https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9750

Occidental Insurance Company Ltd v End to End Ltd & another (Civil Appeal E067 of 2026) [2026] KEHC 9750 (KLR) (17 June 2026) (Ruling) Neutral citation: [2026] KEHC 9750 (KLR) Republic of Kenya In the High Court at Mombasa Civil Appeal E067 of 2026 WM Kagendo., J June 17, 2026 Between Occidental Insurance Company Ltd Applicant and End to End Limited 1st Respondent Abdirahman Mohamud Abdow 2nd Respondent Ruling A. Introduction 1.Before this Court is the Notice of Motion dated 14th April 2026 filed by the Appellant, Occidental Insurance Company Limited, seeking principally an order for stay of execution of the Judgment and Decree issued in Mombasa Chief Magistrate's Civil Case No. E294 of 2025 pending the hearing and determination of the appeal herein. 2.The application is expressed to be brought under Sections 1A, 1B, 3, 3A, 79G and 95 of the Civil Procedure Act, Cap. 21 Laws of Kenya, Order 22 Rule 22, Order 42 Rule 6, Order 50 Rule 6 and Order 51 Rules 1 and 3 of the Civil Procedure Rules, 2010 and all other enabling provisions of the law. 3.The substantive orders sought are:a.Spent;b.That there be a stay of execution of the Judgment and Decree in Mombasa CMCC No. E294 of 2025 pending the hearing and determination of the present appeal; andc.That costs of the application abide the outcome of the appeal. 4.The application is supported by the affidavit of Michael Shisia sworn on 14th April 2026. 5.The Respondents oppose the application through the Replying Affidavit sworn by the 2nd Respondent, Abdirahman Mohamud Abdow, on 12th May 2026 together with numerous annexures. 6.I have carefully considered the Motion, the supporting affidavit, the Replying Affidavit, the annexed documents, the submissions by counsel, and the applicable law. B. Background 7.The dispute arises from an insurance contract between the Appellant and the 1st Respondent concerning Motor Vehicle Registration Number KBU 689L, an Isuzu FRR lorry. 8.It is common ground that the motor vehicle was insured by the Appellant under a comprehensive insurance policy for an insured value of Kenya Shillings Three Million (Kshs. 3,000,000/=). 9.According to the Respondents, on or about 5th February 2019, the motor vehicle was involved in a road traffic accident along the Kasemeni–Kinango Road after allegedly developing brake failure. The vehicle sustained extensive damage and was declared a total loss. 10.Following the accident, the Respondents lodged an insurance claim with the Appellant and supplied the documentation required under the policy. 11.The Respondents contend that the Appellant processed the claim, took possession of the salvage vehicle, retained the same, but failed and/or refused to compensate them under the insurance contract despite repeated demands. 12.As a consequence, the Respondents instituted Mombasa Chief Magistrate's Civil Case No. E294 of 2025 seeking recovery of the insured value together with interest and costs. 13.The Respondents' position is that all pleadings were duly served upon the Appellant through electronic mail addresses associated with the Appellant and its officers in accordance with Order 5 Rule 22B of the Civil Procedure Rules. 14.The Appellant did not enter an appearance nor file a defence within the prescribed period. 15.Consequently, an interlocutory judgment was entered, and the matter proceeded for formal proof. 16.On 11th April 2025, judgment was entered in favour of the Respondents for the sum of Kshs. 3,000,000/= together with interest and costs. 17.The Respondents thereafter commenced execution proceedings. 18.The record before this Court shows that garnishee proceedings were subsequently instituted against several financial institutions and entities believed to be holding funds belonging to the Appellant. 19.Upon becoming aware of the proceedings, the Appellant moved the trial court by an application seeking, among other reliefs, the setting aside of the ex parte judgment and leave to defend the suit. 20.The application was heard inter partes and by a ruling delivered on 2nd April 2026, the learned trial magistrate dismissed the same. 21.Aggrieved by that decision, the Appellant lodged the present appeal and contemporaneously filed the instant application seeking a stay of execution pending appeal. C. The Appellant's Case 22.The Appellant contends that it was never properly served with summons to enter appearance or the pleadings in the subordinate court. 23.It is argued that the judgment entered against it was therefore irregular and contrary to the principles of natural justice. 24The Appellant further contends that the appeal raises serious and arguable questions regarding the validity and sufficiency of electronic service upon a corporate entity. 25.The Appellant maintains that unless a stay is granted, execution will proceed and the appeal will be rendered nugatory. 26.It is further deponed that the decretal amount is substantial and that the Appellant may suffer prejudice if compelled to satisfy the decree before the appeal is heard and determined. 27.The Appellant also expresses apprehension that if payment is made to the Respondents, recovery may prove difficult in the event the appeal ultimately succeeds. 28.The Appellant asserts that it has an arguable appeal with high prospects of success and urges the Court to preserve the substratum of the appeal. 29.On security, the Appellant expresses willingness to comply with such conditions as the Court may deem appropriate. D. The Respondents' Case 30.The Respondents oppose the application in its entirety. 31.They contend that service of summons, pleadings and subsequent court documents was properly effected through the Appellant's official electronic mail addresses in strict compliance with the Civil Procedure Rules. 32.They maintain that the Appellant was fully aware of the proceedings but failed to take any steps to defend the claim. 33.The Respondents further submit that the Appellant has not demonstrated substantial loss as required under Order 42 Rule 6 of the Civil Procedure Rules. 34.According to the Respondents, the decree is purely monetary in nature and is therefore capable of restitution should the appeal succeed. 35.The Respondents expressly depose that they possess the financial ability to refund any sums paid pursuant to the decree if ultimately ordered to do so by the Court. 36.It is further contended that the Appellant has failed to place before the Court any evidence whatsoever demonstrating that the Respondents are persons of straw or otherwise incapable of refunding the decretal amount. 37.The Respondents also accuse the Appellant of material non-disclosure. 38.In particular, they contend that by the time the present application was being canvassed, Garnishee Orders Absolute had already been issued and substantial sums had already been recovered from various garnishees. 39.The Respondents argue that the Appellant failed to candidly disclose those material developments while seeking equitable relief from the Court. 40.The Respondents further submit that the application is merely intended to delay satisfaction of a lawful decree arising from an insurance claim dating back to the year 2019. 41.Finally, they urge the Court to uphold their right as successful litigants to enjoy the fruits of their judgment and dismiss the application with costs. E. Issues For Determination 42.Having considered the pleadings, affidavits, and submissions on record, the following issues arise for determination:i.Whether the Appellant approached the Court with the requisite candour and full disclosure of material facts;ii.Whether the Court retains jurisdiction to grant a stay notwithstanding the partialexecution already undertaken;iii.Whether the Appellant has demonstrated substantial loss as contemplated under Order 42 Rule 6(2)(a) of the Civil Procedure Rules;iv.Whether the application was brought without unreasonable delay;v.Whether the Appellant has satisfied the conditions for the grant of stay pending appeal; andvi.What orders should issue as to costs? F. Analysis And Determination Issue No. 1: Whether the Appellant Approached the Court with Candour and Full Disclosure 43.A party seeking a discretionary and equitable remedy, such as stay of execution, is under a strict obligation to make full, frank, and candid disclosure of all material facts. The duty is not merely procedural; it is a substantive obligation founded upon the equitable maxim that he who seeks equity must do equity and must come to court with clean hands. 44.The Respondents contend that the Appellant failed to disclose that by the time the present application was being prosecuted, Garnishee Orders Absolute had already been issued and substantial sums recovered from various garnishees in partial satisfaction of the decree. 45.The record confirms that Garnishee Orders Absolute were issued after the commencement of garnishee proceedings and that payments had already been made to the Respondents by some of the garnishees. 46.Those developments were undoubtedly material to the determination of the application because they directly affected the extent of execution already undertaken and the nature of the relief that could realistically be granted by this Court. 47.The Appellant's supporting affidavit created the impression that execution remained merely threatened or imminent. The Court is not persuaded that sufficient disclosure was made regarding the actual state of execution at the material time. 48.While this omission may not by itself dispose of the application, it is a factor which the Court is entitled to take into account in the exercise of its discretion. 49.The Court therefore finds that the Appellant fell short of the high standard of candour expected of a litigant seeking equitable relief. Issue No. 2: Whether the Court Retains Jurisdiction Notwithstanding Partial Execution 50.The Respondents have argued that the issuance of Garnishee Orders Absolute and partial satisfaction of the decree substantially undermines the application. 51.The Court does not agree that partial execution extinguishes the appellate court's jurisdiction. 52.Order 42 Rule 6(1) of the Civil Procedure Rules expressly grants the appellate court jurisdiction to entertain applications for stay pending appeal and to make such orders as may appear just. 53.The mere fact that execution has commenced or has been partially completed does not deprive the Court of jurisdiction to consider whether further execution should be stayed. 54.However, the law is equally clear that a stay of execution operates prospectively. It cannot undo acts that have already been lawfully completed. 55.Accordingly, to the extent that funds have already been paid out pursuant to Garnishee Orders Absolute, such execution cannot be reversed through a stay order. 56.The Court therefore retains jurisdiction to consider the application, though such jurisdiction is necessarily limited to the portion of the decree that remains unsatisfied. Issue No. 3: Whether the Appellant Has Demonstrated Substantial Loss 57.This issue lies at the heart of the application. 58.Order 42 Rule 6(2)(a) of the Civil Procedure Rules requires an applicant seeking a stay pending appeal to demonstrate that substantial loss may result unless the order sought is granted. 59.The Court of Appeal in Kenya Shell Ltd v Kibiru & Another emphasized that substantial loss is the cornerstone of the jurisdiction to grant stay. 60.Similarly, in James Wangalwa & Another v Agnes Naliaka Cheseto the Court held that the mere fact that execution has been commenced or completed does not in itself amount to substantial loss because execution is a lawful process. 61.The applicant must demonstrate circumstances showing that execution will create a state of affairs that irreparably affects or negates the essential core of the appeal. 62.The decree before this Court is a money decree. 63.The law relating to money decrees is well settled. Ordinarily, a successful appellant can be compensated through restitution if the appeal succeeds and the decretal amount has already been paid. 64.For that reason, courts have consistently held that payment of a monetary decree does not automatically constitute substantial loss. 65.The Appellant asserts that recovery may be difficult if the decretal sum is paid to the Respondents. 66.However, beyond that assertion, no evidence has been placed before the Court demonstrating that the Respondents lack the financial means to refund the decretal amount. 67.No investigation report, financial analysis, asset search, bank records, valuation reports or other material has been produced to support the allegation that the Respondents would be unable to make restitution. 68.In contrast, the Respondents have expressly deponed that they are financially capable of refunding any sums paid pursuant to the decree should the appeal ultimately succeed. 69.Once such an assertion is made on oath, an applicant is expected to place before the Court some material demonstrating why the Court should disregard it. 70.The Appellant has failed to do so. 71.The Court further notes that the Appellant is a licensed insurance company carrying on business within the Republic of Kenya. 72.While the Court appreciates that any corporate entity may face financial challenges, a mere assertion of hardship cannot suffice. 73.No audited accounts, regulatory notices, financial statements or other documentary evidence have been produced to demonstrate that satisfaction of the decree would threaten the Appellant's operations or render the appeal nugatory. 74.The Court therefore finds that the alleged prejudice remains speculative. 75.Moreover, a substantial portion of the decree has already been recovered through execution proceedings. 76.The Appellant has not demonstrated that those payments have occasioned any irreparable prejudice incapable of compensation through ordinary legal remedies. 77.The Court is consequently not satisfied that the Appellant has established substantial loss within the meaning of Order 42 Rule 6(2)(a) of the Civil Procedure Rules. 78.That finding is sufficient, of itself, to dispose of the application. Issue No. 4: Whether the Application Was Filed Without Unreasonable Delay 79.The ruling sought to be challenged was delivered on 2nd April 2026. 80.The present application was filed on 14th April 2026. 81.The period between the impugned ruling and the filing of the application is approximately twelve days. 82.The Court finds that the application was presented promptly and without unreasonable delay. 83.This requirement has therefore been satisfied. 84.However, satisfaction of one requirement under Order 42 Rule 6 cannot compensate for failure to satisfy the more fundamental requirement of substantial loss. Issue No. 5: Security for the Due Performance of the Decree 85.The final statutory requirement concerns security. 86.Order 42 Rule 6(2)(b) requires an applicant to furnish security for the due performance of such decree or order as may ultimately be binding upon it. 87.The rationale is to balance the interests of both parties by ensuring that the successful litigant is not exposed to unnecessary prejudice during the pendency of an appeal. 88.The Appellant has expressed willingness to abide by any conditions that the Court may impose. 89.However, no concrete proposal for security was placed before the Court. 90.More importantly, security is not a substitute for proof of substantial loss. 91.The Court cannot grant a stay merely because an applicant expresses a willingness to provide security. 92.As was observed in numerous authorities, the three requirements under Order 42 Rule 6 are cumulative and not alternative. 93.Consequently, where substantial loss has not been established, the issue of security cannot independently justify the grant of a stay. Balancing the Rights of the Parties 94.The Court has not lost sight of the Appellant's constitutional right of appeal. 95.Equally important, however, is the Respondents' right to enjoy the fruits of a judgment lawfully obtained. 96.In Machira t/a Machira & Co. Advocates v East African Standard (No. 2) the Court emphasized that a successful litigant should not be deprived of the fruits of judgment without just cause. 97.The Respondents' claim arises from an insurance loss allegedly suffered in February 2019. 98.More than six years have elapsed since the occurrence of the insured event. 99.Judgment was entered in April 2025 and the Respondents have since engaged in lawful execution processes. 100.The Court accepts that the appeal raises an arguable question regarding service of process upon the Appellant through electronic means. 101.Nevertheless, arguability of an appeal is not, by itself, a statutory ground for stay under Order 42 Rule 6. 102.The Court must apply the law as enacted and interpreted by binding precedent. 103.Having failed to establish substantial loss, the Appellant cannot obtain a stay merely because an appeal has been filed. 104.The balance of justice in this case therefore tilts in favour of allowing the successful litigants to continue enjoying the fruits of their judgment while the appeal proceeds in the ordinary course. G. Final Determination 105.Having carefully considered the Notice of Motion dated 14th April 2026, the supporting affidavit, the Replying Affidavit, the rival submissions of counsel, and the applicable law, the Court is unable to find merit in the application. 106.The principles governing the grant of stay of execution pending appeal are now settled. An applicant must satisfy the Court that substantial loss may result unless stay is granted, that the application has been made without unreasonable delay, and that security has been offered for the due performance of the decree. These requirements are cumulative and must be satisfied before the Court's discretion can be exercised in favour of an applicant. 107.In the present case, although the application was filed without unreasonable delay, the Appellant has failed to establish the most critical requirement, namely, substantial loss. 108.The decree sought to be stayed is purely monetary in nature. The Respondents have expressly deponed that they are financially capable of refunding any sums paid pursuant to the decree should the appeal ultimately succeed. That assertion has not been displaced by any cogent evidence. 109.The Appellant has merely expressed apprehension that recovery may be difficult. Such apprehension, unsupported by evidence, cannot satisfy the legal threshold for substantial loss. 110.The Court further finds that the Appellant did not place before the Court any material demonstrating that satisfaction of the decree would cripple its operations, render the appeal nugatory, or occasion irreparable prejudice incapable of compensation through ordinary legal remedies. 111.Equally significant is the fact that substantial execution had already taken place by the time the application came before the Court. Funds had already been recovered pursuant to Garnishee Orders Absolute issued by the subordinate court. The Court has found that this material fact was not disclosed with the degree of candour expected of a litigant seeking equitable relief. 112.While non-disclosure alone may not invariably defeat an application, it remains a relevant consideration in the exercise of judicial discretion and militates against the grant of equitable remedies. 113.The Court has also considered the Appellant's right of appeal and accepts that the appeal raises an arguable issue concerning the adequacy and effectiveness of electronic service upon a corporate entity. 114.However, the existence of an arguable appeal does not automatically entitle a party to stay of execution. The law requires more. The Appellant must still satisfy the statutory conditions stipulated under Order 42 Rule 6 of the Civil Procedure Rules. 115.Having failed to demonstrate substantial loss, the Appellant has failed to satisfy the threshold necessary for the grant of stay. 116.The Court must also bear in mind that litigation must at some point come to an end and that a successful litigant is entitled to enjoy the fruits of a lawful judgment. 117.The Respondents' claim arose from an insurance loss allegedly suffered in February 2019. More than six years have elapsed since that event. Judgment was entered in their favour in April 2025. They have since undertaken lawful execution proceedings in pursuit of the decretal sum. 118.In the circumstances of this case, the balance of justice does not favour further interruption of the Respondents' enjoyment of their judgment. 119.Accordingly, the Court finds that the Notice of Motion dated 14th April 2026 is devoid of merit. H. Disposition 120.Consequently, the Notice of Motion dated 14th April 2026 is hereby dismissed. 121.For the avoidance of doubt:a.Any interim orders of stay previously granted in this matter are hereby discharged forthwith;b.The Respondents shall be at liberty to proceed with the execution of the decree issued in Mombasa Chief Magistrate's Civil Case No. E294 of 2025 for the outstanding decretal amount together with all accrued interest and costs;c.The costs of the Notice of Motion dated 14th April 2026 are awarded to the Respondents. 122.Orders accordingly. DATED, SIGNED AND DELIVERED AT MOMBASA THIS 17th DAY OF June.2026.HON. LADY JUSTICE W. K. MICHENI JUDGEBoth Partied PresentSigned By/for:HON. LADY JUSTICE WENDY MICHENIMOMBASA HIGH COURT