[2024] KEHC 11181 (KLR)

Nyali Latenight Chemist & Medical Services v ABSA Bank Kenya PLC (Commercial Appeal E005 of 2024) [2024] KEHC 11181 (KLR) (26 September 2024) (Ruling)

Neutral citation: [2024] KEHC 11181 (KLR)

Republic of Kenya

In the High Court at Mombasa

Commercial Appeal E005 of 2024

JK Ng'arng'ar, J

September 26, 2024

Between

Nyali Latenight Chemist & Medical Services

Appellant

and

ABSA Bank Kenya PLC

Respondent

Ruling

1. The Appellant/Applicant filed a Notice of Motion application dated 14th June 2024 under Certificate of Urgency pursuant to Article 159 of the Constitution of Kenya, Section 1B, 1A, 3A of the Civil Procedure Act, Order 22 Rule 22 of the Civil Procedure Rules, and all other enabling provisions of the law.

2. The Appellant/Applicant seeks for interim stay of the ruling dated 6th June 2024 in Mombasa Resident Magistrate’s Court Civil Case No. E903 of 2023 and subsequent repossession of Motor Vehicle Registration No. KDJ 6XXXX Mercedes Benz pending the hearing and determination of the appeal. The Appellant/Applicant also prayed that the costs of this application be provided for.

3. The application is premised on grounds on its face and the annexed affidavit of Joseph Bwire Sikudi, the Director of the Appellant/Applicant sworn on 14th June 2024 that the trial court in its ruling dated 6th June 2024 dismissed its application dated 3rd August 2024 seeking an injunction against the Defendant/Respondent’s repossession of Motor Vehicle Reg. No. KDJ 6XXXX Mercedes Benz, the subject matter. That the Appellant/Applicant have appealed against the said ruling in this court and they will be prejudiced if the said subject matter is not preserved as the Defendant/Respondent has already initiated the process of repossession. That the Appellant/Applicant is ready and willing to give an undertaking as to damages and also comply with such conditions as this court will deem just and necessary in the circumstances, and that the application has also been brought without unreasonable delay.

4. The Respondent in opposing the application filed a Replying Affidavit sworn by Samuel Njuguna, the Respondent’s Secured Lending Team Leader – Collections and Recoveries, on 26th June 2024. The Respondent averred that the application cannot be granted because the order of 6th June 2024 dismissing an application for injunction is a negative order incapable of being stayed, and that the Applicant does not show how they will suffer prejudice, irreparable loss and damage. That the court can only grant a relief that has been specifically sought. That the Applicant is not entitled to any discretionary relief because they filed a similar application dated 13th June 2024 before the trial court where they did not obtain any exparte order. That they then filed the application herein without disclosing the earlier application which was withdrawn after obtaining exparte orders before this court.

5. The Respondent further averred that the court should not grant any order which curtails the Respondent’s right to realise its security because the Appellant was in default of Kshs. 7,175,180. 60 as at 4th May 2023 and have not paid anything either to regularize that default or to minimize it. That the suit vehicle is a fast depreciating asset, the outstanding amount continues to accrue interest and that the Appellant can easily be compensated by a monetary award which the Respondent is capable of paying in the event the appeal or suit is successful. The Respondent prayed that the application be dismissed with costs and if any order is to be made in favour of the Appellant, it should be on condition that the Appellant pays at least 50% of the demanded sum within 30 days.

6. The Applicant filed a Further Affidavit sworn by Joseph Bwire Sikudi that the ruling of 6th June 2024 dismissed an application for injunction which was against the process of repossession initiated by the Respondent. That an appeal was preferred and it is only in order that the process of repossession be stayed. That the Appellant has paid almost Kshs. 2,000,000 of the outstanding asset finance loan but the Respondent merged loans which swallowed up most of the deposits and that the merging amounted to rewriting of loan contracts with different terms, which is a ground of the appeal herein.

7. The Applicant stated that the Respondent has not been prejudiced by the fact that the application in the lower court was withdrawn. That the motor vehicle which is the subject of this case was secured by an asset finance loan of Kshs. 3,200,000 and not Kshs. 7,175,180. 60 and as at 4th May 2023, the outstanding loan was Kshs. 2,993,875. 75 and not as alleged by the Respondent. The Appellant maintained that they deposited money for asset finance loan with specific user narrative of asset finance but the Respondent has always channeled them to the term loan account thus causing the asset finance loan to continue being in arrears. That it would not be right for the court to order a deposit of 50% of Kshs. 7,175,180. 60 as requested by the Respondent as the dispute concerns the asset finance loan and not the term loan. That it is in the interest of justice that the application is allowed as prayed.

8. The application was canvassed by way of written submissions. The Appellant/Applicant through their submissions dated 3rd July 2024 relied on the holding in Vashram Ravji Halai v Thornton & Turpin, Civil Application No. Nia. 15 of 1990 (1990) KLR 365 where the Court of Appeal held that whereas the Court of Appeal’s power to grant a stay pending appeal is unfettered, the High Court’s jurisdiction to do so under Order 41 Rule 6 of the Civil Procedure Rules is fettered by three conditions namely, establishment of a sufficient cause, satisfaction of substantial loss and the furnishing of security. Further, the application must be made without unreasonable delay.

9. On sufficient cause being established, the Appellant cited the court decision at paragraph 33 to 35 in Nyamari v Muchendizi & Another (Civil Appeal E087 of 2022) (2023) KEHC 3910 (KLR) (28 April 2023) (Ruling) and submitted that this court should not interfere with the status quo. On substantial loss to be suffered by the Applicant, reliance was placed on paragraphs 41 and 42 of Momentum Credit Limited v Wesley & 2 Others (Civil Appeal E022 of 2022) (2023) KEHC 19205 (KLR) (29 June 2023) (Judgment). The Appellant submitted that the Respondent’s presumption that the motor vehicle can only be used for purposes of trade and business and thus quantifiable is misplaced. That the Applicant uses the subject matter herein as a doctor for his personal and official use as well as for family use and thus compensating him would be unquantifiable.

10. On the application being made without unreasonable delay, the Applicant submitted that the ruling of the trial court was delivered on 6th June 2024 while the Memorandum of Appeal was filed on 13th June 2024 and the application for stay pending appeal filed on 14th June 2024. Therefore, the application herein was filed promptly and without unreasonable delay. That in case the court is inclined to allow the application conditionally, then it should be based on the asset finance loan figure of Kshs. 3,575,678. 40 and not the consolidated term loan and asset finance loan of Kshs. 7,175,180. 60 since the subject matter of this suit is the motor vehicle which was purchased by a loan of Kshs. 3,800,000 from the Respondent.

11. The Respondent in their submissions dated 4th July 2024 contended that since the trial court merely dismissed the application for injunction, there is nothing capable of being stayed. That the Court of Appeal in Jennifer Akinyi Osodo v Boniface Okumu Osodo & 3 Others (2021) eKLR cited with approval previous decisions where it had declared that a stay of a negative order is untenable. This was also the position in Bernard Njoroge Kibaki t/a Njowa Njemu Enterprises v Equity Bank Limited & Another (2020) eKLR. The Respondent submitted that a court does not have jurisdiction to issue orders other than those sought by the parties.

12. The Respondent submitted that the application herein should also be rejected having been filed in this court while a similar one was pending before the trial court, and before the trial court had delivered itself on that application. That this is an abuse of the court process as was held in Car House Limited & Another v Erastus Kavita Musyoka (2022) eKLR. That even though both courts have the power to grant stay pending appeal, the court herein should not be involved until the trial court has weighed as stated in Pius Mbithi & Another v Daniel Mutiria & Another (2017) eKLR.

13. The Respondent argued that at best, this court would invoke Order 42 rule 6(6) of the Civil Procedure Rules, 2010 which empowers it in deserving cases to grant an injunction in its appellate jurisdiction. That an injunction pending appeal will be granted where it is shown that the intended appeal is arguable. That the only issue before this court is whether the Respondent was entitled to combine and consolidate the asset finance loan and the term loan, and issue a demand for both. The Respondent has cited Barclays Bank of Kenya Limited v Kepha Nyabera & 191 Others & Another (2013) KLR and Nicholas Mahihu Muriithi v Barclays Bank Kenya Limited (2018) KLR to support the position. Further, the Respondent stated that an injunction pending appeal will not be granted if the appeal will not be rendered nugatory. That an appeal will not be rendered nugatory if the injury to be suffered is capable of monetary compensation.

14. The Respondent argued that what should persuade the court are the holdings in Mary A. Sidandi Rainwater v Co-operative Bank of Kenya Limited & Another (2017) eKLR and Megashell Transporters Limited v Co-operative Bank Limited (2021) eKLR which are both to the effect that the sale of a financed asset does not lead to irreparable injury for it is an eventuality known and consented to by the Appellant at the time of signing the contract. That an injunction is an equitable remedy and it should not be granted if its effect would be to expand the dispute.

15. I have considered the Appellant/Applicant’s Notice of Motion application dated 14th June 2024, the Respondent’s Replying Affidavit, the Applicant’s Further Affidavit, and submissions by the parties. The issue for determination is whether the Appellant/Applicant’s application is merited.

16. The Appellant/Applicant filed an application in the trial court seeking temporary injunction restraining the Respondents from repossessing, advertising, auctioning, selling, disposing off or in any other manner dealing or otherwise interfering with the motor vehicle registration number KDJ 692U Mercedes Benz pending the hearing and determination of the suit. The court delivered a ruling on 6th June 2024 dismissing the application. Aggrieved by the decision, the Appellant/Applicant filed an appeal, and the application herein for interim stay of the ruling and subsequent repossession of the motor vehicle pending the hearing and determination of the appeal.

17. The Respondent has however pointed out that the prayer being sought by the Appellant/Applicant would certainly not be a stay of execution. That the conditions in Order 42 rule 6(2) of the Civil Procedure Rules 2010 that the Appellant/Applicant has heavily submitted on would not apply but Order 42 rule 6(6) of the Civil Procedure Rules which empowers this court to grant an injunction in its appellate jurisdiction.

18. The distinction between a stay and an injunction was set out in Francis Muthusi Malombe & 7 others v Daniel Kaloki Malombe & 9 others (2022) eKLR where the court stated that a stay of execution relates to halting/suspending judicial proceedings, pending determination of an appeal, review or an application while an injunction relates to interlocutory relief stopping a party from doing an act until the issues at hand are determined or resolved. It is therefore the view of this court that a stay is the proper order being sought by the Appellant/Applicant herein considering an appeal is pending hearing and determination. The applicable provision of the law is therefore Order 42 Rule 6(2).

19. The principles for grant of stay pending appeal have been set out in order 42 Rule 6 (2) of the Civil Procedure Rules as follows: -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.

20. The Appellant/Applicant has demonstrated that substantial loss will be suffered which is unquantifiable as the vehicle is used both for his personal and official use. This court has perused the annextures on record and established that the application was made without unreasonable delay and that the Appellant/Applicant is willing and ready to abide by conditions of stay given by this court. The Appellant/Applicant has also confirmed to this court that the appeal herein would be rendered nugatory should it succeed if motor vehicle registration number KDJ 692U Mercedes Benz is sold pursuant to the ruling of the trial court dated 6th 2024.

21. The court in RWW v EKW (2019) eKLR discussed the purpose of stay orders pending appeal that:“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.”

22. In granting stay, this court therefore has to establish whether the same should be conditional. It is for the interest of justice therefore that this court is inclined towards a conditional stay.

23. The upshot of this court’s findings is that the Notice of Motion application dated 14th June 2024 is allowed in the following terms: -a.An order of stay is granted restraining the Respondent from repossessing and/or dealing with motor vehicle registration number KDJ 692U Mercedes Benz, pursuant to the ruling of the trial court dated 6th June 2024, pending the hearing and determination of the appeal herein.b.The Appellant/Applicant shall deposit Kshs. 3,575,678. 40 in an interest earning account in a reputable commercial bank in the joint names of the advocates for the parties within 30 days of today.c.Costs shall be in the cause.

DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 26TH DAY OF SEPTEMBER, 2024. .........................................J.K. NG’ARNG’AR, HSCJUDGEIn the presence of: -Bunde Advocate for the AppellantNo appearance Advocate for the RespondentCourt Assistant – Mr. Samuel Shitemi