[2022] KEHC 11378 (KLR)

Wewa & another v Kamau (Civil Appeal E305 of 2021) [2022] KEHC 11378 (KLR) (Civ) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11378 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E305 of 2021

DO Chepkwony, J

May 12, 2022

Between

Elisha Wewa

1st Applicant

Grain Industries Ltd

2nd Applicant

and

Grace Muthoni Kamau

Respondent

Ruling

1. Before the court for determination is the Appellants’ Notice of Motion Application dated July 21, 2021 brought under Sections 3, 3A, 63(e), 79, all of the Civil Procedure Act, Cap 21 Laws of Kenya and Order 51 of the Civil Procedure Rules 2010. It seeks for the orders that;a.Spent;b.Spent;c.That this Honourable Court be pleased to order stay of execution of the Judgment delivered by Hon A N Makau on May 21, 2021 in Miliminani C M C C No E3667 of 2020 together with the decretal orders consequential therefrom pending hearing and determination of this appeal;d.That costs of this application be provided for.

2. The grounds adduced in support of the application are that; the Appellants are aggrieved by the Judgment delivered in the suit before the trial court, and have since filed an arguable appeal before this court, so that any execution would be detrimental to the Appellants and possibly render the appeal nugatory since the Respondent is unlikely to refund the decretal sum. Lastly, the Appellant has stated that it would not only be in the interest of justice that the stay is allowed but also confirmed that the Appellants are willing to abide with the conditions to be imposed by this Honourable Court.

3. The affidavit in support of the application sworn by Lucy Kariuki, the Assistant Claims Manager at the Applicant’s insurer illuminates the grounds on face of the application with an addition that the Respondent has instructed auctioneers to undertake the execution but given that the appeal is arguable, the execution ought to be stayed. The deponent has annexed a copy of the lower court Judgment and the memorandum of appeal filed.

4. The Respondent opposed the application through her Replying Affidavit sworn on October 10, 2021. She questioned the Supporting Affidavit of M/S Lucy Kariuki for not attaching any authority or mandate from the Appellants to swear affidavits on their behalf. On that basis, the Respondent has sought the court to dismiss the affidavit for lack of authority. According to her, liability was settled by consent in the ratio of 90:10 in her favour and therefore the mandated before the lower court was determination on quantum. As such, the present appeal is only limited to challenging quantum and assuming that it succeeds, the only outcome would be reduction of the damages awarded on quantum. She suggested that in order to ensure that justice is balanced between the parties and in view of the said consent Judgment, the court should direct that half of the decretal sum be paid to her to assist her cope with her medical needs and the other half be deposited in court as security of the appeal.

5. Parties agreed to canvas the application by way of written submissions and as the record reflects, the Appellants’ submission are dated October 19, 2021 while those for the Respondent are dated October 25, 2021.

6. For the Appellants, it is submitted that the challenge on the Appellants’ Claims Manager swearing an affidavit is cured under Order 4 Rule 1(4) of the Civil Procedure Rules which provides that in case one of the litigants is a corporation, the affidavit is sworn by an officer the Company. According to the Appellants, an affidavit is not required in such instances. This proposition is supported with excerpts from the cases ofPeeraj General Trading & contracting Company (K) Limited & Another vs Mumias Sugar Company (2016)eKLR and Republic vs Registrar General & 13 Others (2005)eKLR.

7. Also, the Appellants submitted that since liability was settled by consent, they have been willing to offset part of the decretal sum to the respondent and indeed the Respondents auctioneers were partly paid Kshs 500,000/= as a part settlement of the decretal sum. Therefore, the appeal challenges the trial court’s decision on quantum for disregarding the submissions by the Appellants, failing to consider relevant factors, and deciding the case on basis of extrinsic factors, failing to adhere to proper principles governing the award of damages such as comparable awards for comparable damages. Therefore, it cannot be gain said that the appeal is arguable.

8. In the event the appeal succeeds, the Appellants submitted that they are likely to suffer prejudice since the Respondent has led no evidence to rebut allegations that she is a woman of straw with no ability to repay the decretal sum. According to the Applicants, it was incumbent for the Respondent to swear an affidavit showing her capability to repay. Lastly, the Appellants submitted that they were willing to abide with any condition that will be imposed by the court for the stay orders to issue. These submissions were supported by reliance on the cases of Stanely Kagethe vs Tony Keter & 5 Others [2015]eKLR, and International Laboratory for Research on Animal Diseases vs Kinyua [1990]KLR 403.

9. For the Respondent, it is submitted that the Appellants ought to have established four key issues, namely, that the appeal is arguable, the substantial loss likely to be suffered if the stay order is not granted, the willingness to deposit security and the fact that the application was made without delay.

10. On the arguability of the appeal, it is submitted that the same was settled by a consent Judgment with respect to liability and the court cannot be invited to reconsider the terms of the consent. As such the only issue which should remain for determination is on the award of damages only.

11. As regards the substantial loss leikelyto be suffered, it is submitted that where the appeal is only on quantum of damages, the Respondent need not swear any affidavit to show her wealth muscles because notwithstanding the outcome of the Appeal, the Respondent will be entitled to an award of damages and should therefore not be denied the enjoyment of a fruitful Judgment.

12. With respect to furnishing security, it is submitted that to balance the interests of both parties, stay should only be granted on conditions for due performance of the decreed and this can only be achieved by furnishing security. According to the Respondent, since the appeal is on quantum, half the decretal sum should be paid to the Respondent and the other half deposited in a joint interest earning account. The Respondent however dismissed the allegations that she was paid Kshs 500,000/= through the auctioneers by submitting that the said sum was paid as auctioneers fees and there is an affidavit by the auctioneers affirming the same. In any event, it is submitted that the Appellants have a recourse and/or remedy against the auctioneers separately. This is supported by reliance on the case of George Ngure Kariuki vs Wanjiru Gitau & 4 Others[2013]eKLR.

13. In seeking this court to allow half the decretal sum to be paid to her and the other half deposited as security, the Respondent relied on cases where similar directions were issued including the case ofGemstar Importers & Another vs Edward Nthiwa Mutiso [2019]eKLR, Boniface Nzioka Malundu vs Jeremiah Kariuki Mwaniki [2018]eKLR.

14. Lastly, the Respondent urged the court to find two (2) months period between the filing of the instant application and the delivery of the lower court judgment as inordinate.

Analysis and Determination 15. Having laid down the parties’ perspective and this being an application for stay of execution pending appeal, the relevant guiding provision of the law is Order 42 Rule 6 of the Civil Procedure Rules, which reads as follows:-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 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 of stay 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 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.

16. Based on the above provision, it goes without saying that the power to grant an application for stay of execution pending appeal is a discretionary one where sufficient cause must be shown that the applicant may suffer substantial loss; that the application is made without unreasonable delay and on provision of such security as the Court may impose.

17. However, before considering the facts of this case vis a vis the three conditions for stay as set above, I will first deal with a preliminary issue that has been raised by the Respondent challenging the Supporting Affidavit for being sworn without express authority of the defendants. The Supporting Affidavit is expressed to have been sworn by Lucy Kariuki, the Assistant Claims Manager at the Applicant’s Insurer Company.

18. By dint of Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act Cap 405, an insurer is under a mandatory legal duty to satisfy any Judgment entered in favour of a 3rd party against the owner of the motor vehicle in question who is its insured. Section 10(2) of the same Act provides that the insurer will only be liable to satisfy the Judgment entered against its insured if it was notified of the proceedings.

19. In the present case, the Respondent did serve the Appellant’s insurer with a statutory notice expecting that in the end, the insurer will satisfy the Judgment. Therefore, although the insurer is not a party to this suit, it cannot be shut out as a stranger to the dispute since it is interested in the outcome of the dispute and is duty bound to satisfy the decree issued.

20. Therefore, it is in order and admissible under the Laws of Evidence for any of the insurer’s officer possessed of the facts and/or information surrounding a particular case that he/she depones on same. That leads to the conclusion on the issue at hand that the affidavit by Lucy Kariuki sworn in her capacity as the Assistance Claims Manager of the Appellant’s insurer expressing to be possessed with information surrounding the facts of the present case cannot be said to be incompetent.

21. This court holds the view that since the Appellants’ insurer has interests in the outcome of the case, no authority was required from the Appellants to swear the affidavit hence the invite to dismiss the application on basis of an incompetent supporting affidavit is turned down.

22. Now turning to the merits on the application for stay of execution, I have had the opportunity of reading through the trial court’s Judgment and on quantum, the trial court awarded the Respondent an aggregate sum of Kshs 4,523,878. 80. The Appellants aver that the Respondent has instructed auctioneers to undertake execution and, in the event, the said execution proceeds, they will suffer substantial loss since the Respondent is of unknown means and she is unlikely to refund the decretal sum in case of a successful appeal. In such an event the Appellants assert that the appeal will be rendered nugatory.

23. On the other hand, the Respondent rebuts that the Appellants stand a chance to suffer substantial loss in submitting that since the appeal is only limited to the issue of quantum, she will be entitled to some damages, and she need not depone to any affidavit to affirm her financial capability.

24. My understanding is that in an application for stay of execution where the applicant expresses fears on the Respondent’s financial muscles or the ability to repay the decretal sum, is prima facie expression of the Applicant suffering substantial loss or otherwise the appeal being rendered nugatory. The appeal, if successful would be rendered nugatory and the consequent Judgment merely decorative words in a piece of paper if the Appellant/Applicant cannot per se recover the decretal sum from the Respondent without resorting to another legal battle to obtain Judgment in that respect. The burden lies with the Respondent to dispel that fear by showing their means or otherwise clear the air on their capability to refund the decretal sum should they lose at the appeal.

25. Unfortunately, in the present case, the Respondent has not adduced such evidence but has invited the court to consider the fact that the appeal is limited to the issue of quantum, and she will in the end be awarded some amount. That in my view does not water down the fears by the Respondent or in any event discharge the burden of showing that she can repay the decretal sum in its entirety so as not render the appeal nugatory.

26. Whilst I would agree that a successful party should not be denied the fruits of his/her Judgment, it is incumbent that the party rebuts the assertion that it would not be in a position to repay the sums paid in the event that the appeal is successful. In the case ofNational Industrial Credit Bank Ltd vs Aquinas Francis Wasike & Another[2006]eKLR, the Court of Appeal held thus:“Once an applicant expresses a reasonable fear that a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly within his knowledge…”

27. Guided by the above principles, it is safe to say that in a money decree, substantial loss would result where the Respondent’s impecunity is not rebutted. In that respect, I am satisfied that the Applicants herein have shown that they are likely to suffer substantial loss.

28. Secondly, on whether the application was brought without undue delay, the Respondent submitted that the two months period between the delivery of the trial court’s Judgment and the filing of the instant application is inordinate whilst the Applicants on their part did not submit on this issue.

29. Reading through Order 42 Rule 6 of the Civil Procedure Rules, does not stipulate the time limits within which an application for stay pending appeal should be filed. Indeed, the provision does not say that an application for stay should be filed once an appeal is lodged. The same is left to the liberty of the Appellant and it can evenly be inferred that an appeal like the present one can proceed to its logical conclusion without an application for stay being filed. However, each case has to be considered on its own facts and merits. And in doing so, the court has to weigh on whether justice could still be achieved despite the delay or alternatively, what prejudice the Respondent has to suffer.

30. In my view, an application for stay aims at ensuring that parties litigate on equal footing and that none of them would be worse off by virtue of exercise of either party’s rights. In this case, I am not convinced that the delay in filing the present application is prejudicial to the Respondent to an extend that cannot be remedied by award of damages.

31. The last limb is with regard to deposit of security. The Appellants have deponed that they are willing to abide with any of this court’s directions on furnishing security while the Respondent on the other hand has suggested half the decretal sum be paid to her while the other half deposited in a joint interest earning account. While both parties agree that the court has a duty to balance both Appellants’ right of appeal and the Respondent’s equally competitive right of enjoyment of fruits of a successful Judgment. I reiterate that Order 42 Rule 6 of the Civil Procedure Rules cuts across the two competing rights by enjoining the Applicant to provide such security equivalent to guarantee the due performance of such decree which may ultimately be binding on the Applicant. Therefore, I presume the security to be offered must be one which can serve that purpose.

32. Courts of similar jurisdiction and even those of higher jurisdiction than this one have suggested where an Applicant proposes to provide security as the Applicant has done, it is a mark of good faith and it would be sufficient for the Applicant to state that he is ready to provide security in satisfying this ground of stay. In my view, the Applicants herein have matched the merit.

33. However, it is the discretion of the court to determine the security to be offered while considering the circumstances of each case. I have read through the Memorandum of Appeal filed in this case and in its totality, the same challenges the quantum as liability was settled on consent by the parties. I agree with the Respondent that at conclusion of the appeal she will be awarded some amount and in the worst-case scenario, the same is unlikely to go below half the decretal sum awarded by the trial court. In the circumstances, the Respondent should not be denied to enjoy part of the quantum awarded as she awaits the conclusion of the appeal.

34. Lastly, it is contented by the Appellants that the sum of Kshs 500,000/= paid to the auctioneer’s was part payment of the decretal sum but the same is wholly contested by the Respondent. There is even an affidavit by the auctioneers confirming that the Kshs 500,000/= was auctioneers fees contrary to the Appellants averments. In this court’s view, the allegations are in want of proof having been rebutted on oath and the Appellants need to do more to substantiate those allegations.

35. The upshot is that the Appellants’ Notice of Motion application dated July 21, 2021 is merited. There shall be a stay of execution of the Judgment delivered by Hon A N Makau on the 21st day of May 2021 in Milimani C M C C No E3667 of 2020 together with the decretal orders consequential therefrom pending hearing and determination of this appeal on the following conditions:-a.The Appellants shall pay to the Respondent part of the decretal sum, to wit, Kshs 2,000,000/= within thirty (30) days from the date hereof.b.The remaining part of the decretal sum being Kshs 2,523,878. 80 shall within thirty (30) days hereof be deposited as security pending appeal in an escrow interest earning account in the joint names of the counsels on record for Appellants and the Respondent.c.In the event of failure to comply with Order (a) and (b) above, the stay order hereby granted shall automatically be discharged and the Respondents shall be at liberty to proceed with execution of the decree.d.Costs of the application shall be in cause of the appeal.It is so ordered.

RULING DELIVERED VIRTUALLY, DATED, AND SIGNED AT NAIROBI THIS 12TH DAY OF MAY, 2022. D O CHEPKWONYJUDGEIn the presence of:M/S Kioko counsel holding brief for Mr Kibiku counsel for RespondentCourt Clerk - Kimoine