[2023] KEHC 26437 (KLR)

National Bank of Kenya Limited v S. Muteithia Kibira t/a Muteithia Kibira Advocates (Civil Appeal E062 of 2023) [2023] KEHC 26437 (KLR) (14 December 2023) (Ruling)

Neutral citation: [2023] KEHC 26437 (KLR)

Republic of Kenya

In the High Court at Nyeri

Civil Appeal E062 of 2023

M Muya, J

December 14, 2023

Between

National Bank of Kenya Limited

Appellant

and

S. Muteithia Kibira t/a Muteithia Kibira Advocates

Respondent

Ruling

1. The notice of motion application dated the 25th day of September 2023 seeks the following orders:-1. Spent2. Spent3. That pending the hearing and determination of the intended appeal this honourable court be pleased to issue an order of stay of execution of the Judgement and decree delivered by Hon. A.G Kibiru on 6th September 2023. The grounds are:-

2. That the application is in respect to Judgment and decree entered on 6th September 2022 in favour of the Respondents condemning the applicants to pay a decretal sum of Ksh 16,230,220 plus costs and interest on both principal amount and costs.

3. That being aggrieved of the honourable courts Judgment the applicant has filed an appeal against the same in the High Court.

4. That the applicant will suffer substantial loss and irreparable damage if the decree is executed and the sum of Ksh 16,230,220/= plus costs and interest on the principal amount and cost is paid out to the Respondent.That if execution is allowed the Respondent might not be in a position to refund the amount to be paid out to him. Thus leading to substantial loss.

5. The application is supported by the affidavit of one Chrispus Maithya the Legal Officer of the applicant and a further Supplementary affidavit of the same officer.The application is opposed by the replying affidavit of Solomon Kibira Muteithia a partner with Muteithia Kibira and Co. Advocates.He depones that the decretal sum is not substantial to the appellant in relation to the appellant which is a large well-established banking corporation.

6. That it’s not normal for a Court to grant stay of execution pending appeal in monetary decrees such as the present one.Further that stay of execution pending appeal in a monetary decree may only be granted if and only if:a)The amount payable under the decree is substantial in relation to the appellant’s means.b)The Respondent that is the decree holder and successful litigant is a “person of straw” who would be unable to refund the said decretal sum should the appeal be successful.

Applicants submissions 7. It is the applicants contention that in the appeal they have raised substantial issues for trial including the interpretation and application of sections 45, 46, 48 and 49 of the advocates Act touching on suits for recovery of advocates costs in non-contentious transactions,That they have an arguable appeal with high chances of success and if the order for stay is not granted as sought, the appeal will be rendered nugatory.The applicant has duly complied with this court’s orders to deposit the whole of the decretal amount in court in the sum of Ksh 21,231, 132. 70 on 11th October, 2023.

8. It is the applicant’s submission that the Respondent has not provided statement of assets and liabilities and or audited financial statements to demonstrate that it is capable of refunding the decretal sum if the appeal is successful.The applicant rallies on order 42 rule which provides:- “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, andb)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.

9. In support of an arguable appeal the applicant rallies on the case of Ena investment Limited Versus Bernard Ochau Mose and 2 others (2022) e KLR where it was held:-“The first requirement is that the intended appeal must be arguable. A cursory look at the memorandum of appeal shows that the grounds raised therein are triable. This first ground is therefore met. The essence of consideration whether the appeal raises triable issues is to avoid the same being rendered nugatory should the decision of the appellate court overturn that of the trial court”

10. On the issue of unreasonable delay, it is submitted that Judgment was rendered on 6th September 2023 and the present application was filed on 26th October which is within a period of one month.That the appeal was filed simultaneously with the application through memorandum of appeal dated 25th October 2023. Reliance is placed on the case of Jamii Bora Bank Limited and another Versus Samuel Ndirangu Civil Appeal No. E0303 of 2021 where a period of one month was found not to be undue delay.It is further submitted that where execution of monetary decree is sought to be stayed the consideration of substantial loss extends to the financial situation of both the applicant and the Respondent. The Court must satisfy itself on the capability of the Respondent to refund the decretal amount.In the case of Focin Mortorcycle Co. Limited – Versus Ann Wambui Wangui and another Civil Appeal No. 22 of 2017. It was held:-“It has been stated that substantial loss lies in the inability of the Respondent to refund the decretal sum. I have stated that the Respondent has failed to prove that she is in a position to refund.”This was held in the case of Lucy Nyamu Kimani Versus Lawrence Mburu Muthiga (2006) e KLR.“An applicant demonstrates substantial loss by showing that the Respondent is not a person of means and payment in decretal sum prior to appeal would put the same beyond reach of the applicant.”

11. It is the contention of the applicant that once it expresses doubt on the Respondent’s capability of refunding the decretal sum, the evidential burden shifts to the Respondent to prove otherwiseIn the case of Stanley Karanja Wainaina & another Versus Ridon Ayangu Mutubwa Nairobi HCCA 427 of 2015 it was held:-“It is not enough for the Respondent to merely swear that fact in an affidavit without going further to provide evidence of his liquidity. In my view the Respondent has evidential burden to show that he has the resources since this is a matter that is purely within his knowledge.”It is submitted that in the instant case the Respondent has not provided evidence that he is in a position to refund. It is submitted that Bank advisory notes from NCBA Bank PLC Co-operative Bank of Kenya Limited, ABSA Bank Kenya Limited showing his gross turn over as well as professional indemnity cover do not indicate his liabilities. There is no statement of assets and liabilities indicated.

Respondent’s submissions 12. The criteria for the grant of the orders sought by the applicantAre summarized as follows:-1. It is not normal for a court to grant stay of execution pending appeal in monetary decrees such as the present one (Ujagar versus- Runda Coffee Estates Limited (1966) EA 2632. A stay of execution pending appeal in monetary decrees may only be granted if and only if:a)The amount payable under the decree is substantial in relation to the appellant’s means.b)The Respondent that is the decree holder and successful litigant is a person of straw who be unable to refund the said decretal amount should the appeal be successful.It is submitted that the applicant sought time to put in a further affidavit. 14 days were granted within which to file and serve the same but filed and served it after the 14 days had expired and without leave of the court.It is submitted that the matter before the court involves a monetary decree issued to the Respondent on 6th September 2023 after a three years trial. Being a monetary decree it is capable of being refunded if the appeal succeeds. That it is not normal for a court to grant a stay of execution in monetary decrees.

13. The second limb of the Respondents submission is that a stay of execution pending appeal in monetary decrees may only be granted if (a)“The amount payable under the decree is substantial in relation to the appellant’s means.Reliance is placed on the case of Jubilee Insurance Co. Ltd –Versus- Nyamu (2022) Where it was held;“in an application of this nature the successful applicant ought to depose expressly as to how substantial loss will arise, whether due, to the hardship resulting from making payments towards the decree or the possibility impossibility or difficulty in recovery of sums paid out in the event the appeal succeeds”

14. In the case of Kenya Shell Ltd –versus Kibiru and another (1985) KLR 410, the Court held:- “substantial loss in its various forms is the cornerstone of both Jurisdictions to granting 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.”It is the Respondents submission that the decretal sum is not substantial to the appellant in relation to its means. That this is a large well –established Banking Corporation wholly owned by Kenya Commercial Bank group. Respondent has attached a print out in his replying affidavit to the effect that the applicant posted a profit of Ksh 828 million financial year ending in December 31, 2023. That it’s not true that the information was gleaned from newspaper reports as alleged by the applicant but the Respondent has provided the necessary links to websites. It is further submitted that the applicant has admitted that it is a reputable banking institution capable of paying should it fail in its appeal.

15. On the other strand of argument that the Respondent is not a man of straw who would be unable to refund the decretal amount should the appeal succeed? It is submitted that in its replying affidavit the Respondent has provided uncontroverted evidence as to its ability to repay the decretal sum in the highly unlikely event that the appeal succeeds.Reliance is placed on the case of Bonface Kariuki Wahome Versus Peter Nziki Nyamai and another 2019 e KLR where the court held:-

16. “The evidential burden resides with the Respondents to prove that he is not a man of straw as alleged. None of the two Respondents in the instant case has made any attempt to discharge this burden. It is expected that a Respondent would become and show the means she has to refund the decretal sum.”It is submitted that the respondent has offered un contradicted proof that he is not a man of straw. This proof is from bus banks.a.That it has shown that four of its bankers have provided uncontroverted evidence that the Respondents cumulative turn over for the last three years is in excess of Ksh 500 millionb.The appellant itself provided some of the appellant’s confidential bank statements in the lower court for the years 2017 – 2018 which was in excess of Ksh 16 million.c.That the Respondent is a reputable law firm established 23 years ago providing services to various financial institutions.d.That the Respondent is able and willing to secure the refund by issuing professional undertaking to refund the decretal amount. That professional undertaking to be backed by its professional indemnity cover of Ksh 500 million.e.That the Respondent has handled numerous matters cumulatively worth several billions of shillings, received, kept and paid out several millions of shillings as advocates for the appellant for close to two decades.f.The Respondent continues to hold several original files belonging to the appellant and its customer’s properties worth billions of shillings.

17. It is submitted that overriding interests does not favour the applicant. In that an applicant for stay of execution of a decree or order pending appeal is obliged to satisfy the conditions set out in order 42 (6) (2) of the Civil Procedure rules that(a)Substantial loss may result to the applicant unless the order is made.(b)That the application has been made without unreasonable delay (c) that such security as the court orders for the due performance of such decree or order has been given.

Analysis and determination 18. Issues For DeterminationWhether the applicant has made out a proper case for grant of stay of execution pending appeal.Section 42 rule 6 (2) of the Civil Procedure rules provides:-“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 andb.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.Whether the amount payable under the decree is substantial in relation to the appellant’s means.In the case of Jubilee Insurance Co. Ltd Supra the court observed that:-“In an application of this nature the successful applicant ought to depose expressly as to how substantial loss will arise whether due to hardship resulting from making payments towards the decree or the impossibility in recovery of sums paid out, in the event the appeal succeeds”It is therefore incumbent upon the applicant to show that the decretal sum is substantial in relation to its means.I have duly perused the supporting affidavit and the supplementary one filed by the applicant and nowhere does it state that the decretal sum is substantial in relation to its means.Whilst in reference to paragraph 6 of the Respondents replying affidavit the applicant deposes that the Respondent relied on newspaper media reports to show financial information on the applicant which evidence is not credible and admissible in evidence as there are no certified and audited financial statements.

19. Apart from that averment it does not go a step further to show or indicate how untrue or false the applicant’s averments on its financial footing.At paragraph 6 of the Replying affidavit the Respondent submits that the applicant is a reputable bank which is wholly owned by KCB group and it posted Ksh 828 million in profit after tax for the financial year ending in December 2022. Annexture Exhibit 1 are extracts of the published audited financials of the applicant and KCB as published in their official websites. The on line links are provided.The second strand of argument is whether the decree holder is so impecunious that he would not be in a position to refund the decretal sum if the appeal succeeds. In short that he/she is a person of straw.

20. The Respondent has submitted that he is not a man of straw and has given several reasons to that effect. In his replying affidavit.a.That the Respondent is a reputable law firm which was established 23 years ago and offers services to financial institutions corporate and individual including the applicant and has had no integrity issues.b.Four of the Respondents bankers have provided evidence that is not controverted that its cumulative turn-over for the last three years exceeds Ksh 500 million.c.The appellant/applicant itself did in the lower court provide the Respondents Confidential bank statements for the year 2017 – 2018 which was in excess of Ksh 16 milliond.That the Respondent has handled numerous matter cumulatively running into billions of shillings, received kept and paid out millions as advocates for the applicant for close to two decades.e.The Respond continuous to hold several original files belonging to the applicant and its customers for properties worth billions of shillings.f.That the Respondent is willing and able to secure the refund by issuing a professional undertaking to refund the decretal amount should the appeal succeed.

21. In answer to the Respondents averments the applicant rejoinder is that no audited financial statements showing liabilities were provided.

22. The application before me is for a stay of execution in a money decree pending the hearing and determination of an appeal.The applicant is a reputable bank in this country and it has not shown that the decretal sum is substantial in relation to its means.It has not shown that the Respondent is so impecunious as to be unable to refund the decretal sum in the event the appeal is successful.The application for stay of execution has no merit and it’s dismissed with costs.

RULING READ AND DELIVERED IN OPEN COURT THIS 14TH DAY OF DECEMBER 2023. HON. JUSTICE M. MUYA....................................JUDGEI certify taht this is a true copy of the originalSignedDEPUTY REGISTRARIn the presence of:Rotich Appellant/ApplicantMiss Nderitu RespondentCourt Assistant: Kinyua