[2022] KEHC 1361 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NYERI

CIVIL APPEAL NO. E52 0F 2021

MUGAMBI WANG’OMBE...................................................1ST APPELLANT/APPLICANT

VERONICA WANJIRU MUGAMBI....................................2ND APPELLANT/APPLICANT

VERSUS

1. BIASHARA SACCO SOICIETY LIMITED........................................1ST RESPONDENT

2. GABRIEL GITHIGAH KURIA GITHIGAH......................................2ND RESPONDENT

3. GEOFFREY MAINA KAGIRI..............................................................3RD RESPONDENT

RULING

1. The applicants have filed an application dated 30th September 2021 seeking for orders that the Honourable court be pleased to issue a temporary stay of execution of the judgment entered against the appellants by the Cooperative Tribunal on 2nd September 2021 together with the resultant decree and all consequential orders, pending the hearing and determination of the instant appeal.

2. The application was based on the grounds on the face thereof and supported by the affidavit of the 1st applicant.

3. The brief facts of the case that gave rise to the application are that the respondents had sued the applicants at the Cooperative Tribunal seeking for the following orders:

(i) An order of inhibition against the Respondents on all those properties known as LR.NO.5104/55, 5104/56, 5104/57, 5104/58 and 5104/59

(ii) An order of specific performance for the transfer of suit properties LR NO.5104/56, 5104/57, 5104/58 and 5104/59 to the 2nd and 3rd Claimants jointly.

(iii) In the alternative and without prejudice to prayer (i) & (ii), the return of the purchase price of Kshs.12,000,000/= to the Claimants, inclusive of a penalty of 30% as provided in the agreement special conditions clause 6 (xii)

(iv) Costs of the suit and interest at court rates.

(v ) Any other or further relief this Honourable Tribunal may deem fit to grant.

4. The Tribunal in its judgment granted an order of specific performance as prayed in prayer (b) above. The applicant was aggrieved by the orders and filed the appeal pending herein. He in the time being filed the instant application seeking for stay of execution of the orders of the Tribunal pending the hearing and determination of the appeal.

5. The application was opposed by the respondents through their grounds of opposition dated 7th October 2021 to the effect that the application is bad in law, frivolous and an abuse of the court process.

Submissions –

6. The advocates for the applicants, Lucy Mwai & Co Advocates, submitted that the applicants have satisfied the threshold for granting of stay of execution as set out under Order 42 Rule 6 of the Civil Procedure Rules. First, that the application was filed without undue delay in that judgment in the suit was delivered on 2nd September 2021 while the instant application was filed on the 30/9/2021.

7. Counsel submitted on the second ground that the applicants will suffer substantial loss if the suit properties are transferred to the respondents as ordered by the tribunal as there is no guarantee that the 2nd and 3rd respondents will not transfer the same to third parties while the appeal is pending in which case the applicants would be unable to reclaim the properties if the appeal succeeds. Counsel demonstrated what is required in proving substantial loss by citing the case of James Wangalwa & Another v Agnes Naliaka Cheseto(2012)eKLR where the court held that:

11. 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. This is what substantial loss would entail, a question that was aptly discussed in the case of Silverstein N. Chesoni [2002] 1KLR 867,and also in the case of Mukuma V Abuoga quoted above. The last case, referring to the exercise of discretion by the High Court and the Court of Appeal in the granting stay of execution, under Order 42 of the CPR and Rule 5(2) (b) of the Court of Appeal Rules, respectively, emphasized the centrality of substantial loss thus:

“…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.”

8. Counsel also cited the case of RWW v EKKW (2019) eKLR where it was observed that:

8. The purpose of an application for stay of execution pending an appeal is to preserve the subject matter in dispute so that the rights of the appellant who is exercising the undoubted right of appeal are safeguarded and the appeal if successful, is not rendered nugatory. However, in doing so, the court should weigh this right against the success of a litigant who should not be deprived of the fruits of his/her judgment. The court is also called upon to ensure that no party suffers prejudice that cannot be compensated by an award of costs.

9. Thirdly, it was submitted that the applicant is willing to provide security for costs by offering to pay a sum of Ksh.12,000,000/- to the respondents or as the court may direct pending the hearing of the appeal. Counsel cited the case of Absalom Dova v Tarbo Transporters(2013) eKLR where the court stated that:

“The discretionary relief of stay of execution pending appeal is designed on the basis that no one would be worse off by virtue of an order of the court; as such order does not introduce any disadvantage; but administers the justice that the case deserves. This is in recognition that both parties have rights.”

10. Counsel cited the case of Focin Motorcycle Co. Ltd v Ann Wambui Wangui & Another (2018) eKLR where the court held that:

Where the applicant proposes to provide security as the Applicant has done, it is a mark of good faith that the application for stay is not just meant to deny the respondent the fruits of judgment. My view is that it is sufficient for the applicant to state that he is ready to provide security or to propose the kind of security but it is the discretion of the Court to determine the security. The Applicant has offered to provide security and has therefore satisfied this ground for stay.

11. The advocates for the respondents, Ng`an`ga Munene & Co. Advocates, on the other hand submitted that the applicants had failed to prove that there is sufficient cause to grant the orders sought. That they also failed to show that they will suffer substantial loss if the orders are not granted.

Analysis and Determination –

12. The application is brought under the provisions of Order 42 Rule 6 of the Civil Procedure Rules. The same provides as follows:

“No order for stay of execution shall be made under sub-rule (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.”

13. The applicants thereby need to satisfy the Court on the following conditions before they can be granted the stay orders:

(a) Substantial loss may result to the applicant unless the order is made.

(b) The application has been made without unreasonable delay, and

(c) Such security as the Court orders for the due performance of the decree or order as may ultimately be binding on the applicant has been given by the applicant.

14. Section 79G of the Civil Procedure Act requires that an appeal to the High Court from a subordinate court be filed within 30 days of the delivery of the judgment or order. The judgment of the Tribunal in this matter was delivered on 2/9/21 and the instant application filed on 30/9/2021. The application was thereby filed without delay. That threshold has therefore been met.

15. The applicants submitted that they stand to suffer substantial loss if the application is not granted. In James Wangalwa case (supra) it was emphasized that substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.

16. The applicants contend that if the property is transferred to the respondents before the appeal is determined, there is likelihood of them transferring it to a third party thereby putting it out of reach of the applicants. I find this argument plausible. There is no guarantee on what the respondents will do with the property if it is placed in their hands before the appeal is heard and determined. Were they to transfer the property to a third party it will render the appeal nugatory and the applicants will end up suffering substantial loss. It is safer for the property to remain in the hands of the applicants pending the hearing of the appeal. The applicants have shown that they are likely to suffer substantial loss if the property is transferred to the respondents before the appeal is heard and determined.

17. The third condition is security for due performance of the decree. The 1st applicant has deposed that he is ready to deposit the sum of Ksh.12,000,000/- into an interest earning account as security. It has to be noted that the respondents had in the alternative sought for refund of the purchase price of Ksh.12 million. They will thereby not suffer any prejudice if the money is deposited as prayed. There is no reason to deny the applicants the prayer for depositing the money as security.

18. The respondents opposed the application on the grounds that the application was frivolous and an abuse of the court process. No evidence was laid before the court to prove so. There is no doubt that the application was made in good faith and pursuant to the law as provided in Order 42 Rule 6 of the Civil Procedure Rules. There was no abuse of the process of the court.

19. The upshot is that the applicants have met the threshold for granting of stay of execution pending the hearing and determination of their appeal. I thereby grant the application for stay of execution pending appeal as prayed in prayer 3 of the notice of motion dated 30th September 2021 on condition that the applicants do, within one month from the date hereof, deposit a sum of Ksh.12,000,000/-in an interest earning account in the names of the respective advocates for the parties.

20. Orders accordingly. Costs to be in the cause.

Delivered, dated and signed at Nyeri this 17th day of March 2022.

J.N. NJAGI

JUDGE

In the presence of:

No appearance: - for Appellants/Applicants

Mr. Ng’ang’a: - for Respondents

Court Assistant: - Kinyua

30 days R/A.