[2022] KEHC 2583 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAKURU

CIVIL APPEAL NUMBER 201 OF 2019

UAP INSURANCE COMPANY LIMITED...........APPELLANT/APPLICANT

VERSUS

JUSTUS MOSETI OKECHI..........................................................RESPONDENT

R U L I N G

1. The application before me is the Notice of Motion dated 27th November 2019 brought by UAP Insurance Company Limited, the appellant/applicant. It is brought under Section 3A of the Civil Procedure Act and Order 42 rule 6(2) of the Civil Procedure Rules 2010. The applicant seeks the following orders:

i. Spent.

ii. Spent.

iii. THAT pending the hearing and determination of the intended appeal this Honorable Court be pleased to stay the execution of the decree and judgement in NAKURU CMCC No. 1173 OF 2017 and/proclamation arising therefrom.

vi. THAT the costs of the application be provided for.

2. The Motion is supported by the grounds set out on its face and Supporting Affidavit of the applicant’s Legal officer one Erick Onderi sworn on even date of this application.

3. He deponed that the appeal arises from the Ruling and order of Hon. W. K. Kitur delivered on 26th November, 2019 in Nakuru CMCC No. 1173 OF 2017. The learned magistrate determined that the Applicant had not availed proof of payment of the decretal sum arising from the Primary Suit being Nakuru CMCC No.106 of 2013 which gave rise to the declaratory suit being filed by the respondent in Nakuru CMCC No.1173 of 2017.

4. That the respondent obtained an ex-parte judgment against the appellant applicant in the declaratory suit obtained an ex-parte judgment against the applicant.

5. The applicant filed an application to set aside the said judgment and its consequential orders while seeking leave to file defence out of time so that the said declaratory suit could be heard on merit. In that application the applicant attached a remittance advice showing it had indeed paid the decretal sum of Kshs.296,160/= to the respondent herein. The copy of the remittance is duly attached and marked as “EO 1”.

6. The respondent did not disclose the fact of payment to the court that the decretal sum had been settled to him in the primary suit. The application was dismissed vide the Ruling of the court delivered on 26th November, 2019, prompting the instant appeal before this court.

7. It is the applicant’s position that the execution of the Ruling and order will render the appeal herein nugatory, and that the applicant will suffer irreparable loss if execution proceeds. That the applicant is willing to give security for the due performance of the decree as will be ordered by this court.

8. In opposing the application, the respondent put in the Replying Affidavit sworn on 5th December, 2019. He deponed that the application is bad in law, made in bad faith, inept, malicious, lacks merit, an afterthought and otherwise an abuse of the court process.

9. That the lower court judgement was delivered in his favour on 18th July, 2017 and 30 days stay of execution granted lapsed before the Applicant’s insurer satisfied the judgement. That the defendant failed to pay the decretal sum and a demand notice was sent to the Applicant herein demanding payment of the decretal sum but the same was neglected necessitating the institution of the declaratory suit as a mode of execution.

10. He deposed that the applicant after due service failed to enter appearance within their prescribed time and exparte judgment was entered. That their subsequent application to set aside the said ex parte judgment was dismissed with costs and the applicant instead of paying the decretal amount opted to file an appeal and this application, which are meant to deny him the fruits of his judgement. He prayed that in the event this court will find the application is merited three quarters of the decretal amount plus costs should be released to him and the rest be deposited in court.

11. On 21st October 2021 the parties consented to canvass the application by way of written submissions. Only the submissions by the applicant are on record.

SUBMISSIONS

12. The applicant filed its submissions on 5th November, 2021. They submitted on two issues namely: -

i.Whether the Applicants is entitled to the prayers sought

ii.Who ought to bear the costs of the suit?

13. On the first issue, the applicant submitted that in an application for stay of execution an applicant has to satisfy the conditions set out in order 42 Rule 6(2). The applicant stated the said conditions and argued them as follows;

(i)On the issue of whether the applicant will suffer Substantial Loss – It was the applicant’s position that it fully paid the respondent the decretal sum on 9th September, 2017 as evidenced by the remittance annexed to their Affidavit. That the respondent failed to disclose this material fact to the court and obtained the ex parte orders. Hence the appeal is arguable with high chances of success.

(ii)On whether there was Unreasonable delay in filing the application- The application was filed timeously, precisely on 27th November 2019 a day after the impugned decision of the lower court was delivered.

(iii) On the issue of Security for the performance of the decree - The applicant asserted it is ready and willing to furnish any security for the decretal sum as a condition for granting stay of execution as this Honorable Court deem fit.

14. On the second issue, the Applicant submitted that as per section 27 of the Civil Procedure Act, costs are discretionary and prayed that it be awarded the same.

ISSUES FOR DETERMINATION

· Whether the Applicant has met the prerequisites for grant of stay of execution.

ANALYSIS

15. An applicant for orders of stay of execution pending appeal is required to firstly; demonstrate that he will suffer substantial loss unless the stay is granted; that the application has been filed without unreasonable delay and that he is willing to offer security for due performance of the decree.

16. Order 42 rule 6(1) of theCivil Procedure Rules 2010 stipulates as follows: -

“No appeal or a 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 an application being made, to consider such application and to make such orders thereon as may to it seem just, 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 the orders set aside.”

17. FurtherOrder 42, rule 6(2) provides that: -

“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.”

18. In Butt vs Rent Restriction Tribunal1979 eKLR (Madan, Miller and Porter JJA) the court stated as follows when considering an application for stay of execution: -

“i.The power of the court to grant or refuse an application for a stay of execution is a discretionary power. The discretion should be exercised in such a way as not to prevent an appeal.

ii. The general principal in granting or refusing a stay is; if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should that appeal court reverse the judge’s discretion.

iii. A judge should not refuse a stay if there are good grounds for granting it merely because in his opinion a better remedy may become available to the applicant at the end of the proceedings.

iv. The court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirement.”

SUBSTANTIAL LOSS

19. In James Wangalwa & another vs Agnes Naliaka ChesetoMisc. Application No 42 of 2011 [2012] eKLR the court stated as follows regarding what amounts to substantial loss:

“…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.”

20. The Applicant’s position that it remitted to the firm of Gekonga & Company Advocates the sum of Kshs.296,160/= on 9th June,2017 in satisfaction of the decree, has not been controverted.

21. If the respondent is allowed to proceed with execution of the primary suit judgment the applicant’s Appeal will be rendered nugatory and as such it will suffer substantial loss. It is therefore my considered view that the applicant herein has satisfied this first condition for grant of stay of execution.

DELAY

22. It was not disputed that the Ruling giving rise to the appeal was delivered on 26th November, 2019 and this application filed on 27th November, 2019. Clearly there has been no delay in filing the instant application.

SECURITY

23. On provision of security for the due performance of the decree, the applicant did not propose any amount for security of costs. Applicant however expressed its willingness to abide by the conditions that will be set by this court for the furnishing of security.

24. In Gianfranco Manenthi & Another vs Africa Merchant Assurance Company Ltd [2019] eKLR, the court observed: -

“…the applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition a party who seeks the right of appeal from money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under order 42 rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the degree in order to enjoy the fruits of his judgment in case the appeal fails.

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 judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal … Thus 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. Counsel for the applicant submitted that he is ready to provide a bank guarantee as security for due performance of the decree.”

25. In Arun C Sharma vs Ashana Raikundalia t/a Raikundalia & Co. Advocates & 2 others [2014] eKLR,the court stated: -

“The purpose of the security needed under Order 42 is to guarantee the due performance of such decree or order as may ultimately be binding on the applicant. It is not to punish the judgment debtor………. Civil process is quite different because in civil process the judgment is like a debt hence the applicants become and are judgment debtors in relation to the respondent. That is why any security given under Order 42 rule 6 of the Civil Procedure Rules acts as security for due performance of such decree or order as may ultimately be binding on the applicants. I presume the security must be one which can serve that purpose.”

26. It is important to balance the respondent’s entitlement to the fruits of its judgment, and the applicant’s to his right of appeal subject to fulfilling the conditions set under Order 42 Rule 6.

27. In the circumstances the application is allowed and the following orders do issue;

i. THAT pending the hearing and determination of the appeal this there be stay the execution of the decree and judgement in Nakuru CMCC No.1173 of 2017 and/proclamation arising therefrom.

ii.That the applicant to deposit the entire decretal sum in a joint interest earning account to be held in the names of advocates for the parties herein in a banking institution of repute within 45 days from the date hereof. In defaultthe stay of execution orders should will automatically lapse and the respondent will be at liberty to proceed with the execution.

iii. Costs to abide the outcome of the appeal.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 3RD DAY OF FEBRUARY, 2022

MUMBUA T MATHEKA

JUDGE

IN THE PRESENCE OF:-

MIRUGI KARIUKI & CO. ADVOCATES FOR THE APPLICANT N/A

GEKONG’A & CO. ADVOCATES FOR THE RESPONDENTN/A