This ruling is in respect to the Application dated 7 th November 2024 wherein the Applicant seeks the following orders: -
SPENT
SPENT.
THAT the Court be pleased to issue an order of stay of execution of the decree issued in Nyamira CMCC No. E107 of 2023 pending the hearing and determination of the Appeal.
THAT costs of the Application be provided for.
The Application is premised on the grounds on the face of the Notice of Motion and is supported by the affidavit of Ms. Joy Muthoka , the Legal Officer of the Applicant’s insurer, Old Mutual Insurance Limited. The Applicant’s deponent avers that the Applicant is aggrieved by the decision of the trial court and wishes to lodge an appeal and that the 30 days stay of execution granted by the trial court have already lapsed. She states that the Respondents might move to execute the decree thereby rendering the intended appeal nugatory if the prayers sought in the Application are not granted. She also avers that the applicant is willing to provide security in the form of a bank guarantee or insurance bond as the Court may direct and that there has been no delay in filing the Application.
The Respondents opposed the Application through the Replying Affidavit sworn by their advocate, Mr. Charles Ogaro Orayo, who avers that the Applicant has not demonstrated the loss that she stands to suffer if the orders sought are not granted. He further states that the Applicant had not only failed to deposit half of the decretal sum as ordered by the trial court within 10 days from the date of the said judgment but has also failed to deposit half of the decretal sum even after the Respondent graciously granted them a further 10 days to deposit the same.
The Respondent urged the court to dismiss the Application as the Applicant was not keen on giving any security as a condition for the granting of stay.
The Application was canvassed by way of written submissions which I have considered.
The only issue for my determination is whether the Applicant has made out a case for the granting pf orders for stay of execution pending appeal.
The law governing orders for stay of execution pending appeal is provided for under Order 42 Rule 6 of the Civil Procedure Rules 2010 as follows: -
No appeal or second appeal shall operate as a stay of execution or proceeding 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 order set aside.
No order for stay of execution shall be made under subrule (1) unless –
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
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.
In Butt vs. Rent Restriction Tribunal [1979] KECA 22 (KLR) the Court of Appeal outlined the principles that should guide a court in determining such applications as follows: -
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.
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.
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.
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.
It is trite law that an appeal does not automatically operate as a stay of execution. This means that a party seeking orders for stay of execution pending appeal must satisfy the following conditions: -
That substantial loss may result to them unless the order is made;
That the Application has been made without unreasonable delay; and
That there is security as the court orders for the due performance of the decree.
What constitutes substantial loss was explained in James Wangalwa & Another vs Agnes Naliaka Cheseto [2012] eKLR thus: -
“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.
In the instant case, the Applicant contends that there is imminent danger that the Respondents might execute the decree, an eventuality that may render the intended appeal nugatory. The Applicant has however not demonstrated the substantial loss that she stands to suffer if the orders sought are not granted.
I have considered the grounds of appeal and I find that they raise triable issues that ought to be addressed in the intended appeal. I am also cognizant of the fact that the Respondents are the rightful decree holders who should not be unduly precluded from enjoying the fruits of their judgment. I find that the appeal would be rendered an academic exercise if the Respondent were to execute the decree before the appeal is heard and determined. For the above reasons, I find that the Application meets the first threshold of substantial loss.
The trial court rendered its judgment on 18 th September 2024 after which the Applicant was granted 30 days’ stay of execution. The Applicant subsequently filed the Memorandum of Appeal on 24 th October 2024 and the present Application filed on 7 th November 2024. I find that the Application was filed without unreasonable delay and that the second condition for an Application for stay of execution has been satisfied.
On security for the due performance of the decree, I find guidance in the case of Gianfranco Manenthi & Another vs. Africa merchant Assurance Co. Ltd [2019] eKLR where it was held 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 a 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 falls. 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 judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal….Thus, 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….”
The Applicant submitted that she is ready to provide a bank guarantee or insurance bond as security for due performance of the decree. I have however considered the fact that Respondents are entitled to enjoy the fruits of their judgment notwithstanding the existence of the intended appeal. I also note that the Respondents did not address the Court on whether they have the capacity to refund the decretal sum should the appeal be successful.
I find that the security proposed by the Applicant will not adequately protect the Respondents’ interests. I am of the view that it will be just to order the Applicant to pay half of the decretal sum to the Respondents while the other half shall be deposited in a joint interest earning account to be held in the joint names of the advocates for both parties. I am guided by the in Nduhiu Gitahi vs. Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100 the Court of Appeal held thus: -
“The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so…The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed, in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it”.
In the final analysis, I find the Application dated is merited and I therefore allow it in the following terms: -
The Applicant shall pay the Respondents ½ of the decretal sum within 15 days from the date of this Ruling.
The other ½ of the decretal sum shall, within 45 days from the date of this ruling, be deposited in a joint interest earning account to be held in the names of the advocates for the parties herein.
That in the event of failure to the comply with the conditions in (a) and (b) hereinabove, the Respondents shall be at liberty to proceed with the process of execution without any further reference to the court.
The costs of this Application shall abide the outcome of the Appeal.
It is so ordered.
SPENT
SPENT.
THAT the Court be pleased to issue an order of stay of execution of the decree issued in Nyamira CMCC No. E107 of 2023 pending the hearing and determination of the Appeal.
THAT costs of the Application be provided for.
The Application is premised on the grounds on the face of the Notice of Motion and is supported by the affidavit of Ms. Joy Muthoka , the Legal Officer of the Applicant’s insurer, Old Mutual Insurance Limited. The Applicant’s deponent avers that the Applicant is aggrieved by the decision of the trial court and wishes to lodge an appeal and that the 30 days stay of execution granted by the trial court have already lapsed. She states that the Respondents might move to execute the decree thereby rendering the intended appeal nugatory if the prayers sought in the Application are not granted. She also avers that the applicant is willing to provide security in the form of a bank guarantee or insurance bond as the Court may direct and that there has been no delay in filing the Application.
The Respondents opposed the Application through the Replying Affidavit sworn by their advocate, Mr. Charles Ogaro Orayo, who avers that the Applicant has not demonstrated the loss that she stands to suffer if the orders sought are not granted. He further states that the Applicant had not only failed to deposit half of the decretal sum as ordered by the trial court within 10 days from the date of the said judgment but has also failed to deposit half of the decretal sum even after the Respondent graciously granted them a further 10 days to deposit the same.
The Respondent urged the court to dismiss the Application as the Applicant was not keen on giving any security as a condition for the granting of stay.
The Application was canvassed by way of written submissions which I have considered.
The only issue for my determination is whether the Applicant has made out a case for the granting pf orders for stay of execution pending appeal.
The law governing orders for stay of execution pending appeal is provided for under Order 42 Rule 6 of the Civil Procedure Rules 2010 as follows: -
No appeal or second appeal shall operate as a stay of execution or proceeding 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 order set aside.
No order for stay of execution shall be made under subrule (1) unless –
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
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.
In Butt vs. Rent Restriction Tribunal [1979] KECA 22 (KLR) the Court of Appeal outlined the principles that should guide a court in determining such applications as follows: -
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.
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.
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.
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.
It is trite law that an appeal does not automatically operate as a stay of execution. This means that a party seeking orders for stay of execution pending appeal must satisfy the following conditions: -
That substantial loss may result to them unless the order is made;
That the Application has been made without unreasonable delay; and
That there is security as the court orders for the due performance of the decree.
What constitutes substantial loss was explained in James Wangalwa & Another vs Agnes Naliaka Cheseto [2012] eKLR thus: -
“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.
In the instant case, the Applicant contends that there is imminent danger that the Respondents might execute the decree, an eventuality that may render the intended appeal nugatory. The Applicant has however not demonstrated the substantial loss that she stands to suffer if the orders sought are not granted.
I have considered the grounds of appeal and I find that they raise triable issues that ought to be addressed in the intended appeal. I am also cognizant of the fact that the Respondents are the rightful decree holders who should not be unduly precluded from enjoying the fruits of their judgment. I find that the appeal would be rendered an academic exercise if the Respondent were to execute the decree before the appeal is heard and determined. For the above reasons, I find that the Application meets the first threshold of substantial loss.
The trial court rendered its judgment on 18 th September 2024 after which the Applicant was granted 30 days’ stay of execution. The Applicant subsequently filed the Memorandum of Appeal on 24 th October 2024 and the present Application filed on 7 th November 2024. I find that the Application was filed without unreasonable delay and that the second condition for an Application for stay of execution has been satisfied.
On security for the due performance of the decree, I find guidance in the case of Gianfranco Manenthi & Another vs. Africa merchant Assurance Co. Ltd [2019] eKLR where it was held 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 a 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 falls. 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 judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal….Thus, 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….”
The Applicant submitted that she is ready to provide a bank guarantee or insurance bond as security for due performance of the decree. I have however considered the fact that Respondents are entitled to enjoy the fruits of their judgment notwithstanding the existence of the intended appeal. I also note that the Respondents did not address the Court on whether they have the capacity to refund the decretal sum should the appeal be successful.
I find that the security proposed by the Applicant will not adequately protect the Respondents’ interests. I am of the view that it will be just to order the Applicant to pay half of the decretal sum to the Respondents while the other half shall be deposited in a joint interest earning account to be held in the joint names of the advocates for both parties. I am guided by the in Nduhiu Gitahi vs. Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100 the Court of Appeal held thus: -
“The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so…The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed, in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it”.
In the final analysis, I find the Application dated is merited and I therefore allow it in the following terms: -
The Applicant shall pay the Respondents ½ of the decretal sum within 15 days from the date of this Ruling.
The other ½ of the decretal sum shall, within 45 days from the date of this ruling, be deposited in a joint interest earning account to be held in the names of the advocates for the parties herein.
That in the event of failure to the comply with the conditions in (a) and (b) hereinabove, the Respondents shall be at liberty to proceed with the process of execution without any further reference to the court.
The costs of this Application shall abide the outcome of the Appeal.
It is so ordered.