[2022] KEHC 15510 (KLR)

Tumaz and Tumaz Enterprises Limited & 2 others v Glory Car Hire Tours and Safaris Limited & another (Civil Appeal E224 of 2021) [2022] KEHC 15510 (KLR) (1 November 2022) (Ruling)

Neutral citation: [2022] KEHC 15510 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Appeal E224 of 2021

OA Sewe, J

November 1, 2022

Between

Tumaz and Tumaz Enterprises Limited

1st Appellant

Julius Mwale

2nd Appellant

Philip Daniel Knox

3rd Appellant

and

Glory Car Hire Tours and Safaris Limited

1st Respondent

Eden Rent a Car Tours & Safaris Limited

2nd Respondent

Ruling

1. The Notice of Motion dated November 22, 2021 was brought by the appellants pursuant to Article 159 of the Constitution of Kenya, Sections 1A, 1B and 3A of the Civil Procedure Act, Chapter 21 of the Laws of Kenya, as well as Order 22 Rules 22 and 25 and Order 51 Rules 1 and 15 of the Civil Procedure Rules, 2010. The appellants thereby prayed for orders that:(a)Spent(b)Spent(c)The Court be pleased to stay execution of the judgment and decree dated April 16, 2019 pending the hearing and determination of the appeal;(d)Such other orders or directions be made as may appear to this Court to be just and convenient;(e)The costs of the application be borne by the respondents.

2. The application was premised on the grounds that the appellants are aggrieved by the decision of Hon Kyambya, CM, in Mombasa CMCC No 2417 of 2018: Glory Car Hire Tours & Safaris Limited & Another v Tumaz & Tumaz Enterprises Limited & 2 Others and have appealed the said decision; that they will suffer substantial loss and damage if the ex parte judgment is executed before their appeal is heard and determined as they will be condemned unheard contrary to the tenets of Article 50 of the Constitution of Kenya; and, that the respondents have no known assets in Kenya and therefore the appellants will not be able to recover the decretal amount in the event the appeal is successful.

3. The appellants further contended that the impugned ex parte judgment will, if allowed to stand, gravely undermine the rule of law and, especially, the credibility, integrity and sanctity of the judicial process; and permanently deprive the appellants of their constitutional rights to fair hearing as guaranteed under Article 50 of theConstitution of Kenya. They added that they are ready to deposit half of the decretal sum in a joint interest earning account in the names of the parties’ advocates as security for due performance of the decree.

4. The application was supported by the affidavit sworn by the 2nd appellant, Julius Mwale, who is a director of the 1st appellant, Tumaz & Tumaz Enterprises Ltd, in which he explicated the grounds aforementioned and pointed out that the instant application was brought at the earliest opportunity possible. Mr Mwale further deposed that the appellants have an arguable appeal that raises triable issues; and therefore that it is imperative that the application be allowed so as to preserve the integrity of the subject matter of the appeal. A copy of the impugned ruling was annexed by the 2nd appellant to the Supporting Affidavit for the Court’s consideration and was marked Annexure “JM-1”.

5. The respondents opposed the application and relied on the Replying Affidavit sworn by Mohamed Riaz Shoukat, a director of the 1st respondent and the chief executive officer of the 2nd respondent. Their stance was that the instant application is frivolous, vexatious and an abuse of the court process; and that it is only aimed at delaying the just and expeditious disposal of the matter before the trial court. At paragraph 6 of the Replying Affidavit, the respondents averred that no final judgment and/or decree has been issued by the lower court; and therefore the appellants are out to mislead this Court so as to obtain undeserved orders.

6. At paragraphs 8 to 16 of the Replying Affidavit, the respondents set out the circumstances that led to the lower court suit and what has transpired therein to date. They accused the appellants of non-disclosure of material facts; particularly the fact that the respondents admitted to having been served with the pleadings but failed to file a Defence within the required period. In proof thereof the respondents annexed a copy of an affidavit sworn on July 16, 2019 by the 2nd appellant in which the admission of service was made. In their view, the appellants have not made out a valid case for stay of execution pending appeal as provided for under Order 42 Rule 6 of the Civil Procedure Rules. They consequently prayed that the instant application be struck out with costs, under Order 2 Rule 15(1) of the Civil Procedure Rules.

7. Pursuant to the directions given herein on December 6, 2021, the application was canvassed by way of written submissions. Accordingly, the appellants’ written submissions were filed herein on February 16, 2022 by Mr Anzala. He proposed only one issue for determination, namely, whether the appellants have satisfied the conditions set out in Order 42 Rule 6(2) of the Civil Procedure Rules to warrant the issuance of the orders sought. He relied on Halai & Another v Thornton & Turpin (1963) Ltd, [1090] KLR 365, Century Oil Trading Company Ltd v Kenya Shell Limited; Focin Motorcycle Co Limited v Ann Wambui Wangui & Another, Civil Appeal No 22 of 2017; Socfinac Company Ltd v Nelphat Kimothi Muturi [2013] eKLR; Van Den Berg (K) Charles Osewe Osodo [2015] eKLR and National Industrial Credit Bank Limited v Aquinas Francis Wasike & Another[2006] eKLR, among other authorities, to demonstrate that the appellants stand to suffer substantial loss unless stay of execution is granted.

8. In terms of security, counsel reiterated the appellants’ assertion that they are ready to provide such security as the Court may order to ensure the due performance of their obligations under the subject decree. He relied on Arun C Sharma v Ashana Rainkundalia T/A Raikundalia & Co Advocates [2014] eKLR as to the purpose of security and submitted that it is sufficient that the appellants are willing to provide security. Thus, counsel for the appellants prayed that the application dated November 22, 2021 be allowed with costs.

9. On his part, Mr Gathu for the respondents proposed the following issues for determination:(a)Whether the application is an abuse of the court process;(b)Whether the appellants have met the threshold for stay of execution;(c)Whether any prejudice will be suffered by the respondents;(d)Whether the instant application was brought without unreasonable delay.

10. Counsel pointed out that the instant application is premised on the ruling dated November 5, 2021 which declined the appellant’s application for review; and therefore that there is no basis for staying execution of a judgment that was obtained with the participation of the appellants since they were heard during the formal proof hearing. With regard to the requirements of Order 42 Rule 6(1) and (2) of the Civil Procedure Rules, it was the submission of Mr Gathu that the appellants have not made out a valid case to warrant the grant of the orders sought. He submitted that it is not enough for the appellants to merely put forward assertions of substantial loss without any empirical or documentary evidence to support their alleged contention that they stand to suffer loss. Counsel maintained that the allegation that the respondents have no known assets in Kenya is false and has been made in bad faith in a bid to convince the court to issue the appellants with undeserved orders.

11. Counsel for the respondents then suggested that, if the court is minded to grant the orders sought, then the appellants ought to be directed to deposit in court the entire special damage component of the respondent’s claim in the sum of Kshs 6,557,705. 00 pending the hearing and determination of the appeal and the matter before the trial court. The court was otherwise urged to strike out the application herein with costs.

12. It is now trite that for the court to grant orders of stay of execution, one must fulfill three conditions set out in Order 42 Rule 6 (2) of the Civil Procedure Rules, 2010. The provision states: -(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.”

13. In a discussion of the above provision in the case of Halai & another v Thornton & Turpin (1963) Ltd [1990] eKLR, the Court of Appeal held: -“…The application before the superior court was made under Order XLI rule 4. In sub-rule (1) the order provides that the court appealed from may for sufficient cause (emphasis is ours) order stay of execution of a decree or order made or passed by it. Before the superior court can exercise its discretion in favour of an applicant for a stay of execution, the applicant must first establish a sufficient cause. Subrule (2) of the same rule reads:“(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;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.”Thus, the Superior Court’s discretion is fettered by three conditions. Firstly 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. The application must, of course, be made without unreasonable delay…”

14. The appellants contend that they stand to suffer substantial loss if the application is not allowed as the respondents will proceed with the process of execution; yet it is now settled that execution is a lawful process and does not, of itself portend substantial loss. In the case of James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR, for instance it was held: -“…No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself, does not amount to substantial loss. Even when execution has been levied and completed, that is to say, the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process…”

15. Hence, in the case of Kinyunjuri Muguta v Wotuku Muguta [2018] eKLR, it was held: -“…The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the Applicant as the successful party in the appeal. This is what substantial loss would entail, a question that was aptly discussed in the case of Silverstein N Chesoni [2002] 1KLR 867, and also in the case of Mukuma v Abuoga quoted above. The last case, referring to the exercise of discretion by the High Court and the Court of Appeal in the granting stay of execution, under Order 42 of the CPR and Rule 5(2) (b) of the Court of Appeal Rules, respectively, emphasized the centrality of substantial loss thus:“…the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory…”

16. What is emerging from the factual averments presented herein by the parties is that there is an interlocutory judgment in the lower court matter. As far as can be gleaned from the pertinent affidavits no precipitate action has been taken by the respondents towards execution. No final judgment and or decree was attached to show that the respondents are poised to levy execution. On the other hand, the respondents have positively affirmed that, as matters stand, there is no judgment and/or decree and therefore there is no threat of execute as the matter is yet to be heard and a final judgment given. It is consequently my finding that the application is entirely premature.

17. The foregoing being my view of the matter, I find no basis for considering the issue of security; with the result that the notice of motion dated November 22, 2021 is hereby struck out with costs.It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 1ST NOVEMBER 2022OLGA SEWEJUDGE