1. Before me for determination is the 1st Plaintiffs’ Notice of Motion Application dated 23/1/2025 filed pursuant to section 3A and 63(e) of the Civil Procedure Act, Order 50, Rule 1 and 2, Order 42, Rule 6, and Order 51 Rule 1 of the Civil Procedure Rules 2010.
2. In the Application, the Applicant/plaintiffs sought an interim stay of execution of the ruling and decree arising out of this suit pending the hearing and determination of the appeal at the appellate court, and for the costs of this application to be provided for.
3. The grounds of the application were that the plaintiffs filed an originating summons seeking leave to institute and maintain a derivative action against the defendants. However, the suit was struck out with costs against the plaintiffs, as per a ruling delivered on 22/1/2025. Aggrieved by this decision, the plaintiffs intend to appeal against the entire ruling at the Court of Appeal.
4. The plaintiffs expressed concern that the defendants might move swiftly to execute the order for costs, which would be detrimental to them and they believed that their appeal was meritorious and had high chances of success. They further argued that if execution proceeded, the appeal would be rendered nugatory and they would suffer substantial loss.
5. In light of these concerns, they submitted that granting the application would serve the interests of justice. They also expressed their readiness to comply with any conditions the court might impose as a prerequisite for granting a stay pending the appeal.
6. In opposition to the subject application, the 1st defendant filed grounds of opposition dated 11/2/2025 in which it raised the following grounds:-
“i. THAT by the Ruling by this Honourable Court delivered on the 22nd January 2025, the Applicant was denied leave to prosecute a Derivative Action. There being no positive/executable Orders issued in favour of the 1st Defendant, there is nothing to execute and therefore Orders for Stay of the Ruling cannot lie.
ii. THAT costs follow the event. To deny the Respondent an opportunity to tax for Costs without cause is to sequester the Respondent’s right arbitrarily.
iii. THAT the Application is premature, conjectural and speculative.
iv. THAT no substantial loss has been shown by the Applicant, warranting the grant of Stay Orders.
v. THAT no Security has been offered or furnished by the Applicant.
vi. THAT the Applicant does not meet the conditions precedent for the grant of the Orders sought.
vii. THAT the Application dated the 23rd January 2025 is irretrievably incompetent both in form and substance and cannot therefore stand.”
7. The application was canvassed by way of written submissions. The 1st plaintiff filed written submissions dated 4/3/2025 while the 1st defendant filed written submissions dated 18/3/2025.
Analysis and determination:
8. From the pleadings, it is evident that the 1st plaintiff is seeking the stay of execution of the ruling delivered on 22/1/2025 by this court, which struck out with costs the plaintiff’s application seeking leave to institute a derivative action against the defendants.
9. The 1st plaintiff argues that he intends to appeal against the said ruling at the Court of Appeal and is apprehensive that the defendants would execute against them in order to recover the costs awarded.
10. The 1st defendant, on the other hand, submitted that the ruling of 22/1/2025 was a negative order, therefore, it is incapable of execution.
11. From the record, I note that the orders issued vide the ruling of 22/1/2025 were as follows:-
“ 44. In any event, it is evident from the pleadings filed that the Plaintiff/Applicant has not shown by way of evidence, that the company is unable to institute the suit in its own name. That the majority shareholders have frustrated the process of pursuing the claim in the name of the company.
45. In the premises, the Plaintiff’s Originating Summons dated 19th September 2022 as amended on 9th February 2024 is hereby dismissed, and the suit is equally struck out with costs to the Respondent.”
12. The Court of Appeal in the case of Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo, Muthomi & Co. Advocates & 2 others [2022] KECA 491 (KLR), it was stated:-
“As submitted by learned counsel for the 1st respondent, the position taken by this Court in respect of applications for stay of execution in respect of negative orders is clear. Negative orders cannot be stayed. We reiterate the sentiments of the predecessor of this Court in its decision in Western College of Arts and Applied Sciences vs Oranga & Others (1976-80) 1 KLR, where the Court stated in respect of stay of execution as follows:
“But what is there to be executed under the judgment, the subject of the intended appeal. The High Court has merely dismissed the suit with costs. Any execution can only be in respect of costs. In Wilson v Church, the High Court had ordered the trustees of a church to make a payment out of that fund. In the instant case, the High Court has not ordered any parties to do anything, or to refrain from doing anything, or to pay any sum. There is nothing arising out of the High Court Judgment for this Court, in an application for stay, it is so ordered.”
13. Guided by the authority above and having read the foregoing orders, I concur with the 1st defendant that the orders issued by the court were negative in nature and were not capable of execution, save for that of costs. Consequently, it is my finding that the 1st Plaintiff is, in law, entitled to make an application for an order of stay of execution in respect of costs as is the case herein.
14. The next task for this Court therefore is to consider whether the conditions for a stay of execution pending appeal have been met. A grant of stay of execution pending appeal is provided for under Order 42 Rule 6 of the Civil Procedure Rules, the relevant parts state as follows:
“No order for stay of execution shall be made under subrule (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.”
15. The instant application is dated 23/5/2025, while the ruling, the subject of the stay application, was delivered on 22/1/2025. It is therefore evident that there was no unreasonable delay on the part of the plaintiff/applicant in filing this stay application.
16. On the question of substantial loss, the 1st plaintiff submitted that unless a stay is granted, the defendants would proceed to tax and enforce the costs awarded, therefore exposing him to substantial financial prejudice. The 1st plaintiff further submitted that if the defendants proceed with the execution of costs, and he subsequently succeeds in the intended appeal, the appeal would be rendered nugatory, particularly where the defendants may not be able to refund any amounts paid in satisfaction of the costs order.
17. In the case of Mukoma v Abuoga (1998) KLR 645, it was held:-
“Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”
18. In the present case, the quantum of the costs is not yet known as the same is yet to be taxed by a taxing master. It is therefore in my view premature for the 1st plaintiff to assert that execution of the costs would bring him any substantial financial prejudice.
19. Further, the court takes judicial notice that the 1st defendant is an established bank in the country, and it is therefore unlikely that it would be unable to refund the costs paid in satisfaction of the order.
20. As for security for due performance, the 1st plaintiff expressed his willingness to abide by such orders for security as the court may deem just. However, in view of my finding above, it is not necessary to consider this limb.
21. In the premises, I am of the view that the plaintiff has not discharged the burden of proving how he would suffer substantial loss, which is a loss that would render his appeal nugatory.
22. The upshot of the foregoing analysis is that the plaintiff’s application lacks merit. The same is hereby dismissed with costs to the Respondent.
23. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
29TH DAY OF MAY, 2025
ADO MOSES
JUDGE
In the presence of:
Moses – C/A
Makori……………..for the Defendant/Respondent
Korir h/b for Kigen………for the Plaintiff/Applicant
2. In the Application, the Applicant/plaintiffs sought an interim stay of execution of the ruling and decree arising out of this suit pending the hearing and determination of the appeal at the appellate court, and for the costs of this application to be provided for.
3. The grounds of the application were that the plaintiffs filed an originating summons seeking leave to institute and maintain a derivative action against the defendants. However, the suit was struck out with costs against the plaintiffs, as per a ruling delivered on 22/1/2025. Aggrieved by this decision, the plaintiffs intend to appeal against the entire ruling at the Court of Appeal.
4. The plaintiffs expressed concern that the defendants might move swiftly to execute the order for costs, which would be detrimental to them and they believed that their appeal was meritorious and had high chances of success. They further argued that if execution proceeded, the appeal would be rendered nugatory and they would suffer substantial loss.
5. In light of these concerns, they submitted that granting the application would serve the interests of justice. They also expressed their readiness to comply with any conditions the court might impose as a prerequisite for granting a stay pending the appeal.
6. In opposition to the subject application, the 1st defendant filed grounds of opposition dated 11/2/2025 in which it raised the following grounds:-
“i. THAT by the Ruling by this Honourable Court delivered on the 22nd January 2025, the Applicant was denied leave to prosecute a Derivative Action. There being no positive/executable Orders issued in favour of the 1st Defendant, there is nothing to execute and therefore Orders for Stay of the Ruling cannot lie.
ii. THAT costs follow the event. To deny the Respondent an opportunity to tax for Costs without cause is to sequester the Respondent’s right arbitrarily.
iii. THAT the Application is premature, conjectural and speculative.
iv. THAT no substantial loss has been shown by the Applicant, warranting the grant of Stay Orders.
v. THAT no Security has been offered or furnished by the Applicant.
vi. THAT the Applicant does not meet the conditions precedent for the grant of the Orders sought.
vii. THAT the Application dated the 23rd January 2025 is irretrievably incompetent both in form and substance and cannot therefore stand.”
7. The application was canvassed by way of written submissions. The 1st plaintiff filed written submissions dated 4/3/2025 while the 1st defendant filed written submissions dated 18/3/2025.
Analysis and determination:
8. From the pleadings, it is evident that the 1st plaintiff is seeking the stay of execution of the ruling delivered on 22/1/2025 by this court, which struck out with costs the plaintiff’s application seeking leave to institute a derivative action against the defendants.
9. The 1st plaintiff argues that he intends to appeal against the said ruling at the Court of Appeal and is apprehensive that the defendants would execute against them in order to recover the costs awarded.
10. The 1st defendant, on the other hand, submitted that the ruling of 22/1/2025 was a negative order, therefore, it is incapable of execution.
11. From the record, I note that the orders issued vide the ruling of 22/1/2025 were as follows:-
“ 44. In any event, it is evident from the pleadings filed that the Plaintiff/Applicant has not shown by way of evidence, that the company is unable to institute the suit in its own name. That the majority shareholders have frustrated the process of pursuing the claim in the name of the company.
45. In the premises, the Plaintiff’s Originating Summons dated 19th September 2022 as amended on 9th February 2024 is hereby dismissed, and the suit is equally struck out with costs to the Respondent.”
12. The Court of Appeal in the case of Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo, Muthomi & Co. Advocates & 2 others [2022] KECA 491 (KLR), it was stated:-
“As submitted by learned counsel for the 1st respondent, the position taken by this Court in respect of applications for stay of execution in respect of negative orders is clear. Negative orders cannot be stayed. We reiterate the sentiments of the predecessor of this Court in its decision in Western College of Arts and Applied Sciences vs Oranga & Others (1976-80) 1 KLR, where the Court stated in respect of stay of execution as follows:
“But what is there to be executed under the judgment, the subject of the intended appeal. The High Court has merely dismissed the suit with costs. Any execution can only be in respect of costs. In Wilson v Church, the High Court had ordered the trustees of a church to make a payment out of that fund. In the instant case, the High Court has not ordered any parties to do anything, or to refrain from doing anything, or to pay any sum. There is nothing arising out of the High Court Judgment for this Court, in an application for stay, it is so ordered.”
13. Guided by the authority above and having read the foregoing orders, I concur with the 1st defendant that the orders issued by the court were negative in nature and were not capable of execution, save for that of costs. Consequently, it is my finding that the 1st Plaintiff is, in law, entitled to make an application for an order of stay of execution in respect of costs as is the case herein.
14. The next task for this Court therefore is to consider whether the conditions for a stay of execution pending appeal have been met. A grant of stay of execution pending appeal is provided for under Order 42 Rule 6 of the Civil Procedure Rules, the relevant parts state as follows:
“No order for stay of execution shall be made under subrule (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.”
15. The instant application is dated 23/5/2025, while the ruling, the subject of the stay application, was delivered on 22/1/2025. It is therefore evident that there was no unreasonable delay on the part of the plaintiff/applicant in filing this stay application.
16. On the question of substantial loss, the 1st plaintiff submitted that unless a stay is granted, the defendants would proceed to tax and enforce the costs awarded, therefore exposing him to substantial financial prejudice. The 1st plaintiff further submitted that if the defendants proceed with the execution of costs, and he subsequently succeeds in the intended appeal, the appeal would be rendered nugatory, particularly where the defendants may not be able to refund any amounts paid in satisfaction of the costs order.
17. In the case of Mukoma v Abuoga (1998) KLR 645, it was held:-
“Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”
18. In the present case, the quantum of the costs is not yet known as the same is yet to be taxed by a taxing master. It is therefore in my view premature for the 1st plaintiff to assert that execution of the costs would bring him any substantial financial prejudice.
19. Further, the court takes judicial notice that the 1st defendant is an established bank in the country, and it is therefore unlikely that it would be unable to refund the costs paid in satisfaction of the order.
20. As for security for due performance, the 1st plaintiff expressed his willingness to abide by such orders for security as the court may deem just. However, in view of my finding above, it is not necessary to consider this limb.
21. In the premises, I am of the view that the plaintiff has not discharged the burden of proving how he would suffer substantial loss, which is a loss that would render his appeal nugatory.
22. The upshot of the foregoing analysis is that the plaintiff’s application lacks merit. The same is hereby dismissed with costs to the Respondent.
23. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
29TH DAY OF MAY, 2025
ADO MOSES
JUDGE
In the presence of:
Moses – C/A
Makori……………..for the Defendant/Respondent
Korir h/b for Kigen………for the Plaintiff/Applicant