Background and Introduction
1. Before court is the application dated 12/8/2024 filed by the defendant. It is brought under Section 1A, 1B and 3A of the Civil Procedure Act, Order 41 Rule 1 and 6 and Order 51 Rule 1 of the Civil Procedure Rules amongst others. The application seeks a stay of execution of the judgment delivered on 22/6/2022 and upheld by the court on 23/5/2024, pending the hearing and determination of the appeal.
2. The application is supported by the affidavit sworn by James Waithaka, and the submissions dated 17/9/2024. The applicant contends that the court, in its ruling on 23/5/2024, upheld the ex parte judgment delivered on 22/6/2022 in favour of the respondents. Dissatisfied with this decision, the applicant has since lodged a notice of appeal against the said ruling.
3. The applicant further asserts that execution is actively underway at their premises in Athi River, where the plaintiff had begun dismantling equipment used in edible oil production. It is also claimed that some of the attached properties belong to a separate entity, Convex Commodities Merchants, and are charged to Stanbic Bank Kenya Limited. The applicant emphasizes that the decretal sum of Kshs. 64,133,233/= is substantial and, if execution proceeds, their business operations will suffer irreparable loss.
4. Additionally, the applicant raises concerns about the plaintiff’s financial capacity, arguing that if the appeal succeeds, recovering the sums paid may be uncertain. The applicant expressed its willingness to provide security including depositing a bank guarantee within 180 days or as directed by the court and urges the court to exercise its discretion in granting the orders sought.
5. The application is opposed through a replying affidavit sworn by Faith Wamuyu on 14/8/2024. The respondent characterizes the application for stay of execution as a meritless delay tactic. It denies the allegation that the execution targets assets belonging to a third party, Convex Commodity Merchants Ltd., asserting instead that the applicant is the rightful owner of the attached properties. It further contends that no evidence has been presented to demonstrate that Convex holds any interest in the suit properties. The respondent also notes that if Convex had any objection to the execution, it ought to have filed an objection, which it has not done.
6. Additionally, the respondent states that after receiving the Proclamation Notice and Warrants of Attachment, the applicant’s director reached out and proposed to pay the decretal sum in installments. This, according to the respondent, contradicts the applicant’s claim of financial hardship and a meritorious appeal.
7. The respondent argues that the applicant has failed to meet the legal requirements for granting a stay. It asserts that the intended appeal has little chance of success, as the court ruled not just on late filing of the defence but also on the lack of triable issues. Furthermore, the applicant has not proven that it will suffer substantial loss, only speculating that the respondent may be unable to refund the money if the appeal succeeds. The respondent maintains that it is a profitable company operating as a going concern and has the ability to repay the decretal sum.
8. The respondent also notes that the application was filed late without any valid reason and that the applicant has not provided proof of its ability to issue a bank guarantee as security. It further claims that the applicant never served it with the Notice of Appeal and request for typed proceedings, making the appeal defective.
Analysis and Determination
9. I have carefully considered the application, response, the submissions on record as well as the authorities cited by counsel. the core issue before court is whether the applicant has made a case for grant of stay of execution.
10. The law governing the granting of orders for stay of execution pending appeal is set out in Order 42 Rule 6 (1) and 2 of the Civil Procedure Rules. The principles applicable have been articulated in the case of Butt vs Rent Restriction Tribunal [1979] where the Court of Appeal reaffirmed the considerations to be considered when determining whether to grant or deny a stay of execution pending appeal as follows:
i. The power of the court to grant or refuse an application for a stay of execution is discretionary; and the discretion should be exercised in such a way as not to prevent an appeal.
ii. Secondly, 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 the appeal court reverse the judge’s discretion.
iii. Thirdly, 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. Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. 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 of costs as ordered will cause the order for stay of execution to lapse.
11. As to what amounts to substantial loss, the court in James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR, observed that
“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.”
12. The application herein was filed approximately two months after this court’s ruling was delivered. The applicant therefore meets the threshold of promptness under Order 42 Rule 6 of the Civil Procedure Rules which requires that an application for stay be made without unreasonable delay. However, compliance with this temporal requirement is only one factor. The applicant must also demonstrate good faith and satisfy the substantive criteria for a stay, as discussed.
13. A central claim by the applicant is that the properties attached in execution do not belong to it, but rather to a third party known as Convex Commodities Merchants Ltd. (Convex), and furthermore that those assets are charged to Stanbic Bank Kenya Ltd. The applicant implies that because the assets are owned by Convex and encumbered by a bank charge, they should not be subject to execution on the applicant’s debt. Upon scrutiny of the evidence however, I find this contention to be misleading and unsupported.
14. The charge instruments on record unequivocally list the applicant itself as the chargor of the properties in question. Nowhere in the charging documents is Convex named as the chargor or owner. In effect, the applicant has charged its own properties to Stanbic Bank as security, which directly contradicts the claim that those properties belong to Convex. The applicant has produced no credible evidence linking Convex to the ownership of the attached properties. It is also not clear which specific properties are in issue. I agree with the respondent that if indeed Convex were the true owner, they would have sought to assert their rights which is not the case.
15. Under the circumstances, the Court is entitled to draw the inference that the properties belong to the applicant as judgment debtor, and that the reference to Convex is a red herring. The attempt to shield these assets from execution by alleging third-party ownership lacks candour and undermines the applicant’s good faith. A party seeking a discretionary order such as a stay of execution must do so with clean hands, and the misrepresentation regarding the charged properties runs afoul of this principle.
16. The conduct of the applicant following the ruling further calls into question the bona fides of this application. Notably, by an email dated 13/8/20204, the applicant proposed a payment plan to the respondent to satisfy the judgment debt. This communication is telling.
17. It evidences that the applicant, rather than immediately moving to challenge the judgment on appeal, acknowledged the debt and sought time to pay. Such an act is consistent with a party that has accepted the outcome or at least the obligation to pay, and it stands inconsistent with a genuine intention to appeal. The payment proposal also raises the question of whether the subsequent decision to file the present application was an afterthought.
18. Indeed, the timing suggests that the notion of appealing (and seeking a stay) arose only after attempts to negotiate payment. An application for stay of execution should not be a stratagem to buy time or derail enforcement when the applicant’s own prior actions signaled willingness to comply with the judgment.
19. Further casting doubt on the applicant’s seriousness in the purported appeal is the failure to serve the Notice of Appeal and request for proceedings on the respondents as is the procedure. The omission speaks volumes. If indeed an appeal were being actively pursued, one would expect compliance with these basic procedural obligations. It leads the Court to conclude, on a balance of probability, that the appeal may be a mere token or tactical appeal, signaled in form but not in substance.
20. This conduct weighs against the applicant in the exercise of the court’s discretion. The impression created is that the present application is not driven by a genuine need to preserve the status quo pending a meritorious appeal, but rather by a desire to delay or evade fulfillment of the judgment. Such a motive does not commend itself to the Court’s equitable discretion.
21. In any case, the court finds no evidence to suggest that the respondent would be unable or unwilling to refund the decretal sum should the appeal eventually succeed. The applicant has not provided any financial information or other proof indicating that the respondent’s means are insufficient or that the sum, once paid, would be in jeopardy.
Disposition
22. Accordingly, the application dated 12/8/2024 is dismissed with costs.
DATED, SIGNED AND DELIVERED IN MOMBASA
THIS 16TH DAY OF APRIL 2025
F. MUGAMBI
JUDGE