https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10827

Moiz Motors Ltd v Abdelsattamostafa & another (Civil Appeal E280 of 2025) [2026] KEHC 10827 (KLR) (17 July 2026) (Ruling) Neutral citation: [2026] KEHC 10827 (KLR) Republic of Kenya In the High Court at Eldoret Civil Appeal E280 of 2025 JM Chigiti, J July 17, 2026 Between Moiz Motors Limited Applicant and Abdalla Said Abdelsatta rmostafa 1st Respondent James Kemboi 2nd Respondent (Being an Appeal against the ruling and/or Orders of Hon. R. Otieno delivered on the 31st day of October,2025 in Eldoret SCCC NO.569 OF 2025) Ruling Introduction; 1.Before this Court is a Notice of Motion dated 12th November,2025 brought by the Applicant pursuant to the provisions of Article 159(2)(d) of the Constitution of Kenya 2010, Sections 1A,3 and 3A of the Civil Procedure Act, Order 42 Rule 6 and Order 51 rule 1 of the Civil Procedure Rules and all other enabling provisions of the law seeking orders of stay pending appeal. 2.The Applicant principally seeks stay of execution of the ruling delivered by the Small Claims Court in Eldoret SCCC Number E569 of 2025 and stay of execution of the judgment and decree arising from the said proceedings pending the hearing and determination of the intended appeal. 3.The application is supported by the affidavit of Nicholus Ngoli Inyangala the sales manager sworn with authority on behalf of the Applicant together with the annexures thereto. The application is opposed by the 1st Respondent through a replying affidavit dated 26th November,2025. 4.The appellant further filed a further affidavit dated 9th March,2026 and annexures thereon. 5.Parties took directions on 23rd February 2026 to canvass the application by written submissions. 6.The Appellant/applicant filed submissions dated 9th March,2026 while the 1st respondent filed submissions dated 13th March,2025 which I presumably note was meant 2026. Background 7.The dispute before the Small Claims Court arose from a road traffic accident involving motor vehicle registration number KDN 882G.The 1st Respondent instituted proceedings against the Applicant seeking compensation for injuries allegedly sustained as a result of the accident. 8.The Applicant was sued on the basis that it was the registered owner of the motor vehicle at the material time. 9.The Applicant's case, however, is that prior to the accident it had sold the motor vehicle to a purchaser who had not completed payment of the purchase price. The Applicant states that although possession and use of the vehicle had passed to the purchaser, the logbook remained registered in the Applicant's name as security pending completion of payment, after which transfer would be effected. 10.According to the Applicant, the accident occurred while the motor vehicle was in the possession and control of the purchaser and not the Applicant. 11.The Applicant further contends that as part of the transaction, the purchaser executed an affidavit of liability in which he acknowledged responsibility for any criminal or civil proceedings arising from the use of the motor vehicle while in his possession and undertook to indemnify the Applicant against any legal costs or liabilities arising therefrom. 12.Following service of the court documents, the Applicant did not enter appearance or file a defence and the matter proceeded before the trial court resulting in judgment being entered against the Applicant. 13.Aggrieved by the ex parte judgment, the Applicant filed an application seeking, among other orders, setting aside of the judgment on the basis that it had not been served with the court documents. 14.The Trial Court considered the application and dismissed it with costs to the Respondent. The court found that service had been effected upon the Applicant and that the documents had been received and acknowledged by stamping with the Applicant's official company stamp. 15.The court further considered that the application had been filed approximately two months after delivery of the judgment and held that, considering the statutory mandate of the Small Claims Court to determine matters expeditiously within the prescribed timelines, the circumstances did not justify reopening the matter. 16.It is that ruling which has given rise to the present application for stay pending appeal. Applicant's Case; 17.The Applicant contends that the intended appeal raises serious and arguable issues which ought to be considered by the appellate court. 18.The Applicant maintains that the trial court erred in finding that service had been effected, arguing that the Respondent did not adduce sufficient evidence at trial to prove proper service of the pleadings. 19.It is the Applicant's position that it was condemned unheard and denied an opportunity to present its defence. 20.The Applicant further argues that it has a genuine defence because it was not in possession, use or control of the motor vehicle at the time of the accident. It states that it only remained the registered owner for purposes of securing payment of the balance of the purchase price. 21.In support of this contention, the Applicant has exhibited a sale agreement confirming that the motor vehicle had been sold before the accident occurred and an affidavit of liability executed by the purchaser accepting responsibility for any consequences arising from the use of the motor vehicle while in his possession. 22.The Applicant submits that unless stay is granted, the Respondent may proceed with execution and dispose of the Applicant's properties, thereby rendering the intended appeal nugatory. 23.The Applicant further submits that it will suffer substantial loss because the financial position of the Respondent is unknown and there is no guarantee that the decretal sum or property disposed of in execution would be recoverable should the appeal succeed. 24.The Applicant relied on Article 40 of the Constitution on protection of property rights and Article 159 on substantive justice. Reliance was also placed on the decision in Nicholas Stephen Okaka v Alfred Wanga Wesonga [2022] eKLR. 25.The Applicant urged the Court to exercise its judicial discretion and allow the application. Respondent's Case 26.The Respondent opposed the application. 27.It was the Respondent's contention that the Applicant was duly served with the pleadings and that the documents were received and acknowledged by stamping with the Applicant's official company stamp. 28.The Respondent argued that the issue of service had already been considered and determined by the Small Claims Court and that the Applicant was attempting to re-open matters already determined. 29.The Respondent further submitted that although the Applicant alleges existence of a defence, it had failed to annex a draft defence demonstrating the alleged triable issues. 30.According to the Respondent, the sale agreement and indemnity undertaking relied upon by the Applicant had no material in the matter more so at this stage and ought to have been dispensed with at trial if the applicant defended the matter. 31.The Respondent maintained that the Applicant had failed to satisfy the requirements for grant of stay under Order 42 Rule 6 of the Civil Procedure Rules and that the application was intended to delay execution of a valid regular judgment. 32.The Respondent therefore urged the Court to dismiss the application with costs. Issues for Determination 33.Having considered the application, the affidavits in support and in opposition, and the rival submissions by the parties, I am of the view that the following issues arise for determination:Whether the prayer for stay of execution of the ruling of the Trial Court is competent.Whether the Applicant has satisfied the conditions for grant of stay of execution pending appeal under Order 42 Rule 6 of the Civil Procedure Rules.Whether the intended appeal raises arguable issuesWhether the court should exercise it’s discretion in allowing the application. Analysis; Whether the prayer for stay of execution of the ruling dated 31st October,2025 is competent. 34.The Applicant has sought, among other orders, stay of execution of the ruling delivered by the Trial Court dismissing its application to set aside the ex parte judgment. The Court must first address the nature of the order sought to be stayed. 35.A stay of execution can only issue where there exists an order capable of execution. A dismissal order is ordinarily a negative order because it does not direct a party to do or refrain from doing any act. The Court of Appeal in Western College of Arts and Applied Sciences v Oranga & Others [1976] KLR 63 held that where a court merely dismisses an application, there is nothing capable of being stayed except, where applicable, an order as to costs. 36.Similarly, in Kenya Commercial Bank Limited v Tamarind Meadows Limited & 7 Others [2016] eKLR, the Court of Appeal reiterated that a negative order is not capable of stay unless there is an executable component arising from it. 37.In the present case, the ruling of the Trial Court dismissed the Applicant's application and awarded costs to the Respondent. The dismissal itself is incapable of execution. The only executable aspect is the order as to costs. 38.Accordingly, the prayer seeking stay of execution of the ruling itself cannot issue. The Court shall therefore consider the substantive prayer relating to stay of execution of the judgment and decree arising from the Small Claims Court proceedings. Principles governing stay pending appeal 39.The power of the Court to grant stay pending appeal is discretionary and is exercised under Order 42 Rule 6 of the Civil Procedure Rules. 40.Order 42 Rule 6(2) provides that no order for stay of execution shall be made unless the court is satisfied that:a.substantial loss may result to the applicant unless the order is made;b.the application has been made without unreasonable delay; andc.such security as the court orders for the due performance of the decree has been given. 41.The principles governing the exercise of this discretion have been settled in numerous decisions. 42.In Butt v Rent Restriction Tribunal [1982] KLR 417, the Court of Appeal held that the power to grant stay is discretionary and should be exercised in such a way as not to prevent an appeal from being rendered nugatory while at the same time ensuring that a successful litigant is not unnecessarily deprived of the fruits of judgment. 43.Similarly, in Halai & Another v Thornton & Turpin (1963) Ltd [1990] KLR 365, the Court of Appeal emphasized that the conditions prescribed under Order 42 Rule 6 are mandatory considerations that must guide the court in determining whether to grant stay. 44.The Court is therefore required to balance two competing interests: the Applicant's right to pursue an appeal and the Respondent's right to enjoy the benefit of a judgment obtained in his favour. Whether the Applicant has demonstrated substantial loss. 45.The Applicant submits that it will suffer substantial loss if execution proceeds because its properties may be sold and may not be recoverable in the event the appeal succeeds. It further contends that the Respondent's financial position is unknown and there is no assurance that the decretal sum would be refunded. 46.The Applicant relied on Nicholas Stephen Okaka v Alfred Wanga Wesonga [2022] eKLR, where the court granted stay after finding that the respondent had failed to provide material demonstrating his ability to refund the decretal sum should the appeal succeed. The Court has considered that submission. 47.It is settled that substantial loss is the cornerstone of an application for stay. An applicant must demonstrate that execution will occasion a loss that is substantial and that the appeal may be rendered nugatory if stay is not granted. 48.In Kenya Shell Ltd v Benjamin Karuga Kibiru & Another [1986] KLR 410 it washeld that Substantial loss is the cornerstone of the jurisdiction to grant stay. Without proof of substantial loss, the jurisdiction to grant stay should not ordinarily be exercised. 49.Further in James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR The Court held that: “The mere fact that execution has been commenced or is likely to occur does not by itself amount to substantial loss. An applicant must demonstrate other factors showing that execution will create a state of affairs that will irreparably affect the very essence of the appeal”. 50.The Court appreciates that in appropriate cases, where the respondent's ability to refund the decretal sum is unknown and no evidence is offered to demonstrate financial capacity, an applicant may establish substantial loss. 51.In Nicholas Stephen Okaka v Alfred Wanga Wesonga [2022] eKLR it was held that where an applicant raises a reasonable apprehension that the decretal sum may not be recoverable because the respondent's financial means are unknown, and the respondent fails to rebut that apprehension, the court may find that substantial loss has been established. 52.In the present case, the Respondent has not placed before the Court evidence demonstrating his financial ability to refund the decretal sum. 53.However, the Court must consider the entire circumstances of the matter. The Applicant has itself stated that it is financially stable, has an established asset base, and is capable of satisfying the decree should the appeal fail. That assertion demonstrates that the Applicant is unlikely to suffer financial ruin by payment of the decretal sum. 54.Nevertheless, the Court is also mindful that execution may result in irreversible consequences, including disposal of assets, before the intended appeal is heard. The Court must therefore preserve the Applicant's right of appeal while ensuring that the Respondent is adequately protected. 55.In the circumstances of this case, the Court finds that the Applicant has demonstrated sufficient concern regarding possible prejudice to warrant preservation of the status quo, subject to appropriate safeguards. Whether the application has been made without unreasonable delay. 56.The Respondent argued that the Applicant approached the court after unreasonable delay, having waited approximately two months after delivery of judgment before seeking to set aside the ex parte judgment. The Court has considered that argument. 57.The delay was a factor considered by the Trial Court when dismissing the application to set aside the judgment. It is also a matter that may arise for determination in the intended appeal. 58.In Utalii Transport Company Limited & 3 Others v NIC Bank Limited & Another [2014] eKLR The Court held that whether a delay is inordinate depends on the circumstances of each case. A court must consider the length of the delay, the explanation offered for it, the prejudice likely to be occasioned to the other party, and whether justice can still be done despite the delay. An unexplained or inadequately explained delay may disentitle an applicant to discretionary relief. 59.In RWW v EKW [2019] eKLR The Court held that in considering delay under Order 42 Rule 6, the court should not merely count the number of days or months that have elapsed but should consider whether the delay has been reasonably explained and whether granting stay would occasion prejudice to the successful litigant. 60.For purposes of the present application, the Court notes that the Applicant moved this Court 11 days after the impugned ruling and has demonstrated an intention to challenge that ruling through an appeal. 61.While the delay cannot be ignored, the Court does not consider it, in the circumstances of this case, sufficient on its own to defeat the application, particularly where the intended appeal raises arguable questions and the Respondent can be adequately protected through security. Whether security for due performance of the decree has been offered. 62.The final consideration under Order 42 Rule 6(2) of the Civil Procedure Rules is the requirement that an applicant provides such security as the court may order for the due performance of the decree. 63.The purpose of security is not to punish an applicant seeking stay, but to ensure that the successful litigant is not prejudiced or left without recourse should the appeal ultimately fail. 64.In Focin Motorcycle Co. Ltd v Ann Wambui Wangui & Another [2018] eKLR The court held that the purpose of security is to strike a fair balance between preserving the appellant's right of appeal and safeguarding the respondent's entitlement to the fruits of the judgment. 65.The Applicant did not, in its application, offer any specific security for the due performance of the decree. However, the Applicant has stated that it is financially stable, has an established asset base, and would be capable of satisfying the judgment should the intended appeal fail. 66.The Court has considered that assertion alongside the Respondent's right to enjoy the fruits of the judgment. Since the Applicant seeks to prevent execution of a decree that has already been issued in favour of the Respondent, it is only fair that the Respondent's interests be secured during the pendency of the appeal. 67.In National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Another [2006] eKLR Security is intended to guarantee the due performance of the decree should the appeal fail and forms an essential consideration in the exercise of the court's discretion. 68.In the circumstances, the Court finds that any order of stay must be conditional upon the Applicant providing security that adequately protects the Respondent. 69.The Court considers that the most appropriate security in the circumstances is a deposit of the entire decretal sum. Such an order strikes a balance between the competing interests of the parties. It preserves the Applicant's right of appeal while ensuring that the Respondent will not be prejudiced by the delay occasioned by the appellate process. Whether the intended appeal raises arguable issues. 70.The Applicant contends that the intended appeal raises serious issues, particularly concerning service of summons and whether the Applicant was properly held liable as the owner of the motor vehicle. 71.The Court has considered the material placed before it. The Applicant has exhibited a sale agreement showing that the motor vehicle had been sold before the accident occurred. It has also exhibited an affidavit of liability executed by the purchaser, in which the purchaser acknowledged possession of the vehicle and undertook responsibility for any civil or criminal proceedings arising from its use. 72.The question whether the Applicant remained liable merely because the vehicle was still registered in its name is not without legal complexity. 73.Section 8 of the Traffic Act provides that the person in whose name a motor vehicle is registered shall, unless the contrary is proved, be deemed to be the owner of the vehicle. The presumption arising from registration is, however, rebuttable. 74.The Court of Appeal in Osapil v Kaddy [2000] eKLR recognized that registration of a motor vehicle creates a rebuttable presumption of ownership and that evidence may be produced to demonstrate that ownership or control had passed to another person. 75.The sale agreement and indemnity undertaking exhibited by the Applicant therefore raise a legitimate question as to whether the Applicant remained the person exercising ownership, possession and control of the vehicle at the material time. 76.At this interlocutory stage, the Court is not required to determine the merits of the intended appeal. The question is whether the appeal is arguable and raises bona fide issues deserving consideration by the appellate court. In Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others [2013] eKLR, the Court of Appeal held that an arguable appeal is not one that must necessarily succeed but one that raises at least a single bona fide point worthy of judicial determination. In the present case, the questions relating to service of process, the legal effect of the sale agreement, the purchaser's indemnity undertaking, and the rebuttable presumption of ownership under section 8 of the Traffic Act are not idle or frivolous. They are issues properly reserved for determination on appeal." 77.The Court is careful to state that it is not determining the appeal at this stage. Whether the Applicant successfully displaced the statutory presumption of ownership, and the legal effect of the purchaser's indemnity undertaking as against an injured third party, are matters to be determined by the appellate court after full consideration of the evidence. 78.For purposes of this application, however, the Court is satisfied that the intended appeal is not frivolous and raises issues deserving consideration. Whether the court should exercise it’s discretion in allowing the application. 79.In Butt v Rent Restriction Tribunal [1982] KLR 417, The discretion to grant stay should be exercised in a manner that preserves the subject matter of the appeal without unnecessarily depriving a successful litigant of the fruits of his judgment. 80.The Applicant has strongly urged that it should not be condemned unheard and that it should be granted an opportunity to ventilate its defence regarding the ownership and possession of the motor vehicle. 81.The right to a fair hearing is a fundamental constitutional guarantee under Article 50 of the Constitution. Courts have consistently emphasised that disputes should, as far as possible, be determined on their merits. 82.At the same time, the right to be heard is exercised within the framework of lawful procedure. A party who has been duly served and fails to participate in proceedings cannot ordinarily invoke the right to a hearing to undo all subsequent proceedings without demonstrating sufficient cause. 83.In the present matter, the Trial Court made a finding that service had been effected upon the Applicant. This Court has not been invited, nor is it appropriate at this stage, to determine whether that finding was correct. That issue remains for determination on appeal. 84.In Machira t/a Machira & Co. Advocates v East African Standard (No. 2) [2002] KLR 63 a successful litigant should not be deprived of the fruits of a judgment except for sufficient cause, and the court must balance that right against the appellant's right of appeal. 85.However, having considered the additional material placed before this Court, particularly the sale agreement and purchaser's indemnity undertaking, the Court is satisfied that the intended appeal raises questions which ought not to be rendered academic before the appellate court has an opportunity to consider them. 86.The grant of stay of execution is an exercise of judicial discretion intended to balance the competing rights of the parties. On the one hand is the Applicant's undoubted right to pursue an appeal that raises bona fide questions deserving appellate consideration. On the other is the Respondent's equally important right to enjoy the fruits of a lawfully obtained judgment without undue delay. In the peculiar circumstances of this case, I am satisfied that those competing interests can best be reconciled through a conditional stay that preserves the subject matter of the appeal while adequately securing the Respondent's interests. 87.The Court therefore finds that the interests of justice are best served by preserving the position pending appeal, but subject to conditions that safeguard the Respondent. Final determination; 88.Having considered the totality of the circumstances, the Court finds that this is a case where the discretion to grant stay ought to be exercised conditionally. 89.The Court is satisfied that:a.The intended appeal raises arguable issues concerning service, ownership, possession and control of the motor vehicle.b.The sale agreement and indemnity undertaking executed by the purchaser demonstrate that the Applicant's contention is not merely an afterthought.c.Execution before determination of the appeal may result in prejudice to the Applicant which may not be easily reversible.d.The Respondent's interests can adequately be protected through appropriate security. 90.The Court reiterates that this decision does not amount to a determination that the Applicant is or is not liable for the accident. Those issues shall be determined by the appellate court. 91.The purpose of this ruling is only to preserve the subject matter of the appeal while balancing the rights of both parties. 92.Accordingly, the Notice of Motion dated 12th November,2025 is allowed on the following terms: Orders: 1.There shall be a stay of execution of the judgment and decree of the Trial Court pending the hearing and determination of the appeal. 2.The stay granted herein shall be conditional upon the Applicant depositing the entire decretal sum into an interest-earning joint account in the names of the advocates for the parties within Thirty (30) days from the date of this ruling. 3.The Applicant shall file and serve the Memorandum of Appeal and the Record of Appeal within Forty-Five (45) days from the date of this ruling. 4.The Applicant shall pay the Respondent throw-away costs of Kshs.30,000/-(Kenya Shillings Thirty Thousand) (30) within Thirty (30) days from the date of this ruling. 5.In default of compliance with any of the conditions set out herein, the stay orders granted by this Court shall automatically lapse and the Respondent shall be at liberty to proceed with execution. 6.The costs of this application shall abide the outcome of the appeal.It is so ordered. DELIVERED, DATED AND SIGNED ON THIS 17TH DAY OF JULY, 2026 AT ELDORET HIGH COURT………………………………J. M. CHIGITI (SC)JUDGEIn the presence of: