[2022] KEHC 15232 (KLR)

Rentworks East Africa Ltd v Waweru & another (Civil Appeal E309 of 2021) [2022] KEHC 15232 (KLR) (Civ) (10 November 2022) (Ruling)

Neutral citation: [2022] KEHC 15232 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E309 of 2021

CW Meoli, J

November 10, 2022

Between

Rentworks East Africa Ltd

Applicant

and

Luka Gichuhi Waweru

1st Respondent

Ndung’u Ngugi

2nd Respondent

Ruling

1. The motion dated June 14, 2021 by Rentworks East Africa Ltd (hereafter the applicant) seeks to stay execution of the judgment delivered in Nairobi Milimani CMCC No 1348 of 2019 pending hearing and determination of the impending appeal. The motion is expressed to be brought under order 42 rules 6 of the Civil Procedure Rules, inter alia, and premised on the grounds on the face of the motion as amplified in the supporting affidavit sworn by Sarah Nyamache, the finance and administration manager of the applicant, authorized by the board of directors and therefore competent to swear the affidavit.

2. To the effect that being aggrieved and dissatisfied with the judgment of the lower court delivered in Nairobi Milimani CMCC No 1348 of 2019 on May 7, 2020 in favour of Luka Gichuhi Waweru (hereafter the 1st respondent), the applicant has preferred an arguable appeal. She proceeds to express apprehension that unless stay of execution is granted the 1st respondent will extract a decree and commence execution against the applicant leading to substantial and 'irreparable loss'. That the 1st respondent will not be prejudiced by the instant application which has been filed without unreasonable delay.

3. The 1st respondent opposes the motion through a replying affidavit in which he asserts that the same is an afterthought and brought in bad faith with the sole intent of preventing him from enjoying the fruits of his judgment. Like the applicant he depones to the merits of the appeal. He asserts that the applicant has not demonstrated the anticipated loss should the orders of stay of execution not be granted whereas the lodging of an appeal does not automatically stay execution of the judgment appealed from. In his view, the applicant while seeking equitable relief before this court does so with unclean hands having failed to put to good use the stay of execution order granted before the lower court. He urges the court to dismiss the motion and, in the alternative, if inclined to allow the same, to impose conditions for provision of security for the eventual performance of the decree.

4. The motion was canvassed by way of written submissions. As regards the applicable principles, counsel for the applicant anchored his submissions on the provisions of order 42 rule 6 of theCivil Procedure Rules. On substantial loss counsel cited the James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR, and Kenya Shell Limited v Benjamin Karuga Kibiru [1986] KLR 410 , RWW v EKW [2019] eKLR for the proposition that the decree herein is a money decree and the court cannot shut its eyes to the possibility that the 1st Respondent may not be in a position to refund the decretal sum in the event the appeal is successful, thus rendering the appeal nugatory. Addressing the issue of security counsel cited the decisions in Arun C Sharma v Ashana Raikundalia t/a Rairundalia & Co Advocates & 2 Others [2014] eKLR and Focin Motorcycle Co Ltd v Ann Wambui Wangui & Another [2018] eKLRand reiterated the applicant’s willingness to provide such security as the court may order.

5. On behalf of the 1st respondent, counsel similarly citing the applicable principles under the provisions of order 42 rule 6 of the Civil Procedure Rules submitted that the relief sought herein is discretionary and it has often been said that the discretion must be exercised judicially, that is, upon defined principles of law and not capriciously or whimsically. On the issue of substantial loss he relied on several decisions including Civil Appeal No E121 of 2021 Shoko Molu Beka & Another v Augustine Gwaro Mokamba, Macharia t/a Macharia & Co Advocates v East Africa Standard (No 2) (2002) KLR 63 and James Wangalwa (supra) to assert that the matter of substantial loss is a factual issue which must be raised in the supporting affidavit and that the applicant has not placed before the court evidential material on the basis of which this court can find that the applicant stands to suffer substantial loss unless stay is granted. Concerning provision of security counsel cited the decisions in Masisi Mwita v Damaris Wanjiku Njeri [2016] eKLR,Equity Bank Ltd v Taiga Adams Company Ltd [2006] eKLR and Edward Kamau & Another v Hannah Mukui Gichuki Misc 78 of 2015 in urging the position that the respondent is entitled to equal treatment before the law hence it is in the interest of justice the applicant be ordered to furnish security. Counsel concluded by submitting that the court should balance the rights of both parties particularly the 1st respondent who has a lawful judgment. The court was urged to dismiss the motion with costs.

6. The 2nd respondent did not participate in the instant proceedings before this court.

7. The court has considered the material canvassed in respect of the motion. The applicant, and to some extent the 1st respondent by their affidavit material and submissions addressed the merits of the appeal. At this interlocutory stage, the court is not concerned with the merits of the appeal. The power of the court to grant stay of execution of a decree pending appeal is discretionary, however the discretion should be exercised judicially. SeeButt v Rent Restriction Tribunal [1982] KLR 417.

8. The applicant’s motion is 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'.

9. The cornerstone consideration in the exercise of the discretion is whether the applicant has demonstrated the likelihood of suffering substantial loss if stay is denied. One of the most enduring legal authorities on the issue of substantial loss is the case of Kenya Shell (supra). The principles enunciated in this authority have been applied in countless decisions of superior courts, including those cited by the parties herein. Holdings 2, 3 and 4 of the Shell case are especially pertinent. These are that:'1. ...2. In considering an application for stay, the Court doing so must address its collective mind to the question of whether to refuse it would render the appeal nugatory.3. In applications for stay, the court should balance two parallel propositions, first that a litigant, if successful should not be deprived of the fruits of a judgment in his favour without just cause and secondly that execution would render the proposed appeal nugatory.4. In this case, the refusal of a stay of execution would not render the appeal nugatory, as the case involved a money decree capable of being repaid.'

10. The decision of Platt Ag JA, in the Shell case, in my humble view set out two different circumstances when substantial loss could arise, and therefore giving context to the 4th holding above. The Platt Ag JA (as he then was) stated inter alia that:'The appeal is to be taken against a judgment in which it was held that the present respondents were entitled to claim damages. It is a money decree. An intended appeal does not operate as a stay. The application for stay made in the High Court failed because the gist of the conditions set out in order XLI rule 4 (now order 42 rule 6(2)) of the Civil Procedure Rules was not met. There was no evidence of substantial loss to the applicant, either in the matter of paying the damages awarded which would cause difficulty to the applicant itself, or because it would lose its money, if payment was made, since the respondents would be unable to repay the decretal sum plus costs in two courts (emphasis added)'

11. The learned judge continued to observe that: -'It is usually a good rule to see if order XLI 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. That is what has to be prevented. Therefore, without this evidence, it is difficult to see why the respondents should be kept out of their money.' (Emphasis added)

12. Earlier on, Hancox JA in his ruling observed that'It is true to say that in consideration [sic] an application for stay, the court doing so must address its collective mind to the question of whether to refuse it would, render the appeal nugatory. This is shown by the following passage of Cotton L J in Wilson -vs- Church (No 2) (1879) 12ChD 454 at page 458 where he said:-'I will state my opinion that when a party is appealing, exercising his undoubted right of appeal, this court ought to see that the appeal, if successful, is not rendered nugatory.'As I said, I accept the proposition that if it is shown that execution or enforcement would render a proposed appeal nugatory, then a stay can properly be given. Parallel with that is the equally important proposition that a litigant, if successful, should not be deprived of the fruits of a judgment in his favour without just cause.'

13. The deponent of the affidavit in support of the motion expresses apprehension that unless stay of execution is granted the 1st respondent will extract a decree and proceed to execute against the applicant which action, if not stayed, will occasion substantial and irreparable loss. The 1st respondent’s response was that the applicant has not demonstrated the loss to be suffered. The mere fact that the process of execution is likely to be or has been initiated by the 1st respondent is not evidence of substantial loss. Execution in satisfaction of a decree is a lawful process, and the applicant was duty bound to demonstrate how substantial loss would arise in this instance, by showing, either that if the appeal were to succeed, the 1st respondent would be unable to refund any monies paid to him under the decree, or that payments in satisfaction of the decree would occasion difficulty to the applicant.

14. It seems that having failed to depose to the matter in the supporting affidavit, the applicants sought to do so in its submissions. That attempt can only be described as too little too late. As the 1st respondent correctly observed, the question of substantial loss is one of fact and a successful applicant must demonstrate substantial loss through affidavit evidence. As stated in the Shell case, substantial loss is the cornerstone consideration in the court’s exercise of discretion in an application seeking stay of execution. And therefore, the court in the Shell case held that without a demonstration of substantial loss, it would be rare that any other event would render the appeal nugatory and justify keeping the decree holder out of his money.

15. It is therefore not enough for the applicant to merely assert that execution will lead to substantial loss; it must be shown how such loss will arise. Substantial loss in its various forms, is the cornerstone of the jurisdiction for granting stay. That is what must be prevented. Therefore, without this evidence, it is difficult to see why the execution process should be stayed. In the court’s view, the applicant herein has not demonstrated substantial loss and therefore the likelihood of the appeal being rendered nugatory. In the circumstances, the motion dated June 14, 2021 must fail and is dismissed with costs.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 10TH DAY OF NOVEMBER 2022C.MEOLIJUDGEIn the presence of:For the Applicant: Ms. KaleFor the 1st Respondent: N/AC/A: Carol