprehension on the respondent’s ability to refund the decretal sum.

30. If execution would entail the sale and transfer of title to either a piece of land or of a motor vehicle, it would be possible to persuade the court that unless execution was stayed, the applicant would suffer substantial loss.

31. In the case of MACHIRA Trading As MACHIRA & Co. ADVOCATES Vs EAST AFRICAN STANDARD (No.2) [2002] 2 KLR 63, Kuloba J. emphasized the need for an applicant to specify the kind of loss he would allegedly suffer if execution was not stayed. The learned Judge said;

“Where no pecuniary or tangible loss is shown to the satisfaction of the court, the court will not grant a stay merely on the ground of annoyance to feelings. Indeed, remote contingencies would not warrant the court’s interference with the ordinary course of justice and the process of law.

Moreover, a court will not order a stay upon a mere vague speculation; there must be the clearest ground of necessity disclosed on evidence”.

32. I share the view summarized above. And once the applicant puts forward information to show that he would suffer substantial loss if execution was not stayed, the respondent would, if he was opposing the application, be expected to demonstrate his ability to refund the decretal amount.

33. If the respondent was unable to satisfy the court that he has the ability to repay the decretal amount, if the appeal was successful, that would imply that the applicant could not recover the money which it had paid out, so as to satisfy the decree.

34. When the respondent has the ability to refund the decretal amount, it means that that which the applicant had paid out, would be returned to him, if the applicant’s appeal was ultimately successful.

35. However, it is not always the case that when the respondent had a demonstrable ability to refund the decretal amount, the applicant would not suffer substantial loss. I say so because if an applicant has to surrender all the funds which he was using to operate a business, the said business would close down.

36. If the appeal was determined after about 2 years, the refund of the decretal amount may not enable the applicant to recover.

37. This example illustrates why the applicant needs to give particulars of the kind of substantial loss which he could suffer, if execution was not stayed. The example further shows why the court ought not to be expected to stay execution on the strength of vague speculation.

38. In this case, the applicant has not provided the court with sufficient material upon which I can make an informed conclusion, that it would suffer substantial loss if execution was not stayed.

39. In similar vein, the respondent did not provide the court with material upon which the court could make an informed conclusion concerning its ability to repay the decretal amount.

40. Nonetheless, the respondent was under no obligation to discharge that evidentiary burden because the applicant had not provided the court with sufficient material upon which the court could have allowed the application, if the respondent did not have a sufficient answer.

41. It is my finding that although there was some delay in bringing the application, the same was not so inordinate as to be a basis for rejecting the said application.

42. I also find no basis upon which I could conclude that the appeal was frivolous.

43. By offering to provide security for the due performance of the decree, the applicant has met one of the cardinal requirements of Order 42 Rule 6 of the Civil Procedure Rules.

44. However, the applicant failed to demonstrate that it would suffer substantial loss if execution was not stayed.

45. In the result, the application is unsuccessful, and is therefore dismissed with costs.

DATED, SIGNED and DELIVERED at NAIROBI this 15th dayof November2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

Miss Janmohamed for Khagram for the Plaintiff

Ogunde for the Defendant

Collins Odhiambo – Court clerk.