[2022] KEHC 13687 (KLR)

Zomu Global Logisttics Limited v Ital-Plastick Africa Limited (Civil Appeal 145 of 2020) [2022] KEHC 13687 (KLR) (Civ) (12 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13687 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 145 of 2020

JN Njagi, J

October 12, 2022

Between

Zomu Global Logisttics Limited

Appellant

and

Ital-Plastick Africa Limited

Respondent

Ruling

1. The appellant/applicant has filed 2 applications. The first one is dated November 29, 2021 wherein they are seeking for stay of execution of the orders of the judgment and consequential orders in Nairobi Civil Case No 726 of 2017 pending the hearing and determination of the appeal filed herein.

2. The application is based on the grounds that the respondent has attached the applicant`s goods in execution of a decree obtained at the Chief Magistrates Milimani Commercial Courts. The applicant contends that if the respondent is permitted to execute the decree the appeal will be rendered nugatory.

3. The second application is dated April 26, 2022 wherein the applicant is seeking for review of the conditional stay orders issued by this court on November 29, 2021 wherein the court ordered the applicant to deposit Ksh 10 million as security and substitute the same with a bank guarantee No MDxxxx from Kenya Commercial Bank dated March 22, 2022 for the sum of Ksh 3 million and adopt it as sufficient security for costs pending the hearing and determination of the motion dated November 29, 2021 and the appeal filed herein.

4. The latter application is made pursuant to Order 45 rule 1 of theCivil Procedure Rules which provides that a person aggrieved by an order or decree made by a court may apply for review on ground of: discovery of new and important matters or where there was mistake or apparent error on the face of the record or for any other sufficient reason. The applicant anchors its application for review on the ground of “sufficient cause” and argues that they were unable to raise the conditional stay sum of Ksh.10 million due to adverse effects on business occasioned by COVID-19 pandemic and the fact that the Government of Kenya directed that all goods be transported on the Standard Gauge Railway. However, that they have instead obtained a bank guarantee of Ksh 3 million.

Submissions – 5. The applicant submitted that it is involved in transport business. That the respondent has attached its vehicles which are its tools of trade. That this will occasion them substantial loss as it will not be able to recover from the respondent in the event that the court found that the appeal is merited. It was submitted that the appeal raises triable issues and therefore that failure to grant the orders sought will subject the applicant to irreparable harm.

6. On security the applicant submitted that it failed to raise the deposit of Ksh 10 million as ordered by this court but it has secured a bank guarantee of Ksh 3 million. That the bank guarantee is sufficient provision of security for due performance.

7. The respondent on the other hand submits that the application dated April 6, 2022 is sub-judice as it raises the same issues raised in the application dated November 29, 2021. That the matters in issue in the two applications are substantially the same hence the principle of res judicata would apply if one suit is determined. That the application dated April 6, 2022 is an abuse of the process of the court.

8. The respondent submitted that the applicant was granted conditional stay which they failed to honour. That vide their application dated November 29, 2021 they stated that they were “ready to abide by all appropriate terms for the grant of a stay” pending the hearing and determination of the instant appeal. Therefore, that the application is misplaced, an abuse of the process of the court and has not met the threshold set in Order 45 rule 1 of the Civil Procedure Rules.

Analysis and determination 9. I have dully considered the application, the affidavits and rival submissions by the advocates for the parties. The issues for determination are:a.Whether to grant a stay of execution pending the hearing and determination of the appeal herein.b.Whether to set aside and or vary, review, modify the conditional stay orders issued on November 29, 2021.

10. The applicant is in the first application seeking for orders of stay of execution pending appeal. For the court to grant the application, the applicant has to meet the conditions set out in Order 42 rule 6(2) of the Civil Procedure Rules, 2010which are:-a.That substantial loss may result unless the order is made.b.That the application has been made without unreasonable delay.c.Such security as the court orders for the due performance of the decree has been given by the applicant.

11. The power of the court to grant or refuge an application for stay of execution pending appeal is discretionary and like the exercise of every discretionary power it has to be done judicially. In the case of Butt v Rent Restrictions Tribunal [1982] KLR 417 the court stated the principles to be considered in such an application and stated as follows:-1. “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.2. The general principle 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.3. 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.4. The court in exercising its discretion whether to grant [or] refuse an application for stay will consider the special circumstances of the case and unique requirements. The special circumstances in this case were that there was a large amount of rent in dispute and the appellant had an undoubted right of appeal.5. The court in exercising its powers under Order XLI rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security for costs as ordered will cause the order for stay of execution to lapse.”

12. The appellant submitted that they will suffer substantial loss if the execution is allowed to proceed. InMichael Ntouthi Mitheu v Abraham Kivondo Musau (2021) eKLR the court interrogated what would constitute substantial loss and quoted Warsame, J (as he then was) inSamvir Trustee Limited v Guardian Bank LimitedNairobi (Milimani) HCCC 795 of 1997 where he expressed himself as follows:“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.”

13. The applicant submitted that at the time of filing the instant application the respondent had made progress towards executing the judgement as evidenced through the proclamation notices where they intend to auction various motor vehicles belonging to the appellant. That the vehicles are the applicant`s tools of trade as it is a transport and logistics company. That this will cause them substantial loss which they may not be able to recover from the respondent in the event that the court finds that the appeal is merited.

14. The trial court entered judgment against the applicant to the sum of over 16 million. I find this to be a substantial amount of money. There is no evidence that the respondent is in a position to refund the money in the event that the appeal is found to be successful. In Century Oil Trading Company Limited v Kenya Shell Limited Nairobi(2008) eKLR, it was stated that: -“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 an issue. The court cannot shut its eyes where it appears the possibility is doubtful of the respondent refunding the decretal sum in the event that the applicant is successful in his appeal. 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”.

15. The appellant has demonstrated that it may suffer substantial loss if execution is allowed to proceed as the financial status of the respondent is not known.

16. The other condition is whether the application has been made without undue delay. Judgment in the matter was delivered on February 5, 2020. The instant application was filed in court on November 29, 2021. This is about 21 months after the delivery of the judgment. There has therefore been delay of about 21 months before the filing of the application and the appeal. There was no satisfactory explanation for the delay. The applicant only stated that they have applied for certified copies of proceedings and judgment from the lower court and said no more. I do not consider that to be sufficient explanation for the delay. In the circumstances the application was not filed without undue delay. In my view the delay was inordinate and inexcusable.

17. For the court to allow an application for stay pending appeal the applicant is required to provide such security as may be binding for the due performance of the decree. It was the applicants submission that they were adversely affected by the COVID3-19 pandemic and the government directive to have all goods from the Mombasa port to be transported by the Standard Rail Gauge. They however state that they have managed to secure a 3 Million Shilling bank guarantee which is sufficient provision for security. On the other hand the respondents argued that this was not sufficient reason for the review of the said orders.

18. In Arun C Sharm v Ashana Raikundalia T/A/Rairundalia & 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…”

19. In Focin Motorcycle Co Limited v Ann Wambui Wangui & Anor [2018] eKLR, it was stated that:“Where the applicant proposes to provide security as the applicant has done, it is a mark of good faith that the application for stay is not just meant to deny the respondent the fruits of judgment. My view is that it is sufficient for the applicant to state that he is ready to provide security or to propose the kind of security but it is the discretion of the court to determine the security.’’

20. The importance of payment of security was explained in the case of Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd(2019) eKLR, where the court observed that:“… 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 decree 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 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.”

21. In this matter the court exercised its discretion on November 29, 2021 and ordered the applicant to deposit security of Ksh 10 million. This was in consideration of the fact that the decretal sum was over Ksh 16 million. The applicant is now offering security in the form of a bank guarantee of Ksh 3 million. Though the security the applicant is offering is not sufficient for due performance of the decree it is the duty of this court to determine the security.

22. The applicant is in the application dated April 6, 2022 seeking a review of the orders issued on November 29, 2021 so as to substitute the order to deposit Ksh 10 million with an order to deposit a bank guarantee of Ksh 3 million. Order 45, rule 1 of the Civil procedure Rules guides on applications for review of decree or order. It provides;(1)Any person considering himself aggrieved;a.By a decree or order from which an appeal is allowed, but from which no appeal has been preferred; orb.By a decree or order from which no appeal is hereby allowed,And who from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or the order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree or order, may apply for a review of judgment to the court which passed the decree or made the order without unreasonable delay.

23. I have duly considered the application for review of security. The orders of the court for the applicant to deposit Ksh10 million was made ex parte before the parties were heard. The applicant now tells the court that it has been unable to raise the cash deposit of Ksh 10 million due to hard economic times brought about by the COVID-19 pandemic.

24. As stated above the power to grant or refuse an application for stay of execution is discretionary which discretion ought to be exercised in such a way as not to prevent an appeal. The court should consider all the circumstances of the case before deciding on whether or not to allow an application for stay of execution. The court is required to balance the interests of the parties where one party has a constitutional right of appeal and the other party has a judgment in its favour and should thus not be denied the fruits of the judgment without justifiable cause. In the instant case, the applicant has failed to raise the cash deposit of Ksh 10 million. They have however shown that they have other properties in terms of motor vehicles that the respondent can attach in execution of the decree besides the bank guarantee of Ksh 3 million that they are offering.They have demonstrated that they may suffer substantial loss if execution is done as they may not be able to recover their money from the respondent in the event that the appeal is successful. In my considered view the denial of the application will hinder the applicant`s right of appeal due to their financial status. This would amount to a traverse of justice. In the circumstances I am inclined to grant the application for stay of execution so that the appeal is not rendered nugatory by execution of the decree.

25. In view of the foregoing I make the following orders:1. That this court does hereby grant an order for stay of execution of the orders of the judgement and consequential orders made by Hon. P Gesora, Chief Magistrate, in Nairobi Milimani CMCC No 726 of 2017 pending the hearing and determination of the appeal filed herein.2. That this court does hereby review the conditional stay orders issued on November 29, 2021 and substitute the same with bank guarantee No MDxxxx for KCB Bank Kenya Limited dated March 22, 2022 for the sum Ksh 3 million.3. That the court does hereby allow the application to adopt bank guarantee No MDxxxx from KCB Bank Kenya Limited dated March 22, 2022 for the sum of Ksh 3 million as security pending the hearing and determination of the appeal dated March 12, 2020. 4.That leave is granted to the applicant to file and serve the record of appeal within 45 days from the date hereof.5. That the costs of this application shall be in the cause.

Orders accordingly.

DELIVERED, DATED AND SIGNED AT NAIROBI THIS 12TH DAY OF OCTOBER 2022. J. N. NJAGIJUDGEIn the presence of:Mr. Farah for Appellant/ApplicantMiss Winnie Nyakiti - RespondentCourt Assistant: Ubar