By a Notice of Motion application expressed under Order 42 and rule 51 (1) and (5) of the civil procedure rules 2010, Section 1A,1B, 3A, of the Civil Procedure Act, Article 50 and 159 (2) (d) of the Constitution and all other enabling provisions of the law, the applicant sought an order of stay of the Judgement/Decree and all consequential orders arising from the judgement of the Hon A.N. Makau, Senior Principal Magistrate delivered at Ngong on 25th September, 2025 in MCCC/219 of 2022 pending the hearing and determination of the Appeal.
The application is premised on the grounds on the face of the application and the supporting affidavit of Joseph Nzai Odanya sworn on 21st October 2025. In summary, the appellants/applicants are registered owners of Plot No Ngong/Ngong 3289 with rental houses comprised of nine (9) self-contained rooms with a total monthly rental income of Ksh 52,000. On 26th September 2018, the appellant applied and obtained a loan facility of Ksh 1,100,000 from the 1st respondent for renovation which facility was secured by a charge over rental premise on the said plot plus a deed of rental assignment. The appellant avers that the 1st respondent accepted, satisfied and approved the management contract between the appellants and the 2nd respondent executed on 1st October, 2017 as constituted deed of rental assignment for purposes of loan facility and proceeded to release the said loan to the appellants on 30th October, 2018. The applicant aver that the loan facility could only be approved subject to the appellant appointing an estate agent vetted, selected and approved by the 1st respondents approved panel of estate agents.
It is contended that upon executing the loan agreement and deed of assignment the appellant handed over to the 2nd respondent the management and rent collection of rent at the rental premises at the plot which the 2nd respondent mismanaged, defaulted and failed to remit the rent collected to the 1st respondent as agreed in the deed of rental assignment resulting in loan arrears of the sum of Ksh 604,092.13 as at 26th January 2022. The appellant blames the 1st respondent as the custodian of the loan account, fully aware of the non-remittance of rent and monitoring the said loan repayment kept silent and raised no alarm or alerted the appellants of non-performance of the loan facility for a period of 12 months only to issue a statutory notice on 28th January 2022 for sale of the charged property. The appellant contends that the 1st respondent owed them a duty of care to alert them on the non-performance of the loan facility.
The appellant argues that, as a result of mismanagement and fraud perpetuated by the 2nd respondent, they filed a suit against 2nd respondent where the court indeed found that the 2nd respondent defrauded the rent and has not refunded since. Subsequently, the appellant filed the suit to restrain the 1st and 3rd respondent from proceeding with the sale of the suit property which suit was dismissed by the Magistrate court. That if the 1st respondent proceed with the sale of their strategic family property, they would suffer substantial loss and the appeal herein would be rendered nugatory. The appellant contends that as they are continuing servicing the loan facility and the title deed still in the custody of the 1st respondent no prejudice would be suffered by the 1st respondent if stay order is granted.
The application for stay is opposed by the 1st respondent by way of a replying affidavit deponed by Martha Mwakio an Advocate of the High Court of Kenya on 25th November 2025.
The 1st respondent agrees that the appellant applied for and was granted a loan facility of Ksh.1,100,000 secured by the subject property repayable over 60 months. The 1st respondent aver that the parties had intended to enter into a deed of rental assignment however the same was never executed and that the estate management contract does not constitute a deed of rental assignment. That a deed of rental assignment is a tripartite agreement executed by the borrower, the estate manager and the Bank. That the present estate management contract was entered into by the 1st appellant and the 2nd respondent which was never approved or entered into with the knowledge or participation of the Bank. The 1st respondent contend that the facility was disbursed on the basis of a legal charge which adequately constituted the required security. It is the 1st respondent contention that the appellants were required to appoint an estate agent manager from the Banks Panel, which decision was at the sole discretion of the appellants who were required to conduct due diligence.
The Bank contend that it does not supervise the remittance of the monthly repayment amount but merely deducts the amount due from the customers account and as the appellants were in default, it opted to exercise the statutory power of sale. Further, the appellant is currently managing the rental units and have not been remitting any payments from the rental income. Therefore, granting the appellants the orders sought will occasion prejudice to the Bank. It is contended that the continuation of execution process does not in any way prejudice the appellants right of appeal nor will the appeal be rendered nugatory as the Bank is fully capable of compensating the appellant by an award of damages should the appeal succeed.
Submission
I have read the submissions filed by both counsel appearing for the parties, and the authorities referred to in the said submissions.
Analysis and Determination
The single issue for this court determination is whether the order for stay of execution should issue pending appeal.
It is trite law that an appeal does not operate as an automatic stay of execution. The conditions which a party must establish in order for the court to order stay of execution are provided for under Order 42 Rule 6(2) Civil Procedure Rules. Order 42 Rule 6 of the Civil Procedure Rules stipulates: -
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 orders set aside.”
No order for stay of execution shall be made under sub rule 1 unless: -
a) The Court is satisfied that substantial loss may result to the 1st 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.
A party seeking the grant of an order of stay of execution pending appeal must show sufficient cause, demonstrate that he/she will suffer substantial loss unless the order of stay is granted, provide security and demonstrate that the application was made without unreasonable delay. This is a discretionary remedy and the court has to determine whether it is equitable to issue the order or not.
Without going into the merits or demerits of the appeal, the Applicant contend that unless a stay of execution is granted, the 1st and the 3rd respondent will proceed with the sale of the appellants property estimated at 30,000,000 for the disputed loan arrears of Ksh 397,743.39 as per the 1st respondent loan statement of 25th October 2025. The appellant contend that it risks permanent loss of their family property whilst there are outstanding issues such the alleged fraud between the 1st respondent and the 2nd respondent. The appellant submits that substantial loss is not only an issue of qualitative value but also strategic loss and that though execution of a decree per-se is a legal process, however where the same would cause adverse substantial change to the situation pending appeal, then the court is obligated to preserve the status quo. The appellants also submit that the application was made without delay and that the title which is in the custody of the 1st appellant is sufficient security.
In Kenya Shell Ltd vs Kibiru & Ano (1986) klr 410 the court of Appeal stated that;
“It is usually a good rule to see if order 42 of the civil procedure rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be rare case when an appeal would be rendered nugatory by some other events. substantial loss in its various forms, is the cornerstone of both jurisdictions for granting a stay. That is what is to be prevented”
Yet still in James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR the Court held 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.
Therefore, substantial loss depends on the circumstances of each case and the court has to consider the peculiar set of facts of each case and determine whether in the whole any substantial loss is likely to occur if stay is denied.
The appellant in the instant application seeks to prevent the eminent sale of his property Ngong/Ngong/3289 which was used as security for the loan advanced and on it was built 9 rental units which gives him Ksh 52,000 per month.
The suit before the Magistrate court was dismissed with cost thus exposing him to the perils of executions if stay is not granted. The effect of dismissal of the appellant suit before the Magistrate court, which sought inter alia an injunction against the sale of his property, effectively allowed the 1st and 3rd respondent to take a positive step and initiate and/or continue the process of sale of the appellant property.
On the other hand, the 1st respondent submitted that the sale of the suit property whose valuation has not been carried out by the appellant, is reversable as the appellant may be compensated by way of an award of damages. Similarly, the sale of the property in default was contemplated under the charge instrument thus any loss alleged by the appellants was foreseeable.
It the courts view that whereas the appellants obtained a loan facility from the 1st respondent and used their property Ngong/Ngong/3289 as security, if stay is not granted, the appellants are likely to suffer substantial loss as there is no indication that the suit property had been sold.
I am satisfied that the application met the threshold set out in Order 42 (6) of the civil procedure rules and grant a stay of execution of the Judgement/Decree and all consequential orders arising from the decision of the Learned Magistrate issued on 25th September 2025 pending the hearing and determination of the appeal.
On the issue of security, and its purpose the court in the case of Arun C. Sharma vs Ashana Raikundalia t/a Raikundalia & Co. Advocates & 2 Others [2014] eKLR observed as follows;
“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 the 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.
Evidently, the issue of security is discretionary and it is upon the court to determine the same. I agree with the appellant that the title to the suit property is held by the 1st respondent and in the event that the appeal fails, the 1st respondent still has the charged document to proceed with the execution process.
In the circumstances the application dated 21st October 2025 is allowed. The cost shall await the outcome of the appeal.
The application is premised on the grounds on the face of the application and the supporting affidavit of Joseph Nzai Odanya sworn on 21st October 2025. In summary, the appellants/applicants are registered owners of Plot No Ngong/Ngong 3289 with rental houses comprised of nine (9) self-contained rooms with a total monthly rental income of Ksh 52,000. On 26th September 2018, the appellant applied and obtained a loan facility of Ksh 1,100,000 from the 1st respondent for renovation which facility was secured by a charge over rental premise on the said plot plus a deed of rental assignment. The appellant avers that the 1st respondent accepted, satisfied and approved the management contract between the appellants and the 2nd respondent executed on 1st October, 2017 as constituted deed of rental assignment for purposes of loan facility and proceeded to release the said loan to the appellants on 30th October, 2018. The applicant aver that the loan facility could only be approved subject to the appellant appointing an estate agent vetted, selected and approved by the 1st respondents approved panel of estate agents.
It is contended that upon executing the loan agreement and deed of assignment the appellant handed over to the 2nd respondent the management and rent collection of rent at the rental premises at the plot which the 2nd respondent mismanaged, defaulted and failed to remit the rent collected to the 1st respondent as agreed in the deed of rental assignment resulting in loan arrears of the sum of Ksh 604,092.13 as at 26th January 2022. The appellant blames the 1st respondent as the custodian of the loan account, fully aware of the non-remittance of rent and monitoring the said loan repayment kept silent and raised no alarm or alerted the appellants of non-performance of the loan facility for a period of 12 months only to issue a statutory notice on 28th January 2022 for sale of the charged property. The appellant contends that the 1st respondent owed them a duty of care to alert them on the non-performance of the loan facility.
The appellant argues that, as a result of mismanagement and fraud perpetuated by the 2nd respondent, they filed a suit against 2nd respondent where the court indeed found that the 2nd respondent defrauded the rent and has not refunded since. Subsequently, the appellant filed the suit to restrain the 1st and 3rd respondent from proceeding with the sale of the suit property which suit was dismissed by the Magistrate court. That if the 1st respondent proceed with the sale of their strategic family property, they would suffer substantial loss and the appeal herein would be rendered nugatory. The appellant contends that as they are continuing servicing the loan facility and the title deed still in the custody of the 1st respondent no prejudice would be suffered by the 1st respondent if stay order is granted.
The application for stay is opposed by the 1st respondent by way of a replying affidavit deponed by Martha Mwakio an Advocate of the High Court of Kenya on 25th November 2025.
The 1st respondent agrees that the appellant applied for and was granted a loan facility of Ksh.1,100,000 secured by the subject property repayable over 60 months. The 1st respondent aver that the parties had intended to enter into a deed of rental assignment however the same was never executed and that the estate management contract does not constitute a deed of rental assignment. That a deed of rental assignment is a tripartite agreement executed by the borrower, the estate manager and the Bank. That the present estate management contract was entered into by the 1st appellant and the 2nd respondent which was never approved or entered into with the knowledge or participation of the Bank. The 1st respondent contend that the facility was disbursed on the basis of a legal charge which adequately constituted the required security. It is the 1st respondent contention that the appellants were required to appoint an estate agent manager from the Banks Panel, which decision was at the sole discretion of the appellants who were required to conduct due diligence.
The Bank contend that it does not supervise the remittance of the monthly repayment amount but merely deducts the amount due from the customers account and as the appellants were in default, it opted to exercise the statutory power of sale. Further, the appellant is currently managing the rental units and have not been remitting any payments from the rental income. Therefore, granting the appellants the orders sought will occasion prejudice to the Bank. It is contended that the continuation of execution process does not in any way prejudice the appellants right of appeal nor will the appeal be rendered nugatory as the Bank is fully capable of compensating the appellant by an award of damages should the appeal succeed.
Submission
I have read the submissions filed by both counsel appearing for the parties, and the authorities referred to in the said submissions.
Analysis and Determination
The single issue for this court determination is whether the order for stay of execution should issue pending appeal.
It is trite law that an appeal does not operate as an automatic stay of execution. The conditions which a party must establish in order for the court to order stay of execution are provided for under Order 42 Rule 6(2) Civil Procedure Rules. Order 42 Rule 6 of the Civil Procedure Rules stipulates: -
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 orders set aside.”
No order for stay of execution shall be made under sub rule 1 unless: -
a) The Court is satisfied that substantial loss may result to the 1st 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.
A party seeking the grant of an order of stay of execution pending appeal must show sufficient cause, demonstrate that he/she will suffer substantial loss unless the order of stay is granted, provide security and demonstrate that the application was made without unreasonable delay. This is a discretionary remedy and the court has to determine whether it is equitable to issue the order or not.
Without going into the merits or demerits of the appeal, the Applicant contend that unless a stay of execution is granted, the 1st and the 3rd respondent will proceed with the sale of the appellants property estimated at 30,000,000 for the disputed loan arrears of Ksh 397,743.39 as per the 1st respondent loan statement of 25th October 2025. The appellant contend that it risks permanent loss of their family property whilst there are outstanding issues such the alleged fraud between the 1st respondent and the 2nd respondent. The appellant submits that substantial loss is not only an issue of qualitative value but also strategic loss and that though execution of a decree per-se is a legal process, however where the same would cause adverse substantial change to the situation pending appeal, then the court is obligated to preserve the status quo. The appellants also submit that the application was made without delay and that the title which is in the custody of the 1st appellant is sufficient security.
In Kenya Shell Ltd vs Kibiru & Ano (1986) klr 410 the court of Appeal stated that;
“It is usually a good rule to see if order 42 of the civil procedure rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be rare case when an appeal would be rendered nugatory by some other events. substantial loss in its various forms, is the cornerstone of both jurisdictions for granting a stay. That is what is to be prevented”
Yet still in James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR the Court held 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.
Therefore, substantial loss depends on the circumstances of each case and the court has to consider the peculiar set of facts of each case and determine whether in the whole any substantial loss is likely to occur if stay is denied.
The appellant in the instant application seeks to prevent the eminent sale of his property Ngong/Ngong/3289 which was used as security for the loan advanced and on it was built 9 rental units which gives him Ksh 52,000 per month.
The suit before the Magistrate court was dismissed with cost thus exposing him to the perils of executions if stay is not granted. The effect of dismissal of the appellant suit before the Magistrate court, which sought inter alia an injunction against the sale of his property, effectively allowed the 1st and 3rd respondent to take a positive step and initiate and/or continue the process of sale of the appellant property.
On the other hand, the 1st respondent submitted that the sale of the suit property whose valuation has not been carried out by the appellant, is reversable as the appellant may be compensated by way of an award of damages. Similarly, the sale of the property in default was contemplated under the charge instrument thus any loss alleged by the appellants was foreseeable.
It the courts view that whereas the appellants obtained a loan facility from the 1st respondent and used their property Ngong/Ngong/3289 as security, if stay is not granted, the appellants are likely to suffer substantial loss as there is no indication that the suit property had been sold.
I am satisfied that the application met the threshold set out in Order 42 (6) of the civil procedure rules and grant a stay of execution of the Judgement/Decree and all consequential orders arising from the decision of the Learned Magistrate issued on 25th September 2025 pending the hearing and determination of the appeal.
On the issue of security, and its purpose the court in the case of Arun C. Sharma vs Ashana Raikundalia t/a Raikundalia & Co. Advocates & 2 Others [2014] eKLR observed as follows;
“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 the 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.
Evidently, the issue of security is discretionary and it is upon the court to determine the same. I agree with the appellant that the title to the suit property is held by the 1st respondent and in the event that the appeal fails, the 1st respondent still has the charged document to proceed with the execution process.
In the circumstances the application dated 21st October 2025 is allowed. The cost shall await the outcome of the appeal.