[2022] KEHC 1026 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL APPEAL NO. E142 OF 2021

PLATINUM CREDIT LIMITED.........................................................................................APPELLANT

VERSUS

AHMED BUNU HAJI AHMED.................................................................................1ST RESPONDENT

CASH GATE AUCTIONEERS.................................................................................2ND RESPONDENT

RULING

[1]This ruling is in respect of the Notice of Motion dated 24th September 2021. The said application was filed herein by the appellant pursuant toSections 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 Rules 1of the Civil Procedure Rules, 2010. The appellant thereby sought orders that:

[a] Spent

[b] Spent

[c] pending the hearing and determination of this appeal, the Court be pleased to order stay of execution of the orders issued by the trial court, including the order that motor vehicle registration number KCM 721F be released to the 1st respondent, pursuant to the ruling delivered on 14th September, 2021;

[d]That the Court be pleased to stay further proceedings inMombasa CMCC No. 19 of 2021: Ahmed Bunu Haji Ahmed v Platinum Credit Limited & Cash Gate Auctioneers,pending the hearing and determination of the appeal;

[e]the costs of the application be in the cause.

[2] The application is premised on the grounds that the lower court delivered its ruling on 14th September 2021 in Mombasa CMCC No. 19 of 2021 wherein it allowed the respondent’s application dated 13th January 2021. The trial court, among other things, ordered the release of Motor Vehicle Registration No. KCM 721 to the 1st respondent at the interlocutory stage; which motor vehicle had been offered to the appellant as security by one Zechariah Gichiri Kariuki, for a loan. Being dissatisfied with the decision of the lower court, the appellant lodged this appeal on 24th September 2021. It is apprehensive that, if the ruling and orders of the lower court are not stayed, it may end up losing its security along with the funds secured thereby.

[3] The grounds were expounded on in the Supporting Affidavit sworn by Richard Simbala, the appellant’s Assistant Legal Officer. He annexed copies of the documents evidencing the financing agreement between the appellant and Zachariah Kariuki Gachiri, as well a copy of the Motor Vehicle Records, to demonstrate that the motor vehicle is registered in the joint names of the appellant and Zachariah Gichiri Kariuki.

[4] In his response to the application, the 1st respondent filed his own affidavit, sworn on 12th October 2021. He conceded to having been granted interlocutory orders on 13th January 2021 in Mombasa CMCC No. 19 of 2021; and that, in consequence thereof, the subject motor vehicle was released to him, pending the hearing and determination of the lower court suit. The 1st respondent posited that, for him to be granted the orders aforementioned, the lower court was satisfied that the auction was procedurally conducted; and that he had a legitimate title to the motor vehicle. He added that prolonged storage of the motor vehicle without use would have exposed it to greater risk of mechanical deterioration; and therefore that the motor vehicle is in good hands pending the hearing and determination of the suit.

[5] At paragraphs 6 and 7 of the Replying Affidavit, the 1st respondent averred that the appellant’s contention that the motor vehicle was sold in breach of Order 22 Rule 41 of the Civil Procedure Rules is an afterthought; as it would have otherwise been raised in Ruiru SPM Civil Case No. 27 of 2020 and Ruiru ELC Case No. 43 of 2020 from where the decree emanated. He therefore asserted that the instant application is nothing but a mischievous attempt to reverse an auction that was properly sanctioned by the court.

[6] The 2nd respondent also resisted the application. To that end, it relied on the affidavit sworn by James Kimani on 1st November 2021. It was thus the contention of the 2nd respondent that the impugned auction was properly and procedurally conducted in accordance with Rule 12 of the Auctioneers Rules; and therefore that the 1st respondent acquired a legitimate title over the motor vehicle. Mr. Kimani further averred that no prejudice will be suffered by the appellant as a result of the interlocutory orders issued by the lower court.

[7] In a Supplementary Affidavit sworn on 19th October 2021, Mr. Simbala reiterated the appellant’s stance that it has an arguable appeal. He added that the issue of breach was raised before the trial court but was never considered; and that this is all the more reason for the appeal. He denied therefore that the issue is an afterthought. Mr. Simbala further averred that the 1st respondent having obtained the motor vehicle through a flawed process cannot be entrusted with its safe custody pending hearing; as that would amount to the Court sanitizing blatant acts of illegality.

[8] Mr. Simbala resisted the suggestion by the 1st respondent that the appellant be required to pay Kshs. 2,500,000/=as security; that sum being the purchase price he paid for the motor vehicle. He posited that the actual value of the motor vehicle can only be pegged on a valuation report; which was not availed. He therefore proposed that reasonable terms as to security be given by the Court in line with Order 42 Rule 6(2)(b) of the Civil Procedure Rules; adding that the appellant is ready and willing to furnish such security.

[9]The application was canvassed by way of written submissions, pursuant to the Court’s directions dated 13th October 2021. The appellant’s written submissions were thereafter filed on 2nd November 2021 by Mr. Wafula. He proposed the following issues for determination:

[a] Whether the application for stay of execution is merited;

[b] What security should be provided? and,

[c]Whether this is a suitable case for the Court to exercise its inherent powers.

[10] Counsel relied on the cases of Medula Academy v Jacklyne Atieno Otieno & Another[2018] eKLR and Magnate Ventures v Simon Mutua Muatha & Another[2018] eKLR to underscore the three prerequisites for an order of stay of execution for purposes of Order 42 Rule 6, Civil Procedure Rules. Mr. Wafula then reiterated the assertions of the appellant at paragraphs 5-8, and 13 of the Supporting Affidavit, to the effect that it advanced a loan facility to Zachariah Gichiri Kariuki for which the log book for the subject motor vehicle was given as security; and that the loan account is in arrears; and therefore that the appellant stands the risk of losing both the funds it lent out as well as the security itself.

[11]Counsel also urged the Court to consider that the motor vehicle was sold in blatant disregard of Order 22 Rule 41 of the Civil Procedure Rules. He made reference to CMC Motor Group v Garex Kenya Ltd & Another [2001] eKLR to buttress his submission that the appellant’s valid interest was completely ignored by the respondents; so much so that the appellant was never served with the Proclamation or the 7 days’ redemption notice before sale, as required by Rule 12(1)(b) & (c) of the Auctioneers Rules.

[12] In terms of security, counsel pointed out that the impugned order is non-monetary; and therefore the suggestion by the 1st respondent for the appellant to make a deposit of Kshs. 2,500,000/= was, in his view, misplaced. Counsel further urged the Court to take into consideration that the appellant was not a party to the impugned auction; and that no valuation report was availed by the respondents to show the actual value of the subject motor vehicle. He consequently invited the Court to consider the totality of the circumstances under which the motor vehicle was disposed of, the illegalities entailed thereby, and the nature of the appellant’s interest in the motor vehicle; and make a reasonable order for compliance by the appellant.

[13] On the authority of Kenya Power & Lighting Company Ltd v Benzene Holdings Ltd t/a Wyco Paints [2016] eKLR Mr. Wafula submitted that this is a fit and proper case for the Court to invoke its inherent jurisdiction under Sections 1A, 1B and 3A of the Civil Procedure Actto do justice to the appellant; the appellant having demonstrated that, at all times material to this appeal, he was a joint owner of the subject motor vehicle.

[14]As far as the record shows, the 1st respondent did not file any written submissions. And, on behalf of the 2nd respondent, written submissions were filed herein on 2nd November 2021 by Mr. Nyamweya. Counsel proposed the following two issues for determination:

[a] Whether the appellant should be granted a stay of execution of the orders issued on 14th September 2021; and,

[b] Whether the appellant should furnish security.

[15] Counsel submitted that sufficient cause for purposes of Order 42 Rule 6(2) of the Civil Procedure Rules, is a question of fact; and that the Court, in exercising its discretion must consider the object of doing substantial justice to all the parties concerned. Mr. Nyamweya argued that it is not enough for the appellant to merely claim that it stands to suffer substantial loss if stay is not granted; the allegation must be substantiated. In his view, all the appellant has done is demonstrate that it entered into an agreement with Zachariah Gichiri Kariuki, who is not a party to these proceedings. He pointed out that, in granting the impugned order, the lower court relied on the principles set out in Giella v Cassman Brown & Company Ltd [1973] EA 358; and was therefore properly guided in arriving at its decision.

[16] Mr. Nyamweya further submitted that it was imperative for the appellant to make a concrete offer as suitable security to guarantee the due performance of such decree or order as may ultimately be binding on it. Counsel relied on Arun C. Sharma v Ashana Raikundalia t/a Raikundalia & Co. Advocates & 2 Others [2014] eKLR and Focin Motorcyle Co. Ltd v Ann Wambui Wangui & Another [2018] eKLR. He consequently prayed for the dismissal of the application and added that, should the Court find merit in the application; suitable security be provided.

[17]I have given due consideration to the application and perused the averments in the Supporting Affidavit filed therewith. I have likewise given due consideration to the written submissions filed by learned counsel. There is no denying that a successful party is entitled to the fruits of that success. Hence, the 1st respondent is indeed entitled to the fruits that flow from the ruling and orders issued by the lower court on14th September 2021inMombasa CMCC No.19 of 2021. In Machira T/A Machira & Co. Advocates vs. East African Standard (No. 2) [2002] KLR 63, it was held thus:

"The ordinary principle is that a successful party is entitled to the fruits of his judgment or any decision of the court giving him success at any stage. That is trite knowledge and is one of the fundamental procedural values which is acknowledged and normally must be put into effect by the way applications for stay of further proceedings or execution, pending appeal are handled. In the application of that ordinary principle, the court must have its sight firmly fixed on upholding the overriding objective of the rules of procedure for handling civil cases in courts, which is to do justice in accordance with the law and to prevent abuse of the process of the court."

[18] The foregoing notwithstanding,Order 42 Rule 6 of the Civil Procedure Rules recognizes that:

"No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except 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..."

[19]Thus, to enable the Court balance the parties’ competing interests in an application of this nature, an applicant must meet the conditions set out in Rule 6(2) of Order 42of theCivil Procedure Rules, by demonstrating that:

[a] substantial loss may result to the applicant unless the order is made;

[b] the application has been made without unreasonable delay; and

[c] that such security as the court orders for the due performance of such decree or order as may ultimately be binding on the applicant has been given.

[20] Accordingly, I am in agreement with the decision in Absalom Dora v Tarbo Transporters [2013] eKLR, that:

“The discretionary relief of stay of execution pending appeal is designed on the basis that no party would be worse off by virtue of an order of the court; as such order does not introduce any disadvantage, but administers the justice that the case deserves. This is in recognition that both parties have rights; the appellant to his appeal which includes the prospects that the appeal will not be rendered nugatory; and the decree holder to the decree which includes full benefits under the decree. The court in balancing the two competing rights focuses on their reconciliation which is not a question of discrimination.”

[21] This principle was also well expounded in Medula Academy v Jacklyne Atieno & Another (supra) and Halai & Another v Thornton & Turpin (supra). Hence, the key issue for determination in this ruling is the question whether sufficient cause has been shown by the appellant to warrant the issuance of an order of stay in terms of prayers (3) and (4) of the Notice of Motion dated 24th September 2021, pending the hearing and determination of the appeal. In answering the question, the Court must interrogate whether the appellant has shown that it risks suffering substantial loss unless stay is granted as sought; that the application has been filed without unreasonable delay; and that the appellant is ready to furnish such security as the Court may order for the due performance of any order that may ultimately be made in the matter.

[22] In terms of substantial loss, the appellant raised two grounds for the court’s consideration. The first is that the log book for the subject motor was given to it to hold as security for a loan advanced to one Zachariah Gichiri Kariuki; whereupon both the appellant and the borrower were registered as joint owners of the vehicle. In support of the averments to that effect there are documents annexed to the Supporting Affidavit, marked Annexures ‘RS-2’, ‘RS-3’, ‘RS-4A and ‘RS-4B’. The document marked Annexure ‘RS-4C’, which is a copy of the records maintained by the National Transport and Safety Authority (NTSA), confirms that, as at 25th January 2021, the subject motor vehicle was registered in the joint names of the appellant and Zachariah Gichiri Kariuki.

[23] That being the case, there is considerable merit in the assertion by the appellant that it needed to be notified of any process that would jeopardize that interest.

[24] Moreover, Order 22 Rule 41 of the Civil Procedure Rules provides that:

“Where the property to be attached consists of the share or interest of the judgment debtor in movable property belonging to him and another as co-owners, the attachment shall be made by a notice to the judgment debtor prohibiting him from transferring the share or interest or charging it in any way.”

[25] It cannot therefore be said that the appeal is frivolous; seeing as a valid question has been validly raised as to whether that interest was taken into account when the impugned order was made. As correctly pointed out by counsel for the appellant, infractions of clear provisions of the law that protect the rights of citizens are not the sort of transgressions to be swept under the carpet. I would accordingly take the same viewpoint as did Hon. Warsame, J. in Sharok Kher Mohamed Ali & Another vs. Southern Credit Banking Corporation [2008] eKLR, albeit within the context of an application for temporary injunction, thus:

"I am satisfied a party deprived of his property through an illegal process would suffer irreparable loss and/or damage. In any case, a party entitled to a legal right cannot be made to take damages in lieu of his right. In essence the damages and/or loss that would be suffered by the Plaintiffs would be significant if an injunction is not granted. My position is that a party in contravention of the law cannot be rewarded for his contravention.

[26] The record shows that the instant application was brought on 24th September 2021, about one week after the impugned order was given. It was consequently timeously filed.

[27]The last issue for consideration is whether the applicant has complied with Order 42 Rule 6(2)of theCivil Procedure Rules,in so far as suitable security is concerned. No specific offer was made by the appellant in this connection. Nevertheless, at paragraph 10 of the Supplementary Affidavit, the appellant made it clear that it is ready and willing to furnish such security as the Court may require. Thus, a suggestion was made by the 1st respondent that security be furnished by way of a cash deposit in the sum ofKshs. 2,500,000/=.The justification for that proposition is that the amount is equivalent to the purchase price paid by the 1st respondent at the auction.

[28] Mr. Wafulafaulted that assertion on various fronts. First and foremost, counsel urged the Court to find that no proof was availed by the 1st respondent to demonstrate that he paid a purchase price ofKshs. 2,500,000/=.According toMr. Wafula, Annexure ABHA 1is not explicit as to who the funds were transferred to and for what purpose. He posited that a current valuation would have best revealed the actual value of the motor vehicle. He further pointed out that the appellant was not a party to the impugned auction; and therefore is not to blame for the blunders that were committed in that regard that have necessitated the instant appeal.

[29] I have considered these rival submissions and note that this appeal is not in respect of a monetary decree. Having taken into account the circumstances under which the motor vehicle was disposed of as well as the nature of the appellant’s interest in the motor vehicle, I would agree that it would be unreasonable to demand that a deposit in cash, equivalent to the purchase price paid by the 1st respondent. Order 42 Rule 6(2) gives the Court the discretion to make such order as to security as would meet the ends of justice, bearing in mind the peculiar circumstances of the parties before it. In this instance, I am of the considered view that the motor vehicle is, itself sufficient security.

[30]In the result, the appellant’s Notice of Motion dated 24th September 2021 is meritorious. The same is hereby allowed and orders granted as hereunder:

[a] That an order of stay of execution of the ruling delivered in Mombasa CMCC No. 19 of 2021: Ahmed Bunu Haji Ahmed v Platinum Credit Limited & Another on 14th September 2021 together with its consequential orders, including the order that motor vehicle registration number KCM 721F be released to the 1st respondent, be and is hereby granted pending the hearing and determination of this appeal.

[b]That an order of stay of further proceedings inMombasa CMCC No. 19 of 2021: Ahmed Bunu Haji Ahmed v Platinum Credit Limited & Cash Gate Auctioneers,be and is hereby granted pending the hearing and determination of the appeal;

[c] That the costs of the application be costs in the appeal.

It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 10TH DAY OF MARCH 2022.

____________

OLGA SEWE

JUDGE