[2017] KEHC 2907 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KIAMBU

CIVIL APPEAL NO. 67 OF 2016

PADDY MICRO-INVESTMENTS LIMITED……......…………..APPLICANT

VERSUS

PETER WERU KABUI…………………………………1STRESPONDENT

IRENE WAKUTHII NYANJA………….…...…………..2NDRESPONDENT

RULING

1. The Applicant filed an application by way of a Notice of Motion dated 25th October, 2016 (“Application”) and brought under section 3A of the Civil Procedure Act 2010 and Order 42 rule 6, 2 of the Civil Procedure Rules seeking, in the main, for orders that there be a stay of execution of the order made in Thika CMCC NO. 940 of 2016on 7th October, 2016 pending the hearing and determination of the appeal filed herein.

2. The Application is based on the grounds on the face of it and supported by the affidavit of Patrick Nthiga Mvungu, a director of the Appellant who, through his advocate deponed that he was dissatisfied with the order of the lower court issued in Thika CMCC No. 940 of 2016 by Honourable C.A. Muchoki made on 7th October, 2016.

3. Briefly, the facts are as follows. The Appellant and the 1st Respondent had a business relationship in which the latter took a loan from the former. It would appear that a Chattel Mortgage was executed with respect to the loan in which the 1st Respondent’s household goods were secured as collateral to the loan. However, there is a dispute whether the Chattel Mortgage was registered and whether stamp duty was paid on it in order to perfect it.

4. In any event, it is not denied by either parties that on or about 30/07/2016, the Applicant sent its agents (the Respondents insist they were goons) to take away the Respondents’ household goods following an alleged failure by the 1st Respondent to pay the loan amounts due. The Respondent asserts, and the Appellant does not controvert, that the Appellant’s agents carried away all their household goods a list of which is exhibited in the 1st Respondent’s Replying Affidavit. Almost incredibly, the list includes children’s text books, mattresses, kids’ clothes, a baby’s cot and other personal and household effects.

5. The Respondents responded by filing Thika CMCC No. 940 of 2016. As part of the suit, they filed an application seeking for an order requiring the Appellant and his agents to surrender all the household goods they had seized from the Respondents back to the Respondent until the hearing and final determination of the suit.

6. It is this ruling that the Appellant is dissatisfied with and has timeously preferred an appeal. The Appellant seeks a stay of execution of that order pending the hearing and determination of the appeal. In both the Court below and here, the Applicant alleges that it is not in a position to comply with the Court orders since the household items repossessed from the respondent have already been sold and is apprehensive that the Respondents may institute contempt proceedings if the orders are not stayed.

7. The Appellant argued that the Respondents can be compensated by way of damages if it is ascertained that the repossession and sale were irregular.

8. The Applicant through his advocate submitted that if the order for stay of execution is not granted, and the lower court issues execution order against the applicant that will amount to improper exercise of judicial discretion since the applicant is not in a position to return the said goods having sold them.

9. The Applicant submitted that he filed the current Application without unreasonable delay and that if not granted it would suffer irreparable loss since the Respondents are likely to seek enforcement of the order through commital to jail for contempt of Court – a penalty which cannot be reversed.

10. The Appellant placed reliance Order 42 Rule 6 of the Civil Procedure Rules 2010andDeposit Protection FundBoard suing as the liquidator of Reliance Bank Limited (in liquidation) -vs- Panachad Jivraji Shah and Others, Nairobi HCCC No. 1529 of 2009which set out the conditions for grant of a stay of execution pending appeal. It equally relied on United Insurance Company Ltd-vs-Stephen Ngare Nyamboki, Civil Application No. 295 of 2001, NairobiandPurshotam Ramji Kotecha & Another vs Narandas Ranchoddas Pau & Another, Civil Application No. 63 of 2003, Nairobito demonstrate that a stay of execution should be granted where a party successfully shows that an appeal will be rendered nugatory if execution proceeds.

11. On the other hand, the Respondents bristle at the idea that stay should be granted. In a Replying Affidavit sworn by the 1st Respondent on his own behalf and that of the 2nd Respondent, the Respondents allege that the Applicant hired goons to go to their residence and cart away all their household goods. They did so, they insist, without any colour of right or lawful justification.

12. The 1st Respondent complains that not only were their household goods taken maliciously, but that he was seriously beaten up by the Appellant’s agents.

13. The Respondents argue that their household goods should be returned and if at all they are indebted to the Appellant they can pay the debt. They insist that the proper procedure for attaching goods was not followed. First, they point out that the attachment was “omnibus attachment” as it did not list the number of goods attached contrary to provisions of rule 12 (b) of Auctioneers Rules. Secondly, the goods repossess were sold with no advertisement or auction.

14. Further, the Respondents cited Section 38 of the Stamp Duty Act, cap 480 and submitted that the chattel mortgage which the Appellant ostensibly relied on to levy the repossession is invalid, defective and cannot defeat the decree holder process of execution. They also submitted that the attachment did not comply with the requirements of section 4-10 of the Chattel Transfer Act as it was not registered as per the Act.

15. Lastly, the Respondents urged the Court not to grant stay orders since they stand to suffer without their household goods especially since they have school-going children. Further, they argued that the Appellant had not submitted an account of the goods that were taken away by the applicant.

16. The Respondents relied on Gedion Muriuki & another vs Cleophas Wekesa & another(2015)eklrto persuade the court not to interfere with the lower Court’s decision.

17. Applications for stay of execution are governed, primarily, by the terms of Order 42 Rule 6 of the Civil Procedure Rules. The conditions to be met by an Applicant in order to be entitled to an order for stay are encapsuled in that Rule in the following terms:

6. (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 sub-rule (1) unless—

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 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.

18. The law regarding the grant of stay of execution is well established in Kenya. Among the legion of authoritative cases establishing it, the judges of the Court of Appeal were both concise and emphatic in Rhoda Mukuma v John Abuoga:

It was laid down in M M Butt v The Rent Restriction Tribunal, Civil Application No Nai 6 of 1979, (followingWilson v Church (No 2) (1879) 12 Ch 454 at p 488) that in the case of a party appealing, exercising his undoubted right of appeal, the court ought to see that the appeal is not rendered nugatory. It should therefore preserve the status quo until the appeal is heard.

Granting a stay in the High Court is governed by Order XLI rule 4(2), the questions to be decided being – (a) whether substantial loss may result unless the stay is granted and the application is made without delay; and (b) the applicant has given security.

19. Hence, under our established jurisprudence, to be successful in an application for stay, an Applicant has to satisfy a four-part test. It must demonstrate that:

i. The appeal it has filed is arguable;

ii. It is likely to suffer substantial loss unless the order is made.Differently put, it must demonstrate that the appeal will be rendered nugatory if the stay is not granted;

iii. The application was made without unreasonable delay; and

iv. It has given or is willing to give such security as the court may order for the due performance of the decree which may ultimately be binding on him.

20. On the first aspect as to whether the intended appeal is arguable and not frivolous, see Kenya TeaGrowers Association & Another vs Kenya Planters & Agricultural Workers Union Civil Application Nai. No. 72 of 2001wherein the Court addressed what is considered to be an arguable appeal thus,He (the applicant) need not show that such an appeal is likely to succeed. It is enough for him to show that there is at least one issue upon which the Court should pronounce its decision.

21. Hence, demonstration of the existence of even one arguable point will suffice in favour of an Applicant. From my perusal of the application and the Memorandum of Appeal, I am not ready to conclude that the appeal is inarguable. This is because one of the main issue on appeal is whether the orders granted by the Court were capable of being obeyed since the Appellant argues that it had already sold the repossessed items. Of course, the Appellant will ultimately have to persuade the Court that the repossession and sale of the goods was lawful. It has placed scanty materials before the Court in aid of that effort – but that will await the trial at the lower Court or the preferred appeal.

22. Turning to the second limb as to whether the appeal could be rendered nugatory if stay orders are not granted, the Applicant is apprehensive because it is not in a position to fulfill the trial court’s order since the goods in question have already been sold thus cannot be returned as ordered. In the circumstances, the Appellants fear that its officials might be committed to civil jail if the stay order is not granted. While the Appellant has placed no material before me to demonstrate that it has, indeed, disposed off the repossessed goods, the Respondents have not seriously disputed the Appellant’s averments on oath on this. Consequently, it behooves the Court to accept the Appellant’s version that the goods have indeed, been sold off. If so, it would be absurd to make an order requiring the Appellant to do the impossible by restoring the goods to the Respondents.

23. Lastly, I note that the Appellant has indicated that it is willing to abide by and conditions given by the Court. Since the exact inventory of goods repossessed is disputed, having looked at the list of goods the Respondents claim was carted away from their house, I will order that the Appellant deposits a round figure of Kshs. 200,000/= in Court as security.

24. Since, it is not in doubt that the Application was brought timeously and without delay, it follows that my conclusion is that the Appellant has satisfied the conditions for the grant of an order for stay. Consequently, the orders that the Court shall give are as follows:

(a) That there be a stay of execution of the order made in Thika CMCC No. 940 of 2016 on 07/10/2016 pending the hearing and determination of the Appeal filed herein.

(b) That the Appellant shall deposit with the Court a sum of Kshs. 200,000/= as security for the due performance of the decree or order.

(c) That the costs of this Application will be in the cause.

25. Orders accordingly.

Dated and delivered at Kiambu this 12thday of October, 2017.

…………………………………

JOEL NGUGI

JUDGE