[2022] KEHC 1983 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAKURU

CIVIL APPEAL NO. 45 OF 2020

NOBEL TRADING CO. LTD...................................................1ST APPELLANT/APPLICANT

NILE PERCH LTD...................................................................2ND APPELLANT/APPLICANT

VICTOR OTIENO NYAKIIR.................................................3RD APPELLANT/APPLICANT

VERSUS

PETER ODHIAMBO MAREGA..........................................................................RESPONDENT

RULING

1. In their Notice of Motiondated6th November 2020 the applicants pray for orders that there be stay of execution of the judgement delivered on 27th February 2020 by the lower court namely Molo CMCC no. 388 of 2018pending the hearing and determination of the main appeal.

2. The application is based on the grounds thereof and the affidavit of Pauline Nyambura a Claims Officer at Direct Line Assurance Company Limited sworn on the same date. She deposed that the appellants were dissatisfied with the judgement of the trial court which awarded the respondent a principal sum of Kshs. 4,954,773/=.

3. She deposed further that the appellants attempt to seek stay at the trial court was dismissed hence this application. She stated that the appeal herein raised triable issues with high chances of success. That unless the order of Stay of execution is granted, the respondent will commence execution of the said judgment entered on 27th February 2020 and the appellants will suffer irreparable loss and damage. She further deposed that they were willing to offer bank guarantee as security for stay of execution pending appeal and that the respondent will not be prejudiced in any way if the application is allowed.

4. The respondent through his replying affidavit sworn on 17th September 2021 has vehemently opposed the application. He deposed that the appellants’ advocates entered appearance for the applicants and further entered into a consent on liability with his advocates on record on 20th June, 2019 in the ratio of 95:5 in his favor. That thereafter, the matter proceeded to full hearing and judgment was delivered on 27th February 2020 in his favor. That after judgment was delivered the applicants were granted 30 days stay of execution and they failed to comply. That further, the applicants herein being dissatisfied with the terms of the judgment filed this appeal and went ahead to file an application dated 17th June, 2020 in the trial court seeking stay of execution of the said judgment pending appeal.

5. He deposed that the trial court in a ruling granted the applicants stay on condition that they do pay him a sum of Kshs. 1,000,000/= for medication and to deposit the balance of the decretal sum amounting to Kshs. 4,000,000/ in a joint interest earning account within 21 days. That the applicants failed to comply with the stay conditions above and as such he paid further court fees and the process of execution commenced.

6. He deposed further that he would not leave the appellate court empty handed as the appeal being on quantum, he was therefore entitled to the decretal sum awarded to him in his judgment and the claim of inability to refund does not suffice. He said that the bank guarantee was not a proper way of offering security as the same will bog him down and will not realize the fruits of judgment and that he needed the money for his medication.

7. The appellants in response to the respondent’s reply affidavit filed a supplementary affidavit dated 17th September 2021 sworn by Kevin Ngure who is the Deputy Claims Manager at Direct Line Assurance Co. Ltd. He said that the court should accept the bank guarantee pending the determination of the pending appeal.

8. When the matter came up for hearing the court directed that the same be determined by way of written submissions which all parties have complied.

Applicants Submission

9. The applicants submitted that they had met the conditions required for stay to be granted in line with Order 51 rule 1 and Order 42 rule 6 of the Civil Procedure Rules. The applicants submitted further that they have a meritorious and arguable appeal with high chances of success and if the orders sought are not granted, they are apprehensive that the respondent may levy execution against them rendering the appeal nugatory. That as a result, they will suffer substantial loss. That furthermore, the judgment was of substantial amount (Kshs. 4,954,773/=) and the applicants were apprehensive that if the respondent is paid he may deal with the same in a manner prejudicial to them and if the appeal is successful, the applicants might not be able to recover the same from the respondent. He placed reliance on the case of Amal Hauliers Limited v Abdulnasir Abukar Hassan [2017] eKLR.

10. The applicants went on to submit that they had demonstrated how they had taken steps since the delivery of the judgment in the lower court matter to ensure that the appellants are not left exposed to execution pending the hearing and determination of the appeal herein. The applicants submitted that the bank guarantee would ensure that the liabilities of a debtor would be met by the bank if debtor fails to settle the debt. That it was an unconditional undertaking given by the bank, on behalf of the customer, to pay the recipient of the guarantee the amount of the guarantee on written demand. The court’s attention is drawn to the case of Shanzu Beach Resort Limited v Crown Marbie & Quartz Ltd [2020] eKLR.

11. In conclusion, the applicants submitted that the court must recognize the importance of balancing the rights of a successful litigant who should not be kept away from his fruits of judgment against those of an appellant who would face the possibility of not being able to recover the paid amounts in the event they succeeded in their appeal. They urged the court to allow the application with costs in the cause.

Respondent’s Submissions

12. The respondents in his submissions identified two issues for determination namely; whether the applicant will suffer any substantial loss if the application herein is allowed and whether the applicants had given any security.

13. On the first issue, the respondent while quoting Order 42 rule 6(2) of the Civil Procedure Rules, submitted that applicants had been enjoying stay of execution for the longest time since judgment was delivered at his detriment. That the trial court granted the applicant stay of execution with conditions on security that the applicants do pay Kshs. 1,000,000/= for medication and to deposit Kshs. 4,000,000/= in a joint interest earning account within 21 days in the ruling delivered on 20 August, 2020 but the applicant failed to adhere to those conditions set by the court. The respondent submitted further that for the applicants to approach this court at the moment to seek orders for stay of execution is an abuse of the court process. That the applicant had approached this honourable with unclean hands and therefore undeserving of any orders sought.

14. The respondent submitted that even if it were to be proved that the he was of no means, which has not been proved, it would not justify him being denied the fruits of his judgment. He said further that the applicants had not specified the exact loss they will suffer. He draws the courts attention to the cases of Kenya Women Microfinance Ltd v Martha Wangari Kamau [2020] eKLR and Equity Bank Limited v Taiga Adams Company Limited Civil Appeal No. 722 of 2000as cited in the case of Luxus Woods (K) Limited v Patrick Amugune Kamandi [2016] eKLR.

15. On the second issue, it is the respondent’s submission that a bank guarantee was not a proper mode or a mode of security provided for in road traffic accidents matters. Further, the respondent submitted that the involvement of a bank in this matter will bog down the process and add an unnecessary complexity yet the respondent has been waiting to enjoy the fruits of his judgment.

16. In conclusion, the respondent submitted that the application herein had not met all the requirements of Order 42 rule 6(2) of the Civil Procedure Rules and therefore urged the court to dismiss the same with costs. In addition to this the respondent submitted that in the event the court allowed the application herein then he prays for a deposit of three quarters of the decretal award plus costs and the balance be deposited in court within 14days of allowing the application for stay of execution.

Analysis and Determination

17. I have considered the pleadings and submissions by the applicants and in my view the issue arising for determination is whether this court should grant stay of execution of the judgement in Molo CMCC No. 388 of 2018 pending hearing and determination of the appeal herein.

18. Order 42 Rule 6 of the Civil Procedure Ruleswhich provide that:

“(1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except appeal case of 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 subrule (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”.

19. In view of the above, it is clear that the facts to be considered before granting an application for stay of execution pending appeal entails that; the applicant must demonstrate substantial loss, the application has been made without unreasonable delay and the provision of such security as the court may impose.

20. On whether the appellant will suffer substantial loss in James Wangalwa & Another v Agnes Naliaka Cheselo [2012] e KLRthe court held that: -

“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 Silvester –vs- Chesoni [2002] 1 KLR 887, and also in the case of Mukuma –vs- Abwoga 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 S (2)(b) of the court by Appeal Rules respectively emphasized the centrality of substantial loss thus: -

“…the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss of what has to be prevented by preserving the status quo because such loss would render the appeal nugatory?

21. In applying the same principles in this case, the subject matter of this appeal in my understanding is the judgement by the trial court. The applicants submitted that they stand to suffer irreparable loss and prejudice if this application is not allowed and that if the decretal sum is paid to the respondent he will not be in a position to refund if the Appeal succeeds as they were unaware of the respondent’s resources. I note that the applicants applied for stay of execution on two instances whereby on the first instance stay was granted with conditions that they deposit Kshs.1 million to the respondent within 14days and Kshs. 4 million in a joint interest earning account within 21 days’ failure to which execution issue. On the second instance after being dissatisfied with the said conditions, the appellants sought extension of time to comply with said conditions for stay of execution and for a review of the terms of the ruling. Their application was however dismissed.

22. The question that this court therefore has to answer is what substantial loss the appellants will suffer if stay of enforcement of the judgment of the subordinate court is not made in their favour. It appears to me that the applicants have not demonstrated how they will suffer substantial loss and bearing in mind that they had earlier been granted stay of execution with conditions but they made no attempt to comply with the said conditions set by the Court.

23. In the case of James Wangalwa & Another vs. Agnes Naliaka Cheseto (supra)the court held that:

“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.’’

24. On the second condition of whether the application had been brought without unreasonable delay this court notes that from the date the judgment was issued up to the date of this application, the period is very reasonable in the circumstances. In addition to this, the respondent in his submission does not challenged the timelines in the application had been filed.

25. On the third condition of security, the applicant has offered a bank guarantee. There is an agreement exhibited between Diamond Trust Bank and the directors of Directline Assurance Company Limited who are the insurers of the applicants. The same is for a sum of Kshs30 million. It is for a period of 12 months and it is expiring on 30th November 2021. This court takes notes of the fact that applicant is not a party to the said agreement and that there is no evidence that the said guarantee is for the benefit of this matter specifically. Moreover, there is no evidence that as at the time of this ruling the same had been renewed.

26. In the premises I find that the said bank guarantee is not viable for this matter and it could be available where it specifically stated how each party is to benefit instead. In essence it is a general bank guarantee.

27. Consequently, I do not find the application herein meritorious at all. The trial courts orders of paying Kshs. 1,000,000 to the respondent and depositing the balance was reasonable. The fact that the applicants entered into a consent on liability meant at least if not for any cause an acknowledgement of the accident. In any case looking casually at the medical report attached to the affidavits it is clear that the respondent suffered serious injuries classified at 70%. In other words, he will continue to require medication even as the appeal progresses. This court cannot turn a blind eye over the same.

28. The other issue which this court notes are multiplicity of applications by the applicants. The two are dated 18th November 2020 and 15th December 2020. As at the time of writing this ruling they are yet to be prosecuted. This in my view is vexatious and ought to be discouraged.

29. Needless to state that the application dated 6th November 2020 is hereby dismissed with costs to the respondent. Let the applicant comply with the lower courts directives which were not onerous or oppressive to them.

DATED SIGNED AND DELIVERED AT NAKURU VIA VIDEO LINK THIS 3RD DAY OF MARCH 2022.

H K CHEMITEI

JUDGE