[2024] KEHC 11428 (KLR)

Nur v Transami (Kenya) Limited & another (Commercial Case 267 of 2005) [2024] KEHC 11428 (KLR) (Commercial and Tax) (20 September 2024) (Ruling)

Neutral citation: [2024] KEHC 11428 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case 267 of 2005

MN Mwangi, J

September 20, 2024

Between

Abdi Ali Nur

Plaintiff

and

Transami (Kenya) Limited

1st Defendant

Kobil Petroleum Limited

2nd Defendant

Ruling

1. The 1st defendant/applicant filed a Notice of Motion application dated 2nd November, 2023 pursuant to the provisions of Sections 1A & 3A of the Civil Procedure Act, Order 42 Rule 6 & Order 51 Rule 1 of the Civil Procedure Rules, 2010. The applicant also premised its application on this Honourable Court’s leave granted on 22nd September, 2023, seeking an order for stay of execution of the judgment and decree issued on 22nd September, 2023 pending the hearing and determination of the intended appeal.

2. The application is premised on the grounds on the face of the Motion and is supported by an affidavit sworn on the same day by Maurice Lugadiru, a Senior Legal Officer of AGL Kenya Limited, formerly known as Transami (Kenya) Limited, the 1st defendant herein.

3. The 1st defendant in its affidavit in support of the instant application sworn by Mr. Lugadiru deposed that this Court delivered judgment on 22nd September, 2023 directing the 1st defendant to satisfy the 2nd defendant’s costs of Kshs. 209,210. 00 and Kshs. 355,821. 00, being an amount of Kshs. 565,031. 00 in total, as taxed against the plaintiff in HCCC No. 267 of 2005 and HCCC No. 657 of 2003.

4. Mr. Lugadiru averred that the 1st defendant is dissatisfied with the said judgment and has since lodged a Notice of Appeal against it. He further averred that the 1st defendant has an arguable appeal thus it stands to suffer substantial loss in the event that the instant application is not allowed as it will pay the aforementioned costs twice.

5. On 22nd January, 2024 when this matter came up for highlighting of written submissions Mr. Esmail, learned Counsel for the 2nd defendant indicated that the 2nd defendant would not file any responses to the instant application.

6. The instant application was canvassed by way of written submissions as well as oral submissions which were filed on 22nd January, 2024 and made on March, 2024, respectively. The 1st defendant’s submissions were filed by the law firm of Kaplan and Stratton Advocates. The 2nd defendant did not file any written submissions but its Counsel on record made oral submissions.

7. Mr. Wasonga, learned Counsel for the 1st defendant referred to the case of Butt v Rent Restriction Tribunal [1982] KLR 417 and submitted that the 1st defendant has fulfilled the conditions set out under Order 42 Rule 6 of the Civil Procedure Rules, 2010, thus an order for stay of execution should issue. He stated that the 1st defendant promptly filed its Notice of Appeal pursuant to the provisions of Order 42 Rule 6(4) of the Civil Procedure Rules, 2010, and that it has an arguable appeal that raises triable issues, thus if the instant application is not allowed, its intended appeal will be rendered nugatory. To buttress these submissions, Counsel relied on the decisions made in Transouth Conveyors Limited v Kenya Revenue Authority & Another [2007] eKLR and Ahmed Musa Ismael v Kumba Ole Ntamorua & 4 others [2014] eKLR.

8. He cited the case of G.N. Muema P/A (sic) Mt. View Maternity & Nursing Home v Miriam Maalim Bishar & another [2018] eKLR and stated that the sum of Kshs.565,031. 00 which the 2nd defendant seeks to recover from the 1st defendant is a colossal amount of money, thus if execution against the 1st defendant is allowed to proceed, it stands to suffer substantial loss by paying costs twice, and it will have to go through the hardship of instituting legal proceedings against the 2nd defendant in order to recover the said amount. Counsel further stated that the 1st defendant has already deposited 60% of the decretal sum in Court as security, and that the 2nd defendant stands to suffer no prejudice in the event the orders sought are granted.

9. On his part, Mr. Esmail, learned Counsel for the 2nd defendant submitted that the 1st defendant has not satisfied the test for substantial loss since the decretal sum if paid can be recovered from the 2nd defendant or the plaintiff. He urged that for the said reason, the 1st defendant will not need to institute any proceedings to recover the said sum in the event its appeal to the Court of Appeal is successful. He relied on the case of Kenya Shell v Kibiru [1986] KLR 410, and submitted that the judgment creditor who is entitled to the fruits of its judgment has not been paid for thirteen (13) years, and prayed for the application herein to be dismissed. Counsel referred to the provisions of Section 79D of the Civil Procedure Act which provides that no second appeal shall be made in regard to the same matter, except as provided for under Section 72 of the Civil Procedure Act. He submitted that the intended appeal cannot lie as it only raises issues of fact.

10. In a rejoinder, Mr. Wasonga submitted that the 1st defendant’s appeal raises both issues of law and fact, which include the nature of the garnishee proceedings, representation with regard to the attachment order and the consent entered into. He stated that there are special circumstances that now exist that call for consideration of both facts and the law on appeal.

Analysis And Determination. 11. I have considered the application filed herein, the grounds on the face of the Motion and the affidavit filed in support thereof. I have also considered the written submissions by Counsel for the 1st defendant and the oral submissions made the said by Counsel and Counsel for the 2nd defendant. The issue that arises for determination is whether the 1st defendant has met the conditions to warrant being granted an order for stay of execution pending appeal.

Whether the 1st defendant has met the conditions to warrant being granted of an order for stay of execution pending appeal. 12. The principles that govern an order for stay of execution being granted pending appeal are provided for under Order 42 Rule 6(2) of the Civil Procedure Rules, 2010 which states as follows -“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.”

13. It is trite that in determining an application for stay of execution pending appeal, Courts are under a duty to balance the competing interests of the parties taking into account the fact that an appellant has an undoubted right of appeal, whereas the respondent has a decree which he should not be obstructed from executing unless there is a good reason. In the case of Vishram Ravji Halai v Thornton & Turpin [1990] KLR 365, the Court of Appeal held that whereas its power to grant stay of execution pending appeal is unfettered, the High Court’s jurisdiction to do so under Order 42 Rule 6 of the Civil Procedure Rules, 2010 is fettered by three conditions namely –i.establishment of a sufficient cause;ii.satisfaction of substantial loss; andiii.the furnishing of security.

14. In a judgment I delivered on 22nd September, 2023, I allowed the 2nd defendant’s appeal against the Deputy Registrar’s ruling delivered on 1st November, 2021, effectively allowing the 2nd defendant’s application to execute its decree against the plaintiff, with the 1st defendant being liable to pay the costs, as per the judgment. The net effect of the said judgment was that the 1st defendant should pay the 2nd defendant’s costs of Kshs. 209,210. 00 and Kshs. 355,821. 00 amounting to Kshs. 565,031. 00 as taxed against the plaintiff in HCCC No. 267 of 2005 and HCCC No. 657 of 2003.

15. In view of the above, it is evident that the decree herein is a money decree. It is trite law that when a decree is a money decree, an order for stay of execution pending appeal will not readily be granted unless it is demonstrated that the decree holder is not financially sound, and is as such incapable of refunding the decretal sum to the judgment debtor in the event that the appeal is successful. In the Court of Appeal case of Kenya Shell Limited v Benjamin Karuga Kibiru & another [1986] eKLR, Platt JA when addressing the issue of substantial loss held 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 this 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….”

16. The 1st defendant submitted that if the orders sought are not granted, it will suffer loss since it will have paid the said costs twice, and it will be required to institute legal proceedings against the 2nd defendant in order to recover the said amount. The 2nd defendant in response thereto submitted that the decretal sum if paid to it can be recovered either from it or from the plaintiff, thus the 1st defendant does not stand to suffer any loss in the event that the orders sought are not granted.

17. On perusal of the 1st defendant’s affidavit in support of the application herein, I note that it is not alleged that the 2nd defendant is a “man of straw” and/or that its financial means is unknown to the 1st defendant, such that in the event that the intended appeal is successful, it might not be able to recover the decretal sum if paid out to the 2nd defendant.

18. It is therefore this Court’s finding that the 1st defendant has not demonstrated that it is likely to suffer substantial loss in the event the application herein is not allowed.

19. As to whether the instant application was filed timeously, it is evident from the record that I delivered judgment on 22nd September, 2023 and four (4) days later on 26th September, 2023, the 1st defendant filed its Notice of Appeal in respect of the said judgment. The application herein was however filed on 2nd November, 2023 which is approximately thirty-nine (39) days after delivery of the judgment that forms the subject of the intended appeal. The 1st defendant has not offered any explanation as to why the instant application was not filed simultaneously with the Notice of Appeal. The delay in filing the instant application has not been explained to the satisfaction of this Court.

20. As a result, this Court finds that there has been inordinate delay in filing the instant application. To this end, I am persuaded by the holding in Jaber Mohsen Ali & another v Priscillah Boit & another [2014] eKLR where the Court held that-“The question that arises is whether this application has been filed after unreasonable delay. What is unreasonable delay being dependent on the surrounding circumstances of each case. Even one day after judgment could be unreasonable delay depending on the judgment of the court and any order given thereafter. In the case of Christopher Kendagor v Christopher Kipkorir, Eldoret ELC 919 of 2012 the applicant had been given 14 days to vacate the suit land. He filed an application one day after the 14 days. The application was denied, the court holding that, the application ought to have come before expiry of the period given to vacate the land.”

21. On the issue of security for the due performance of the decree, the 1st defendant submitted that it has already deposited 60% of the decretal sum in Court as security, and that the 2nd defendant stands to suffer no prejudice in the event that the orders sought are granted. In the case of Focin Motorcycle Co. Limited vs. Ann Wambui Wangui & another [2018] eKLR, it was 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.”

22. It has been held by Courts time and again that in the absence of proof of substantial loss, Courts will rarely grant an order for stay of execution pending appeal. The Court of Appeal in the case of Kenya Shell Limited v Benjamin Karuga Kibiru & another (supra) in discussing substantial loss stated that -“It is usually a good rule to see if Order XLI Rule 4 of the Civil Procedure Rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the corner stone of both jurisdictions for granting a 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”. (Emphasis added).

23. In the circumstances of this case, I find that the application herein is not merited. It is hereby dismissed with costs to the 2nd defendant.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI ON THIS 20TH DAY OF SEPTEMBER, 2024. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.NJOKI MWANGIJUDGEIn the presence of;-Mr. Wesonga h/b for Mr. Mutahi for the 1st defendant/applicantMr. Karanja h/b for Mr. Ismail for the 2nd defendant/respondentNo appearance for the plaintiffMs B. Wokabi - Court Assistant.