[2020] KEHC 1429 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MACHAKOS

Coram: D. K. Kemei - J

CIVIL APPEAL NO. 103 OF 2017

PASHA ENTERPRISES LTD.......................APPLICANT/RESPONDENT

VERSUS

TANATHI WATER SERVICES BOARD...RESPONDENT/APPELLANT

RULING

1. The applicant vide application dated 24. 7.2020 is seeking for the following orders;

a) Spent

b) Spent

c) That there be a stay of execution of the judgement and/or decree and any consequential orders emanating from the judgement herein delivered on 5. 5.2020 pending the hearing and final determination of the applicant/respondent’s Civil Appeal 253 of 2020 at the Court of Appeal in Nairobi.

d) That the costs of this application be provided for.

2. The application is supported by the affidavit of Samuel Kimondo Theuri deponed on 24. 7.2020. The application is brought under Order 22 Rule 1, 42 Rule 6, Order 51 Rule 1 of the Civil Procedure Rules, Article 159(2)(d) of the Constitution and Sections 1A, 1B, 3 and 3A of the Civil Procedure Act.

3. The grounds upon which the application is premised are contained in the face of the notice of motion as well as the supporting affidavit and are:

a) That the ruling allowing the appellant’s appeal was delivered on the 5. 5.2020 and that the applicant is dissatisfied with the same.

b) That the applicant filed an appeal before the Court of Appeal being Civil Appeal 253 of 2020 and filed a notice of appeal on 15. 5.2020.

c) That the applicant filed and served the record of appeal on the respondent and that the appeal is pending fixing a hearing date before the Court of Appeal.

d) That the costs of the appeal have not been taxed but that the appellant had already commenced execution to recover costs in Machakos CMCC 96 of 2016.

e) That unless execution is stayed, the appeal will be rendered nugatory.

4. Copies of the notice of appeal and memorandum of appeal, proclamation notice and warrants of attachment and sale were annexed to the affidavit.

5. In the affidavit in reply deponed by Anthony Mulekyo dated 10. 8.2020, he averred that the application lacked merit as he had not stated sufficient reasons why a stay of execution order ought to be granted. It was averred that the only thing capable of execution is the costs of this court and that of the subordinate court. It was averred that the costs of the subordinate court were taxed and that those of this court were not taxed but however by dint of the Advocates Remuneration Order 2014 the applicants claim for Kshs 15,290,524/- attracted getting up fees of Kshs 541,080. 66/-. It was pointed out that the respondent is a state corporation hence willing to refund the amounts paid by the applicant in the event of success of the appeal. The deponent proposed that the applicant pays into a joint interest earning account the sum of Kshs 362,774. 00 being the costs in the subordinate court and Kshs 650,000. 00 being the estimated costs in this court.

6. The application was canvassed vide submissions. Learned counsel for the applicant in placing reliance on the case of Bethuel Muiruri Benjamin v Development Bank of Kenya[2006] eKLR urged this court to grant the prayer sought.

7. Counsel for the respondent while appreciating the input of Order 42 Rule 6 of the Civil Procedure Rules submitted that the applicant had not demonstrated the loss they would incur if the application is not allowed; that the respondent would suffer prejudice if the stay order is granted as they had been in court since 2016. On the element of security, it was submitted that the proposal by the applicant to deposit Kshs 300,000/- as security was insufficient and that the total of Kshs 1,012,744. 00/- be deposited as security being the costs in the trial court as well as the estimated amount in this court.

8. I have considered the application and the issue for determination is whether the orders sought in the application may be granted. In determining such application, the court will be guided by the following considerations- :

1) Whether the application has been brought without unreasonable delay;

(2) Whether the Court is satisfied that substantial loss would occur unless stay is granted; and

(3) On being convinced that stay is deserved, the court will ask the Applicant to furnish such security as shall be sufficient to satisfy any decree that might ultimately be binding on the Applicant.

9. The application is brought under inter alia section 3A of the Civil Procedure Act that states that;

“Nothing in this Act shall limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.”

10. Order 42 Rule 6 of the Civil Procedure Rules provides for stay of execution pending appeal and it sets out the conditions to be met by an Applicant in order to be entitled to an order for stay as laid out 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—

(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.

11. I have seen the notice of appeal that the appellant had annexed to the application as well as the memorandum of appeal and which imputes an intention to appeal to the Court of Appeal despite the fact that the same bears no receiving stamp from the Court of Appeal. Without going to the merits of the intended appeal and without overstepping the jurisdiction of that court I agree that the applicant has every right to be heard in the Court of Appeal. The application had been filed about two months and three weeks after delivery of judgement. I find the said period not inordinate since the applicant presented its notice of appeal dated 14. 5.2020 before the Deputy Registrar of this court.

12. On the element of substantial loss I am guided by the case of Kenya Shell Limited v Benjamin Karuga Kibiru & Ruth Wairimu Karuga (1982-1988) 1 KAR 1018, where it was stated that:-

“It is usually a good rule to see if Order 41 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 cornerstone of both jurisdictions for granting stay.”

13. In Kakamega Paper Converters Limited v Mohanlal Arora & 4 others [2011] eKLR, Justice Kimondo stated that “The decisions in Ujagar Singh vs Runda Coffee Estates Ltd [1960] E.A 263 and Kenya Shell Ltd vs Benjamin KarugaKibiru & Ruth Wairimu Karuga [1982 – 1988] 1 KAR 1018 are ample authority for the proposition that an appeal will not be rendered nugatory in monetary decree if payment is made.”

14. In the Kenya Shell case, Justice Hancox stated that;

“It is not sufficient by merely stating that the sum of Shs 20,380. 00 is a lot of money and the applicant would suffer loss if the money is paid. What sort of loss would this be? In an application of this nature, the applicant should show the damages it would suffer if the order for stay is not granted. By granting a stay would mean that status quo should remain as it were before judgment. What assurance can there be of appeal succeeding? On the other hand, granting the stay would be denying a successful litigant of the fruits of his judgment. The applicant has not given to court sufficient materials to enable it to exercise its discretion in granting the order of stay.”

15. In the case of Kenya Hotel Properties Limited v Willesden Investments Limited [2007] eKLR,the Learned Justices of Appeal rendered themselves thus;

“Would the success of the intended appeal, if it succeeds, at all be rendered nugatory if this application is refused at this juncture? That is the next matter for us to consider. The decree is a money decree and normally the courts have felt that the success of the appeal would not be rendered nugatory if the decree is a money decree so long as the court ascertains that the respondent is not a “man of straw” but is a person who, on the success of the appeal, would be able to repay the decretal amount plus any interest to the applicant. However, with time, it became necessary to put certain riders to that legal position as it became obvious that in certain cases, undue hardship would be caused to the applicants if stay is refused purely on grounds that the decree is a money decree.”

16. Guided by the above authorities, I note that the bone of contention herein is on the issue of costs in both the lower court and this court. Already the lower court costs have been assessed at Kshs 362, 744/ while those of this court are yet to be taxed. Counsel for the respondent has proposed that a sum of about Kshs 1 million be deposited into an interest earning account pending determination of the appeal. It has also transpired that the respondent is a parastatal which is a government agency which is not likely to fail to refund any amounts in the event of success of the appeal and hence its quest to be allowed to proceed with the execution of the decree. On the other hand, the appellant is entitled to agitate its appeal without fear of losing out in the event of success of its appeal. An order on deposit of some amount into a joint account appears to be best approach in the circumstances. Balancing the interests of the parties herein, I find that an order that a substantial amount of the costs likely to be awarded to the Respondent be deposited into an interest earning account in the joint names of the advocates for the parties is reasonable pending determination of the appeal. Looking at the costs in the lower court and the ones due to be taxed in this court, I am of the view that a sum of Kshs 500,000/ would be reasonable. I am satisfied that the Respondent/Applicant has satisfied the requisite conditions for an order for stay of execution pending determination of its appeal in the Court of Appeal.

17. In view of the foregoing observations, the Respondent/Applicant’s application dated 24. 7.2020 is allowed in the following terms:

a) There be an order of stay of execution of the judgement and/or decree and any consequential orders from the judgement herein delivered on 5. 5.2020 pending the hearing and determination of the Respondent/Applicant’s Civil Appeal No. 253 of 2020 at the Court of Appeal in Nairobi upon the Respondent/Applicant depositing the sum of Kshs 500,000/ into a joint interest earning account in the names of the Advocates for the parties within thirty(30) days from the date of this ruling failing which the order of stay shall lapse.

b) The costs of the application shall abide in the appeal

It is so ordered.

Dated and delivered at Machakos this 1st day of December, 2020.

D. K. Kemei

Judge