[2022] KEHC 16355 (KLR)

Wabule & 3 others v Wanyama & another (Civil Appeal 157 of 2022) [2022] KEHC 16355 (KLR) (16 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16355 (KLR)

Republic of Kenya

In the High Court at Eldoret

Civil Appeal 157 of 2022

RN Nyakundi, J

December 16, 2022

Between

David Sichangi Wabule

1st Applicant

Fausa Peter Satia

2nd Applicant

Irene Akinyi Okoth

3rd Applicant

Paul Mboya Shabole

4th Applicant

and

Zeki Wanjala Wanyama

1st Respondent

Momentum Credit Limited

2nd Respondent

Ruling

1. By a Notice of Mtice Application dated 27/10/2022, the Applicants seek the following orders:-1. Spent.2. Spent.3. That there be a permanent stay of execution of the Ruling dated 14/10/2022 and all consequential orders arising therefrom in Eldoret CMCC No. 1089 of 2021 pending the hearing and determination of the appeal herein.4. That pending the hearing and determination of the appeal herein the Honourable Court be pleased to issue orders of release of attached/proclaimed motor vehicles registration numbers KCD 757V, KBU 646L, KBW 164C and KCE 235Z to the Appellants, on a running attachment.5. That’s cost of this application be provided for.

2. The application is premised on the grounds set therein and it is further supported by the affidavit by Irene Akinyi Okoth sworn on 27/10/2022.

The Applicants’ Case 3. The Applicants being dissatisfied with the ruling of Hon. B. K. Kiptoo in Eldoret CMCC No.1089 of 2021 delivered on 14/10/2022 have since preferred an appeal.The Applicants contend that effect of the said ruling is that they have been deprived ownership of the following motor vehicles; motor vehicle registration numbers; KCD 757V, KBU 646L, KBW 164C and KCE 235Z.

4. The Applicants maintain that they were not parties to the proceedings in the trial Court and were not aware of the said proceedings until Auctioneers were sent to attach/proclaim motor vehicles registration numbers; KCD 757V, KBU 646L, KBW 164C and KCE 235Z.The Applicants argue that they have sufficient proof that 1st Respondent is not the owner of the suit motor vehicles and that they suit motor vehicles belong to them pursuant to the sale agreements dared 11/11/2021. 19/8/2021 and 21/8/2020.

5. The Applicants want the ruling dated 14/10/2022 and the consequential orders arising therefrom stayed so as to enable them prove to the Court that they have both actual and beneficial interest of the suit motor vehicles.The Applicants contend that they have an arguable appeal with high chances of success and such the suit motor vehicle ought to be preserved pending the outcome of the appeal.The Applicant contend that unless the Court grants stay of execution then the appeal will be rendered nugatory.

The 2nd Respondent Case 6. The application is opposed by the 2nd Respondent vide the Replying Affidavit dated 11/11/2022, sworn by Sheila Imali, a Legal Officer with the 2nd Respondent. The 2nd Respondent contends that this instant application is an abuse of Court process, mischievous, incompetent, brought in bad faith and ought to be dismissed.The 2nd Respondent maintains that at the trial Court, the Applicants herein were unable to proof ownership of the suit motor vehicle and thus their application was dismissed.According to the 2nd Respondent, the Applicant only seek to derail it from exercising its lawful power of sale over the suit motor vehicles which are jointly registered in its name and that of the 1st Respondent.

7. The 2nd Respondent maintains that this instant application is only a delay tactic aimed at curtailing it from enjoying the fruits of its judgement where its security for the loans disbursed to the 1st Respondent has crystallized.With regard to motor vehicle registration number KCE 235Z, the 2nd Respondent deposed that on 7/8/2020, the 1st Respondent approached the 2nd Respondent seeking a credit facility of Kshs.375,500/=. The 2nd Respondent maintains that 1st Respondent voluntarily executed the loan application form and was issued with a loan facility of Kshs.375, 550/= which was secured by motor vehicle registration number KCE 235Z.

8. Subsequently, the 2nd Respondent deposed that on 11/12/2020, the 1st Respondent applied for additional funds being Kshs.72,000/= and secured the said amount with motor vehicle registration number KCE 235Z bringing the total loan amount to Kshs.401,560/=.With regard to motor vehicle registration number KCD 757V, the 2nd Respondent deposed that on 2/8/2021, the 1st Respondent approached the 2nd Respondent seeking a credit facility of Kshs.480,000/=. The 2nd Respondent maintains that 1st Respondent voluntarily executed the loan application form and was issued with a loan facility of Kshs.480,000/= which was secured by motor vehicle registration number KCD 757V.With regard to motor vehicle registration number KBW 164C, the 2nd Respondent deposed that on 12/8/2021, the 1st Respondent approached the 2nd Respondent seeking a credit facility of Kshs.360,000/=. The 2nd Respondent maintains that 1st Respondent voluntarily executed the loan application form and was issued with a loan facility of Kshs.360,000/= which was secured by motor vehicle registration number KCD 757V.

9. During the pendency of the aforementioned loan, the 2nd Respondent deposed that on 20/8/2021, the 1st Applicant further approached it seeking a loan facility of Kshs.180,000/= with motor vehicle registration number KBU 646L being used as security.Consequently, the 2nd Respondent that the 1st Objector defaulted in repaying the loans and has accumulated substantial arrears and thereby exposing the 2nd Respondent financially to a threat of a non-performing facility.The 2nd Respondent contends that despite issuing demand notices to the 1st Respondent, the 1st Respondent has continued to be in default, thus forcing the 2nd Respondent to exercise it statutory power of sale over the suit motor vehicles. The 2nd Respondent further contends that despite the Auctioneers Notice of repossession, the 1st Respondent has failed to settled the outstanding loan facilities.

10. The 2nd Respondent contends that the Applicants claim to have purchased the suit motor vehicles without evidence of actual consideration that was paid for the suit motor vehicles. According to the 2nd Respondent the mere production of a sale agreement is not enough in the circumstance.According to the 2nd Respondent, if the Applicants had undertaken due diligence by carrying out a simple search at NTSA then they would be aware that no rights with respect to the suit motor vehicles could pass to them respectively without the consent of the 2nd Respondent.The 2nd Respondent maintains that the Applicants have not demonstrated any such rights over the suit motor vehicles or presented any evidence that would warrant the Court to override the registered rights of the 2nd Respondent.

Determination 11. I have considered the application, the affidavit both in support of the application and in opposition and the only issue for determination is whether the order of stay of execution should be granted.The principles that guide Court when deciding on application for stay of execution pending appeal are clearing set out under Order 42 Rule 6 (1) and (2) of the Civil Procedure Rules, which provides:(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 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.

12. On the face of it Order 42 Rule 6(1) of the Civil Procedure Rule presumes that the Applicant should pray for orders of stay of execution from the court it is appealing from since the appeal does not act as a stay of execution. The provision further gives the Applicant leeway to have the appellate court set aside the orders of stay of execution from the Court it is appealing to and if denied, then he can seek the order for stay of execution.In an application for stay of execution pending appeal, an applicant must satisfy the provisions of order 42 Rule 6 of the CPR. The Applicant must have filed the application without undue delay, must establish that he or she will suffer substantial loss and that he or she is ready and willing to abide by such security for the due performance of the decree as may be set by the court to be binding on the applicant.

13. The purpose of stay of execution pending Appeal is to preserve the subject matter. See the case of Consolidated Marine Vs. Nampijja & Another, Civil App.No.93 of 1989 (Nairobi), where the Court held that;The purpose of the application for stay of execution pending appeal is to preserve the subject matter in dispute so that the right of the appellant who is exercising his undoubted right of appeal are safeguarded and the appeal if successful is not rendered nugatory”.

14. In the case of Kenya Women Microfinance Ltd Vs. Martha Wangari Kamau [2020] eKLR the Court cited the case of Samvir Trustee Limited Vs. Guardian Bank Limited Nairobi (Milimani) HCCC 795 of 1997 where the Court held that: -Every party aggrieved with a decision of the High Court has a natural and undoubted right to seek the intervention of the Court of Appeal and the Court should not put unnecessary hindrance to the enjoyment and exercise of that right by the defendant. A stay would be overwhelming hindrance to the exercise of the discretionary powers of the court…The Court in considering whether to grant or refuse an application for stay is empowered to see whether there exist any special circumstances which can sway the discretion of the court in a particular manner. But the yardstick is for the court to balance or weigh the scales of justice by ensuring that an appeal is not rendered nugatory while at the same time ensuring that a successful party is not impeded from the enjoyment of the fruits of his judgement. It is a fundamental factor to bear in mind that, a successful party is prima facie entitled to the fruits of his judgement; hence the consequence of a judgement is that it has defined the rights of a party with definitive conclusion. The respondent is asserting that matured right against the applicant/defendant…For the applicant to obtain a stay of execution, it must satisfy the court that substantial loss would result if no stay is granted. It is not enough to merely put forward mere assertions of substantial loss, there must be empirical or documentary evidence to support such contention. It means the court will not consider assertions of substantial loss on the face value but the court in exercising its discretion would be guided by adequate and proper evidence of substantial loss…Whereas there is no doubt that the defendant is a bank, allegedly with substantial assets, the court is entitled to weigh the present and future circumstances which can destroy the substratum of the litigation…At the stage of the application for stay of execution pending appeal the court must ensure that parties fight it out on a level playing ground and on equal footing in an attempt to safeguard the rights and interests of both sides. The overriding objective of the court is to ensure the execution of one party’s right should not defeat or derogate the right of the other. The Court is therefore empowered to carry out a balancing exercise to ensure justice and fairness thrive within the corridors of the court. Justice requires the court to give an order of stay with certain conditions.”

15. The Court has to balance the interest of the Applicant who is seeking to preserve the status quo pending the hearing of the Appeal so that his Appeal is not rendered nugatory and the interest of the Respondent who is seeking to enjoy the fruits of his judgment.In the case of Macharia t/a Macharia & Co. Advocates –vs- East African Standard [2002] 2 KLR 63, Kuloba J held as follows;to be obsessed with the protection of an appellant or intending appellant in total disregard or flitting mention of the so far successful opposite party is to flirt with one party as crocodile tears are shed for the other, contrary to sound principle for the exercise of a judicial discretion.The ordinary principle is that a successful party is entitled to the fruits of his judgment or of any decision of the Court giving him success at any stage. That is trite knowledge and is one of the fundamental procedural values which is acknowledged and normally must be put into effect by the way applications for stay of further proceedings or execution, pending Appeal are handled. In the application of that ordinary principle, the Court must have its sight firmly fixed on upholding the overriding objective of the rules of procedure for handling civil cases in Courts, which is to do justice in accordance with the law and to prevent abuse of the process of the Court”.

16. The conditions that the Applicant herein should satisfy is as stated in Order 42 Rule 6(2) of the Civil Procedure Rules. The Court will now consider each of the condition and determine whether the Applicant is deserving of the orders sought.The Applicants herein contended that they will suffer substantial loss if stay of execution his not granted. They argue that the are the owners of the suit motor vehicles having purchased them from the 1st Respondent herein. They argued that they have sale agreements with the that proof ownership of the suit motor vehicles.The 2nd Respondents on the other hand argues that it jointly owns the suit motor vehicles with the 1st Respondent. This is light of it having given the 1st Respondent several loan facilities that were secured by the suit motor vehicles. The 2nd Respondent maintains that in view of the default by the 1st Respondent to repay the various loan facilities that were issued to him the 2nd Respondent’s statutory right of sale has since materialized and cannot be curtailed by the Applicants who have nothing prove that they are legitimate owners of the suit motor vehicles.In the case of James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR, the Court observed that;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. 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 ... 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.”

17. Going by the foregoing, an Applicants must show the substantial loss they are likely to suffer if the 2nd Respondent executes the decree against them since granting stay would mean that the status quo should remain as it were before the judgment and that would be denying a successful litigant of the fruits of his/her judgment. I must point out that this is the most important limb of the application for stay of execution is proof of substantial loss and it should be noted that mere mention or alleging that an Applicant will suffer substantial loss is not enough.From the evidence on record, there no doubt that the 1st Respondent secured various loan facilities from the 2nd Respondent and used the suit motor vehicles were used as security. The 1st Respondent defaulted and has since not made good his default forcing the 2nd Respondent to exercise its statutory power of sale so as to recover the said sum. As evidenced by the various agreements on record that were entered into by the 1st and 2nd Respondents herein. To my mind the Applicants are third parties to the transaction herein, they have not demonstrated the substantial loss they are likely to suffer if stay of execution is not granted. The 1st Respondent, voluntarily gave the suit motor vehicles to used as security in case of default and thus the 2nd Respondent cannot be stopped from realizing its security in the instance of default.

18. It is not contested that the Application was brought without undue delay, therefore this requirement has been satisfied and I need not say more.On the last condition as to provision of security, I find that Order 42 Rule 6 (2) (b) of the Civil Procedure Rules stipulate in mandatory terms that the third condition that a party needs to fulfil so as to be granted the stay order pending Appeal is that (s)he must furnish security. In the case of Aron C. Sharma vs. Ashana Raikundalia T/A Rairundalia & Co. Advocates the court held that: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.”

19. The Applicants are silent of the issue of security in the event the Court was to grant orders of stay of execution.The Court in the case of Congress Rental South Africa v Kenyatta International Convention Centre; Co-operative Bank of Kenya Limited & Another (Garnishee) [2019] eKLR at paragraph 41 on the issue of security for the due performance observed as follows;The Applicant has been silent on the issue of security in this matter. The offer for a security should come from the applicant, it should not be inferred or implied or left for the Court to make an order for security for due performance as that would amount to stepping into the arena of dispute.”

20. The Applicants also sought for the release of the suit motor vehicles, the Applicants have not demonstrated to this Court that they are actually the legitimate and lawful owner of the suit motor vehicles. What then would be the basis for the Court to release the suit motor vehicles? The sale agreements on record? In my view the interests of the 2nd Respondent cannot be overridden by those of the Applicants who blindly purchased the suit motor vehicles without conducting a search with the view of establishing their status at the time. A perusal of the various sale agreements on record will reveal that at the time when the Applicants were entering into the said agreements with the 1st Respondent, he had already secured the various loan facilities with the suit motor vehicles herein.In the end, the Notice of Motion dated 27/10/2022, is without merits and is hereby dismissed with costs to the 2nd Respondent.It is so ordered.

DATED, SIGNED AND DELIVERED AT ELDORET THIS 16TH DAY OF DECEMBER, 2022. ............................R. NYAKUNDIJUDGE