[2020] KEHC 579 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

COMMERCIAL & TAX DIVISION

CIVIL CASE NO. 141 OF 2011

NDUNGU MBUGUA..................PLAINTIFF/RESPONDENT

VERSUS

BENSON IRUNGU MBARIA....DEFENDANT/APPLICANT

RULING

Background

1. The Application for consideration is an amended Notice of Motion application dated 15th July 2020 filed by the Defendant pursuant to Order 42 Rule 6(1) & (2), Order 51 Rule 1of theCivil Procedure Rules, Sections 1A, 1B, 3A & 63of theCivil Procedure Act,Chapter 21 of the Laws of Kenya and all other enabling provisions of Law. The Defendant seeks for stay of execution of the judgment delivered by this court (Hon. Lady Justice G. Nzioka) on 29th April, 2020 pending the hearing and determination of his intended Appeal. He also seeks for an extension of time for filing a Notice of Appeal against the judgment and prays that once so granted, the Notice of Appeal dated 16th June, 2020 annexed hereto be deemed as properly on record.

2. The application is supported by the Defendant’s Affidavit sworn on even date in which he depones that he intends to appeal against the judgment and his advocates have since requested for typed proceedings and a certified copy of the judgment in order to lodge the appeal. He avers that he has an arguable appeal with high chances of success but is reasonably apprehensive that the Plaintiff may at any time institute execution proceedings for the colossal judgment sum since the Plaintiff’s advocates have already prepared and forwarded to his advocates a draft decree with the intention of having it sealed for execution purposes.

3. Further, he depones that since this was a test suit for two others namely Milimani HCCC No. 142 of 2011: Peter Kinyanjui v Benson Irungu Mbaria and CMCC No. 101 of 2011: Daniel Joseph Njagi b Benson Irungu Mbaria, he is justifiably apprehensive that the Respondent may at any time institute execution proceedings in all three maters and he stands to suffer irreparable harm, loss and damage as a result thereof. He adds that the Plaintiff does not have any known assets thus, it may be impossible to recover the colossal judgment sum from him in the event that his appeal succeeds and as such, he will not only suffer loss and damage but this application as well as the intended appeal will be rendered nugatory.

4. He also states that he is willing to abide by any reasonable orders and conditions as to security to guarantee the due performance of the decree herein preferably by providing a suitable bank guarantee for the judgment sum. Finally, he avers that the application has been made without undue delay since his advocates only became aware of the judgment on 4th June 2020 upon receipt of a letter dated 2nd June, 2020 from the Plaintiff’s advocates forwarding a draft decree in respect thereof. Immediately thereafter, his advocates set out to obtain a copy of the judgment, notify him as well as obtain instructions from him on the way to proceed before filing the Notice of Appeal on 16th June, 2020.

5. The Respondent opposed the application by way of Grounds of Opposition dated 23rd July, 2020. He stated that the delay in filing the Notice of Appeal is inordinate and has not been explained. He also stated that the application is incompetent, fatally defective and misconceived.

Analysis and determination

6. The application was canvassed by way of written submissions. The Defendant’s written submissions are dated 27th August, 2020 whilst the Plaintiff’s submissions are dated 4th September, 2020. Upon carefully considering the application, the Grounds of Opposition and the parties respective submissions, I find that the following are the issues for determination: whether the time within which to file a Notice of Appeal should be extended and whether the Defendant has made out a case for the grant of a stay of execution.

Whether the time within which to file a notice of appeal should be extended

7. On this issue, the Defendant reiterated the averments in his supporting affidavit and added that he was never served with a notice of delivery of judgment. He submitted that his advocates’ efforts to obtain a copy of the judgment immediately upon becoming aware of the same were frustrated by the partial closure of court due to the covid-19 pandemic. Be that as it may, he argued that he filed a Notice of Appeal on 16th June, 2020 which was fourteen (14) days since becoming aware of the judgment. In his view, it is evident that the delay in filing the Notice of Appeal was neither intended nor inordinate and as such, he urges the court to exercise its discretion under Section 59of theInterpretation and General Provisions Actin his favour and allow him to file the same out of time.

8. In rebuttal, the Plaintiff submitted that an order for extension of time to file a Notice of Appeal is discretionary. He submitted that pursuant to the provisions of Rule 4of theCourt of Appeal Rules and the case of George Wachira Kirira v Joe Maina Ruthuti [2013] eKLR,there are four conditions to be satisfied namely: that delay in filing was not inordinate; delay has been explained; the intended appeal is arguable and that by granting leave, the same will not greatly prejudice the Respondent. He argued that the Defendant has not explained why it took him a further sixteen (16) days, upon becoming aware of the judgment, to file the Notice of Appeal and the application under consideration.

9. The Plaintiff contended that in the absence of such explanation, the court has no basis on which to exercise its discretion in his favour. To support this, he relied on Republic v Kenyatta University & Anor Ex-parte Wellington Kihato Wamburu [2018] eKLR; Leo Sila Mutiso v Rose Hellen Wangari Mwaangi CA Application Nai 25 of 1997; Ruben M. Muli t/a Konza Merchants v Keshra Vishra t/a Alpesh Enterprises [2007] eKLR;andCyprian Shivachi Shisanya v Emily Susan Kayanda & Anor [2019] eKLR.

10. The court’s power to extend the time sought by the Defendant herein, for good cause, is not questionable. This is evident from the provision of Section 7 of the Appellate Jurisdiction Act, Chapter 9of the Laws of Kenya which states thus:

"The High Court may extend the time for giving notice of intention to appeal from a judgment of the High Court or for making an application for leave to appeal or for a certificate that the case is fit for appeal, notwithstanding that the time for giving such notice or making such appeal may have already expired."

11. Similarly, both Section 59of theInterpretation and General Provisions Act which the Defendant sought to rely on and Order 50 Rule 6 of the Civil Procedure Rules, 2010 empower the court to grant such an extension. In particular, Order 50 Rule 6 provides that:

"Where a limited time has been fixed for doing any act or taking any proceedings under these Rules, or by summary notice or by order of the court, the court shall have power to enlarge such time upon such terms (if any) as the justice of the case may require, and such enlargement may be ordered although the application for the same is not made until after the expiration of the time appointed or allowed:

Provided that the costs of any application to extend time and of any order made thereon shall be borne by the parties making such application, unless the court orders otherwise."

12. Notably however, the granting of extension is a matter of court’s discretion which must be exercised judiciously. The Supreme Court set out the guiding principles for the exercise of such discretion in the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR as follows:

"This being the first case in which this Court is called upon to consider the principles for extension of time, we derive the following asthe underlying principles that a Court should consider in exercise of such discretion:

1. Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the Court;

2. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;

3. Whether the court should exercise the discretion to extend time is a consideration to be made on a case to case basis;

4. Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the Court;

5. Whether there will be any prejudice suffered by the respondents if the extension is granted;

6. Whether the application has been brought without undue delay; and

7. Whether in certain cases, like election petitions, public interest should be a consideration for extending time."

13. In the present case, it is not disputed that the Defendant became aware of the judgment of 29th April, 2020 on 2nd June, 2020 by which time thirty-three (33) days had already elapsed and thus he could not lodge a Notice of Appeal against the judgment within fourteen days as required under Rule 75 (1) of the Court of Appeal Rules, 2010. My perusal of the court record reveals that the date of delivery of judgment was postponed quite a number of times. I have also confirmed that there is nothing on record to show that parties were notified about the date of delivery of judgment or that any of them was present during the time of delivery of judgment.

14. Further, the Defendant has clearly explained the steps that his advocates took upon becoming aware of the judgment. They wrote a letter to the deputy registrar requesting for typed proceedings and a copy of the judgment to enable them lodge an appeal on his behalf. However, no response was forthcoming because of the partial closure of the court due to the covid-19 pandemic. This culminated in the filing of the Notice of Appeal dated 16th June, 2020 alongside the application for extension. The Plaintiff has not controverted any of these averments save to claim that the delay has not been explained.

15. In the circumstances, I find that the Defendant has tendered a reasonable explanation for the delay in filing the Notice of Appeal. It is also clear to me from the circumstances herein, that the application for extension of time was filed without any undue delay and the Plaintiff does not stand to suffer any prejudice if the extension sought by the Defendant is granted. I am therefore minded to exercise my discretion to extend the time within which the Defendant shall file the Notice of Appeal against the judgment of 29th April, 2020.

Whether the Defendant has made out a case for the grant of a stay of execution.

16. On this issue, the Defendant submitted that where a court grants orders which are capable of execution, the same may be stayed albeit as a matter of court’s discretion. He submitted that Order 42 Rule 6(2)of theCivil Procedure Rules, 2010sets out three conditions to be fulfilled in order for stay of execution to issue. He contended that substantial loss may result to him unless stay is granted because he will be required to pay the Plaintiff a colossal sum of Kshs. 29,830,980. 11 for the three suits whereas its evident from his evidence during trial that his milk processing business, which he purchased from the Plaintiff herein, failed to take off due to a series of challenges.

17. Further, he argued that in any case, the Plaintiff has failed to demonstrate that he would be able to repay the decretal sum should the appeal succeed. He relied on the case of National Industrial Credit Bank Limited v Acquinas Francis Wasike & Anor (UR) Civil Application No. 238 of 2005 where the Court of Appeal posited that once an Applicant expresses his fears of a Respondent’s inability to pay back the decretal sum, the evidential burden shifts to the Respondent since that is a matter that is peculiarly within his knowledge. He submitted that the overriding principle is to ensure that a party exercising his indisputable right of appeal is not exposed to unwarranted harm by failure to grant stay of execution. In support, he cited the case of Butt v Rent Restriction Tribunal [1982] eKLR.

18. It was further his submission that it is evident from the circumstances of the case that the application for stay was made without undue delay since it was filed immediately upon becoming aware of the judgment. Lastly, the Defendant expressed his willingness to abide by any reasonable orders and conditions as to security to guarantee due performance of the decree herein preferably by providing a suitable bank guarantee.

19. In rebuttal, the Plaintiff contended that in the absence of a valid Notice of Appeal, such as in the Defendant’s case, this court lacks jurisdiction to grant an order for stay of execution pending the hearing and determination of the appeal. In this sense, he placed reliance on the Court of Appeal’s expression to that effect in the case of Multichoice (K) Limited v Wananchi Group (Kenya) Limited & 2 others [2002] eKLR.

20. Further, the Plaintiff argued that even if the court has jurisdiction, the application has not satisfied the requirements for stay of execution under Order 42 Rule 6(2) of theCivil Procedure Rules, 2010. It was his submission that the Defendant has not demonstrated how he stands to suffer substantial loss by paying the decretal sum. The Plaintiff stated that he is perfectly able to repay the decretal sum in the event that the Defendant’s intended appeal succeeds since he is a partner in a leading architectural firm and also owns several real estate properties in the country, a fact that the Defendant is well aware of.

21. The Plaintiff cited the case of Peter Rugu Gikanga & Another v Weston Gitonga & 10 Others [2014] eKLR where the court noted that it is not enough for an Applicant to merely say that he will suffer substantial loss if the decree is executed, he must go ahead and show the substantial loss that he stands to suffer. He also relied to the case of Macharia t/a Macharia & Co. Advocates v East African Standard [2002] eKLR where the court held a similar view and added that an applicant must prove specific details and particulars of the substantial loss that he stands to suffer. In totality therefore, the Plaintiff urged that the Application be dismissed.

22. The power to grant orders for stay of execution pending appeal is discretionary. This discretion must be exercised judiciously. Order 42 Rule 6(2)of theCivil Procedure Rules, 2010 sets out the conditions necessary for the grant of stay of execution in the following terms:

"(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."

23. To begin with and without belaboring the point, I have no doubt that the application was made timeously. The initial application was lodged on 16th June, 2020 which was fourteen days after becoming aware of the judgment.

24. On the question of the security for due performance of the decree, I note that the Defendant is ready to provide a suitable bank guarantee in that regard and abide by any reasonable orders and conditions attached that may be thereto. However, the determination of what amounts to a suitable security is a matter of court’s discretion. In Focin Motorcycle Co. Limited v Ann Wambui Wangui & another [2018] eKLR,the court stated 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….”

25. In Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd [2019] eKLR, the court observed as follows:

“… the applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition a party who seeks the right of appeal from money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under order 42 rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the degree in order to enjoy the fruits of his judgment in case the appeal fails.

Further, order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgement involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal … Thus the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine. Counsel for the applicant submitted that he is ready to provide a bank guarantee as security for due performance of the decree.

26. In the present case, the Defendant has offered to provide security on any terms that this court may set and has therefore satisfied this ground for stay.

27. As regards substantial loss, it is generally considered as the corner stone for granting stay of execution. In circumstances where a money decree is involved such as the case herein, substantial loss lies in the Respondent’s inability to reimburse the decretal sum incase the appeal succeeds. It places an obligation upon the court to strike a balance between two competing interests. On the one hand, the Plaintiff as the successful party is entitled to the fruits of his judgment while on the other, the Defendant being aggrieved by the judgment is entitled to exercise his right of appeal and to have that right protected by avoiding a situation where his appeal may be rendered nugatory. It is therefore imperative for an applicant to satisfactorily demonstrate the substantial loss that he stands to suffer in the event that stay is not granted.

28. In Machira t/a Machira & Co. Advocates v East African Standard [2002] eKLR,the court expressed itself as follows:

"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….In attempting to convince a court that substantial loss is likely to be suffered so that whatever he intends to achieve by his intended recourse to some other authority will be nugatory if ultimately he prevails, the applicant is under a duty to do more than merely repeating to the court words of the relevant statutory rule or general words used in some judgment or ruling of a court in a decided case cited as a judicial precedent to guide. It is not enough merely to state that substantial loss will result, or that the appeal if successful will be rendered nugatory. That will not do.

If the applicant cites, as a ground, substantial loss, the kind of loss likely to be sustained must be specified, details or particulars thereof must be given, and the conscience of the court, looking at what will happen unless a suspension or stay is ordered, must be satisfied that such loss will really ensue and that if it comes to pass, the applicant is likely to suffer substantial injury by letting the other party proceed further with what may still be remaining to be done or in execution of an awarded decree or order, before disposal of the applicant’s business (e.g. appeal or intended appeal).”

29. In the present case, the Defendant deponed that the risk of the Plaintiff executing the decree in this suit as well as two others namely Milimani HCCC No. 142 of 2011: Peter Kinyanjui v Benson Irungu MbariaandCMCC No. 101 of 2011: Daniel Joseph Njagi v Benson Irungu Mbariaagainst him is imminent since the Plaintiff’s advocates had already drawn up and sent his advocates a draft decree. He averred in his affidavit that if stay is not granted, he will be required to pay the Plaintiff a colossal sum of Kshs. 29,830,980. 11 for the three suits yet he is currently facing financial difficulties as is evident from his evidence during trial that his milk processing business, which he purchased from the Plaintiff herein, failed to take off. Further, he noted that in any case, the Plaintiff has no known assets from which he may recover the colossal amount in the event that his appeal succeeds hence he stands to suffer substantial loss and his intended appeal will also be rendered nugatory.

30. Notably, the Defendant has not provided any proof of the allegations that he is a facing financial hardship. In similar vein, the Plaintiff despite indicating that he is able to reimburse the decretal sum in the event that the Defendant’s intended appeal succeeds,has not revealed his net worth with specificity by adducing evidence of his means and/or title deeds of the alleged assets in court to demonstrate that he has the financial capability to reimburse the decretal sum when the need arises. Thus, upon weighing the competing interests of the parties herein, I find that the balance tilts in favour of granting a stay of execution of the judgment of 29th April, 2020.

Conclusion

31. The upshot of the above is that the Amended Notice of Motion dated 15th July, 2020 succeeds as follows:

a. There shall be a stay of execution of the judgment delivered on 29th April, 2020 and all consequential orders pending the hearing and determination of the intended appeal on condition that the Defendant provides an irrevocable bank guarantee in the sum of Kshs.Kshs. 29,830,980. 11 from a reputable bank, to be valid during the pendency of the appeal, within 21 days from the date hereof, failure to which the stay order shall lapse.

b. The Defendant is also granted an extension of fourteen (14) days from the date hereof to file and serve his Notice of Appeal against the Judgment of 29 April, 2020.

c. The costs of the application shall abide the outcome of the appeal.

DATED AND DELIVERED AT NAIROBI THIS 3RD DECEEMBER, 2020

G.W.NGENYE

JUDGE

In the presence of:

1. M/s KemboiI h/b for Mr. Nyachoti for the Defendant /Applicant.

2. E.K.Mutua for the Plaintiff/Respondent (Absent).