1. The application before this Court is a Notice of Motion dated 14th February, 2023 brought under the provisions of Articles 48, 50 & 159(2)(a) & (d) of the Constitution of Kenya, 2010, Sections 1A, 1B, 3A & 63(e) of the Civil Procedure Act, Cap 21 Laws of Kenya and Order 21 Rule 1B, Order 22 Rule 22, Order 40 Rule 6, Order 51 Rule 1 of the Civil Procedure Rules and all other enabling provisions of the law. The appellant/applicant seeks the following orders-
(i) Spent;
(ii) Spent;
(iii) That this Honourable Court be pleased to grant the applicant an interim setting aside and/or stay of execution of the exparte judgment delivered on 26th January, 2023 and the directions issued on 13th February, 2023 and 14th February, 2023 in terms of the proclamations for attachment and sale dated 3rd February, 2023, pending the hearing and determination of this appeal;
(iv) That this Honourable Court be pleased to grant an order for stay of all proceedings in the Trial Court, pending the hearing and determination of this appeal;
(v) Spent;
(vi) That this Honourable Court be pleased to issue any other order and/or direction it deems fit to grant in the circumstances; and
(vii) That the costs of this application abide the outcome of the appeal.
2. The application is brought on the grounds on the face of it and is supported by an affidavit sworn on the same day by Anndonna Kimani, learned Counsel for the applicant. In opposition thereto, the respondent filed a replying and a further affidavit sworn on 21st February, 2023, and 17th March, 2023, respectively, sworn by Joseph Rwamba Mwai, an Advocate of the High Court of Kenya and the respondent herein. The respondent also filed a replying affidavit on 27th February, 2023, sworn by Eliud Chai Wambu, a licensed Auctioneer.
3. The instant application was canvassed by way of written submissions. The applicant’s submissions were filed by the law firm of Ngugi & Company Advocates on 10th March, 2023, whereas the respondent’s submissions were filed on 17th March, 2023 by Joseph Mwai, Advocate.
4. Ms. Muthoni, learned Counsel for the applicant submitted that the jurisdiction of this Honourable Court is invoked under the provisions of Order 42 Rule 6(2) of the Civil Procedure Rules, 2010. She relied on the case of Global Tours and Travels Ltd; Nairobi HC Winding Up Cause No. 43 of 2000 where Ringera J. (as he then was) held that whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of justice. She referred to the case of Judicial Commission of Inquiry into the Goldenberg Affair & 3 others v Kilach [2003] eKLR and submitted that an arguable appeal is not one that will succeed as all that the Court should look at is that that intended appeal is not frivolous.
5. Ms. Muthoni indicated that the draft Memorandum of Appeal raises issues that merit consideration by this Court since they mainly include the contention that the exparte judgment as delivered contravenes the provisions of Article 50 of the Constitution of Kenya, 2010 which provides for the right to a fair hearing. She relied on the case of Joel Gichana Nyamigwa v SDA (EA) Union Limited [2017] eKLR, where the Court quoted the Supreme Court of India in the case of Sangram Singh v Election Tribunal Koteh, AIR 1955 SC 664 at 711 and stated that to deny a litigant the right to be heard should be the last resort.
6. It was submitted by Ms. Muthoni that in the event that stay of execution is not granted, the appeal herein will be rendered nugatory causing the applicant to suffer irreparable damage since the respondent had already proceeded to execute by instructing Chador Auctioneers, who served the applicant with a proclamation of attachment dated 3rd February, 2023. She relied on the case of Butt v Rent Restriction Tribunal [1982] KLR 417, where the Court held that discretion ought to be exercised in a manner that would not prevent an appeal.
7. She further relied on the case of National Industrial Credit Bank Limited v Aquinas Francis Wasike & another (UR) cited in Stanley Karanja Wainaina & another v Ridon Anyangu Mutubwa [2016] eKLR, where the Court held that the onus lies on the respondent to show proof of ability to refund the decretal sum in the event the appeal succeeds. Ms Muthoni also relied on the case of James Wangalwa & another v Agnes Naliaka Cheseto [2012] eKLR, where it was held that substantial loss is the cornerstone of both jurisdictions and submitted that the applicant stands to suffer substantial loss of over Kshs. 180, 626.00 as well as costs and interest in the event that stay is not granted. She stated that the respondent had not demonstrated that he is able to refund the decretal sum in the event the appeal succeeds. She submitted that the decree is for a substantial amount of money and the applicant is apprehensive that if the said money is paid to the respondent, the former will not be able to recover the whole sum.
8. On the issue of security, Counsel relied on the cases of Arun C. Sharma v Ashana Raikundalia t/a Rairundalia & Co. Advocates & 2 others [2014] eKLR and Focin Motorcycle Co. Limited v Ann Wambui Wangui & another [2018] eKLR and submitted that the appellant is ready and willing to issue security in the form of a bank guarantee from a well known and fully functioning bank, within a period of 45 days. She stated that in any event, the appellant has already deposited the whole decretal amount in Court as per the orders by Judge Mshila issued on 15th February, 2023, thus this also acts as security deposit in this matter.
9. Ms. Muthoni asserted that there has been no inordinate delay in bringing the appeal as the judgment and decree being appealed against was delivered on 26th January, 2023, whereas the Memorandum of Appeal was filed on 14th February, 2023. She urged this Court to be guided by the decision in Michael Ntouthi Mitheu v Abraham Kivondo Musau [2021] eKLR.
10. Mr. Mwai, learned Counsel and the respondent relied on the Court of Appeal finding in the case of James Kanyitta Nderitu & another v Marios Philotas Ghikas & another [2016] eKLR and stated that the applicant herein was served with summons, it acknowledged the same, and filed a memorandum of appearance but failed to file a defence. He submitted that the default judgment on record is regular and this Court should uphold it. He stated that the applicant filed its memorandum of appearance before the Cooperative Tribunal almost two months after the withdrawal of the suit in the small claims Court, but failed to file a defence. He expressed the view that the said delay was inexcusable and cannot be attributed to an accident, inadvertence, or excusable mistake or error. He relied on the case of Ali Issa Ali v Attorney General [2022] eKLR, where the Court held that it must balance the interest of the petitioner, claimant or plaintiff against the prejudice the order made is likely to occasion on the other side.
11. He submitted that the judgment herein was delivered on 26th January, 2023, and the respondent served the appellant with a notice of entry of judgment on the same day. Subsequently, on 6th February, 2023 the appellant was served with a proclamation notice by Auctioneers but it took no action whatsoever. He pointed out that the appellant’s submissions in support of the instant application were filed and served six days late, in breach of the orders by Judge Mabeya, issued on 28th February, 2023. He stated that the applicant’s Chief Executive Officer (CEO) attributed their delay to bureaucracy within their office but the said excuse was not valid as the CEO is ultimately responsible for the efficient running of the company.
12. Mr. Mwai submitted that the Court must consider the object of doing substantial justice to all parties concerned and must not be deterred by technicalities of the law. He indicated that the applicant has failed to provide a valid excuse for its delay and it is culpable of indolence and unreasonable delay. Mr. Mwai relied on the case of Jaber Mohsen Ali & another v Priscillah Boit & another [2014] eKLR and urged the Court to strike out the appellant’s submissions for being filed late against Court directed timelines.
13. He stated that in several instances, the appellant and its Advocates on record had disobeyed Court orders and/or directions. He relied on the case of Samuel M. N Mweru & others v National Land Commission & 2 others [2020] eKLR and urged this Court to dismiss the instant application with costs noting that a party who disobeys Court orders should not get audience before the Court, and especially a party culpable of multiple infractions.
14. He further stated that the appellant did not disclose to this Court that it had already paid the decretal sum and the Auctioneer’s costs via cheques, but thereafter its Advocates illegally instructed their bank not to honour the said cheques without a Court order on the ground that they had an order on their email of 20th February, 2023. Mr. Mwai was of the view that the appellant does not deserve audience before this Court. He relied on the Court of Appeal decision in Uhuru Highway Development Limited v Central Bank of Kenya & 2 others [1995] eKLR and submitted that had Judge Mshila not been misled by the appellant, she would not have granted the orders issued.
ANALYSIS AND DETERMINATION.
15. I have considered the application filed herein, the grounds on the face of it and the affidavits filed by both the applicant and the respondent. I have also considered the written submissions by Counsel for the parties. The issue that arises for determination is whether the applicant has satisfied the conditions set down to warrant being granted an order for stay of execution pending appeal.
16. In the affidavit filed by the applicant, it deposed that the respondent obtained an exparte judgment for the sum of Kshs. 100,610.53 against the applicant on 26th January, 2023 at the Cooperative Tribunal in Nairobi. Thereafter, the latter filed an application dated 8th February, 2023 before the Honourable Chairperson of the said Tribunal seeking to set aside the said judgment. The Tribunal gave directions that the said application be served upon the respondent and the matter be mentioned on 6th April, 2023 for further directions but the applicant was not granted interim orders for stay of execution. The applicant averred that this prompted it to file another application dated 13th February, 2023 seeking a review of the directions issued by the Tribunal on 13th February, 2023 however, the Tribunal maintained its earlier directions.
17. The applicant contended that the notice of entry of judgment was served on 26th January, 2023 thus it ought to have lapsed on 7th February, 2023 but the respondent has since instructed Chador Auctioneers who served it with notices of proclamation of attachment dated 3rd February, 2023. In addition, it stated that it was not served with a decree before the execution process commenced, and as such, the warrants of attachment issued on 3rd February, 2023 and the proclamation notice contravene the provisions of Order 22 Rule 6 of the Civil Procedure Rules, 2010 and are irregular.
18. The applicant stated that as the claim before the Cooperative Tribunal was not a liquidated one, it ought to have proceeded by way of formal proof. It also stated that it has since filed a Memorandum of Appeal which has high chances of success as it raises issues of being denied a fair hearing. The applicant averred that it is also ready, willing and able to furnish the Court with a bank guarantee from a reputable bank as security. The applicant deposed that should the proclamation and warrants of attachment herein be executed, it shall suffer irreparable loss. It also deposed that there has been no unreasonable, inordinate and inexcusable delay in the bringing of the instant application.
19. The respondent in his replying affidavit deposed that the applicant has filed three separate applications under certificate of urgency, and in all the applications, the Court issued it with orders to serve the said applications forthwith but it never served, thus blatantly disobeying Court orders. He averred that the applicant and its Advocates on record deliberately and calculatedly misled the Court by failing to mention that execution was already completed by the time the instant application was filed, since the applicant had issued two cheques that had already been banked.
20. The respondent contended that no orders were issued by this Court to recall, halt or for the restitution of the already banked cheques. He stated that in addition, once the said cheques were issued, given to the Auctioneer and banked, they ceased being the property of the applicant and only a Court could order for restitution as provided for under Order 22 Rule 22(2) of the Civil Procedure Rules.
21. It was stated by the respondent that the instant application breaches several maxims of equity such as equity will not allow a remedy that is contrary to law and equity will not allow a wrongdoer to profit from a wrong. He further stated that it is dangerous for an Advocate to swear an affidavit on behalf of his client.
22. Although this is an application for stay pending appeal, a perusal of the submissions by the respondent reveals that he has only submitted on the merits and demerits of the appeal. In addition, there are several allegations on the conduct of the applicant and its Advocate such us disobedience of Court orders which have been raised in the respondent’s replying affidavit. These issues and/or allegations cannot be dealt with by the Court in this forum since what is before the Court is an application seeking stay of execution of the judgment and decree of the lower Court pending appeal.
23. The principles that govern the grant of an order for stay of execution pending appeal are provided for under Order 42 Rule 6(2) of the Civil Procedure Rules, 2010 as hereunder-
“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 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.”
24. It is trite that the Court’s power to grant an order for stay of execution is discretionary and the said discretion ought to be exercised judiciously. In dealing with an application for stay of execution, the Court has a duty to balance the competing interests of the parties taking into account the fact that an appellant has an undoubted right of appeal, whereas the respondent has a decree which he should not be obstructed from executing unless there is a valid reason.
25. It was submitted that the respondent obtained an exparte judgment against the applicant at the Cooperative Tribunal for the sum of Kshs. 100,610.53 and on 3rd February, 2023, the said Tribunal issued Chador Auctioneers with warrants of sale of property in execution of a money decree for Kshs. 183,000.27 which was stated to be a colossal amount of money. It was submitted by the applicant that the respondent has not demonstrated that he is able to refund the decretal sum in the event that the appeal filed by the applicant is successful and that he has already commenced the execution process which has the effect of rendering the appeal nugatory. The Court of Appeal in Kenya Hotel Properties Limited v Willesden Investments Limited [2007] when dealing with a similar application held as follows-
“Courts have felt that the success of the appeal would not be rendered nugatory if the decree is a money decree so long as the Court ascertains that the respondent is not a “man of straw” but is a person who, on the success of the appeal, would be able to repay the decretal amount plus any interest to the applicant.”
26. In the present application, the applicant neither put forth its current financial position to demonstrate how the same would be affected in the event that stay of execution was not granted and the decretal sum was paid out to the respondent, nor did it allege that it might not be able to recover the decretal sum if paid to the respondent since the respondent’s financial position is unknown. The applicant submitted that the respondent had not demonstrated that he would be able to refund the decretal sum if the appeal succeeds.
27. The respondent on the other hand, did not state that he is not a man of straw and/or demonstrate his financial capacity to this Court by providing financial statement(s) to demonstrate his ability to refund the applicant its money in the event that the applicant will be successful in its appeal. This Court holds that the respondent had no duty to prove and/or demonstrate his financial position since the applicant did not allege that he was incapable of refunding the decretal sum in the event that the appeal was successful. In Kenya Shell Ltd v Kibiru & another [1986] KLR 410, Platt Ag JA (as he then was) held as follows-
“If there is no evidence of substantial loss to the Applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the cornerstone of both jurisdictions for granting stay. That is what has to be prevented. Therefore, without this evidence, it is difficult to see why the Respondents should be kept out of their money.”
28. This Court’s finding is that the applicant has not satisfied and/or at the very least attempted to demonstrate to this Court that it is likely to suffer substantial loss in the event that stay of execution is not granted.
29. Although this is an application for stay of execution pending appeal, instead of addressing the issue of whether there had been inordinate delay in filing the instant application, the applicant’s Counsel submitted that there had been no inordinate delay in filing the appeal, as the judgment being appealed against was delivered on 26th January, 2023, whereas the Memorandum of Appeal was filed on 14th February, 2023.
30. It is noted that the Cooperative Tribunal delivered its judgment on 26th January, 2023. Thereafter, the applicant filed an application dated 8th February, 2023 seeking stay of execution and the setting aside of the exparte judgment. The Tribunal directed the applicant to serve the said application and that the matter be mentioned on 6th April, 2023 for further directions. The Tribunal did not grant the applicant an order for interim stay of execution. On 14th February, 2023, the applicant filed another application dated 13th February, 2023 seeking a review of the Tribunal’s directions given on the same day. The Tribunal however maintained its directions issued on that day. The applicant then filed the instant application. In view of the above, it is my finding that there has been no delay in filing the instant application since it was filed a day after the Cooperative Tribunal issued directions on the matter.
31. On the issue of security, the applicant stated that pursuant to the Court order issued on 15th February, 2023, it had deposited the entire decretal sum in Court which deposit acts as security. It further stated that it is ready and willing to issue security in form of a bank guarantee from a well known and fully functioning bank, within a period of forty-five days.
32. In the case of Focin Motorcycle Co. Limited vs. Ann Wambui Wangui & another [2018] eKLR, it was stated as follows on the issue of security.
“Where the applicant proposes to provide security as the Applicant has done, it is a mark of good faith that the application for stay is not just meant to deny the respondent the fruits of judgment. My view is that it is sufficient for the applicant to state that he is ready to provide security or to propose the kind of security but it is the discretion of the Court to determine the security.”
33. Inasmuch as the applicant has satisfied two conditions provided for under Order 42 Rule 6 of the Civil Procedure Rules, 2010 in as far as there has been no delay in filing the instant application and that it is willing to provide security for the due performance of the decree, it has not demonstrated and/or established that it will suffer substantial loss in the event that stay of execution is not granted. In light of the holding by the Court in Kenya Shell Ltd v Kibiru & another (supra), where it was held that without evidence of the likelihood of suffering substantial loss, it would be rare that any other event would render the appeal nugatory and to justify keeping the decree holder out of his money, it is this Court’s finding that a lawful process of execution, without more, cannot be cited as evidence of substantial loss.
34. The upshot is that the application dated 14th February, 2023 is devoid of merit and the same is dismissed with costs to the respondent.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 31st day of March, 2023. Ruling delivered through Microsoft Teams Online Platform.
(i) Spent;
(ii) Spent;
(iii) That this Honourable Court be pleased to grant the applicant an interim setting aside and/or stay of execution of the exparte judgment delivered on 26th January, 2023 and the directions issued on 13th February, 2023 and 14th February, 2023 in terms of the proclamations for attachment and sale dated 3rd February, 2023, pending the hearing and determination of this appeal;
(iv) That this Honourable Court be pleased to grant an order for stay of all proceedings in the Trial Court, pending the hearing and determination of this appeal;
(v) Spent;
(vi) That this Honourable Court be pleased to issue any other order and/or direction it deems fit to grant in the circumstances; and
(vii) That the costs of this application abide the outcome of the appeal.
2. The application is brought on the grounds on the face of it and is supported by an affidavit sworn on the same day by Anndonna Kimani, learned Counsel for the applicant. In opposition thereto, the respondent filed a replying and a further affidavit sworn on 21st February, 2023, and 17th March, 2023, respectively, sworn by Joseph Rwamba Mwai, an Advocate of the High Court of Kenya and the respondent herein. The respondent also filed a replying affidavit on 27th February, 2023, sworn by Eliud Chai Wambu, a licensed Auctioneer.
3. The instant application was canvassed by way of written submissions. The applicant’s submissions were filed by the law firm of Ngugi & Company Advocates on 10th March, 2023, whereas the respondent’s submissions were filed on 17th March, 2023 by Joseph Mwai, Advocate.
4. Ms. Muthoni, learned Counsel for the applicant submitted that the jurisdiction of this Honourable Court is invoked under the provisions of Order 42 Rule 6(2) of the Civil Procedure Rules, 2010. She relied on the case of Global Tours and Travels Ltd; Nairobi HC Winding Up Cause No. 43 of 2000 where Ringera J. (as he then was) held that whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of justice. She referred to the case of Judicial Commission of Inquiry into the Goldenberg Affair & 3 others v Kilach [2003] eKLR and submitted that an arguable appeal is not one that will succeed as all that the Court should look at is that that intended appeal is not frivolous.
5. Ms. Muthoni indicated that the draft Memorandum of Appeal raises issues that merit consideration by this Court since they mainly include the contention that the exparte judgment as delivered contravenes the provisions of Article 50 of the Constitution of Kenya, 2010 which provides for the right to a fair hearing. She relied on the case of Joel Gichana Nyamigwa v SDA (EA) Union Limited [2017] eKLR, where the Court quoted the Supreme Court of India in the case of Sangram Singh v Election Tribunal Koteh, AIR 1955 SC 664 at 711 and stated that to deny a litigant the right to be heard should be the last resort.
6. It was submitted by Ms. Muthoni that in the event that stay of execution is not granted, the appeal herein will be rendered nugatory causing the applicant to suffer irreparable damage since the respondent had already proceeded to execute by instructing Chador Auctioneers, who served the applicant with a proclamation of attachment dated 3rd February, 2023. She relied on the case of Butt v Rent Restriction Tribunal [1982] KLR 417, where the Court held that discretion ought to be exercised in a manner that would not prevent an appeal.
7. She further relied on the case of National Industrial Credit Bank Limited v Aquinas Francis Wasike & another (UR) cited in Stanley Karanja Wainaina & another v Ridon Anyangu Mutubwa [2016] eKLR, where the Court held that the onus lies on the respondent to show proof of ability to refund the decretal sum in the event the appeal succeeds. Ms Muthoni also relied on the case of James Wangalwa & another v Agnes Naliaka Cheseto [2012] eKLR, where it was held that substantial loss is the cornerstone of both jurisdictions and submitted that the applicant stands to suffer substantial loss of over Kshs. 180, 626.00 as well as costs and interest in the event that stay is not granted. She stated that the respondent had not demonstrated that he is able to refund the decretal sum in the event the appeal succeeds. She submitted that the decree is for a substantial amount of money and the applicant is apprehensive that if the said money is paid to the respondent, the former will not be able to recover the whole sum.
8. On the issue of security, Counsel relied on the cases of Arun C. Sharma v Ashana Raikundalia t/a Rairundalia & Co. Advocates & 2 others [2014] eKLR and Focin Motorcycle Co. Limited v Ann Wambui Wangui & another [2018] eKLR and submitted that the appellant is ready and willing to issue security in the form of a bank guarantee from a well known and fully functioning bank, within a period of 45 days. She stated that in any event, the appellant has already deposited the whole decretal amount in Court as per the orders by Judge Mshila issued on 15th February, 2023, thus this also acts as security deposit in this matter.
9. Ms. Muthoni asserted that there has been no inordinate delay in bringing the appeal as the judgment and decree being appealed against was delivered on 26th January, 2023, whereas the Memorandum of Appeal was filed on 14th February, 2023. She urged this Court to be guided by the decision in Michael Ntouthi Mitheu v Abraham Kivondo Musau [2021] eKLR.
10. Mr. Mwai, learned Counsel and the respondent relied on the Court of Appeal finding in the case of James Kanyitta Nderitu & another v Marios Philotas Ghikas & another [2016] eKLR and stated that the applicant herein was served with summons, it acknowledged the same, and filed a memorandum of appearance but failed to file a defence. He submitted that the default judgment on record is regular and this Court should uphold it. He stated that the applicant filed its memorandum of appearance before the Cooperative Tribunal almost two months after the withdrawal of the suit in the small claims Court, but failed to file a defence. He expressed the view that the said delay was inexcusable and cannot be attributed to an accident, inadvertence, or excusable mistake or error. He relied on the case of Ali Issa Ali v Attorney General [2022] eKLR, where the Court held that it must balance the interest of the petitioner, claimant or plaintiff against the prejudice the order made is likely to occasion on the other side.
11. He submitted that the judgment herein was delivered on 26th January, 2023, and the respondent served the appellant with a notice of entry of judgment on the same day. Subsequently, on 6th February, 2023 the appellant was served with a proclamation notice by Auctioneers but it took no action whatsoever. He pointed out that the appellant’s submissions in support of the instant application were filed and served six days late, in breach of the orders by Judge Mabeya, issued on 28th February, 2023. He stated that the applicant’s Chief Executive Officer (CEO) attributed their delay to bureaucracy within their office but the said excuse was not valid as the CEO is ultimately responsible for the efficient running of the company.
12. Mr. Mwai submitted that the Court must consider the object of doing substantial justice to all parties concerned and must not be deterred by technicalities of the law. He indicated that the applicant has failed to provide a valid excuse for its delay and it is culpable of indolence and unreasonable delay. Mr. Mwai relied on the case of Jaber Mohsen Ali & another v Priscillah Boit & another [2014] eKLR and urged the Court to strike out the appellant’s submissions for being filed late against Court directed timelines.
13. He stated that in several instances, the appellant and its Advocates on record had disobeyed Court orders and/or directions. He relied on the case of Samuel M. N Mweru & others v National Land Commission & 2 others [2020] eKLR and urged this Court to dismiss the instant application with costs noting that a party who disobeys Court orders should not get audience before the Court, and especially a party culpable of multiple infractions.
14. He further stated that the appellant did not disclose to this Court that it had already paid the decretal sum and the Auctioneer’s costs via cheques, but thereafter its Advocates illegally instructed their bank not to honour the said cheques without a Court order on the ground that they had an order on their email of 20th February, 2023. Mr. Mwai was of the view that the appellant does not deserve audience before this Court. He relied on the Court of Appeal decision in Uhuru Highway Development Limited v Central Bank of Kenya & 2 others [1995] eKLR and submitted that had Judge Mshila not been misled by the appellant, she would not have granted the orders issued.
ANALYSIS AND DETERMINATION.
15. I have considered the application filed herein, the grounds on the face of it and the affidavits filed by both the applicant and the respondent. I have also considered the written submissions by Counsel for the parties. The issue that arises for determination is whether the applicant has satisfied the conditions set down to warrant being granted an order for stay of execution pending appeal.
16. In the affidavit filed by the applicant, it deposed that the respondent obtained an exparte judgment for the sum of Kshs. 100,610.53 against the applicant on 26th January, 2023 at the Cooperative Tribunal in Nairobi. Thereafter, the latter filed an application dated 8th February, 2023 before the Honourable Chairperson of the said Tribunal seeking to set aside the said judgment. The Tribunal gave directions that the said application be served upon the respondent and the matter be mentioned on 6th April, 2023 for further directions but the applicant was not granted interim orders for stay of execution. The applicant averred that this prompted it to file another application dated 13th February, 2023 seeking a review of the directions issued by the Tribunal on 13th February, 2023 however, the Tribunal maintained its earlier directions.
17. The applicant contended that the notice of entry of judgment was served on 26th January, 2023 thus it ought to have lapsed on 7th February, 2023 but the respondent has since instructed Chador Auctioneers who served it with notices of proclamation of attachment dated 3rd February, 2023. In addition, it stated that it was not served with a decree before the execution process commenced, and as such, the warrants of attachment issued on 3rd February, 2023 and the proclamation notice contravene the provisions of Order 22 Rule 6 of the Civil Procedure Rules, 2010 and are irregular.
18. The applicant stated that as the claim before the Cooperative Tribunal was not a liquidated one, it ought to have proceeded by way of formal proof. It also stated that it has since filed a Memorandum of Appeal which has high chances of success as it raises issues of being denied a fair hearing. The applicant averred that it is also ready, willing and able to furnish the Court with a bank guarantee from a reputable bank as security. The applicant deposed that should the proclamation and warrants of attachment herein be executed, it shall suffer irreparable loss. It also deposed that there has been no unreasonable, inordinate and inexcusable delay in the bringing of the instant application.
19. The respondent in his replying affidavit deposed that the applicant has filed three separate applications under certificate of urgency, and in all the applications, the Court issued it with orders to serve the said applications forthwith but it never served, thus blatantly disobeying Court orders. He averred that the applicant and its Advocates on record deliberately and calculatedly misled the Court by failing to mention that execution was already completed by the time the instant application was filed, since the applicant had issued two cheques that had already been banked.
20. The respondent contended that no orders were issued by this Court to recall, halt or for the restitution of the already banked cheques. He stated that in addition, once the said cheques were issued, given to the Auctioneer and banked, they ceased being the property of the applicant and only a Court could order for restitution as provided for under Order 22 Rule 22(2) of the Civil Procedure Rules.
21. It was stated by the respondent that the instant application breaches several maxims of equity such as equity will not allow a remedy that is contrary to law and equity will not allow a wrongdoer to profit from a wrong. He further stated that it is dangerous for an Advocate to swear an affidavit on behalf of his client.
22. Although this is an application for stay pending appeal, a perusal of the submissions by the respondent reveals that he has only submitted on the merits and demerits of the appeal. In addition, there are several allegations on the conduct of the applicant and its Advocate such us disobedience of Court orders which have been raised in the respondent’s replying affidavit. These issues and/or allegations cannot be dealt with by the Court in this forum since what is before the Court is an application seeking stay of execution of the judgment and decree of the lower Court pending appeal.
23. The principles that govern the grant of an order for stay of execution pending appeal are provided for under Order 42 Rule 6(2) of the Civil Procedure Rules, 2010 as hereunder-
“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 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.”
24. It is trite that the Court’s power to grant an order for stay of execution is discretionary and the said discretion ought to be exercised judiciously. In dealing with an application for stay of execution, the Court has a duty to balance the competing interests of the parties taking into account the fact that an appellant has an undoubted right of appeal, whereas the respondent has a decree which he should not be obstructed from executing unless there is a valid reason.
25. It was submitted that the respondent obtained an exparte judgment against the applicant at the Cooperative Tribunal for the sum of Kshs. 100,610.53 and on 3rd February, 2023, the said Tribunal issued Chador Auctioneers with warrants of sale of property in execution of a money decree for Kshs. 183,000.27 which was stated to be a colossal amount of money. It was submitted by the applicant that the respondent has not demonstrated that he is able to refund the decretal sum in the event that the appeal filed by the applicant is successful and that he has already commenced the execution process which has the effect of rendering the appeal nugatory. The Court of Appeal in Kenya Hotel Properties Limited v Willesden Investments Limited [2007] when dealing with a similar application held as follows-
“Courts have felt that the success of the appeal would not be rendered nugatory if the decree is a money decree so long as the Court ascertains that the respondent is not a “man of straw” but is a person who, on the success of the appeal, would be able to repay the decretal amount plus any interest to the applicant.”
26. In the present application, the applicant neither put forth its current financial position to demonstrate how the same would be affected in the event that stay of execution was not granted and the decretal sum was paid out to the respondent, nor did it allege that it might not be able to recover the decretal sum if paid to the respondent since the respondent’s financial position is unknown. The applicant submitted that the respondent had not demonstrated that he would be able to refund the decretal sum if the appeal succeeds.
27. The respondent on the other hand, did not state that he is not a man of straw and/or demonstrate his financial capacity to this Court by providing financial statement(s) to demonstrate his ability to refund the applicant its money in the event that the applicant will be successful in its appeal. This Court holds that the respondent had no duty to prove and/or demonstrate his financial position since the applicant did not allege that he was incapable of refunding the decretal sum in the event that the appeal was successful. In Kenya Shell Ltd v Kibiru & another [1986] KLR 410, Platt Ag JA (as he then was) held as follows-
“If there is no evidence of substantial loss to the Applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the cornerstone of both jurisdictions for granting stay. That is what has to be prevented. Therefore, without this evidence, it is difficult to see why the Respondents should be kept out of their money.”
28. This Court’s finding is that the applicant has not satisfied and/or at the very least attempted to demonstrate to this Court that it is likely to suffer substantial loss in the event that stay of execution is not granted.
29. Although this is an application for stay of execution pending appeal, instead of addressing the issue of whether there had been inordinate delay in filing the instant application, the applicant’s Counsel submitted that there had been no inordinate delay in filing the appeal, as the judgment being appealed against was delivered on 26th January, 2023, whereas the Memorandum of Appeal was filed on 14th February, 2023.
30. It is noted that the Cooperative Tribunal delivered its judgment on 26th January, 2023. Thereafter, the applicant filed an application dated 8th February, 2023 seeking stay of execution and the setting aside of the exparte judgment. The Tribunal directed the applicant to serve the said application and that the matter be mentioned on 6th April, 2023 for further directions. The Tribunal did not grant the applicant an order for interim stay of execution. On 14th February, 2023, the applicant filed another application dated 13th February, 2023 seeking a review of the Tribunal’s directions given on the same day. The Tribunal however maintained its directions issued on that day. The applicant then filed the instant application. In view of the above, it is my finding that there has been no delay in filing the instant application since it was filed a day after the Cooperative Tribunal issued directions on the matter.
31. On the issue of security, the applicant stated that pursuant to the Court order issued on 15th February, 2023, it had deposited the entire decretal sum in Court which deposit acts as security. It further stated that it is ready and willing to issue security in form of a bank guarantee from a well known and fully functioning bank, within a period of forty-five days.
32. In the case of Focin Motorcycle Co. Limited vs. Ann Wambui Wangui & another [2018] eKLR, it was stated as follows on the issue of security.
“Where the applicant proposes to provide security as the Applicant has done, it is a mark of good faith that the application for stay is not just meant to deny the respondent the fruits of judgment. My view is that it is sufficient for the applicant to state that he is ready to provide security or to propose the kind of security but it is the discretion of the Court to determine the security.”
33. Inasmuch as the applicant has satisfied two conditions provided for under Order 42 Rule 6 of the Civil Procedure Rules, 2010 in as far as there has been no delay in filing the instant application and that it is willing to provide security for the due performance of the decree, it has not demonstrated and/or established that it will suffer substantial loss in the event that stay of execution is not granted. In light of the holding by the Court in Kenya Shell Ltd v Kibiru & another (supra), where it was held that without evidence of the likelihood of suffering substantial loss, it would be rare that any other event would render the appeal nugatory and to justify keeping the decree holder out of his money, it is this Court’s finding that a lawful process of execution, without more, cannot be cited as evidence of substantial loss.
34. The upshot is that the application dated 14th February, 2023 is devoid of merit and the same is dismissed with costs to the respondent.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 31st day of March, 2023. Ruling delivered through Microsoft Teams Online Platform.