[2023] KEHC 20747 (KLR)

Ocean Engineering Works Limited v Ahmed Ali Investments Limited & another (Civil Appeal 27 of 2022) [2023] KEHC 20747 (KLR) (19 July 2023) (Ruling)

Neutral citation: [2023] KEHC 20747 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Appeal 27 of 2022

OA Sewe, J

July 19, 2023

Between

Ocean Engineering Works Limited

Appellant

and

Ahmed Ali Investments Limited

1st Respondent

Kinyua & Co. Auctioneers

2nd Respondent

Ruling

1. This Notice of Motion dated February 28, 2022was filed herein by the appellant undersections 1A, 1B and 3A of the Civil Procedure Act, Chapter 21 of the Laws of Kenya as well as Order 42 Rule 6 and Order 51 Rule 1 of the Civil Procedure Rules. The appellant thereby seeks orders that:(a)Spent;(b)Spent(c)That the Court be pleased to issue an order restraining the respondents by themselves and/or their agents, employees or servants from any further auction, selling, disposing and or in any way dispossessing the applicant of its goods as per the auction notice on the newspaper publication of February 16, 2022pending the hearing and determination of this appeal.(d)That the courtbe pleased to issue an order directing the respondents to file statements of account and deposit funds/monies in court for all already auctioned and/or sold items/goods for accountability purposes.(e)That the costs of the application be provided for.

2. The application was premised on the grounds that the appellant is dissatisfied with the ruling of the lower court and has therefore preferred this appeal; yet its property is in danger of being auctioned after its application for stay of execution was dismissed by the lower court on February 24, 2022. The appellant further contended that, while the parties were negotiating with a view of an amicable settlement of the dispute, the respondents proceeded, without any Notice of Proclamation, to attach its movable properties, including its tools of trade. The appellant added that, in the process the respondents also attached property belonging to the appellant’s clients.

3. In the supporting affidavit, sworn on February 28, 2022by one of the directors of the plaintiff, Mohamed Shiraz Adam, it was averred that the attached goods are worth much more than the alleged rent arrears of Kshs. 12,000,000/=; and therefore that it is in the interest of justice that the goods be returned. The appellant averred that it is willing to abide by any conditions that may be set by the court to ensure justice prevails. Mr. Adam believes the appeal has high chances of success. He annexed copies of the relevant newspaper advert, the impugned ruling and the Memorandum of Appeal filed herein as attachments to his affidavit.

4. In response to the application, the respondents filed a replying affidavit sworn on May 12, 2022 by Hashim Ali Ahmed, a director of the 1st respondent. He averred that the appellant has been in arrears of rent from 2017, an amount that has now grown to over Kshs. 15,000,000/=; and that it was on this account that 1st respondent instructed the 2nd respondent to levy distress for rent. Mr. Ahmed further averred that the appellant thereupon proceeded to Court and obtained temporary orders restraining the 2nd respondent from attaching its goods pending the hearing and determination of the application.

5. At paragraphs 6 and 7 of the Replying Affidavit, the respondent averred that, pending the hearing and determination of the application aforementioned, the appellant sought to negotiate with the respondent; however, the appellant soon showed disinterest yet he was still in occupation of the premises. The application proceeded without the respondent’s participation and was dismissed; whereupon the respondent commenced the process of attachment. Thus, Mr. Ahmed averred that it was hypocritical for the appellant to claim that negotiations were ongoing and that attachment was done during negotiations when in fact they continued to prosecute their application ex parte.

6. Regarding the initial attempt at distress, Mr. Ahmed averred that the appellant’s attached property was sold for Kshs. 6,020,500/=; and that only Kshs. 5,670,500/= was credited to the rent arrears account, which then stood at Kshs. 12,836,317/=. Thus, Mr. Ahmed averred that the appeal has no chances of success, granted that the appellant has admitted to the rental arrears. He further deposed that the trailers have since been sold and Memorandum of Sale duly issued in respect thereof by the 2nd respondent as per Annexures HAA-05. In conclusion therefore, Mr. Ahmed pointed out that the respondent continues to suffer great financial loss due to the breach by the appellant of the tenancy agreement in refusing to pay rent.

7. The application was canvassed by way of written submissions, and therefore, Mr. Ondieki relied on his written submissions filed herein on June 23, 2022. He proposed one issue for determination, namely, whether the applicant is entitled to stay of auction pending the hearing and determination of this appeal. Counsel submitted that the essence of an application for stay pending appeal is to preserve the subject matter of litigation, so as to avoid a situation where a successful appellant only ends up with a paper judgment, while at the same time balancing the rights of the parties. He added that in determining the issue, the Court needs to ensure that the appeal is not frivolous and that, if successful, the appeal will not be rendered nugatory. He relied on Kenya Tea Growers Association &another v Kenya Planters & Agricultural Workers Union; Civil Application No. 72 of 2001 and Carter & Sons Ltd v Deposit Protection Fund Board & 2others in support of his submissions.

8. On behalf of the respondent, Ms. Essajee relied on her written submissions filed on September 14, 2022in which she proposed two issues for determination, namely:(a)Whether the appellant has satisfied this Court as to the need for an order for stay of further auction; and(b)Whether the appellant ought to deposit security for costs.

9. Ms. Essajee reiterated that the auction took place immediately after the ruling dated February 24, 2022; and that there has not been any other attempt at distress to warrant such an application. She relied on Kalya Soi Farmers’ Cooperative Society v Paul Kirui &another [2003] eKLR and UAP Provincial Insurance Company Limited v Michael John Beckett, Civil Application No. 204 of 2004, in urging the court to dismiss the application as court orders ought not to issue in vain.

10. On the second limb of her submissions, Ms. Essajee relied on paragraph 27 of the 1st respondent’s Replying Affidavit in which it was averred that:“That theappellant has since admitted on the rental arrears and ought to deposit the disputed amount in court together with security for costs before proceeding with the appeal.”

11. Counsel pointed out that as at July 2020 when attachment was levied, the rental arrears stood at Kshs. 12,836,317/= together with auctioneer’s fees of Kshs. 1,500,200/=; and that since only Kshs. 5,670,500/= of the sale proceeds was credited to the rent account, the respondent was yet to recover some Kshs. 7,165,817/=. Accordingly, it was the submission of Ms. Essajee that the instant application is a classic example of an abuse of the court process by the appellant and therefore the appellant ought to be required to deposit security for costs. She relied on Machira T/A Machira & Co. Advocates v East African Standard (No. 2)[2002] eKLR for the principle that a successful party is entitled to the fruits of his judgment and Mohamed Ali Osman T/A Hanan Petroleum v Juanco Group Ltd [2021] eKLR to support her proposal that an order for security for costs be made in the sum of Kshs. 8,715,817/=, being the balance of the rental arrears, auctioneer’s fees and costs of the appeal.

12. I have given due consideration to the application in the light of the facts presented herein. It is expressed to have been brought under Order 42 Rule 6 of the Civil Procedure Rules, which provides 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.

13. The provision presupposes that there be either a decree or order in respect of which precipitate action is looming. In this case the ruling and order in question is the decision given by Hon. Kalo, CM, dated February 24, 2022. The outcome thereof was that the appellant’s Notice of Motion dated February 18, 2022 was dismissed with costs.

14. It is now trite that a negative order is incapable execution and therefore is not amenable to stay for purposes of Order 42 Rule 6 of the Civil Procedure Rules. For instance, in Raymond M Omboga v Austine Pyan Maranga, Kisii HCCA No 15 of 2010, Hon. Makhandia, J. (as he then was) held:“…The order dismissing the application is in the nature of a negative order and is incapable of execution save, perhaps, for costs and such order is incapable of stay. Where there is no positive order made in favour of the respondent which is capable of execution, there can be no stay of execution of such an order...The applicant seeks to appeal against the order dismissing his application. This is not an order capable of being stayed because there is nothing that the applicant has lost. The refusal simply means that the applicant stays in the situation he was in before coming to court and therefore the issues of substantial loss that he is likely to suffer and or the appeal being rendered nugatory do not arise... It is trite law that stay of execution pending appeal can only be granted against the order being appealed against. Put differently, an order for stay of execution pending appeal cannot be granted if the intended appeal is not against the order sought to be stayed; yet this is what obtains in this application where the applicant’s appeal is against the order of dismissal of his application, yet the stay sought is against the subordinate court’s judgement or decree.”

15. Similarly, in Western College of Arts & Applied Sciences vs. Oranga &others [1976] KLR 63, a decision of the Court of Appeal for Eastern Africa that was followed by the Court of Appeal in George Ole Sangui & 12others v Kedong Ranch Ltd [2015] eKLR, it was held thus:“But what is there to be executed under the judgment, the subject of the intended appeal? The High Court has merely dismissed the suit with costs. An execution can only be in respect of costs…The High Court has not ordered any of the parties to do anything, or to refrain from doing anything or to pay any sum. There is nothing arising out of the High Court judgment for this court in an application for stay to enforce or to restrain by injunction.”

16. And in Co-operative Bank of Kenya Ltd v Banking Insurance & Finance Union (Kenya) [2015] eKLR, the Court of Appeal (per Hon. Kantai, J.A.) had occasion to restate that:‘An order for stay of execution [pending appeal] is ordinarily an interim order which seeks to delay the performance of positive obligations that are set out in a decree as a result of a Judgment. The delay of performance presupposes the existence of a situation to stay – called a “positive order” – either an order that has not been complied with or has partly been complied with. See, for this general proposition, the holding of the Court of Appeal of Uganda in Mugenyi & Co Advocates v National Insurance Corporation (Civil Appeal No 13 of 1984) where it was stated:‘….. an order for stay of execution must be intended to serve a purpose …’ ” (emphasis supplied).

17. In the premises, it is my finding that the appellant’s application is utterly lacking in merit and is hereby dismissed with costs.

18It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 19TH DAY OF JULY 2023OLGA SEWEJUDGE