[2023] KEHC 24973 (KLR)

Transmara Sugar Company Limited v Ogake (Civil Appeal 56 of 2021) [2023] KEHC 24973 (KLR) (9 November 2023) (Ruling)

Neutral citation: [2023] KEHC 24973 (KLR)

Republic of Kenya

In the High Court at Migori

Civil Appeal 56 of 2021

RPV Wendoh, J

November 9, 2023

Between

Transmara Sugar Company Limited

Applicant

and

Samuel Achuti Ogake

Respondent

Ruling

1. Transmara Sugar Company Limited (applicant) filed the Notion of Motion dated March 21, 2023. The application is based on the grounds found on the body of the application and is supported by the affidavit of Emmanuel Seriani, counsel for the applicant sworn on March 10, 2023. The applicant seeks the following orders: -1. Spent.

2. Spent.

3. That stay be granted pending furnishing of fresh bank guarantees as security pending the hearing and determination of the intended appeal to be preferred at the Court of Appeal.

4. There be costs in the cause.

2. It was deposed that pending the hearing and determination of this appeal, the applicant furnished security by way of bank guarantee of Kes 360,000/= through I & M Bank vide payment guarantee no 001/CB/LG/194/2021; that this court delivered its judgement on January 19, 2023 and dismissed the appeal with costs; that the respondent has proclaimed with the intention of executing; that the applicant has filed a notice of appeal to the Court of Appeal; that if stay of execution is not granted, the appeal will be rendered nugatory and the applicant will suffer risk of irreversible loss. The applicant urged that if this court does not grant the orders to stop the execution, the applicant will suffer substantial loss; that the application has been made without undue and unreasonable delay.

3. The respondent opposed the application through grounds of opposition as follows: -1. That the application lacks merit and is meant to waste the court’s time and is an abuse of the court’s process.2. That the application is vexatious and frivolous.3. That the application is meant to deny the respondent the right to reap the fruits of his judgement in the lower court.

4. None of the parties filed their respective written submissions. The only issue for determination is whether this court should grant the stay orders.

5. In granting stay orders, this court is guided by the provisions of order 42 rule 6 of the Civil Procedure Rules. In Halai &another vs Thornton & Turpin (1963) Ltd (1990) eKLR, the Court of Appeal held that whereas the Court of Appeal’s power to grant a stay pending appeal is unfettered, the High Court’s jurisdiction to do so under the now, order 42 rule 6 of the Civil Procedure Rules is fettered by three conditions namely, the applicant must establish a sufficient cause; secondly, the court must be satisfied that substantial loss would ensue from a refusal to grant a stay; and thirdly, the applicant must furnish security. Further the application must be made without unreasonable delay.

6. The applicant filed this application after the respondent commenced execution proceedings against it. Judgement was delivered on January 19, 2023. The instant application was filed on March 21, 2023 a period of two months after the judgement. Even if there was some form of delay, yet the applicant has already moved and filed a notice of appeal showing its keenness to challenge the said decision.

7. The applicant contends that it will suffer substantial loss if stay orders are not granted pending appeal. The applicant is apprehensive that the respondent will proceed and recover the decretal sum thereby rendering the intended appeal nugatory. While this court cannot comment on the merits of the intended appeal, it is true that since this court dismissed the appeal with costs to the respondent, the respondent is entitled to proceed with execution if at all the decretal sums are not settled by the applicant. However, the applicant has lodged a notice of appeal to the Court of Appeal.

8. On execution proceedings where decree of money is involved, Odunga J (as he was then) held as follows in Michael Ntouthi Mitheu v Abraham Kivondo Musau (2021) eKLR

9. Where execution of a money decree is sought to be stayed, in considering whether the applicant will suffer substantial loss, the financial position of the applicant and that of the respondent becomes a crucial issue. The court cannot shut its eyes where it appears the possibility of the respondent refunding the decretal sum in the event that the applicant is successful in his appeal is doubtful. The court has to balance the interest of the applicant who is seeking to preserve the status quo pending the hearing of the appeal to ensure that his appeal is not rendered nugatory and the interest of the respondent who is seeking to enjoy the fruits of his judgement. In other words, the court should not only consider the interest of the applicant but has also to consider, in all fairness, the interest of the respondent who has been denied the fruits of her judgement.”

10. I am of the view that the applicant will suffer substantial loss in the event that the appeal is successful and the stay orders are not made thereby rendering the intended appeal a nugatory. Had the respondent established that he is a man of means who can refund the decretal sum, then I would have reluctantly allowed this application.

11. On the security to be furnished, the applicants have proposed the furnishing of fresh bank guarantees as security pending the intended appeal. The guiding principles on the purpose of furnishing security pending appeal were aptly stated in the case of Mwaura Karuga t/a Limit Enterprises v Kenya Bus Services Ltd & 4others (2015) eKLR it was held that:-"… the security must be one which shall achieve due performance of the decree which might ultimately be binding on the applicant. The rule does not, therefore, envisage just any security. The words ‘’ultimately be binding’ are deliberately used and are useful here, for they refer to the entire decree as will be payable at the time the appeal is lost. That is the presumption of law here. Therefore, the ultimate decree envisaged under order 42 rule 6 (2) (b) of the Civil Procedure Rules includes costs and interest on the judgment sum unless the latter two were not granted-which is seldom. The security to be given is measured on that yardstick.”

12. In Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd (2019) eKLR, the court observed: -"…Further, order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgement involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal … This the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine.”

13. The Court of Appeal in Gitahi & another v Warugongo (1988) eKLR expressed itself as follows: -"The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so…The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it”

14. A summation of the above findings is that even as an appellant wishes to exercise its right of appeal, if the appeal was to be unsuccessful, the respondent should not be put in a position where it finds it difficult or impossible to realize the decree. In making the decision on the mode in which the security is to be furnished, the court is not bound by the proposition of the applicant but it should balance the interests of the both parties.

15. The applicant has undertaken to furnish fresh bank guarantees from Diamond Trust Bank. In balancing the interest of both parties, the applicant will deposit in court half of the total decretal sum in the appeals which this judgement applies to, that is, Civil Appeals Nos. 40, 42, 45 46 and 56 all of 2021 as security and procure fresh bank guarantees for the other half of the decretal sum pending the hearing and determination of the intended appeal.

16. The following orders do issue: -i.The applicant is hereby granted stay of execution of the judgement and decree of this court pending the hearing and determination of the intended appeal on condition that: -a.The applicant do deposit, the total decretal amount in Civil Appeals No Civil Appeals Nos 40, 45, 46 and 56 all of 2021 as security for due performance within 21 days hereof in a joint interest earning account of both counsel.ii.Failure to comply with the above stay conditions, the respondent be at liberty to proceed with the execution.iii.These orders will apply to Civil Appeals Nos 40, 45 and 46 all of 2021. iv.Costs shall be in the cause.v.Mention on March 4, 2024 for directions.

DATED, SIGNED AND DELIVERED AT MIGORI THIS 9TH DAY OF NOVEMBER 2023R. WENDOHJUDGERuling delivered in the presence of;Ms. Akoya holding brief for Mr. Oyagi for the Applicant.No appearance for the Respondent.Emma & Phelix Court Assistants.