Rama Homes Ltd v Shah & 2 others (Environment and Land Appeal E033 of 2026) [2026] KEELC 3107 (KLR) (22 May 2026) (Ruling)

Rama Homes Ltd v Shah & 2 others (Environment and Land Appeal E033 of 2026) [2026] KEELC 3107 (KLR) (22 May 2026) (Ruling) Neutral citation: [2026] KEELC 3107 (KLR) Republic of Kenya In the Environment and Land Court at Nairobi Environment and Land Appeal E033 of 2026 EK Wabwoto, J May 22, 2026 Between Rama Homes Ltd Appellant and Narendra Shah 1st Respondent Rameshchandra Shah 2nd Respondent Sanjay Ramji Fulchand Shah 3rd Respondent Ruling 1.This ruling is in respect to the application dated 25th March 2026 filed by the Respondents/Applicants seeking the following principal orders:(i)A review, setting aside and/or variation of this Court’s order of 19th March 2026 directing that the stay of execution pending appeal be conditional upon the Appellant furnishing a bank guarantee for Kshs. 4,503,094/= within thirty (30) days, failing which the stay would automatically lapse;(ii)An order directing the Appellant/Respondent to deposit the full decretal sum of Kshs. 6,196,884/= (inclusive of interest and costs) in a joint interest-earning account in the names of the parties’ advocates in satisfaction of the judgment and decree; and(iii)In the alternative, an order setting aside the ex parte orders of 19th March 2026 and granting leave to file a Replying Affidavit to the Appellant’s stay application dated 9th March 2026. 2.By a judgment delivered on 30th January 2026 in Milimani MCELC No. E137 of 2022 Narendra Shah & 2 Others v Rama Homes Limited Hon. M.A. Otindo (SPM) entered judgment in favour of the Applicants for a decretal sum, interest and costs totalling Kshs. 6,196,884/=, with the principal decretal sum being Kshs. 4,503,094/=. The Appellant being aggrieved lodged this appeal against the entirety of that judgment. 3.On 9th March 2026, the Appellant filed a Notice of Motion under Certificate of Urgency seeking stay of execution pending the hearing and determination of the appeal. The application was filed on 16th March 2026, and upon filing, this Court issued directions on the same date fixing the application for hearing on 19th March 2026. 4.On 19th March 2026, the matter came up for directions in the presence of Counsel for the Appellant, and in the absence of the Respondents/Applicants, who had been duly served and notified. This Court granted a conditional stay of execution in the following terms:“1.That there shall be stay of execution of the judgment and decree of Hon. M.A. Otindo (SPM) delivered on 30th January 2026 pending hearing and determination of the instant appeal on condition that the Appellant do provide and file before this court a bank guarantee of the decretal sum of Ksh 4,503,094.00 within 30 days from today failure of which the stay so granted shall automatically lapse.” 5.The Applicants discovered the service email which had been directed to their Spam folder on 23rd March 2026, and filed the present application on 25th March 2026. The Motion is supported by the Supporting Affidavit of Awuor Mauleen Nelly sworn on 25th March 2026 and opposed by the Replying Affidavit of Serah Kamau, the Chief Finance Officer of the Appellant, sworn on 20th April 2026. Both parties filed written submissions with the Applicant filing written submissions dated 28th April 2026 while the Appellants filing written submissions dated 8th May 2026. The Applicants’ case and written submissions 6.The Applicants’ case, as set out in the Notice of Motion dated 25th March 2026, the Supporting Affidavit of Awuor Mauleen Nelly sworn on the same date, and the written submissions dated 28th April 2026 filed by Kiriba Kariuki & Associates Law, may be summarised as follows. 7.On the question of their absence from court on 19th March 2026, the Applicants depose that the service email transmitting the stay application and the hearing notice was automatically directed to their Spam folder and that they did not receive any notification in their inbox. They aver that they only discovered the email on 23rd March 2026, upon which counsel immediately telephoned the Appellant’s advocates to enquire about the outcome of the hearing. They exhibit a screenshot of the Spam folder and a call log in support thereof. They further contend that the Appellant served the application on short notice on 16th March 2026, only two days before the 19th March 2026 hearing, which they submit was insufficient time to prepare, contrary to Article 50(2)(c) of the Constitution guaranteeing the right to a fair hearing. They rely on the case of Sunday Publishers Limited & another v. Nairobi City County [2025] KEHC 14919 (KLR) where a court set aside an ex parte judgment on similar facts of an email going to spam, and urge that the mistakes of counsel should not be visited upon the party. 8.On the suitability of a bank guarantee as security for a money decree, the Applicants submit that a bank guarantee is an inadequate and unsuitable form of security for three principal reasons. First, there is a real possibility that the issuing bank may dishonour the guarantee. Second, since the bank is not a party to the suit, the successful party would be compelled to institute a separate suit to enforce the guarantee, making it a cumbersome and uncertain remedy. Third, the Appellant failed entirely to propose, disclose, or annex any draft bank guarantee or any information about the proposed issuing bank either in the stay application or its Supporting Affidavit thereby depriving both the Court and the Applicants of the opportunity to assess the proposed security’s suitability. In support of these contentions the Applicants rely on Nyangau v. Choi & 2 Others [2022] KEHC 3015 (KLR); Kariuki v. Wanjiru [2022] KEHC 13630 (KLR); Nobel Trading Co. Ltd & 2 others v. Peter Odhiambo Marega [2022] KEHC 1983 (KLR); Gianfranco Manenthi & another v. Africa Merchant Assurance Company Ltd [2019] KEHC 7586 (KLR); Njoroge v. Nganga [2024] KEHC 14521 (KLR); and Virji Vishram Patel & Sons Co Ltd v. Nyabuto [2026] KEHC 1627 (KLR). 9.Additionally, the Applicants draw the Court’s attention to the fact that, as evidenced by the CR12 filed as exhibit “AMN-5,” the Appellant is encumbered by registered charges in excess of Kshs. 1 billion. They submit that in the likely event the appeal fails, the Applicants may be unable to recover the judgment sum, and they therefore express apprehension about the Appellant’s ability to procure or maintain a credible bank guarantee. 10.On the question of review jurisdiction, the Applicants submit that the Court can properly entertain a review of an order for security under the “any other sufficient reason” ground in Order 45 Rule 1 of the Civil Procedure Rules, and that such reason need not be analogous to the other two specific grounds. They rely on Martha Wambui v. Irene Wanjiru Mwangi & another [2015] KEHC 5616 (KLR); Owino Caroline v. Castro Otiende [2014] KEHC 5213 (KLR); and Hayer & another v. Kenya Railways Corporation [2023] KEELC 15820 (KLR) as authority that a court has previously considered and in appropriate circumstances allowed review of security orders under that limb. 11.The Applicants’ primary prayer is that the Court directs the Appellant to deposit the full decretal sum of Kshs. 6,196,884/= in a joint interest-earning account in the names of the parties’ advocates. In the alternative, they pray that half the amount be deposited in such an account and the Appellant provide a bank guarantee for the remaining half. As a further alternative, they seek leave to file a Replying Affidavit to the substantive stay application. The Appellant’s case and written submissions 12.The Appellant’s case, as set out in the Replying Affidavit of Serah Kamau Chief Finance Officer sworn on 20th April 2026 and the written submissions dated 8th May 2026 filed by M & E Advocates LLP, may be summarised as follows. 13.It is the Appellant’s contention that the application is misconceived, unmerited and an abuse of the process of this Court, and ought to be dismissed in its entirety. The Appellant identifies the following issues for determination: whether the Applicants have satisfied the threshold for review under Section 80 of the Civil Procedure Act and Order 45 Rule 1; whether there is a proper basis for setting aside the ex parte orders of 19th March 2026; and whether there is any sound basis for interfering with the Court’s order that security be furnished by way of bank guarantee. 14.On service and non-attendance, the Appellant submits that service is expressly admitted by the Applicants in their own Motion and Supporting Affidavit, and that the Court was satisfied as to service before making the orders of 19th March 2026, as is evidenced by the Affidavit of Service sworn on 18th March 2026 and the recitation in the order that the matter proceeded in the absence of the Respondents “though duly served and notified.” The Appellant characterises the spam filter issue as an internal office management failure entirely outside the Appellant’s control and responsibility, and not an excusable basis for setting aside a validly obtained court order. The Sunday Publishers case authority is distinguished on the ground that the order set aside in that case was a final ex parte judgment not a conditional interlocutory order and that a materially more demanding standard applies to the setting aside of interlocutory orders. 15.On the short notice allegation: the Appellant submits that the two-day window between service and hearing was not of its making but was a direct consequence of the Court’s own directions upon the urgent application. The Appellant filed under Certificate of Urgency on 16th March 2026, and the Court fixed the hearing for 19th March 2026 on the same day. The Appellant cannot be faulted for complying with the Court’s own timetable. If the Applicants were aggrieved by the abridged notice, the proper course was to attend court and seek an adjournment not to allow the matter to proceed in their absence and subsequently seek to set aside the resulting order. 16.On the review jurisdiction, the Appellant relies on National Bank of Kenya Limited v. Ndungu Njau [1997] eKLR for the proposition that review may only be granted to correct a self-evident error on the face of the record and that it is not a sufficient ground for review that another judge could have taken a different view. The Appellant submits that the Applicants have not identified any new matter or evidence, any error apparent on the face of the record, or any other sufficient reason; their complaint is purely about the form of security, which is a matter of disagreement with the Court’s exercise of discretion and therefore properly a ground of appeal, not review. 17.On the bank guarantee, the Appellant submits that a bank guarantee issued by a reputable financial institution is a recognised and adequate form of security in stay proceedings, and that it secures the decretal amount without unnecessarily tying up the Appellant’s liquid funds during the pendency of the appeal. The Applicants have not placed before the Court any evidence that the Appellant intends to evade the order or will furnish a defective guarantee. Their apprehension that a bank may dishonour a future guarantee is described as speculative, premature and unsupported by evidence as no guarantee has yet been presented for examination. 18.On the CR12, the Appellant submits that the existence of registered charges is a standard and routine feature of corporate financing and does not by itself establish insolvency, inability to meet obligations, or inability to procure a bank guarantee. No statutory demand, winding-up petition, receivership appointment or audited accounts evidencing financial distress have been placed before the Court. The CR12, properly read, demonstrates that Rama Homes Limited is a going concern with active directors and shareholders, fully capable of meeting its obligations. The Appellant further points out that compelling a full cash deposit of Kshs. 6,196,884/= would be punitive, oppressive, and would render the appeal illusory — contrary to the principle in Butt v. Rent Restriction Tribunal [1982] KLR 417. The Appellant relies on Focin Motorcycle Co. Limited v. Ann Wambui Wangui & another [2018] eKLR for the proposition that it is the Court’s discretion to determine the nature of security and that an offer to provide security is a mark of good faith. 19.The Appellant further notes that each of the authorities cited by the Applicants in opposition to the bank guarantee is distinguishable: Nyangau v. Choi and Nyangau v. Mekenye involved fact-specific non-enforcement risks on primary stay applications not reviews of a guarantee already directed by the court; Kariuki v. Wanjiru involved a guarantee that had actually been presented and found to be both wrongly addressed and expired; Nobel Trading involved a specific factual finding of non-viability after presentation; Virji Vishram Patel involved an appellant’s own silence on security unlike this case where the Court independently chose the bank guarantee; and Owino Caroline and Hayer both resulted in the review applications being dismissed. 20.On the prayer for leave to file a Replying Affidavit, the Appellant submits that this has been overtaken by events, the Applicants having already placed before the Court every argument they wish to canvass including a draft Replying Affidavit by the 1st Respondent Narendra Shah through the present application and its supporting documents. 21.The Appellant accordingly prays that the Notice of Motion be dismissed in its entirety with costs, and that the orders of 19th March 2026 remain undisturbed. Issues for determination 22.Having considered the pleadings, affidavit evidence, and the written submissions of both parties, this Court identifies two issues for determination:(i)Whether the Applicants have established a proper basis for setting aside the orders of 19th March 2026;(ii)What are the appropriate orders to grant herein. Issue (i): Setting Aside of the Orders of 19th March 2026 23.The Applicants’ primary explanation for their absence from court on 19th March 2026 is that the service email was directed to their Spam folder, which they only checked on 23rd March 2026. They further contend that service was on short notice two days before the hearing contrary to Article 50(2)(c) of the Constitution. 24.The governing principle on setting aside ex parte orders is well-settled. In Shah v. Mbogo & Another [1967] EA 116, Harris J held that the discretion to set aside is “intended to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but is not designed to assist the person who has deliberately sought whether by evasion or otherwise, to obstruct or delay the course of justice.” That statement was affirmed by the former Court of Appeal for East Africa in Mbogo v. Shah [1968] EA 93 and remains the lodestar in this jurisdiction. Under Order 51 Rule 15 of the Civil Procedure Rules, the court may set aside an order made ex parte where it is satisfied either that the Applicant was not properly served, or that the Applicant failed to appear for sufficient cause. 25.On the question of service, it is common ground indeed expressly admitted in both the Motion and Supporting Affidavit that the stay application and the hearing notice were transmitted by email on 16th March 2026. The Applicants do not contest receipt; their complaint is confined to the internal routing of the email to a Spam folder. That admission is, in the Court’s view, conclusive on the question of service. The Court was satisfied as to service before proceeding on 19th March 2026, as is apparent from the prefatory recitation in the order: the matter proceeded “in the absence of the Respondents though duly served and notified of today’s proceedings.” This Court therefore finds that service was properly effected. 26.The failure of counsel’s email provider to deliver the service email to the inbox rather than the Spam folder is an internal office management matter entirely within the control and responsibility of the receiving party’s advocates. It is not a matter for which the Appellant can be held responsible, nor one that can be attributed to any irregularity in the proceedings of 19th March 2026. The Applicants rely on Sunday Publishers Limited & another v. Nairobi City County [2025] KEHC 14919 (KLR) where a court set aside an ex parte judgment on account of an email going to spam. However, that case is materially distinguishable: the order set aside there was a final ex parte judgment conclusively determining the parties’ substantive rights. The order of 19th March 2026 is an interlocutory, conditional, preservatory order. The Applicants’ rights as decree holders are not extinguished they are preserved pending appeal. The threshold for setting aside a conditional interlocutory order is materially more demanding than that applicable to a final judgment. 27.On the short notice complaint, it is noteworthy that the Appellant filed the stay application under Certificate of Urgency on 16th March 2026. Upon filing, this Court exercised its inherent jurisdiction under Section 3A of the Civil Procedure Act and fixed the hearing for 19th March 2026. The two-day window between service and hearing was therefore a consequence of the Court’s own directions on an urgent application not a contrivance of the Appellant. The Appellant cannot be faulted for complying with a timetable set by the Court itself. If the Applicants were aggrieved by the abridged timetable, the appropriate course was to attend court on 19th March 2026 and seek an adjournment. The argument that proceeding on short notice violated Article 50(2)(c) of the Constitution overlooks that the Applicants were served and notified and could have attended to seek more time. 28.The Court is therefore not persuaded that the Applicants have demonstrated sufficient cause for their non-attendance on 19th March 2026. The principal prayer to set aside the orders on that basis accordingly fails. Issue (ii): What are the appropriate orders to grant herein 29.Order 45 Rule 1 of the Civil Procedure Rules permits a court to review its decree or order on three grounds:(i)discovery of new and important matter or evidence not within the knowledge of the applicant at the time, after the exercise of due diligence;(ii)some mistake or error apparent on the face of the record; or(iii)for any other sufficient reason. 30.This Court accepts the proposition supported by the authorities cited by both parties that an order for security may, in appropriate circumstances, be the subject of a review application under the “any other sufficient reason” ground in Order 45. The scope of that limb is not to be restricted by analogy to the other two grounds: see Martha Wambui v. Irene Wanjiru Mwangi (supra). However, “sufficient reason” must be, as articulated in Attorney General v. Law Society of Kenya & another [2013] eKLR: “rational, plausible, logical, convincing, reasonable and truthful” and must “not leave unexplained gaps in the sequence of events.” The Court must determine whether the Applicants have crossed that threshold on the particular facts of this application. 31.The Applicants advance three grounds for review of the mode of security:(a)the possibility that a bank might dishonour a guarantee;(b)the impracticability of enforcing a guarantee against a bank that is not a party to the suit; and(c)the absence of any draft guarantee or disclosure of the issuing bank in the Appellant’s stay application, coupled with the Appellant’s alleged indebtedness of over Kshs. 1 billion as evidenced by its CR12. 32.On the question of the Appellant’s financial standing: the Applicants rely on the CR12 filed as exhibit “AMN-5,” which reveals four registered charges totalling approximately Kshs. 1.045 billion. This Court agrees with the Applicants that the existence of substantial registered charges, particularly against a company whose share capital is only Kshs. 100,000, is a matter that warrants serious attention. A company carrying secured debt of over Kshs. 1 billion with nominal capital of Kshs. 100,000 raises a meaningful question about its ability to procure and maintain a credible bank guarantee. The Appellant’s rejoinder that registered charges are a routine feature of commercial operations is correct as a general proposition but does not address the specific concern raised: whether, in the circumstances of this company, a bank guarantee would constitute genuine security. 33.Furthermore, the absence of any disclosure of the proposed issuing bank, any draft guarantee, or any evidence of the Appellant’s ability to obtain a guarantee is a concrete lacuna. This Court is required to ensure that any security ordered genuinely protects the decree holders’ interests. It cannot make that assessment in a vacuum. In Virji Vishram Patel & Sons Co Ltd v. Nyabuto [2026] KEHC 1627 (KLR) the court directed cash deposit precisely because the appellant had failed to disclose any bank or annex any proof of ability to furnish a guarantee. While the Appellant rightly notes that it was the Court itself that ordered the bank guarantee in this case, that observation does not resolve the underlying concern: the Court made that order without the benefit of any material from either party regarding the suitability or viability of such a guarantee. 34.The enforcement concern is also not without merit. In Nyangau v. Choi & 2 Others [2022] KEHC 3015 (KLR) the court, in substituting a bank guarantee with a cash deposit, noted the enforcement difficulties attendant upon a bank guarantee: the bank is not a party to the suit, and enforcement would necessitate separate proceedings. While the Appellant is correct that no bank has yet been identified and the guarantee has not been presented, the Applicants are entitled to raise these concerns before the guarantee is filed particularly given that the very purpose of the present application is to avoid being placed in a position of having to enforce a potentially inadequate or defective instrument after the 30-day window has closed. 35.Weighing these considerations, this Court is satisfied that the Applicants have demonstrated “any other sufficient reason” within the meaning of Order 45 Rule 1 to warrant a review of the mode of security. The concern is not a bare preference for a different form of security, but a specific and demonstrable apprehension grounded in the Appellant’s CR12, the absence of any disclosure regarding the proposed guarantee, and the inherent enforcement difficulties of bank guarantees, such that the security as originally ordered may not adequately protect the Applicants’ interests as decree holders. The Ndungu Njau principle is not violated: this Court is not being asked to reconsider the merits of the stay, but to revisit a specific ancillary condition in light of material that was not placed before the Court when the order was made. 36.Having found that review of the mode of security is warranted, the Court must now determine the appropriate form of security. The guiding principle, as articulated by the Court of Appeal in Butt v. Rent Restriction Tribunal [1982] KLR 417, is that security should balance the Appellant’s undoubted right of appeal against the Respondents’ right to enjoy the fruits of their judgment. Security is not designed to be punitive, but must be genuine and enforceable. 37.The Applicants press for substitution of the bank guarantee with a cash deposit into a joint interest-earning account, citing concerns about enforceability, the absence of any disclosure of the proposed issuing bank, and the Appellant’s indebtedness. The Appellant maintains that a bank guarantee from a reputable financial institution is a recognised and adequate commercial instrument that achieves the same protective purpose without tying up the Appellant’s liquid funds. The Appellant further invokes Focin Motorcycle Co. Limited v. Ann Wambui Wangui & another [2018] eKLR for the proposition that compelling a full cash deposit would be punitive and oppressive and would render the appeal illusory. 38.This Court has had regard to all the foregoing considerations. A full cash deposit of the decretal sum of Kshs. 6,196,884/= would indeed be disproportionate and potentially oppressive at this stage, and could undermine the Appellant’s right of appeal. However, the concerns regarding the Appellant’s financial profile and the enforceability of a bank guarantee are real and cannot be dismissed. A proportionate resolution is to require a concrete cash security of a specified amount that provides the Applicants with tangible and immediately accessible protection, while not unduly burdening the Appellant. 39.In the premises, this Court is of the view that the appropriate and proportionate form of security in the circumstances of this case is a cash deposit of Kshs. 2,000,000/= to be deposited into a joint interest-earning account in the names of both Advocates on record. This sum is sufficient to provide genuine and enforceable security for the Applicants as decree holders, while balancing the Appellant’s right to pursue its appeal without being saddled with a disproportionate financial burden. The bank guarantee condition imposed on 19th March 2026 shall accordingly be discharged and substituted with this cash deposit requirement. 40.As regards the prayer for leave to file a Replying Affidavit to the Appellant’s stay application dated 9th March 2026, the Court finds that this has been overtaken by events. The Applicants have placed before the Court, through the present Motion and its supporting documents, every argument they wish to canvass in opposition to the stay including a draft Replying Affidavit deposed by the 1st Respondent, Narendra Shah. The substantive security position has now been resolved by this ruling. No useful purpose would be served by directing a further round of affidavit evidence on the stay application itself. The prayer for leave to file a Replying Affidavit is accordingly declined as having been overtaken by events. Final Orders 41.Accordingly, the Notice of Motion dated 25th March 2026 is partially allowed in the following terms:i.The order of 19th March 2026 directing the Appellant to furnish a bank guarantee of Kshs. 4,503,094/= is hereby reviewed and varied; the Appellant is directed to deposit the sum of Ksh. 2,000,000/= as security into a joint interest-earning account in the names of both Advocates on record or deposit the same in Court within 30 days from today, failing which the stay of execution shall automatically lapse.ii.Each party shall bear their own costs of this application. DATED, SIGNED AND DELIVERED VIRTUALLY THIS 22ND DAY OF MAY 2026.E.K. WABWOTOJUDGEIn the presence of:Mr. Kioko for the Appellant.Ms. Awour for the Respondents/Applicants.Court Assistants: Mary Ngoira and David Ngoosa.