' Background and Introduction
1. This matter is filed against a background of litigations concerning the ownership, lease, and disputed rights over the suit property, L.R No. 12251/13, and related parcels. The history begins on or about 18th December 2018, when the defendants, who are the applicants in the present application, offered the suit premises to the respondent, who accepted and entered into a lease agreement. This lease was duly registered with the 1st applicant, in the belief that it was the lawful landlord. The respondent took possession of the properties and remitted quarterly rent payments consistently until November 2020. However, on or about 23rd November 2020, the respondent was served with a notice of intention to proceed with distress for rent from the interested party.
2. Subsequently, the interested party filed Nairobi CMCC Civil Application No. E1270 of 2020, claiming trespass and mesne profits, which culminated in a court ruling against the respondent on 6th August 2021. During these proceedings, the respondent discovered that the applicants had, prior to executing the lease and registering it, lost ownership of the suit premises. This loss occurred following a public auction conducted on 12th November 2018 by Garam Investments, wherein the interested party was declared the highest bidder. The transfer of the property to the interested party was duly registered but this vital information was never disclosed to the respondent, according to its case.
3. Following this revelation, the respondent surrendered the premises to the interested party, pending further redress through this suit. Notably, the origins of this dispute also date back further to a separate litigation involving the same property. In 2017, Amazing Tours & Travel Limited, the original registered owners of the suit properties, filed HCCC No. 463 of 2017 challenging the legality of the auction, the sale, and transfer processes, alleging fraud and procedural irregularities. A ruling was delivered on 31st January 2020 following which the interested party successfully sought eviction orders against the applicants in Nairobi Miscellaneous Application No. 1270 of 2021. Subsequent attempts by the applicants to review or stay those orders were dismissed in May 2023.
4. Currently, the respondent, who is the plaintiff in this matter, filed the suit seeking to recover monies allegedly paid to the respondents as rent for the disputed property. The interested party was enjoined to these proceedings due to its registered ownership. The applicants have now applied through the Motion dated 7th November 2024, to stay proceedings in this suit pending the outcome of the earlier case, Nairobi HCCC No. 463 of 2017, which is currently part heard before this Court (F. Mugambi, J).
5. The applicants contend that the parties in the two suits are similar save for the Bank, (HFCK) and that the issues in the instant suit emanate from HCCC 463 of 2017. The applicants argue that setting the instant suit for hearing before HCCC 463 of 2017 will not only embarrass the court by having to determine similar issues, it will also prejudice them. That should they be successful in HCCC 463 of 2017, that would render the instant suit nugatory.
6. The application is opposed by way of replying affidavits sworn on behalf of the respondent and the interested party. The respondent confirms that it is not a party in HCCC 463 of 2017. It further contends that the present suit seeks the refund of all monies it paid to the applicants, arising from the fraudulent lease. The respondent therefore denies the similarities in the suits as averred by the applicants and instead argues that the determination of one suit cannot dispose of the other.
7. The interested party on the other hand acknowledges ownership of the suit property. It contends that the instant application is meant to frustrate its possession of the suit property and deprive it of its right of ownership and enjoyment as an innocent purchaser for value who has been forced to pursue unnecessary legal proceedings in relation to the suit property thus incurring unnecessary litigation costs. As far as it is concerned, HCCC 463 of 2017 was disposed of by a Ruling of this Court, (Okwany, J) on 31st October 2020.
Analysis and Determination
8. The principles guiding an application for stay of proceedings are well-established and serve to balance judicial efficiency with the litigants’ constitutional right to a fair and expeditious hearing. As enunciated in Global Tours & Travels Limited, Nairobi HC Winding Up Cause No. 43 of 2000 and Kenya Wildlife Service V James Mutembei, [2019] KEHC 10478 (KLR), stay of proceedings is a grave judicial action which seriously interferes with the right of a litigant to conduct his litigation. It impinges on the right of access to justice, right to be heard without delay and overall, right to fair trial. Therefore, the test for stay of proceedings is high and stringent and should only be granted in exceptional circumstances.
9. In the present case, the applicants contend that the issues in this suit are substantially similar to those already adjudicated in HCCC No. 463 of 2017, which challenges the validity of the sale, transfer, and ownership of the suit property. They argue that proceeding with this suit could lead to judicial embarrassment, inconsistent judgments, and prejudice should they succeed in HCCC No. 463 of 2017. Conversely, the respondents and interested party submit that the issues in this suit are distinct, primarily involving the respondent’s claim for refund of monies paid under a lease that is alleged to be fraudulent, and that the earlier case dealt solely with ownership rights and procedures of sale.
10. A close examination of the issues, however, reveals that the preliminary questions of ownership and transfer, which were fully and conclusively settled in the ruling of Okwany J. dated 31st October 2020, are now res judicata and form the basis for the current determination.
11. The Court held at paragraph 25 that:
“the moment the 3rd defendant was issued with the Memorandum and Certificate of Sale, the sale of the suit property was perfected and actualized. That being the case, the plaintiff lost all the rights to the suit property and cannot purport to lease the same to a third party.”
12. This finality on ownership underscores that the issues of title and sale legality have been settled, and any attempt to re-litigate these matters would amount to an abuse of process, as they are barred by the doctrine of res judicata and the provisions of Section 6 of the Civil Procedure Act.
13. Nonetheless, this Court recognizes that the applicants have a constitutional right to fully ventilate their case on other substantive issues not settled by the ruling, including the legality of the lease agreement and the subsequent claims arising from alleged fraud.
14. Therefore, while the issues concerning ownership and sale legality have been definitively settled, this determination is made without prejudice to the applicants’ right to argue their case fully on other substantive grounds. The court finds that the application for a stay of proceedings is not justified, given the absence of any real risk of conflicting judgments or judicial embarrassment, and that the interests of justice will be better served by allowing the current proceedings to proceed.
Disposition
15. Accordingly, the application dated 7th November 2024 for stay of proceedings is dismissed with costs.
'
1. This matter is filed against a background of litigations concerning the ownership, lease, and disputed rights over the suit property, L.R No. 12251/13, and related parcels. The history begins on or about 18th December 2018, when the defendants, who are the applicants in the present application, offered the suit premises to the respondent, who accepted and entered into a lease agreement. This lease was duly registered with the 1st applicant, in the belief that it was the lawful landlord. The respondent took possession of the properties and remitted quarterly rent payments consistently until November 2020. However, on or about 23rd November 2020, the respondent was served with a notice of intention to proceed with distress for rent from the interested party.
2. Subsequently, the interested party filed Nairobi CMCC Civil Application No. E1270 of 2020, claiming trespass and mesne profits, which culminated in a court ruling against the respondent on 6th August 2021. During these proceedings, the respondent discovered that the applicants had, prior to executing the lease and registering it, lost ownership of the suit premises. This loss occurred following a public auction conducted on 12th November 2018 by Garam Investments, wherein the interested party was declared the highest bidder. The transfer of the property to the interested party was duly registered but this vital information was never disclosed to the respondent, according to its case.
3. Following this revelation, the respondent surrendered the premises to the interested party, pending further redress through this suit. Notably, the origins of this dispute also date back further to a separate litigation involving the same property. In 2017, Amazing Tours & Travel Limited, the original registered owners of the suit properties, filed HCCC No. 463 of 2017 challenging the legality of the auction, the sale, and transfer processes, alleging fraud and procedural irregularities. A ruling was delivered on 31st January 2020 following which the interested party successfully sought eviction orders against the applicants in Nairobi Miscellaneous Application No. 1270 of 2021. Subsequent attempts by the applicants to review or stay those orders were dismissed in May 2023.
4. Currently, the respondent, who is the plaintiff in this matter, filed the suit seeking to recover monies allegedly paid to the respondents as rent for the disputed property. The interested party was enjoined to these proceedings due to its registered ownership. The applicants have now applied through the Motion dated 7th November 2024, to stay proceedings in this suit pending the outcome of the earlier case, Nairobi HCCC No. 463 of 2017, which is currently part heard before this Court (F. Mugambi, J).
5. The applicants contend that the parties in the two suits are similar save for the Bank, (HFCK) and that the issues in the instant suit emanate from HCCC 463 of 2017. The applicants argue that setting the instant suit for hearing before HCCC 463 of 2017 will not only embarrass the court by having to determine similar issues, it will also prejudice them. That should they be successful in HCCC 463 of 2017, that would render the instant suit nugatory.
6. The application is opposed by way of replying affidavits sworn on behalf of the respondent and the interested party. The respondent confirms that it is not a party in HCCC 463 of 2017. It further contends that the present suit seeks the refund of all monies it paid to the applicants, arising from the fraudulent lease. The respondent therefore denies the similarities in the suits as averred by the applicants and instead argues that the determination of one suit cannot dispose of the other.
7. The interested party on the other hand acknowledges ownership of the suit property. It contends that the instant application is meant to frustrate its possession of the suit property and deprive it of its right of ownership and enjoyment as an innocent purchaser for value who has been forced to pursue unnecessary legal proceedings in relation to the suit property thus incurring unnecessary litigation costs. As far as it is concerned, HCCC 463 of 2017 was disposed of by a Ruling of this Court, (Okwany, J) on 31st October 2020.
Analysis and Determination
8. The principles guiding an application for stay of proceedings are well-established and serve to balance judicial efficiency with the litigants’ constitutional right to a fair and expeditious hearing. As enunciated in Global Tours & Travels Limited, Nairobi HC Winding Up Cause No. 43 of 2000 and Kenya Wildlife Service V James Mutembei, [2019] KEHC 10478 (KLR), stay of proceedings is a grave judicial action which seriously interferes with the right of a litigant to conduct his litigation. It impinges on the right of access to justice, right to be heard without delay and overall, right to fair trial. Therefore, the test for stay of proceedings is high and stringent and should only be granted in exceptional circumstances.
9. In the present case, the applicants contend that the issues in this suit are substantially similar to those already adjudicated in HCCC No. 463 of 2017, which challenges the validity of the sale, transfer, and ownership of the suit property. They argue that proceeding with this suit could lead to judicial embarrassment, inconsistent judgments, and prejudice should they succeed in HCCC No. 463 of 2017. Conversely, the respondents and interested party submit that the issues in this suit are distinct, primarily involving the respondent’s claim for refund of monies paid under a lease that is alleged to be fraudulent, and that the earlier case dealt solely with ownership rights and procedures of sale.
10. A close examination of the issues, however, reveals that the preliminary questions of ownership and transfer, which were fully and conclusively settled in the ruling of Okwany J. dated 31st October 2020, are now res judicata and form the basis for the current determination.
11. The Court held at paragraph 25 that:
“the moment the 3rd defendant was issued with the Memorandum and Certificate of Sale, the sale of the suit property was perfected and actualized. That being the case, the plaintiff lost all the rights to the suit property and cannot purport to lease the same to a third party.”
12. This finality on ownership underscores that the issues of title and sale legality have been settled, and any attempt to re-litigate these matters would amount to an abuse of process, as they are barred by the doctrine of res judicata and the provisions of Section 6 of the Civil Procedure Act.
13. Nonetheless, this Court recognizes that the applicants have a constitutional right to fully ventilate their case on other substantive issues not settled by the ruling, including the legality of the lease agreement and the subsequent claims arising from alleged fraud.
14. Therefore, while the issues concerning ownership and sale legality have been definitively settled, this determination is made without prejudice to the applicants’ right to argue their case fully on other substantive grounds. The court finds that the application for a stay of proceedings is not justified, given the absence of any real risk of conflicting judgments or judicial embarrassment, and that the interests of justice will be better served by allowing the current proceedings to proceed.
Disposition
15. Accordingly, the application dated 7th November 2024 for stay of proceedings is dismissed with costs.
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