https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1068

Ibrahim v Regional Container Freight Station Ltd & 3 others (Civil Application E081 of 2025) [2026] KECA 1068 (KLR) (29 May 2026) (Ruling) Neutral citation: [2026] KECA 1068 (KLR) Republic of Kenya In the Court of Appeal at Mombasa Civil Application E081 of 2025 AK Murgor, KI Laibuta & GW Ngenye-Macharia, JJA May 29, 2026 Between Nedim Mohamed Ibrahim Applicant and Regional Container Freight Station Ltd 1st Respondent AK B Investment Ltd 2nd Respondent Transouth Conveyors Company Ltd 3rd Respondent and Zumzum Invstments Ltd Interested Party (An application for stay of proceedings and stay of execution of the Decree pending the hearing and determination of the intended appeal against the Ruling and Order of the High Court at Mombasa (Ng’aah, J.) delivered on 25th August 2025 in Mombasa HCCC 116 of 2016) Ruling 1.Nedim Mohamed Ibrahim, the Applicant has brought this Notice of Motion dated 2nd September 2025 pursuant to Rule 5(2) (b) of the Court of Appeal Rules, Article 159 of the Constitution of Kenya 2010 seeking, inter alia:i)that there be a stay of further proceedings in Mombasa HCCC No. 116 of 2016 pending the hearing and determination of this application and the intended appeal;ii)that there be a stay of execution in Mombasa HCCC No. 116 of 2016 pending the hearing and determination of this application, and that the cost of this application be provided for. 2.The Applicant’s Motion is brought on several grounds, substantive of which are: that unless an order for stay is granted, this application together with the intended appeal will be rendered nugatory; that the intended appeal has very high chances of success; that the decree holder in HCCC No. 116 of 2016 has already applied for execution of the decree by way of attachment and sale of immovable properties known as Plot No. 5905, Section I/MN, C.R. No. 19849 and L.R. No. 1482/11/MN (the properties), which belongs to the Applicant; that the debt has been settled between the parties under, and by virtue of a Mediation Agreement, which has been litigated upon and upheld by the High Court in Mombasa High Court Civil Case No. E051 of 2021 – Nedim Mohammed Ibrahim vs Abdulkarim Saleh Muhsin; and that all the attached properties belong to the Applicant by virtue of the Judgment of the High Court in Mombasa HCCC No. E051 of 2021, which the learned Judge declined to recognize. 3.It was further contended that, on account of its decision, the High Court has unraveled the settlement between the parties, and condemned the dispute back to litigation by disregarding the Mediation Agreement, and the requirements of Article 159(2) (c) of the Constitution that enjoins courts to promote alternative dispute resolution, including mediation; and that if the stay sought is not granted, judicial time will be wasted resolving disputes that have already been settled by the parties, which is contrary to the dictates of the Constitution and public interest. 4.Furthermore, if the intended auction of the attached properties proceeds, the Applicant will suffer irreparable damage as it will be almost impossible to recover them in the event the appeal succeeds; that the attachment of the properties was irregular ab initio as no formal application for execution was ever filed in accordance with Order 22 or 22 Rule 6 of the Civil Procedure Rules; that the interest of justice requires that a stay be granted so as to afford the Applicant an opportunity to exercise his undeniable right of appeal; and that, if this Court decline to grant a stay, the Applicant will suffer irreparable harm that cannot be reversed or compensated by way of damages. 5.The application is supported by an affidavit sworn by the Applicant on 2nd September, 2025 and in which he states that, together with Abdulkarim Saleh Muhsin (Abdulkarim), he is a director and majority shareholder of Zumzum Investment Limited, the Interested Party and judgment debtor; and that they have long been business partners and co-directors using the company as their investment vehicle in real estate. It was deposed that, over the years, numerous disputes arose between them, which led to the filing of several suits, including ELC No. 122 of 2014, ELC No. 248 of 2014, ELC No. 130 of 2012, ELC No. 318 of 2014, ELC No. 25 of 2015, HCCC No. 116 of 2016, and HCCC No. 93 of 2016; that, so as to conclusively resolve all these disputes, the partners executed a Mediation Agreement dated 7th May 2017, but that Abdulkarim declined to cooperate in implementing the agreement, thereby prompting the Applicant to file Mombasa HCCC No. E051 of 2021 seeking specific performance of the Mediation Agreement; and that, upon considering the suit, the High Court ordered specific performance of the terms of the agreement as prayed. Although the Respondent sought for a stay of execution of that decision in this Court, the application was dismissed on 24th May 2024. 6.It was contended that, as a result of the Judgment in HCCC No. E051 of 2021, and despite their being registered in the name of the Interested Party, ownership of the attached properties vested in him and Abdulkarim in accordance with the Mediation Agreement and are held in trust pending full implementation of the Judgment, which also settled and compromised HCCC No. 116 of 2016; that the decree holder, despite being aware of the Judgment, proceeded to apply on 22nd June 2023 and 30th July 2023 for attachment and sale of the properties now in dispute; that, upon learning of the sale, he filed an objection to the attachment and sale as well as an application on 21st August 2025 seeking to be joined as an interested party; and that, on 25th August 2025, the High Court dismissed his objection and allowed the decree holder’s applications, thereby prompting him to lodge a Notice of Appeal dated 27th August 2025 and a request for typed proceedings. 7.Annexed to the application is a Notice of Appeal dated 27th August 2025 and a Memorandum of Appeal raising grounds in which the Applicant contends that the learned Judge failed to uphold the constitutional principles of judicial authority under Article 159 of the Constitution with regard to the Mediation Agreement, and disregarded the binding and conclusive decision of the High Court in Mombasa HCCC No. E051 of 2021 - Nedim Mohammed Ibrahim vs Abdulkarim Saleh Muhsin & Others, which upheld the Mediation Agreement. 8.On their part, the Respondents oppose the stay application on the grounds that it is incompetent, founded on a defective affidavit, and constitutes an abuse of process; that the Applicant actively participated in HCCC No. 116 of 2016 long after the alleged Mediation Agreement of 2017, which was abandoned by both sides and never adopted as an order of the Court; that, therefore, the decree from 2019 remains valid and enforceable with a current outstanding amount of Kshs 1.755 billion; that the execution proceedings were properly conducted; and that the Mediation judgment in HCCC No. E051 of 2021 did not nullify the existing decree. The deponent concluded by asserting that the Applicant has failed to satisfy the legal threshold for stay of the court’s orders. 9.In a replying affidavit filed on behalf of the Interested Party, Abdulrasaul Swaleh Mohsin, a director, deposed that the High Court in HCCC No. 116 of 2016 entered a judgment in favour of the Respondents against the Interested Party in the sum of Kshs. 903,008,308.39, which amount the Interested Party has not settled, and which continues to accrue interest in accordance with the Judgment; that, the High Court having delivered judgment and closed its file, there are no active proceedings before the court capable of being stayed as sought in prayers 3 and 4 of the application dated 2nd September 2025; that prayer 5 of the application only seeks a stay of execution in HCCC No. 116 of 2016 pending hearing and determination of the application itself, and that the Applicant does not seek a stay pending the hearing and determination of the intended appeal. He therefore contends that the application is misconceived, incompetent, and an abuse of the court process. 10.The above missteps notwithstanding, it was deponed that the decree in HCCC No. 116 of 2016 was filed against the Interested Party which has a legal obligation to honour and satisfy the decree issued by the High Court; and that the properties sought to be attached belong to the Interested Party. It was averred that the Interested Party is desirous of resolving the dispute with the decree holders amicably so as to avoid further losses and wastage of company assets, as well as the continued accumulation of interest on the Judgment sum to the Interested Party’s detriment. 11.The parties filed written submissions and, when the application came up for hearing on a virtual platform, learned counsel Mr. P. Mwangi appeared for the Applicant while learned counsel Mr. Muchoki appeared for the 1st, 2nd and 3rd Respondents, and Mr. Wafula appeared for the Interested Party. In their written submissions, counsel for the Applicant submitted that the intended appeal is indeed arguable, though it may not necessarily succeed, but necessarily raises at least one bona fide issue deserving of the Court’s consideration as articulated in Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 Others [2013] eKLR. It was submitted that the Applicant intends to challenge the finding of the learned Judge in HCCC No. 116 of 2016 on the basis that the suit had been fully compromised by the Mediation Agreement dated 7th May 2017, which was subsequently upheld by the High Court in HCCC No. E051 of 2021; and that the High Court’s refusal to recognize the conclusive effect of the Mediation Agreement has resulted in conflicting judicial outcomes, which undermine the proper administration of justice and institutional integrity. Counsel further submitted that the appeal also raises an arguable issue on whether the subject properties were capable of attachment, given that they had been allocated to the Applicant and Abdulkarim under the Mediation Agreement. 12.On the nugatory aspect, counsel argued that the intended appeal would be rendered nugatory if the act sought to be stayed is irreversible, or if any harm caused by allowing execution cannot be adequately compensated by damages; that, in this case, if execution proceeds, the Respondents will sell the properties, which will cause the Applicant substantial and irreversible loss not capable of being remedied through monetary compensation because the subject matter of the dispute would be completely destroyed. Therefore, even if the Applicant eventually succeeds in that appeal, he would never enjoy the fruits of such success. 13.In their written submissions, counsel for the 1st, 2nd and 3rd Respondents contended that the Applicant’s motion is wholly unmeritorious, legally incompetent, and amounts to a calculated attempt to frustrate lawful execution efforts in HCCC No. 116 of 2016; that the Supporting Affidavit and the Further Affidavits sworn by the Applicant in Ethiopia violates Section 88 of the Evidence Act, since Ethiopia is not a Commonwealth country; that the affidavits ought to have been notarised, and that the notary’s seal and authority duly authenticated. Counsel argues that this was never done, thereby rendering the affidavits inadmissible and the Application fatally defective. 14.Turning to the arguability of the intended appeal, it was submitted that the Applicant has not demonstrated any bona fide ground of appeal; that the High Court entered Judgment against the Interested Party in November 2019, and that the decree remains unsettled with the sum outstanding at approximately Kshs. 1.7 billion by June 2024. Counsel asserted that, throughout the entire litigation in the High Court between 2016 and 2024, the Applicant and his spouse were in control of the Interested Party and personally directed its defence. It is therefore misleading for the Applicant to now allege ignorance of the proceedings or to feign detachment from the judgment debtor. 15.As concerns the Applicant’s reliance on the Mediation Agreement of 7th May 2017, it was argued that the mediation between the parties collapsed in 2018 due to the Applicant’s refusal to comply with its terms; that, further, the agreement was never adopted as an order of the court as required by Resolution No. 17 of the agreement, and that, therefore, it cannot be invoked to defeat the Respondents’ lawful decree, or to compromise concluded litigation; that, even after the collapse of mediation, the Applicant actively participated in the High Court proceedings through the Interested Party, swearing multiple affidavits and directing counsel; that in HCCC No. E051 of 2021—filed by the Applicant two years after the High Court judgment (Wangari, J.) acknowledged that the disputes in HCCC No. 116 of 2016 had been heard and determined; that the Applicant’s applications before the High Court (to be joined as an interested party and to mark the matter as compromised) were rightly dismissed; that the High Court could not reopen a concluded matter or declare it as having been settled based on a Mediation Agreement that had not been adopted as an order of the court; that, therefore, the properties the Applicant seeks to shield from execution are all registered in the name of the Interested Party, and that, therefore, any internal arrangement between shareholders cannot take precedence over the rights of third-party creditors. 16.On the nugatory limb, counsel asserted that the decree is a money decree against the Interested Party which is a separate legal entity from the Applicant; and that execution of a money decree does not render an appeal nugatory, particularly where the Applicant himself was the cause of the inordinate and unexplained delay. In conclusion, counsel submitted that the Applicant has failed to demonstrate an arguable appeal, or that the appeal would be rendered nugatory. 17.In their written submissions, counsel for the Interested Party urges the Court to dismiss the Applicant’s motion in limine. It was submitted that the prayer for stay of proceedings has been overtaken by events since the High Court delivered a Judgment in HCCC No. 116 of 2016 on 11th November 2019, thereby rendering the High Court functus officio; and that no further proceedings exist which can be stayed by this Court. They relied on the overriding objective under Sections 3A and 3B of the Appellate Jurisdiction Act and the decisions in the case of Uganda Corporation Creameries Limited and Another v Reamation Limited (Civil Reference No. 11 of 1999) [1999] UGCA 75 (29 June 1999) for the proposition that, courts should only adjudicate upon live disputes and not academic issues; and Fredrick Karisa Shungu & 3 Others v Rev. Geoffrey Guyo Dida [2012] eKLR for the proposition that, once the core grievance is spent, there remains nothing for judicial intervention. 18.Turning to the prayer for stay of execution, counsel submitted that the Notice of Motion dated 2nd September 2025 only seeks stay of execution pending the hearing of the application itself and does not seek stay pending the hearing and determination of the intended appeal; that this Court should confine itself to matters raised in the parties’ pleadings; that, since the Applicant did not specifically pray for stay pending appeal, the Court cannot grant such an order. 19.Regarding the status and ownership of the properties, counsel submitted that they are all registered in the name of the Interested Party, which vested absolutely and indefeasibly in the registered proprietor; that although the Applicant is a shareholder of the Interested Party, shareholding does not of itself confer proprietary rights over company assets. Citing the long-standing principle in Salomon vs Salomon [1895–9] All ER 3, it was submitted that a company is a separate legal entity from its shareholders, and that shareholders cannot interfere with or assert ownership over the company’s property. 20.In conclusion, counsel submitted that the intended appeal is plainly not arguable, that the prayers sought are defective and incompetent, and that the Application fails to satisfy the requirements for relief under Rule 5(2)(b). 21.We have considered the motion, the replies and the parties’ submissions. What is before us is an application brought under Rule 5 (2) (b) seeking a stay of execution pending determination of the application and stay of proceedings pending determination of the appeal. 22.As regards the prayers seeking stay of proceedings and stay of execution of the application pending the ruling, these prayers are already spent, which would leave only the prayer for stay of proceedings pending the appeal for determination. 23.It is well settled that under Rule 5 (2) (b) of this Court’s rules, an applicant must satisfy two principles: first, that the intended appeal is arguable; and, secondly, that unless the orders sought are granted, the appeal would be rendered nugatory. Both limbs must be satisfied `conjunctively. See Reliance Bank Ltd (In Liquidation) vs Norlake Investments Ltd [2002] 1 EA 227. 24.And in the case of Trust Bank Limited and Another vs Investech Bank Limited and 3 Others [2000] eKLR, this Court delineated the jurisdiction of this Court in such an application as follows:The jurisdiction of the Court under Rule 5(2)(b) is original and discretionary and it is trite law that to succeed an applicant has to show firstly that his appeal or intended appeal is arguable, to put another way, it is not frivolous and secondly that unless he is granted a stay the appeal or intended appeal, if successful will be rendered nugatory. These are the guiding principles but these principles must be considered against facts and circumstances of each case…” 25.On the first limb as to whether the appeal is arguable, in the Memorandum of Appeal, the Applicant argues that the learned Judge failed to recognize the Mediation Agreement and the subsequent Judgment in HCCC No. E051 of 2021 where the trial court ordered specific performance of the terms of the agreement. It was also contended that the learned Judge improperly assumed jurisdiction over the Notice to Show Cause instead of allowing it to be heard by the Deputy Registrar under Order 49 of the Civil Procedure Rules. They further invoked Article 159(2) (c) of the Constitution, arguing that the High Court failed to promote alternative dispute resolution. 26.Without making definitive findings on the merits of the intended appeal, the questions raised regarding the interrelationship between the Mediation Agreement and the judgments in HCCC No. E051 of 2021, and HCCC No. 116 of 2016, are not frivolous, but are matters worthy of ventilation before this Court. Accordingly, the intended appeal is arguable. 27.The second limb is the nugatory aspect, and is concerned with whether the appeal, should it succeed, be rendered nugatory if this Court declines to grant the orders sought. 28.In this motion, the Applicant is seeking an order of stay of proceedings. In the cases of Meta Platforms, Inc & Another vs Samasource Kenya EPZ Limited t/a Sama & 185 Others; Central Organization of Trade Unions Kenya & 8 Others (Interested Parties) (Civil Application No. E178 of 2023) [2023] KECA 999 (KLR), this Court stated that:“The nature of an order of stay of proceedings and the principles, which should guide a court in exercising its discretion to grant or refuse an application for stay, were adequately stated by the Court of Appeal of Nigeria, Abuja Division in the case of NNPC & Anor vs. Odidere Enterprises Nigeria Ltd (2008) 8 NWLR (Pt. 1090) 583 at 616-618 per Aboki JCA as follows:“Stay of Proceedings is a serious, grave and fundamental interruption on the right of a party to conduct his litigation towards the trial on the basis of the substantive merit of his case, and therefore the general practice of the courts is that a stay of proceedings should not be granted, unless the proceedings beyond all reasonable doubt ought not to be allowed to continue.” 29.Guided by the foregoing principles, this court is mindful that a stay of proceedings is a drastic remedy and ought to be granted sparingly. The Applicants must therefore demonstrate that, if the proceedings are allowed to continue, they will suffer significant prejudice that would render the intended appeal nugatory. See SBM Holdings Limited vs Khimji (Suing as the seller's representatives on behalf of the former shareholders of Fidelity Commercial Bank Limited) & another (Civil Application E111 of 2025) [2026] KECA 232 (KLR). 30.Regarding the nugatory aspect, the Applicant’s case is that the properties registered in the name of the Interested Party belong to him and Abdulkarim jointly and that, in the event they are sold, the consequences of such sale would be irreversible, as they would no longer be in a position to lay claim over them. It was further contended that, under the Mediation Agreement, the properties were apportioned between himself and Abdulkarim; and that, therefore, in the event the sale proceeds, he would suffer immense prejudice. On the other hand, the 1st, 2nd and 3rd Respondents assert that the properties are registered in the name of the Interested Party and not in the name of the Applicant; that the Interested Party is indebted to them to the tune of Kshs.1.7 billion, and that no basis was established on which to stay the proceedings in the High Court; and that the correct position is that the properties should be sold to liquidate the Interested party’s debts. They add that the Mediation Agreement which apportioned the properties had since collapsed, so that, there was nothing on which the Applicant could rely to lay claim to the properties. 31.In considering the rival positions, much as the Applicant claims that the properties were apportioned to himself and Abdulkarim under the Mediation Agreement, the record shows that the Interested Party remained the registered owner. The record is also clear that the properties were attached to liquidate debts belonging to the Interested Party. 32.With this in mind, the Applicant has not demonstrated what irreversible loss he stands to suffer, since the properties are not his personal property. He has not shown that he resides in any of them or conducts his business thereon. Besides being a shareholder of the Interested Party, we are unable to establish a nexus between the Applicant and the properties or any loss that he will be liable to suffer personally, and neither have we been shown how the impending sale will lead to loss on the Applicant’s part. Moreover, and more importantly, this being a money decree, the Applicant has not proffered any alternative proposal for liquidation of the colossal debt. In short, the Applicant has not demonstrated how the intended appeal will be rendered nugatory were execution to proceed. In any event, the Mediation Agreement is still capable of being performed with or without the properties, were the parties so inclined to pursue its terms. As a consequence, we find that the Applicant has failed to satisfy the second criterion. 33.In sum, the Applicant having failed to meet the established threshold for the grant of an order of stay of proceedings under Rule 5(2) (b) of the Rules the Notice of motion dated 2nd September 2025 lacks merit and is hereby dismissed. Costs in the appeal.It is so ordered. DATED AND DELIVERED AT MOMBASA THIS 29TH DAY OF MAY, 2026.A. K. MURGOR….............JUDGE OF APPEALDR. K. I. LAIBUTA CArb, FCIArb................JUDGE OF APPEALG. W. NGENYE-MACHARIA...............JUDGE OF APPEALI certify that this is the true copy of the originalsignedDEPUTY REGISTRAR