The Appellant has filed this application by way of Notice of Motion dated 25 th March 2026 under Order 42 Rule 6 of the Civil Procedure Rules and Sections 1A, 1B & 3A of the Civil Procedure Act , seeking the following orders:
(1) THAT this Application be certified urgent and be heard ex parte in the first instance.
(2) THAT there be a stay of execution of the Judgment and Decree delivered on 24 th March 2026 pending hearing and determination of this application.
(3) THAT there be a stay of execution pending hearing and determination of the Appeal.
(4) THAT costs of this application be provided for.
The application is supported by the affidavit of Dr. Joseph Bwire Sikudi, a Director of the Appellant, sworn on 25 th March 2026. It is further accompanied by a Certificate of Urgency sworn by Eliakim B. Okayo, Advocate, of the same date, as well as written submissions filed on 15 th June 2026.
The Respondent has not filed any replying affidavit or submissions in response to the application.
BACKGROUND
The Appellant entered into an asset finance arrangement with the Respondent, SBM Bank (K) Ltd, on or about 28 th May 2021 and 21 st June 2021 for the acquisition of an Isuzu FRR Lorry, Registration No. KDE 028U, at a total facility amount of Kshs. 4,860,000/=. The Appellant additionally contributed a top-up sum of Kshs. 700,000/= towards the purchase price, with repayment structured at monthly instalments of Kshs. 132,563.01. The motor vehicle was registered in the joint names of the parties.
As at 28 th February 2024, the Appellant had made payments totalling Kshs. 3,758,020.85, representing approximately 78.29% of the total facility amount. Notwithstanding this substantial repayment, the Respondent on or about 3 rd April 2023 repossessed the said motor vehicle, allegedly on account of default, without instituting any recovery proceedings.
The Appellant challenged the repossession before the Mombasa Chief Magistrate's Court in CMCC No. E407 of 2023, contending inter alia that the transaction constituted a hire purchase arrangement governed by the Hire Purchase Act Cap 507 and that, by virtue of Section 15 thereof, the Respondent was precluded from repossessing the motor vehicle otherwise than through a court process, having been paid more than two-thirds of the hire purchase price. The learned Chief Magistrate, Hon. C. L. Yalwala, dismissed the Appellant's suit with costs by Judgment delivered on 24 th March 2026, finding that the repossession was lawful.
The Appellant, being aggrieved by the said Judgment and Decree, has filed the present Appeal before this Court and simultaneously moved this application seeking a stay of execution pending the hearing and determination of the Appeal.
ISSUES FOR DETERMINATION
The issues for determination in this application are:
(a) Whether the Appellant stands to suffer substantial loss if the order of stay is not granted;
(b) Whether the application was made without unreasonable delay;
(c) Whether security for the due performance of the decree has been tendered or offered; and
(d) Whether the balance of convenience favours the grant of stay.
ANALYSIS AND DETERMINATION
The jurisdiction to grant a stay of execution pending appeal is governed by Order 42 Rule 6(2) of the Civil Procedure Rules, which provides that no order for stay shall be granted unless the Court is satisfied that: (a) substantial loss may result to the applicant unless the order is made; (b) the application has been made without unreasonable delay; and (c) such security as the Court orders for the due performance of the decree has been given.
(i) Substantial Loss
Substantial loss is the cornerstone of the jurisdiction to grant a stay of execution. An applicant must demonstrate that failure to grant stay would occasion prejudice that cannot adequately be remedied if the appeal succeeds.
The Appellant deposes that Motor Vehicle Registration No. KDE 028U is a core income-generating asset essential to its daily commercial operations. It is the very subject matter of the appeal and is presently in the possession and use of the Appellant. The Appellant contends that if execution proceeds and the Respondent repossesses, sells, or otherwise disposes of the motor vehicle before the Appeal is determined, the Appellant will be deprived of a critical business asset, with resulting disruption of commercial operations, loss of revenue and goodwill, in a manner not compensable by damages.
The subject matter of this appeal is the said motor vehicle itself. If the asset is disposed of or alienated before the Appeal is heard and determined, the Appeal would be rendered nugatory, as there would be nothing left to restore to the Appellant even if it succeeds on appeal. A successful appeal would be rendered an empty exercise.
I am satisfied that the Appellant has demonstrated that it stands to suffer substantial loss if the order of stay is not granted.
(ii) Absence of Unreasonable Delay
The Judgment in CMCC No. E407 of 2023 was delivered on 24 th March 2026. The present application was filed on 25 th March 2026, the very next day. There is manifestly no unreasonable delay. This requirement is satisfied.
(iii) Security for Due Performance of the Decree
The Appellant has expressed willingness to comply with any reasonable conditions that this Court may impose regarding security. The Court retains discretion as to the nature and extent of security to be ordered, and this discretion must be exercised in a manner that balances the competing interests of the parties without stifling the right of appeal.
(iv) Arguability of the Appeal and Balance of Convenience
Though not expressly listed as a requirement under Order 42 Rule 6, it is now settled practice that the Court examines whether the appeal raises at least a single bona fide point deserving judicial consideration. An arguable appeal is one that raises a genuine issue; it need not necessarily succeed.
The Memorandum of Appeal raises, amongst others, the following substantial questions of law and fact: whether the learned Chief Magistrate correctly characterised the transaction as a loan rather than a hire purchase arrangement; whether the provisions of the Hire Purchase Act Cap 507 applied to the transaction; whether the Respondent was legally precluded from repossessing the motor vehicle outside of a court process by virtue of Section 15 of the Hire Purchase Act Cap 507 after the Appellant had paid more than two-thirds of the hire purchase price; whether the repossession was effected without valid statutory notice; and whether the learned Magistrate adequately addressed and determined these fundamental issues.
These are not idle points. Section 15 of the Hire Purchase Act Cap 507 expressly provides that where two-thirds of the hire purchase price has been paid or tendered, the owner shall not take possession of the goods otherwise than by action in court. The question of whether payment of 78.29% of the hire purchase price attracted this statutory bar against self-help repossession, and whether the Respondent was consequently obliged to institute court proceedings before repossessing Motor Vehicle KDE 028U, is a substantive legal issue with significant consequences for the parties. The learned Magistrate's failure to address and determine this issue — compounded by the mischaracterisation of the transaction as a loan rather than a hire purchase arrangement — raises an arguable point warranting appellate consideration.
As regards the balance of convenience, the Appellant is presently in possession of the motor vehicle and seeks only to preserve the existing state of affairs. Granting stay maintains the status quo and avoids unnecessary disruption pending determination of the Appeal. The Respondent, being a licensed financial institution, is not without remedy and any prejudice to it can be adequately addressed through the imposition of appropriate security conditions by this Court. Conversely, refusal of stay would deprive the Appellant of a critical operational asset that forms the very subject matter of the dispute, and the resulting loss would not be adequately compensable in damages.
The balance of convenience strongly favours the grant of stay.
DISPOSITION
In the premises, I am satisfied that the Appellant has met the requirements for the grant of a stay of execution pending appeal under Order 42 Rule 6 of the Civil Procedure Rules. Accordingly, I make the following orders:
1. The application is hereby certified urgent and shall be heard on this basis.
2. There shall be a stay of execution of the Judgment and Decree of the Mombasa Chief Magistrate's Court in CMCC No. E407 of 2023, delivered on 24 th March 2026, pending the hearing and determination of this Appeal.
3. As a condition for the grant of this stay, the Appellant shall deposit the sum of Kshs. 2,000,000/ in a joint interest-earning account in the names of the advocates for both parties, or furnish such other security as this Court may direct, within 30 days of the date of this Ruling.
4. The matter shall be mentioned on 8 th September 2026 before the Deputy Registrar. for confirmation of compliance with the condition in Order 3 above and for further directions.
5. Costs of this application shall be in the Appeal.
Dated, signed , and delivered in Open Court/Online through MS TEAMS , this … 30TH …… day of …JULY …… 2026.
HON. LADY JUSTICE W. K. MICHENI
JUDGE
(1) THAT this Application be certified urgent and be heard ex parte in the first instance.
(2) THAT there be a stay of execution of the Judgment and Decree delivered on 24 th March 2026 pending hearing and determination of this application.
(3) THAT there be a stay of execution pending hearing and determination of the Appeal.
(4) THAT costs of this application be provided for.
The application is supported by the affidavit of Dr. Joseph Bwire Sikudi, a Director of the Appellant, sworn on 25 th March 2026. It is further accompanied by a Certificate of Urgency sworn by Eliakim B. Okayo, Advocate, of the same date, as well as written submissions filed on 15 th June 2026.
The Respondent has not filed any replying affidavit or submissions in response to the application.
BACKGROUND
The Appellant entered into an asset finance arrangement with the Respondent, SBM Bank (K) Ltd, on or about 28 th May 2021 and 21 st June 2021 for the acquisition of an Isuzu FRR Lorry, Registration No. KDE 028U, at a total facility amount of Kshs. 4,860,000/=. The Appellant additionally contributed a top-up sum of Kshs. 700,000/= towards the purchase price, with repayment structured at monthly instalments of Kshs. 132,563.01. The motor vehicle was registered in the joint names of the parties.
As at 28 th February 2024, the Appellant had made payments totalling Kshs. 3,758,020.85, representing approximately 78.29% of the total facility amount. Notwithstanding this substantial repayment, the Respondent on or about 3 rd April 2023 repossessed the said motor vehicle, allegedly on account of default, without instituting any recovery proceedings.
The Appellant challenged the repossession before the Mombasa Chief Magistrate's Court in CMCC No. E407 of 2023, contending inter alia that the transaction constituted a hire purchase arrangement governed by the Hire Purchase Act Cap 507 and that, by virtue of Section 15 thereof, the Respondent was precluded from repossessing the motor vehicle otherwise than through a court process, having been paid more than two-thirds of the hire purchase price. The learned Chief Magistrate, Hon. C. L. Yalwala, dismissed the Appellant's suit with costs by Judgment delivered on 24 th March 2026, finding that the repossession was lawful.
The Appellant, being aggrieved by the said Judgment and Decree, has filed the present Appeal before this Court and simultaneously moved this application seeking a stay of execution pending the hearing and determination of the Appeal.
ISSUES FOR DETERMINATION
The issues for determination in this application are:
(a) Whether the Appellant stands to suffer substantial loss if the order of stay is not granted;
(b) Whether the application was made without unreasonable delay;
(c) Whether security for the due performance of the decree has been tendered or offered; and
(d) Whether the balance of convenience favours the grant of stay.
ANALYSIS AND DETERMINATION
The jurisdiction to grant a stay of execution pending appeal is governed by Order 42 Rule 6(2) of the Civil Procedure Rules, which provides that no order for stay shall be granted unless the Court is satisfied that: (a) substantial loss may result to the applicant unless the order is made; (b) the application has been made without unreasonable delay; and (c) such security as the Court orders for the due performance of the decree has been given.
(i) Substantial Loss
Substantial loss is the cornerstone of the jurisdiction to grant a stay of execution. An applicant must demonstrate that failure to grant stay would occasion prejudice that cannot adequately be remedied if the appeal succeeds.
The Appellant deposes that Motor Vehicle Registration No. KDE 028U is a core income-generating asset essential to its daily commercial operations. It is the very subject matter of the appeal and is presently in the possession and use of the Appellant. The Appellant contends that if execution proceeds and the Respondent repossesses, sells, or otherwise disposes of the motor vehicle before the Appeal is determined, the Appellant will be deprived of a critical business asset, with resulting disruption of commercial operations, loss of revenue and goodwill, in a manner not compensable by damages.
The subject matter of this appeal is the said motor vehicle itself. If the asset is disposed of or alienated before the Appeal is heard and determined, the Appeal would be rendered nugatory, as there would be nothing left to restore to the Appellant even if it succeeds on appeal. A successful appeal would be rendered an empty exercise.
I am satisfied that the Appellant has demonstrated that it stands to suffer substantial loss if the order of stay is not granted.
(ii) Absence of Unreasonable Delay
The Judgment in CMCC No. E407 of 2023 was delivered on 24 th March 2026. The present application was filed on 25 th March 2026, the very next day. There is manifestly no unreasonable delay. This requirement is satisfied.
(iii) Security for Due Performance of the Decree
The Appellant has expressed willingness to comply with any reasonable conditions that this Court may impose regarding security. The Court retains discretion as to the nature and extent of security to be ordered, and this discretion must be exercised in a manner that balances the competing interests of the parties without stifling the right of appeal.
(iv) Arguability of the Appeal and Balance of Convenience
Though not expressly listed as a requirement under Order 42 Rule 6, it is now settled practice that the Court examines whether the appeal raises at least a single bona fide point deserving judicial consideration. An arguable appeal is one that raises a genuine issue; it need not necessarily succeed.
The Memorandum of Appeal raises, amongst others, the following substantial questions of law and fact: whether the learned Chief Magistrate correctly characterised the transaction as a loan rather than a hire purchase arrangement; whether the provisions of the Hire Purchase Act Cap 507 applied to the transaction; whether the Respondent was legally precluded from repossessing the motor vehicle outside of a court process by virtue of Section 15 of the Hire Purchase Act Cap 507 after the Appellant had paid more than two-thirds of the hire purchase price; whether the repossession was effected without valid statutory notice; and whether the learned Magistrate adequately addressed and determined these fundamental issues.
These are not idle points. Section 15 of the Hire Purchase Act Cap 507 expressly provides that where two-thirds of the hire purchase price has been paid or tendered, the owner shall not take possession of the goods otherwise than by action in court. The question of whether payment of 78.29% of the hire purchase price attracted this statutory bar against self-help repossession, and whether the Respondent was consequently obliged to institute court proceedings before repossessing Motor Vehicle KDE 028U, is a substantive legal issue with significant consequences for the parties. The learned Magistrate's failure to address and determine this issue — compounded by the mischaracterisation of the transaction as a loan rather than a hire purchase arrangement — raises an arguable point warranting appellate consideration.
As regards the balance of convenience, the Appellant is presently in possession of the motor vehicle and seeks only to preserve the existing state of affairs. Granting stay maintains the status quo and avoids unnecessary disruption pending determination of the Appeal. The Respondent, being a licensed financial institution, is not without remedy and any prejudice to it can be adequately addressed through the imposition of appropriate security conditions by this Court. Conversely, refusal of stay would deprive the Appellant of a critical operational asset that forms the very subject matter of the dispute, and the resulting loss would not be adequately compensable in damages.
The balance of convenience strongly favours the grant of stay.
DISPOSITION
In the premises, I am satisfied that the Appellant has met the requirements for the grant of a stay of execution pending appeal under Order 42 Rule 6 of the Civil Procedure Rules. Accordingly, I make the following orders:
1. The application is hereby certified urgent and shall be heard on this basis.
2. There shall be a stay of execution of the Judgment and Decree of the Mombasa Chief Magistrate's Court in CMCC No. E407 of 2023, delivered on 24 th March 2026, pending the hearing and determination of this Appeal.
3. As a condition for the grant of this stay, the Appellant shall deposit the sum of Kshs. 2,000,000/ in a joint interest-earning account in the names of the advocates for both parties, or furnish such other security as this Court may direct, within 30 days of the date of this Ruling.
4. The matter shall be mentioned on 8 th September 2026 before the Deputy Registrar. for confirmation of compliance with the condition in Order 3 above and for further directions.
5. Costs of this application shall be in the Appeal.
Dated, signed , and delivered in Open Court/Online through MS TEAMS , this … 30TH …… day of …JULY …… 2026.
HON. LADY JUSTICE W. K. MICHENI
JUDGE