[2022] KEHC 9825 (KLR)

NCBA Bank Group PLC v Mose & another (Civil Appeal 158 of 2021) [2022] KEHC 9825 (KLR) (12 July 2022) (Ruling)

Neutral citation: [2022] KEHC 9825 (KLR)

Republic of Kenya

In the High Court at Kisii

Civil Appeal 158 of 2021

REA Ougo, J

July 12, 2022

Between

NCBA Bank Group PLC

Appellant

and

Josephat Nyachio Mose

1st Respondent

Boaz Iteba Sosi

2nd Respondent

Ruling

1. The application before Court is a Notice of Motion dated 9th December 2021 seeking the following orders;1. Spent2. Spent3. That the Honorable Court be pleased to issue an Order of Stay of Execution of the Order issued to the Ruling delivered on 23rd November 2021 in Ogembo MCCC/158/2021– Josephat Nyachio Mose v NCB Bank Group Plc & Boaz Iteba Sosi by Hon. G.W. Barasa (R) along with all consequential Orders pending the hearing and determination of this Appeal.4. That this Honorable Court be pleased to issue any order it deems fair and just in the circumstances.5. That the costs of and incidental to this application be costs in the appeal.

2. A brief background to the application is that the respondent in its application dated 19th August 2021 before the subordinate court sought a temporary injunction against the applicant to prevent it from advertising/selling motor vehicle registration number KCY 078A and a mandatory interlocutory injunction compelling the applicant to return the vehicle to the 1st respondent. On 20th August 2021 the trial magistrate issued ex parte interim orders restraining the applicant from advertising or selling the vehicle and a mandatory injunction, compelling the applicant to return the suit vehicle to the 1st respondent. The applicant filed a replying affidavit opposing the application before the subordinate court and it also sought to discharge the orders of 20th August 2021 as the suit motor vehicle had been sold on 3rd August 2021, two (2) weeks before the 1st respondent moved to the lower court. The ruling subject to the applicant’s appeal was delivered on 23rd November 2021 allowing the 1st respondent’s application on mandatory orders, additionally, the trial magistrate ordered the applicant to pay Kshs. 3,328,000/= which the applicant claims had not been sought in the 1st respondent’s application or plaint.

3. The applicant dissatisfied with the finding of the trial court has lodged an appeal against the ruling of the court. In its application dated 9th December 2021 the applicant seeks stay of execution pending appeal. The grounds in support of the application are in the face of the application and the supporting affidavit sworn by the applicant’s legal manager, Jackson Kingori.

4. According to the applicant, its appeal poses serious and arguable grounds. The applicant contends that the award by the learned magistrate is for a substantive sum and the capacity of the 1st respondent to reimburse the same on a successful appeal is unknown. Although the applicant is willing to offer security as a condition for grant of the orders for stay pending appeal the nature of the award of Kshs. 3,328,000/- by the Magistrate’s court is so egregious and without substance, in the circumstance the applicant proposes that the grant for orders of stay be issued in the court’s discretion without necessity of requirement of deposit of the said sum. It was averred that the application was filed without undue delay. The application was also on grounds that the 1st respondent will not suffer any prejudice in the event the application is allowed but to the contrary the applicant shall suffer substantial loss unless the application for stay is allowed.

5. The applicant further filed an application dated 20th December 2021 seeking stay pending inter partes hearing of its application dated 9th December 2021. This court upon considering the application granted stay of execution pending interpartes hearing of the matter. The respondent failed to file a replying affidavit despite being served with the application.

6. The application was canvassed by way of written submissions. The applicant through the firm of M/s Makori & Karimi Advocates filed their submissions on 14th March 2022 while the 1st respondent through his counsel Ogwe & Associates Advocate filed his submissions on 17th March 2022.

7. Having considered the rival submissions, the only issue for this court’s determination is whether the applicant has met the legal threshold for the grant of an order of stay of execution pending appeal pursuant to Order 42 Rule 6 (2) of the Civil Procedure Rules. The court while considering an application such as this has the discretion in granting an order for stay of execution. The order of stay pending appeal is supposed to preserve the subject matter in dispute so that the appeal is not rendered nugatory. The court in RWW v EKW [2019] eKLR stated:“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.Indeed to grant or refuse an application for stay of execution pending appeal is discretionary. The Court when granting the stay however, must balance the interests of the Appellant with those of the Respondent.”

8. The applicant is therefore required to prove that its application was filed without undue delay; secondly, that if the order of stay of execution is not granted the applicant stands to suffer substantial loss; and finally, that it can provide security for the decretal sum. Order 42 Rule 6 (1) and (2) of the Civil Procedure Rules provides as follows:“(1) No appeal or second appeal shall operate as a stay of execution or proceeding under a decree or order appealed from except in so far as the court appealed from may order but, 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.(2)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.”

9. I am inclined to agree with the applicant’s submissions that its application had been presented without unreasonable delay. The decision by the trial magistrate was made on 23rd November 2021 and the applicant filed its memorandum of appeal together with the application for stay on 9th December 2021.

10. On substantial loss, the appellant submitted that the entire suit before the trial court is about the failure by the borrower to service the loan proffered by the appellant bank. Unless stay is granted, the bank will be exposed to extensive and substantial loss as the award of Kshs. 3,328,000/- had not been pleaded. It was argued that the burden of proof of the ability to reimburse a decretal amount lies with the respondent once the appellant casts doubt on ability to pay. It placed reliance of the case of National Industrial Credit Bank Limited v Aquinas Francis Wasike and Another [2006] eKLR. With regards to the issue of security, it was submitted that the applicant is ready to furnish security, however, in light of the peculiarity of this case, it was submitted that the deposit of security is not necessary for the grant of stay orders. The applicant argued that the award of Kshs 3,328,000/- was neither pleaded nor proved. It was further submitted that the respondent made no mention of his ability to reimburse the decretal sum.

11. The court in Jessikay Enterprises Ltd v George Kahoto Muiruri [2022] eKLR cited with approval the decision in Kenya Shell Ltd v Kibiru & Another [1986] KLR 410 where Platt Ag JA observed as follows:“The appeal is to be taken against a judgment in which it was held that the present Respondents were entitled to claim damages…It is a money decree. An intended appeal does not operate as a stay. The application for stay made in the High Court failed because the gist of the conditions set out in Order XLI Rule 4 (now Order 42 Rule 6(2)) of the Civil Procedure Rules was not met. There was no evidence of substantial loss to the Applicant, either in the matter of paying the damages awarded which would cause difficulty to the Applicant itself, or because it would lose its money, if payment was made, since the Respondents would be unable to repay the decretal sum plus costs in two courts… (Emphasis added)”

12. The applicant contends that the issue before the subordinate court concern default of a loan and therefore there is likelihood that the respondent will not be able to reimburse the applicant. Indeed, there is real danger that the 1st respondent would be unable to repay the decretal sum. There was no evidence by the 1st respondent that it could repay the decretal sum and I find that the applicant had established the second limb required for the grant of an order of stay pending appeal.

13. Although the parties have made submissions on issues touching on the appeal, more particularly whether the award of Kshs 3,328,000/- was merited or not, I will restrain from commenting on the merits or lack thereof of any of the grounds raised in the appeal until the same has been heard.

14. The applicant averred that it is ready to deposit security and I hereby grant orders for stay of execution to issue pending the hearing and determination of the appeal on condition that the applicant deposit a third (1/3) of the decretal sum in court within 45 days from the date of this Ruling. The applicant shall file and serve the Record of Appeal within 45 days from today in default execution to issue. Costs of the application shall abide the outcome of the Appeal.

DATED, SIGNED AND DELIVERED AT KISII THIS 12TH DAY OF JULY 2022. R.E. OUGOJUDGEIn the presence of:Miss Kibaba For the Appellant/ApplicantRespondent AbsentAphline Court Assistant