[2022] KEHC 15796 (KLR)

Tiny Bees Credit (K) Limited v Nderitu & another (Civil Appeal E204 of 2022) [2022] KEHC 15796 (KLR) (Civ) (1 December 2022) (Ruling)

Neutral citation: [2022] KEHC 15796 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E204 of 2022

JN Mulwa, J

December 1, 2022

Between

Tiny Bees Credit (K) Limited

Appellant

and

Patrick Macharia Nderitu

1st Respondent

Washington Kinguru Kahoro

2nd Respondent

Ruling

1. This ruling is in respect to the applicant’s notice of motion dated April 6, 2022 and the 1st respondent’s notice of preliminary objection dated May 6, 2022.

2. The applicant notice of motion dated April 6, 2022 was brought under section 75 of the Civil Procedure Act, orders 43 rule 1 (3) and order 51 rule 1 of the Civil Procedure Rules 2010. The applicant seeks an order stay of execution of the ruling and order delivered on March 4, 2022 in Milimani CMCC No E 11807 of 2021 pending the hearing and determination of its appeal, as well as stay of the proceedings in the said suit pending hearing and determination of the appeal.

3. The application is founded on the grounds set out on its face and supported by a supporting affidavit and supplementary affidavit sworn by its General Manager Carol Ogallo.

4. In response, the 1st respondent filed a replying affidavit sworn on April 4, 2022 and raised a notice of preliminary objection dated May 6, 2022 on the grounds that there is no resolution of the applicant's Board of Directors authorizing Carol Ogolla to swear the supporting affidavit as required under order 4 rule 1 (4) of the Civil Procedure Rules 2010.

5. The applicant responded to the preliminary objection vide grounds of opposition dated June 8, 2022.

6. The court has considered the pleadings, and the submissions. The issues that arise for determination before this court are as follows:1. Whether the 1st respondent’s preliminary objection is merited.2. Whether the execution of the ruling and order delivered on March 4, 2022 in Milimani CMCC No E 11807 of 2021 should be stayed pending the hearing and determination of this appeal.3. Whether the proceedings in Milimani CMCC No E 11807 of 2021 should be stayed pending the hearing and determination of this appeal.

Whether the 1st Respondent’s Preliminary Objection is Merited. 7. The 1st respondent contends that the applicant’s application herein is fatally defective as the deponent of the supporting affidavit has not demonstrated that she has authority to swear it on behalf of the applicant company.

8. The applicant refuted this contention and submitted that order 4 rule 1(4) of the Civil Procedure Rulesdoes not demand that a company’s board resolution under seal and/or authority be filed together with an affidavit sworn by an officer of the company and that in any event, it is now well settled that the failure to file an authority to act and/or board resolutions cannot invalidate a suit. Further, the applicant submitted that the 1st respondent has by his conduct accepted the authority of Carol Ogallo to swear affidavits on behalf of the applicant by accepting affidavits sworn by her in Milimani CMCC No E 11807 of 2021. To support its submissions, the appellant cited Mawe Mbili Limited v Equity Bank [2022] eKLR and Peeraj General Trading & Contracting Company Limited & another v Mumias Sugar Company Limited[2016] eKLR.

9. Order 4 rule 1(4) of the Civil Procedure Rules provides:"Where the plaintiff is a corporation, the verifying affidavit shall be sworn by an officer of the company duly authorized under the seal of the company to do so.”

10. There is no requirement in the said provision that the authority and/or resolution of the company under seal be exhibited in the verifying affidavit as the same can be filed any time before suit is heard. Whereas the above provision concerns the swearing of a verifying affidavit that accompanies a plaint when filing a suit by a corporation, this court notes that it is equally important that the court be satisfied that the deponent of any other affidavit sworn on behalf of a company in relation to a suit in court, was mandated to do so by the company.

11. In this case, the applicant annexed to the supplementary affidavit sworn by Carol Ogallo, a company resolution and authority made on March 21, 2022 authorizing the deponent to sign and swear all documents that may become necessary in these proceeding. The court therefore finds that the applicant’s General Manager, Carol Ogallo, was duly mandated and authorized to swear the supporting affidavit on behalf of the applicant.

12. In the premises, the court finds the 1st respondent’s preliminary objection to be lacking in merit. It is dismissed.

Whether the Execution of the Ruling and Order Delivered on March 4, 2022 in Milimani CMCC No E 11807 Of 2021 Should Be Stayed Pending the Hearing and Determination of This Appeal. 13. The conditions necessary for the grant of stay of execution pending appeal are laid out in order 42 rule 6(1) & (2) 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 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; andb.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."

14. From the said provision, it is clear that in order to succeed in an application for stay of execution, an applicant must demonstrate that substantial loss may result unless the order of stay is issued; that the application has been brought without undue delay; and must give security for the due performance of any decree or order that may ultimately be found to be binding on the applicant.

15. As regards substantial loss, the applicant submitted that in the March 4, 2022 ruling, the trial court ordered that the suit property namely motor vehicle registration No KCH 137U be released to the 1st respondent pending the determination of the case. The applicant submitted the said motor vehicle is a security for a loan that was advanced to the 2nd respondent. As such, it is reasonably apprehensive that the 1st respondent may dispose of the motor vehicle thus leaving it without security or any fall back plan for recovery of the outstanding loan amount due to it.

16. According to the 1st respondent however, the applicant has not demonstrated that it is deserving of the orders sought. He urged that if the lower court order is executed, the applicant will not suffer any substantial loss as the trial court has imposed strict conditions inter alia that the motor vehicle shall be availed to court any time when ordered and he is ready to abide with the said conditions.

17. None of the parties exhibited the ruling of March 4, 2022 to enable this court appreciate its contents. What was annexed to the applicant’s supporting affidavit is a copy of the court order that was extracted therefrom. Notably, the 1st respondent has not refuted the applicant’s assertion that the vehicle is a security for a loan that was advanced to the 2nd respondent. In the court’s view, if the vehicle is released to the 1st respondent, there is a possibility of the vehicle depreciating in value due to wear and tear even if the 1st respondent is ready and willing to avail it in court whenever ordered to. This court is therefore satisfied that the applicant has demonstrated that it stands to suffer substantial loss if stay of execution is not granted.

18. On whether the application has been made without unreasonable delay, the ruling was delivered on March 4, 2022 and the instant application was filed on April 6, 2022. The court finds that the applicant satisfies this condition.

19. On security, the appellant has indicated that it is capable, ready and willing to provide such security as this court may direct. In the instant case, the applicant has demonstrated that the subject motor vehicle is a security for a loan that was advanced to the 2nd respondent. It will therefore be unreasonable and against the interest of justice to require it to deposit security. In the court’s view, the expression of willingness and readiness to comply suffices in this case.

20. Consequently, the court finds that the applicant has made out a case for the grant of stay of execution orders pending hearing and determination of the appeal.

Whether the Proceedings in Milimani CMCC No E 11807 Of 2021 Should Be Stayed Pending the Hearing and Determination of this Appeal. 21. The applicant submitted that if the proceedings in the lower court are not stayed, there is a likelihood of execution of the order by the lower court since the 1st appellant has already lodged an application seeking to enforce the orders of March 4, 2022. It urged that the respondent will not suffer any prejudice if the proceedings in the lower court are stayed.

22. The power to stay proceedings pending appeal is derived from both order 42 rule 6 of the Civil Procedure Rulesas well the inherent jurisdiction reserved under section 3A of the Civil Procedure Act. Notably however, the test for stay of proceedings is very high and stringent. Halsbury’s Law of England, 4th edition vol 37 page 330 and 332, states that:“The stay of proceedings is a serious, grave and fundamental interruption in the right that a party has to conduct his litigation towards the trial on the basis of the substantive merits of his case, and therefore the court’s general practice is that a stay of proceedings should not be imposed unless the proceeding beyond all reasonable doubt ought not to be allowed to continue”

23. In the case of Global Tours & Travels Limited; Nairobi HC Winding Up Cause No 43 of 2000, Ringera J stated thus;“As I understand the law, whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of Justice...the sole question is whether it is in the interest of justice to order a stay of proceedings and if it is, on what terms it should be granted. In deciding whether to order a stay, the court should essentially weigh the pros and cons of granting or not granting the order. and in considering those matters, it should bear in mind such factors as the need for expeditious disposal of cases, the prima facie merits of the intended appeal, in the sense of not whether it will probably succeed or not but whether it is an arguable one, the scarcity and optimum utilization of judicial time and whether the application has been brought expeditiously.”

24. This court holds the considered view that having stayed the execution of the order for release of the subject motor vehicle to the respondent pending the hearing and determination of the appeal which is only centered on that particular order, it is unnecessary to stay the proceedings in the trial court. Rather, it is imperative that the suit before the trial court be heard and concluded speedily. The court will therefore not grant a stay of the proceedings.

Conclusion 25. For the foregoing, the court finds as follows:1. The 1st respondent’s notice of preliminary objection dated May 6, 2022 lacks merit and is hereby dismissed with costs to the applicant.2. The applicant’s notice of motion dated April 6, 2022 is partly successful. There shall be a stay of execution of the ruling and order delivered on March 4, 2022 in Milimani CMCC No E 11807 of 2021 pending the hearing and determination of this appeal.3. The applicant shall file and serve its record of appeal within sixty (60) from the date of this ruling and thereafter come back to court for mention to confirm the status of the appeal.4. The costs of the applicant’s application shall abide in the appeal.Orders accordingly.

DELIVERED, DATED AND SIGNED THIS 1ST DAY OF DECEMBER 2022. J.N. MULWAJUDGE