[2022] KEHC 10660 (KLR)

Modern Truckers Limited & another v Kenya Commercial Bank Limited (Civil Suit E049 of 2021) [2022] KEHC 10660 (KLR) (9 May 2022) (Ruling)

Neutral citation: [2022] KEHC 10660 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit E049 of 2021

OA Sewe, J

May 9, 2022

Between

Modern Truckers Limited

1st Plaintiff

Haroo Shahid Butt

2nd Plaintiff

and

Kenya Commercial Bank Limited

Defendant

Ruling

1. Before the Court for determination is the defendant’s Notice of Motion dated 16th November, 2021. It was brought pursuant to Sections 1A, 1B, 3, 3A & 63 (e) of the Civil Procedure Act, Chapter 21 of the Laws of Kenya and Order 42 Rule 6(2) of the Civil Procedure Rules, 2010, for orders that:(a)The application be certified urgent and service be dispensed with in the first instance. (Spent)(b)There be a stay of execution of the ruling and order made on 4th November, 2021 pending the inter-parties hearing and determination of this application. (Spent)(c)There be a stay of execution of the ruling and order made on 4th November, 2021 pending the lodging, hearing and determination of the intended appeal to the Court of Appeal or for such other period as may be ordered.(d)The costs of this application be in the cause.

2. The application is predicated on the grounds that the Court (Hon. Chepkwony, J.) delivered a ruling on the plaintiff’s Notice of Motion dated 26th April 2021 and granted an interlocutory mandatory injunction in terms of Prayer 2, compelling the defendant to discharge the Charge registered against the plaintiff’s piece of land situate within Nyali Estate in Mombasa known as Land Reference No. MN/1/57xx pending the hearing and determination of this suit; and that the defendant is aggrieved by the whole of the ruling and orders and intends to appeal. It was further averred that a Notice of Appeal dated 4th November 2021 had already been filed; and that the defendant believes the intended appeal is meritorious.

3. It was further the contention of the defendant that such a discharge as was ordered will cause it substantial loss as the property may be put beyond its reach; and yet if the title is not discharged even for one day after the lapse of the stay order, the defendant will be at risk of being cited for contempt of court, and possibly have its officers sentenced to serve civil jail terms.

4. The application was supported by the affidavit of Simeon Mzugha, sworn on 16th November 2021, in which it was reiterated that the defendant is aggrieved by the whole of the ruling and the orders granted therein and has filed a Notice of Appeal dated 4th November 2021. Annexed to the said affidavit is a copy of the Notice of Appeal, marked as Annexure SM-1. Mr. Mzugha further averred that the defendant will not dissipate the suit property while the appeal is pending; and therefore that there is adequate security for the due performance of the decree in the event the intended appeal is not successful. In addition, it was averred that the defendant is willing to offer such other security for the due performance of the decree as the Court may order.

5. It was further deposed on behalf of the defendant that the plaintiffs stand to suffer no prejudice if stay of execution is granted; and that any loss, if at all, is capable of monetary compensation, which loss has been computed in the Plaint. It was also stated that the application has been brought without unreasonable delay; and therefore that it is in the interest of justice and fairness that the orders prayed for be granted to protect the defendant’s constitutional right to fair hearing.

6. The application was opposed by the plaintiffs vide the 2nd plaintiff’s Replying Affidavit, sworn on 26th November 2021. He averred that, following the delivery of the ruling, the defendant made an oral application for grant of stay of execution of the orders for 14 days; and that the said application was granted. Thus, it was the averment of the 2nd plaintiff that the instant application is res judicata and should therefore be dismissed with costs on that account. He further averred that there was no justifiable cause for the defendant to wait till the 16th November 2021, a day to the expiry of the stay order, to file the instant application. He surmised that this was a deliberate act on the part of the defendant to extend its hold on the plaintiffs’ asset.

7. Thus, the 2nd plaintiff averred that an order of stay, as sought by the defendant, would only cause prolonged suffering to the plaintiffs as they urgently need the title for the purpose of procuring additional capital to improve and keep their business afloat. He likewise averred that the intended appeal is nothing but an attempt to further delay this matter with a view of preventing the plaintiffs from enjoying the fruits of the ruling and order dated 4th November 2021. The 2nd plaintiff refuted the defendant’s assertions that it has an arguable appeal; or that the conditions set out in Order 42 Rule 6(2) of the Civil Procedure Rules have been satisfied.

8. At paragraph 25 of the Replying Affidavit, the 2nd plaintiff averred that, should the Court be inclined to grant stay of execution as sought herein, then it ought to be on condition that the defendant pays at least 50% of the damages so far incurred by the plaintiffs and have the same deposited into an interest earning joint account to be held in the names of the parties’ advocates pending the hearing and determination of the intended appeal.

9. The application was canvassed by way of written submissions; and on behalf of the defendant, Mr. Musyoka filed his written submissions dated 6th December 2021 and thereby proposed the following issues for determination in line with Order 42 Rule 6(2) of the Civil Procedure Rules:(a)Whether the defendant will suffer substantial loss absent a stay;(b)Whether the application has been made without unreasonable delay; and,(c)Whether the defendant has offered security for the performance of the order.

10. Mr. Musyoka conceded that the merits of the intended appeal is not a consideration under the aforementioned provision. He relied on Gianfranco Manenthi & Another v Africa Merchant Assurance Company Ltd [2019] eKLR in support of that proposition. He urged the Court to find that the property is of the kind that could easily be sold to a third party, hence irreparably affecting the substratum of the appeal. He relied on R W W v E K W [2019] eKLR; Karume Investments Ltd v Kenya Shell Limited & Another [2008] eKLR and Suleiman Mohamed Said Suleiman Al-Busaidy & Another v Shell Co. of E.A. (now Kenya Shell Ltd) & 2 Others [2018] eKLR; and urged the Court to note that, at paragraph 20 of the Replying Affidavit, the 2nd plaintiff confirmed that they intend to encumber the suit property. Mr. Musyoka submitted therefore that it is not difficult to see, not only the futility of a successful appeal if that happens, but also the possibility that the plaintiffs will be unable to repay the Kshs. 135,508,939. 20 that the defendant claims to be outstanding by way of facilities extended to the plaintiffs.

11. Counsel also made reference to the danger of the defendant’s officers being cited for contempt unless the orders sought are granted. He urged the Court to find, on the basis of Wanyiri Kihoro v Konahauthi Limited [2009] eKLR and Michael Rotich v Republic [2016] eKLR, that a person’s liberty is priceless; and therefore that the defendant and its officers truly risk suffering substantial loss.

12. According to Mr. Musyoka, the application was filed within 14 days of the impugned order; and that the Notice of Appeal was filed on 4th November 2021, on the same day the ruling was delivered. On security, counsel urged the Court to take into account that the order sought to be appealed is the discharge of Charge; and therefore that it is not a monetary award. He submitted that, in the event of the appeal failing, the order that will be binding will be the discharge of Charge; and therefore there is no possibility of the Court of Appeal ordering the defendant to make any monetary payments to the plaintiffs. He therefore urged the Court to find the proposal by the plaintiffs for the defendant to deposit 50% of the sums claimed in the plaint to be unfounded. On the authority of Gianfranco Manenthi (supra) and Suleiman Mohamed Said (supra), Mr. Musyoka urged the Court to find that the defendant has satisfied the third condition as to security. He accordingly prayed that the Notice of Motion dated 16th November 2021 be allowed and the orders prayed for therein be granted.

13. On his part, Mr. Agwara for the plaintiffs proposed two issues for determination, vide his written submissions filed herein on 20th December 2021, namely:(a)Whether the defendant’s application dated 16th November 2021 is barred by the doctrine of res judicata;(b)In the alternative, whether the defendant has met the threshold for the Court to exercise its discretion and grant stay of execution herein pending the hearing and determination of the suggested appeal.

14. With reference to Section 7 of the Civil Procedure Act, counsel took the stance that the question of stay was heard and determined with finality on 4th November 2021. He relied onIndependent Electoral & Boundaries Commission v Maina Kiai & 5 Others [2017] eKLR and Okiya Omtatah Okoiti v Communications Authority of Kenya & 14 Others [2015] eKLR as to the rationale and prerequisites of the doctrine of res judicata. Mr. Agwara submitted therefore that, by re-opening substantive issues that had already been conclusively heard and determined, the defendant seeks to merely engage the plaintiffs in a fruitless pursuit of wastage of judicial time and resources on a futile round of litigation.

15. In the alternative, it was the submission of Mr. Agwara that the defendant had woefully failed to satisfy the conditions for stay as set out in Order 42 Rule 6 of the Civil Procedure Rules. He relied on James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR for the proposition that the three conditions must all exist to warrant the exercise of the Court’s discretion. In Mr. Agwara’s view, it is the plaintiffs who stand to suffer substantial and irreparable loss should stay of execution be granted. He submitted that despite the Charge, the defendant reneged on its contractual obligations, declined to advance any financial facility to the plaintiffs and further denied them from using the suit property to access much needed capital for four years now.

16. Regarding arguability of the proposed appeal, while Mr. Agwara conceded that it is not a requirement for purposes of Order 42 Rule 6 of the Civil Procedure Rules. He nevertheless submitted that the Court has a duty to ensure that the intended appeal is not frivolous. He relied on Obadiah Mugambi v Joyce Ncoro [2021] eKLR in support of this assertion. He further argued that, although the plaintiffs admitted that they are in a precarious financial situation, it is not so dire as to render them incapable of meeting their obligations, financial or otherwise.

17. Mr. Agwara conceded that the application was filed without unreasonable delay, in that it was filed a day before the expiry of the 14-day stay period granted on 4th November 2021. He however submitted that the requirement as to security had not been met. He relied on Visram Ravji Halai & Another v Thornton & Tupin [1963] Ltd , Civil Appeal No. Nai 15/1990 for the proposition that the Court ought not to place the plaintiffs in a position in which, should the appeal fail, it would be difficult for them to realize the fruits of their litigation due to inadequacy of the security ordered. He therefore urged the Court to balance the rights of the defendant against those of the plaintiffs in the manner proposed in Machira t/a Machira & Co. Advocates v East Africa Standard [No. 2] [2002] KLR 63, in recognition of the fact that the plaintiffs are also entitled to the fruits of the orders made in their favour.

18. In the light of the foregoing summary of the background facts and submissions by counsel on the applicable law, the issues for determination are as follows:(a)Whether the application herein is res judicata;(b)Whether the defendant has satisfied the conditions for the grant of an order of stay of execution pending hearing and determination of the Appeal

19. On whether the stay application herein is res judicata, the court record confirms that the application dated 26th April, 2021 was heard by the court and Hon. Chepkwony, J. and a ruling delivered on the 4th November, 2021. The Court granted the application and issued the following orders: -(a)A temporary mandatory injunction be and is hereby issued compelling the Defendant Bank to forthwith discharge the 2nd Plaintiff’s piece of land situated within Nyali Estate in the Mombasa County containing by measurement 0. 4021 Hactares or thereabout and known as Land Reference No. MN/1/57xx as contained in grant Number C. R20xxx and forthwith release to the 2nd Plaintiff/Applicant the encumbered title document to the said Land Reference MN/1/570xx.(b)Costs of the application shall be in cause on main cause.

20. Thereupon, counsel for the defendant, Mr. Kongere, made an oral application and sought leave to appeal as well an order for stay of execution. Although counsel for the plaintiffs, Mr. Ochieng, opposed the application for stay of execution, the Court, after hearing the parties, acceded to the defendant’s prayer and granted it a 14-day stay of execution of the orders issued on the 4th November, 2021. The proceedings of the court further confirm that, Mr. Kongere’s application for 14 days’ stay of execution was made pending filing of a formal application for stay of execution either before this court or the Court of Appeal. The defendant thereafter filed the instant application on 16th November 2021; a day before the expiry of the 14 days granted by the Court. In those circumstances, I find no merit in the argument that the instant application is res judicata.

21. There is no gainsaying that a successful litigant is entitled to the fruits of his litigation. Hence, in Machira T/A Machira & Co. Advocates v East African Standard (No. 2) [2002] KLR 63 it was appreciated that:“The ordinary principle is that a successful party is entitled to the fruits of his judgment or any decision of the court giving him success at any stage. That is trite knowledge and is one of the fundamental procedural values which is acknowledged and normally must be put into effect by the way applications for stay of further proceedings or execution, pending appeal are handled. In the application of that ordinary principle, the court must have its sight firmly fixed on upholding the overriding objective of the rules of procedure for handling civil cases in courts, which is to do justice in accordance with the law and to prevent abuse of the process of the court."

22. The foregoing notwithstanding, Order 42 Rule 6(1) of the Civil Procedure Rules, provides that:“… 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..."

23. Thus, the Court does have the discretion to grant stay of execution where a justification has been made therefor. It is for this reason that Order 42 Rule 6(2) of the Civil Procedure Rules, stipulates that:(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; and(b)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 the light of the foregoing, it is incumbent upon any applicant for stay of execution to demonstrate the risk of substantial loss unless stay is granted; and be ready to furnish such security as the court may order. It must also be plain that the application was brought without unreasonable delay. The Court had also been asked to consider the arguability of the intended appeal; but, as both counsel conceded, this last consideration is unnecessary for purposes of Order 42 Rule 1 of the Civil Procedure Rules, where the appeal or intended appeal is from the decision of this Court. I therefore share the position taken by Hon. Muriithi, J. in Obadiah Mugambi v Joyce Ncoro (supra) that:“Arguability of appeal as a condition for stay has not been expressly provided for in the Civil Procedure Rules. The same is however a condition for stay under Rule 5(2)(b) of the Court of Appeal Rules...”

25. There is no dispute that the instant application for stay was filed without unreasonable delay. Therefore, the only key issue that presents itself for determination herein is whether the 1st defendant stands to suffer substantial loss unless an order of stay is granted. The Court will also consider whether, in the circumstances hereof, there is need for the furnishing of security for the due performance of the decree.

26. With regard to substantial loss, the Court of Appeal held in Kenya Shell Limited v Kibiru [1986] KLR 410 held that:“It is usually a good rule to see if Order XLI Rule 4 of the Civil Procedure Rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the corner stone of both jurisdictions for granting a stay. That is what has to be prevented. Therefore without this evidence it is difficult to see why the respondents should be kept out of their money.”

27. In the same vein, Gachuhi, Ag. JA (as he then was) at 417 had the following to say:“It is not sufficient by merely stating that the sum of Shs 20,380. 00 is a lot of money and the applicant would suffer loss if the money is paid. What sort of loss would this be? In an application of this nature, the applicant should show the damages it would suffer if the order for stay is not granted. By granting a stay would mean that status quo should remain as it were before judgement. What assurance can there be of appeal succeeding? On the other hand, granting the stay would be denying a successful litigant of the fruits of his judgement.”

28. It is pertinent to note that this is not a money decree; and that compliance would, in effect, simply mean the discharge of the Charge registered against the title to the suit property in favour of the defendant.In its endeavor to demonstrate substantial loss, the defendant urged the Court to consider the likelihood that the suit property may be disposed of to a third party or otherwise encumbered before the appeal is determined; and that in the event of such an eventuality, it would have nothing to fall back on. Indeed, at paragraph 20 of the Replying Affidavit, the 2nd plaintiff deposed that:“That I honestly believe that in considering the subject Application, this Honourable Court must be alive to the fact that the Defendant’s proposed Appeal is verily hopeless and likely to fail and as such it is proper and just that the Plaintiff interest in applying its property herein to obtain some capital for its business be protected even as the Defendant/seeks to pursue the otherwise hopeless appeal...”

29. In the circumstances, the defendant’s apprehensions are not misplaced. It was therefore the responsibility of the plaintiffs to allay the defendant’s concerns. The Court of Appeal made it clear in National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Another [2006] eKLR, that:“This Court has said before and it would bear repeating that while the legal duty is on an applicant to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it is unreasonable to expect such an applicant to know in detail the resources owned by a respondent or the lack of them. Once an applicant expresses a reasonable fear that a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly within his knowledge.”

30. The same principles apply to non-monetary decrees, as is the case herein. Accordingly, balancing the interests of both parties to the instant application, I am convinced that the interests of justice would best be served by a stay order pending the hearing and determination of the appeal; and that since the title is still in the defendant’s safe custody, that title would suffice for purposes of security. Needless to say that what is proposed to be filed is an interlocutory appeal. The main suit is yet to be heard and determined; and therefore it would be unreasonable to peg security on the sums sought by the plaintiffs in their Plaint. I am therefore in agreement with Arun C Sharma v Ashana Raikundalia T/A Raikundalia & Co. Advocates [2014] eKLR in which it was held that:“The purpose of the security needed under Order 42 is to guarantee the due performance of such decree or order as may ultimately be binding on the applicant. It is not to punish the judgment debtor………. Civil process is quite different because in civil process the judgment is like a debt hence the applicants become and are judgment debtors in relation to the respondent. That is why any security given under Order 42 rule 6 of the Civil Procedure Rules acts as security for due performance of such decree or order as may ultimately be binding on the applicants. I presume the security must be one which can serve that purpose.”

31. In the result, I find the application dated 16th November 2021 meritorious. The same is hereby allowed and orders granted as hereunder:(a)That there be stay of execution of the ruling and order made on 4th November, 2021 pending the lodging, hearing and determination of the intended appeal to the Court of Appeal.(b)The costs of this application be in the cause.It is so ordered.

SIGNED, DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 9TH DAY OF MAY 2022. OLGA SEWEJUDGE