REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
COMMERCIAL APPEAL NO.E051 OF 2023
CP HARDWARE LIMITED..................................1ST APPELLANT/APPLICANT
CATHERINE NJOKI NJIRAINI……………… 2ND APPELLANT/APPLICANT
VERSUS
BAPA LIMITED…………………………………….……….…….RESPONDENT
RULING
1. Before this Court is the appellants/applicants’ Notice of Motion dated 13th March, 2023 brought under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 42 Rule 6 of the Civil Procedure Rules, 2010. The applicants seek the following orders:
(i) Spent
(ii) Spent
(iii) Spent
(iv) That this Honourable Court be pleased to grant an order for stay of execution of the judgement delivered on 19th November, 2021 in Milimani Small Claims Court Commercial Suit No. 551 of 2021 as well as all consequential orders, proceedings and/or decrees pending the hearing and determination of the appeal herein.
(v) That the respondent does bear the costs of this application.
2. The application is premised on the grounds on the face of it and the supporting affidavit of the 2nd applicant herein. The grounds relied upon by the applicants are that a ruling was issued in the respondent’s favour in Milimani Small Claims Court Commercial Suit No. 551 of 2021 on 27th February, 2022 whereby the Court dismissed the applicants’ application dated 21st October, 2022 which sought to have the matter marked as fully settled.
3. In the affidavit filed by the 2nd applicant, she deposed that the effect of the aforementioned ruling was that the respondent is at liberty to execute the judgment delivered on 19th November, 2021 against the applicants as there are no orders for stay of execution in force.
4. The applicants depose that the Trial Court failed to consider the merits of their application dated 21st October, 2021 which sought to have the matter marked as fully settled on the basis that the respondent attached the applicants’ goods valued at a forced sale value of Kshs.997,790.00, which were sufficient to satisfy the decretal sum. The applicants’ claim is that the Auctioneer disposed of the goods for the sum of Kshs.75,000/=, thus exposing the applicants to further execution proceedings.
5. The applicants plead that their appeal will be rendered nugatory and they will suffer substantial loss if any further execution proceedings are not stayed pending determination of the appeal.
6. The respondent opposed the application through grounds of opposition dated 14th April, 2023 and a replying affidavit sworn on 14th April, 2023 by Diran Naran Patel, a director of the respondent company.
7. In the grounds of opposition, the respondent contends that the instant application is frivolous and does not meet the threshold for grant of a stay of execution pending appeal. The respondent states that it is an entity in a good financial position and can therefore satisfy the decree in the appellate Court in the event that stay of execution is not granted and as such, the intended appeal cannot be rendered nugatory.
8. In the replying affidavit, the respondent’s director’s averments replicate the grounds of opposition. The respondent in its affidavit emphasizes that the applicants have not met the mandatory threshold for grant of stay of execution under Order 42 Rule 6 of the Civil Procedure Rules, 2010. The respondent averred that it will suffer unfair prejudice if the Court permits the prayers sought, though unwarranted, and extra legal costs, delay in execution and recovery of money rightfully owed to it.
9. The applicants through the 2nd applicant swore a supplementary affidavit on 4th April, 2023, whereby they attached additional documents in support of the instant application.
10. The applicants filed a 2nd supplementary affidavit sworn on 24th April, 2023 by the 2nd applicant. The said affidavit was in response to the respondent’s replying affidavit and grounds of opposition.
11. In the 2nd supplementary affidavit, the applicants averred that the respondent did not dispute that execution had already been levied in satisfaction of the decree in the primary suit and that the amount recovered from the execution was more than sufficient to satisfy the decretal amount. They contended that it would be manifest injustice for the respondent to be allowed to levy further execution in respect of the decree in the primary suit before the question of whether the decretal sum was fully settled is determined.
ANALYSIS AND DETERMINATION.
12. I have considered the application, the supporting affidavit and the two supplementary affidavits filed by the applicants. I have also considered the replying affidavit and the grounds of opposition filed by the respondent, as well as the rival submissions filed by the parties’ Advocates. The sole issue for determination is whether the applicants have met the threshold for grant of an order for stay of execution.
13. The applicable law on stay of execution is Order 42 Rule 6 of the Civil Procedure Rules, 2010 which provides that-
“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.”
14. The first limb to be considered is whether the applicants have demonstrated that they will suffer substantial loss if stay of execution is not granted. The applicants submitted that they will suffer substantial loss if the respondent is allowed to levy further execution before the issue of whether or not the decretal sum was fully settled by the initial execution levied by the respondent is determined. They explained that they will be subjected to attachment of their property and disposal of the same despite having been subjected to the attachment of their property which ought to have satisfied the decree.
15. On the other hand, the respondent’s Counsel submitted that it is not enough for the applicants to state that they would suffer substantial loss because execution had already been levied. Counsel stated that execution is a lawful process and cannot amount to substantial loss.
16. It is evident that the applicants filed an application in the Small Claims Court seeking stay of execution of a decree issued earlier by that Court against them on the grounds that the respondent had already satisfied the decree by selling their goods. The applicants’ argument was that the goods proclaimed by the respondent to satisfy the decree were worth Ksh.997,790.00, whereas the respondent stated that it disposed of the goods for only Kshs.75,000/=.
17. In the ruling of 27th July, 2023, the Adjudicator at the Small Claims Court found that he could not ascertain the amount realized at the auction and that the most prudent action would be to direct the Auctioneer to produce the certificates of sale of the proclaimed goods before undertaking further auction.
18. In the case of James Wangalwa & another v Agnes Naliaka Cheseto [2012] eKLR, it was held as follows on the issue of substantial loss-
“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. 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.” (emphasis added).
19. This Court concurs with the above decision and agrees with the submissions made by Counsel for the respondent that the fact that the respondent had levied execution against the applicants does not in itself mean that they have demonstrated substantial loss as stipulated under Order 42 Rule 6 of the Civil Procedure Rules, 2010.
20. The applicants herein must demonstrate to the satisfaction of this Court that they would indeed suffer substantial loss that would render the appeal nugatory. In this application, the applicants have not done so.
21. On the other hand, the respondent showed by way of its bank statements marked as ‘DNP-1’ attached to its replying affidavit that in the event the appeal filed by the applicants is successful, it would be in a financial position to pay the decretal amount.
22. The second consideration before granting an order for stay of execution is whether the application herein was filed without unreasonable delay. The ruling of the Small Claims Court was delivered on 27th February, 2023 and the application before this Court is dated 13th March, 2023. That is a period of less than a month from the time of the delivery of the said ruling and the filing of the instant application. That demonstrates that there was no unreasonable delay before the filing of the application herein.
23. The third limb to be considered in an application for stay of execution is the provision of security by the applicants for the due performance of the decree that may be binding on them. The applicants herein offered no security but left it to this Court to determine the type of security to be deposited.
24. The applicants herein have however failed to establish the substantial loss aspect which would render their appeal nugatory. This Court is therefore not inclined to grant an order for stay of execution pending appeal, which leads to the conclusion that it is not necessary for this Court to make an order requiring the applicants to deposit security for the due performance of the decree that may be binding on them.
25. The upshot is that the application before this Court lacks merit. It is dismissed with costs to the respondent.
DATED, SIGNED and DELIVERED at NAIROBI on this 8th day of December, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Ms Ngatia for the appellants/applicants
Mr. Maranga for the respondent
Ms. B. Wokabi- Court Assistant.
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
COMMERCIAL APPEAL NO.E051 OF 2023
CP HARDWARE LIMITED..................................1ST APPELLANT/APPLICANT
CATHERINE NJOKI NJIRAINI……………… 2ND APPELLANT/APPLICANT
VERSUS
BAPA LIMITED…………………………………….……….…….RESPONDENT
RULING
1. Before this Court is the appellants/applicants’ Notice of Motion dated 13th March, 2023 brought under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 42 Rule 6 of the Civil Procedure Rules, 2010. The applicants seek the following orders:
(i) Spent
(ii) Spent
(iii) Spent
(iv) That this Honourable Court be pleased to grant an order for stay of execution of the judgement delivered on 19th November, 2021 in Milimani Small Claims Court Commercial Suit No. 551 of 2021 as well as all consequential orders, proceedings and/or decrees pending the hearing and determination of the appeal herein.
(v) That the respondent does bear the costs of this application.
2. The application is premised on the grounds on the face of it and the supporting affidavit of the 2nd applicant herein. The grounds relied upon by the applicants are that a ruling was issued in the respondent’s favour in Milimani Small Claims Court Commercial Suit No. 551 of 2021 on 27th February, 2022 whereby the Court dismissed the applicants’ application dated 21st October, 2022 which sought to have the matter marked as fully settled.
3. In the affidavit filed by the 2nd applicant, she deposed that the effect of the aforementioned ruling was that the respondent is at liberty to execute the judgment delivered on 19th November, 2021 against the applicants as there are no orders for stay of execution in force.
4. The applicants depose that the Trial Court failed to consider the merits of their application dated 21st October, 2021 which sought to have the matter marked as fully settled on the basis that the respondent attached the applicants’ goods valued at a forced sale value of Kshs.997,790.00, which were sufficient to satisfy the decretal sum. The applicants’ claim is that the Auctioneer disposed of the goods for the sum of Kshs.75,000/=, thus exposing the applicants to further execution proceedings.
5. The applicants plead that their appeal will be rendered nugatory and they will suffer substantial loss if any further execution proceedings are not stayed pending determination of the appeal.
6. The respondent opposed the application through grounds of opposition dated 14th April, 2023 and a replying affidavit sworn on 14th April, 2023 by Diran Naran Patel, a director of the respondent company.
7. In the grounds of opposition, the respondent contends that the instant application is frivolous and does not meet the threshold for grant of a stay of execution pending appeal. The respondent states that it is an entity in a good financial position and can therefore satisfy the decree in the appellate Court in the event that stay of execution is not granted and as such, the intended appeal cannot be rendered nugatory.
8. In the replying affidavit, the respondent’s director’s averments replicate the grounds of opposition. The respondent in its affidavit emphasizes that the applicants have not met the mandatory threshold for grant of stay of execution under Order 42 Rule 6 of the Civil Procedure Rules, 2010. The respondent averred that it will suffer unfair prejudice if the Court permits the prayers sought, though unwarranted, and extra legal costs, delay in execution and recovery of money rightfully owed to it.
9. The applicants through the 2nd applicant swore a supplementary affidavit on 4th April, 2023, whereby they attached additional documents in support of the instant application.
10. The applicants filed a 2nd supplementary affidavit sworn on 24th April, 2023 by the 2nd applicant. The said affidavit was in response to the respondent’s replying affidavit and grounds of opposition.
11. In the 2nd supplementary affidavit, the applicants averred that the respondent did not dispute that execution had already been levied in satisfaction of the decree in the primary suit and that the amount recovered from the execution was more than sufficient to satisfy the decretal amount. They contended that it would be manifest injustice for the respondent to be allowed to levy further execution in respect of the decree in the primary suit before the question of whether the decretal sum was fully settled is determined.
ANALYSIS AND DETERMINATION.
12. I have considered the application, the supporting affidavit and the two supplementary affidavits filed by the applicants. I have also considered the replying affidavit and the grounds of opposition filed by the respondent, as well as the rival submissions filed by the parties’ Advocates. The sole issue for determination is whether the applicants have met the threshold for grant of an order for stay of execution.
13. The applicable law on stay of execution is Order 42 Rule 6 of the Civil Procedure Rules, 2010 which provides that-
“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.”
14. The first limb to be considered is whether the applicants have demonstrated that they will suffer substantial loss if stay of execution is not granted. The applicants submitted that they will suffer substantial loss if the respondent is allowed to levy further execution before the issue of whether or not the decretal sum was fully settled by the initial execution levied by the respondent is determined. They explained that they will be subjected to attachment of their property and disposal of the same despite having been subjected to the attachment of their property which ought to have satisfied the decree.
15. On the other hand, the respondent’s Counsel submitted that it is not enough for the applicants to state that they would suffer substantial loss because execution had already been levied. Counsel stated that execution is a lawful process and cannot amount to substantial loss.
16. It is evident that the applicants filed an application in the Small Claims Court seeking stay of execution of a decree issued earlier by that Court against them on the grounds that the respondent had already satisfied the decree by selling their goods. The applicants’ argument was that the goods proclaimed by the respondent to satisfy the decree were worth Ksh.997,790.00, whereas the respondent stated that it disposed of the goods for only Kshs.75,000/=.
17. In the ruling of 27th July, 2023, the Adjudicator at the Small Claims Court found that he could not ascertain the amount realized at the auction and that the most prudent action would be to direct the Auctioneer to produce the certificates of sale of the proclaimed goods before undertaking further auction.
18. In the case of James Wangalwa & another v Agnes Naliaka Cheseto [2012] eKLR, it was held as follows on the issue of substantial loss-
“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. 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.” (emphasis added).
19. This Court concurs with the above decision and agrees with the submissions made by Counsel for the respondent that the fact that the respondent had levied execution against the applicants does not in itself mean that they have demonstrated substantial loss as stipulated under Order 42 Rule 6 of the Civil Procedure Rules, 2010.
20. The applicants herein must demonstrate to the satisfaction of this Court that they would indeed suffer substantial loss that would render the appeal nugatory. In this application, the applicants have not done so.
21. On the other hand, the respondent showed by way of its bank statements marked as ‘DNP-1’ attached to its replying affidavit that in the event the appeal filed by the applicants is successful, it would be in a financial position to pay the decretal amount.
22. The second consideration before granting an order for stay of execution is whether the application herein was filed without unreasonable delay. The ruling of the Small Claims Court was delivered on 27th February, 2023 and the application before this Court is dated 13th March, 2023. That is a period of less than a month from the time of the delivery of the said ruling and the filing of the instant application. That demonstrates that there was no unreasonable delay before the filing of the application herein.
23. The third limb to be considered in an application for stay of execution is the provision of security by the applicants for the due performance of the decree that may be binding on them. The applicants herein offered no security but left it to this Court to determine the type of security to be deposited.
24. The applicants herein have however failed to establish the substantial loss aspect which would render their appeal nugatory. This Court is therefore not inclined to grant an order for stay of execution pending appeal, which leads to the conclusion that it is not necessary for this Court to make an order requiring the applicants to deposit security for the due performance of the decree that may be binding on them.
25. The upshot is that the application before this Court lacks merit. It is dismissed with costs to the respondent.
DATED, SIGNED and DELIVERED at NAIROBI on this 8th day of December, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Ms Ngatia for the appellants/applicants
Mr. Maranga for the respondent
Ms. B. Wokabi- Court Assistant.