Introduction
1. Before me for determination is an application dated 22nd November 2021 taken out by the 1st Defendant, seeking in the main, an order for stay of execution of the judgment delivered on 27th November 2020, as well as an order for extension of time within which the 1st Defendant/Applicant herein is to lodge an appeal against the said judgment.
2. The Application is expressed to have been brought under Section 1A, 1B & 3A and Section 75 (1) of the Civil Procedure Act, Order 42 Rule 6, Order 43(3), and Order 51 Rule 1 of the Civil Procedure Rules 2010. In the Application, the 1st Defendant/Applicant seeks orders that; -
i. Spent
ii. This Honourable Court do issue a stay of execution of the Judgment delivered on 27th November 2020 and any consequential orders pending hearing and determination of this application.
iii. This Honourable Court be pleased to extend time and grant the 1st Defendant/ Applicant leave to lodge an appeal out of time against the Judgment delivered on 27th November 2020.
iv. This Honourable Court do issue a stay of execution of the Judgment delivered on 27th November 2020 and any consequential orders pending hearing and determination of the intended appeal.
v. The costs of this application be provided.
3. The application is based on the grounds on the face of the application and is supported by two affidavits, one by Gilbert Josiah Mungu (the Applicant’s Counsel on record); and the other by Joseph Njuguna Ciira (director of the Applicant), sworn on 8th November 2021, and 18th November 2021, respectively.
4. The Application is opposed by both the Plaintiff and the 2nd Defendant. The Plaintiff filed a Replying Affidavit sworn on 11th February 2022 by Ramesh Varsani, the Plaintiff’s managing director, while the 2nd Defendant’s Replying Affidavit is dated 28th April 2022, sworn by Christine Wahome, the 2nd Defendant’s Legal Manager. on 28th April 2022
5. The Application was canvassed by way of written submissions. The Applicant’s submissions is dated 16th March 2022. The 1st and 2nd Respondents’ submissions are dated 31st March 2022, and 28th April 2022 respectively.
Applicant’s Submissions
6. The Applicant/1st Defendant states that on 27th November 2020, the Judgment in this matter was entered in favour of the Plaintiff against the 1st Defendant in the sum of Kshs.17,940,979 plus interest at the rate of 15 percent per annum from the date of filing the suit, further, with costs.
7. The Applicant contends that they were never served with any notice informing them that the Judgment was to be delivered on the said date. That prior to this, parties had been informed that the Judgment was to be delivered on notice, unfortunately, the Applicant's counsel was not informed as to when the Judgment was eventually delivered.
8. It was further the Applicant’s contention that they only became aware of the existence of the said judgment on 14th September 2021, when the Plaintiff’s Counsel, copied to their advocate, an email correspondence addressed to the Deputy Registrar, High Court, seeking to have the decree arising from the said judgment executed against the 1st Defendant/Applicant herein.
9. That upon realizing that judgment had been delivered, they (Applicant/1st Defendant), through their advocates, immediately, by a letter dated 6th October 2021 wrote to the Deputy Registrar of the High Court requesting for the said Judgment.
10. That to date, neither the Deputy Registrar to whom the letter was addressed nor any of the parties herein, to whom the letter was copied, have responded to the same, and the judgment has never been availed to the 1st Defendant/Applicant herein, necessitating the instant application.
The 1st Respondent's Submissions
11. The 1st Respondent/Plaintiff opposed the application on the premise that the Applicants instituted the present application despite having disregarded the orders of this Honourable Court issued on 8th December 2011 which directed the Applicant to deposit a sum of KES 17,940,979.81 in a joint interest-earning account of both parties’ Advocates within 10 days from the date of the Order.
12. It was the 1st Respondent’s position that in any event, the Applicant has not satisfied the condition for the grant of orders for stay of execution since the Applicant has failed to demonstrate that there is sufficient cause to warrant the issuance of the orders sought.
13. In particular, the 1st Respondent argues that there has been an inordinate delay on the part of the Applicant in bringing the instant application; That the Applicant having failed to attach a draft memorandum of appeal to the application, failed to demonstrate that the intended appeal is arguable; That no evidence has been adduced by the Applicant that the intended appeal is likely to be rendered nugatory if the stay sought is not granted.
14. Finally, it is the 1st Respondent’s position that no offer for security has been made by the Applicant and it is therefore not deserving the stay orders sought. That having failed to abide by the Ruling and Order of 8th December 2011 as well as this Court’s directions of 8th December 2021 regarding the provisions of security, the Applicant has not come to court with clean hands.
15. On the prayer for the extension of time within which to file the appeal, the 1st Respondent took the position that the same is not deserved since no plausible explanation had been provided by the Applicant for the delay.
16. According to the 1st Respondent, the instant application is simply meant to delay its right as a Plaintiff, to enjoy the fruits of its judgment.
17. Accordingly, the 1st Respondent urged this court to find the Applicant’s (1st Defendant’s) application herein to be without merit and to dismiss the same with costs.
The 2nd Respondent's Submissions
18. The 2nd Respondent’s position is that the Applicant is not deserving of the orders sought. according to the 2nd Respondent, contrary to the principles set in the case of County Executive of Kisumu v County Government of Kisumu & 8 others [2017] eKLR, the Applicant has not explained the period of delay in bringing the instant application.
19. That the Applicant having failed to annex a draft memorandum of appeal, the court has no material to evaluate whether the intended appeal has merit. The 2nd Respondent cited the case of Athuma Nasura Juma v. Afwa Mohamed Ramadhan [2015] eKLR in support of this argument.
20. Regarding the application for stay, it is the Respondent’s position that the Applicants have failed to demonstrate that they are likely to suffer substantial loss if the order of stay is not granted, neither have the Applicants offered any security for the due performance of the decree of the court.
21. In the circumstances, the 2nd Respondent prays that the Application be dismissed with costs in its favour.
Analysis And Determination
22. I have considered the application, the two affidavits filed in support thereof as well as the submissions made on behalf of the Applicant/1st Defendant. I have also considered the replying affidavits filed by the Respondents, as well as the parties’ respective written submissions. The main issues for determination in this application are; -
i. Whether this court should grant an order of stay of execution pending the hearing and determination of the intended appeal.
ii. Whether the Applicant/1st Defendant should be granted an extension of time within which to lodge an appeal.
Whether this court should grant an order of stay of execution pending the hearing and determination of the intended appeal.
23. Order 42 Rule 6 of the Civil Procedure Rules, 2010 is the operative law when it comes to the issues of stay pending appeal. It provides as follows; -
[Order 42, rule 6.] Stay in case of appeal
“(1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.
(2) 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.”
24. These principles were enunciated in Butt vs Rent Restriction Tribunal [1979] where the Court of Appeal laid out what ought to be considered in determining whether to grant or refuse a stay of execution pending appeal. The Court stated as follows; -
a. The power of the court to grant or refuse an application for a stay of execution is discretionary, and the discretion should be exercised in such a way as not to prevent an appeal.
b. Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.
c. Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.
d. Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put the security of costs as ordered will cause the order for stay of execution to lapse.
i. Undue Delay
25. The Judgment in this matter was delivered on 27th November 2020. The instant application was filed on 22nd November 2021, which is more than one year after the delivery of the judgment.
26. The Applicant explained that the delay was due to the fact that the Judgment was delivered without notice to them and that they only became aware of the existence/delivery of the judgment on 14th September 2021 when they were copied in an email by the Plaintiff to the Registrar, seeking the execution of the decree arising from the judgment. No explanation was however provided for the delay in respect of the period between 14th September 2021 when they allegedly became aware of the judgment), and 22nd November 2021 when the instant application was filed in court.
27. The Supreme Court in the case of County Executive of Kisumu v County Government of Kisumu & 8 others [2017] eKLR stated that in considering whether a delay has been explained, a court must be satisfied that the whole period of delay has not only been declared, but must also be satisfactorily explained. The Court stated that; -
"It is trite law that in an application for extension of time, the whole period of delay should be declared and explained satisfactorily to the Court."
28. As rightly submitted by the 2nd Defendant/2nd Respondent, the Applicant/1st Defendant failed to explain the delay of a period in excess of two (2) months. Consequently, that is ground enough to disentitle the 1st Defendant from having this court’s discretion being exercised in its favour.
ii. Substantial Loss
29. Regarding substantial loss, Ogolla, J in Tropical Commodities Suppliers Ltd & Others vs. International Credit Bank Ltd (in liquidation) [2004] 2 EA 331 stated that: -
“Substantial loss does not represent any particular mathematical formula. Rather, it is a qualitative concept. It refers to any loss, great or small, that is of real worth or value as distinguished from a loss without value or a loss that is merely nominal."
30. The onus of proving substantial loss lies with the Applicant. In the case of James Wangalwa & Another vs. Agnes Naliaka Cheseto [2012] eKLR the court stated as follows regarding the issue; -
“No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself, does not amount to substantial loss. Even when execution has been levied and completed, that is to say, the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process. The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential core of the applicant as the successful party in the appeal ... the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”
31. The same position was adopted by Kimaru, J in Century Oil Trading Company Ltd vs. Kenya Shell Limited Nairobi (Milimani) HCMCA No. 1561 of 2007 where he stated that:-
“The word “substantial” cannot mean the ordinary loss to which every judgment debtor is necessarily subjected when he loses his case and is deprived of his property in consequence. That is an element which must occur in every case and since the Code expressly prohibits stay of execution as an ordinary rule it is clear the words “substantial loss” must mean something in addition to all different from that…Where execution of a money decree is sought to be stayed, in considering whether the applicant will suffer substantial loss, the financial position of the applicant and that of the respondent becomes an issue. The court cannot shut its eyes where it appears the possibility is doubtful of the respondent refunding the decretal sum in the event that the applicant is successful in his appeal. The court has to balance the interest of the applicant who is seeking to preserve the status quo pending the hearing of the appeal so that his appeal is not rendered nugatory and the interest of the respondent who is seeking to enjoy the fruits of his judgment.”
32. I have carefully considered the two affidavits sworn on behalf of the Applicant in support of the application in this case and note that the Applicant has not demonstrated the manner in which it stands to suffer substantial loss if the order of stay is declined.
33. In the supporting affidavits, the Applicant has merely stated, without more, that they are “likely to suffer substantial and irreparable harm if orders of stay of execution and enlargement of time are not issued urgently as the 1st Defendant may never recover the decretal sum”. The Applicant however failed to demonstrate to this court why they think they may never recover the decretal sum for the Respondents.
34. From the facts of this case and taking into account that the Applicants themselves had in the past failed to comply with the orders of this court as to the provision of security, this Court finds that the Applicants have failed to sufficiently demonstrate to this court that they are deserving the discretionary powers of the court.
iii. Security
35. As regards the deposit of security, the court observed in the case of Gianfranco Manenthi & Another vs Africa merchant Assurance Co. Ltd [2019] eKLR that: -
“The applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition, a party who seeks the right of appeal from a money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under Order 42 Rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the decree in order to enjoy the fruits of his judgment in case the appeal falls.
Further Order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgment involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal….
Thus, the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine. Counsel for the applicant submitted that he is ready to provide a bank guarantee as security for due performance of the decree.”
36. The Court must similarly consider the overriding objective and balance the interest of the parties to the suit while considering the issue of security to be offered. The law is that where the applicant intends to exercise his undoubted right of appeal, and in the event, that if he were eventually to succeed, he should not be faced with a situation where he would be unable to get back his money.
37. Likewise, a Respondent who has a decree in his favour should not, if the applicant were to eventually be unsuccessful in the intended appeal, find it difficult or impossible to realize the decree.
38. The above is the cornerstone for consideration by the court before granting a security as a condition for a stay pending appeal.
39. The Court of Appeal in Nduhiu Gitahi vs. Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100 considered the issue of adequacy of security and expressed itself as follows: -
“The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so…The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed, in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it”.
40. In its affidavits in support of the application, I note that the Applicant did not expressly state their willingness to provide any security. It is only in the submissions (in paragraph 13 thereof) that the Applicant, when responding to the Plaintiff’s submissions, touched on the issue of security.
41. From the record, it is evident that on 8th December 2011, an order for the provision of security by the Applicant was made by this court whereby the 1st Defendant to deposit security in the sum of KES 17,940,979 pending hearing and determination of the suit. However, to date, that order of the court is yet to be complied with by the 1st Defendant/Applicant herein.
42. Consequently, the Applicant’s conduct in these proceedings, in my view, disentitles them from having the orders sought being granted in their favour.
Whether the Applicant/1st Defendant should be granted an extension of time to lodge an appeal out of time.
43. An appeal from the decision of the High Court to the Court of Appeal is governed by the Appellate Jurisdiction Act, Cap 9 (Laws of Kenya) and the rules made thereunder. Rule 77 (2) of the Court of Appeal Rules provides that an intended appellant must lodge a notice of appeal within fourteen (14) days after the date of the decision, against which the appeal is lodged.
44. However, Section 7 of the Appellate Jurisdiction Act clothes this court with the discretionary power to extend the time within which to lodge an appeal, where sufficient cause is shown, in the following terms; -
“Section 7: Power of High Court to extend time
The High Court may extend the time for giving notice of intention to appeal from a Judgment of the High Court or for making an application for leave to appeal or for a certificate that the case is fit for appeal, notwithstanding that the time for giving such notice or making such appeal may have already expired.”
45. The power of the High Court to extend time under Section 7 of the Appellate Jurisdiction Act was considered in the case of Diamond Trust Bank of Kenya Limited –vs- Invesco Assurance Company Limited and Another [2021]eKLR, where the Court held that:-
“In view of the above provisions, it is explicitly clear that the High Court may extend time for giving Notice of Intention to Appeal from a judgment of the High Court and in my view the said Section 7 does not need any more than a literal interpretation. Therefore, Section 7 if the Appellate Jurisdiction Act clearly confers to the High Court jurisdiction to extend time for the filing of a Notice of Appeal and to decide otherwise is akin to completely disregarding a clear provision in the law.”
46. The question then is whether, in the circumstances of this case, this court has discretion to extend the time within which to lodge and file an appeal. The Supreme Court in the case of Nicholas Kiptoo Arap Korir Salat –vs- Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR laid the following as the underlying principles which are to guide a court in the exercise of discretion to extend time; -
i. Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the court;
ii. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;
iii. Whether the court should exercise the discretion to extend time, is a consideration to be made on a case-to-case basis;
iv. Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the court;
v. Whether there will be any prejudice suffered by the Respondents if the extension is granted;
vi. Whether the application has been brought without undue delay; and
vii. Whether in certain cases, like election petitions, public interest should be a consideration for extending time.
47. Similarly in the case of Paul Musili Wambua v Attorney General & 2 Others [2015]eKLR, the Court of Appeal in considering an application for extension of time and leave to file the Notice of Appeal out of time stated the following:-
“…….it is now settled by a long line of authorities by this court that the decision of whether or not to extend the time for filing an appeal the Judge exercises unfettered discretion. However, in the exercise of such discretion, the court must act upon reason(s) not based on whim or caprice. In general, the matters which a court takes into account in deciding whether or not to grant an extension of time are; the length of delay, the reason for the delay, the chances of the appeal succeeding if the application is granted, the degree of prejudice to the respondent if the application is granted.” [emphasis added]
48. Regarding the length of delay in making this application, it is not in contention that the impugned Judgment was delivered on 27th November 2020. It is also not in dispute that the Applicant filed the instant application on 22nd November 2021, which is more than one year after the delivery of the judgment, which is way beyond the statutory timeline of filing notice of appeal of fourteen (14) days pursuant to Rule 77 (2) of the Court of Appeal Rules, 2022.
49. According to the Applicant, the delay was due to the fact that the Judgment was delivered without notice to them and that they only became aware of the existence/delivery of the judgment on 14th September 2021 when they were copied in an email by the Plaintiff to the Registrar, seeking the execution of the decree arising from the judgment in question.
50. For the reasons cited elsewhere in this judgment, and as rightly submitted by the 2nd Defendant, the failure by the Applicant to explain the delay of a period in excess of two (2) months, is ground enough to disentitle the Applicant from having this court’s discretion being exercised in its favour.
51. Regarding the chances of the intended appeal being successful, the Applicant submitted that the intended appeal has high chances of success since the Honourable Judge failed to consider the evidence tendered by the 1st Defendant at trial, thereby reaching the wrong conclusion.
52. It is further the Applicant’s submissions that the mere fact that they failed to attach a draft memorandum of appeal in this application, should not of itself be a ground for concluding that the appeal is not arguable. According to the Applicant, in the absence of a draft memorandum of appeal, the court can still gauge the arguability of the intended appeal from other supportive evidence.
53. It is critical to note that from the decision in the case of Paul Musili Wambua (supra), one of the considerations in granting an extension of time within which to lodge an appeal is the chances of the intended appeal succeeding.
54. In the instant case, no draft memorandum of appeal has been annexed by the Applicant. While the court agrees with the Applicant’s submissions that the court can gauge the arguability of an intended appeal from other supportive evidence in the absence of a draft memorandum of appeal, in the instant case, I am unable to find any evidence pointing that the intended appeal would be arguable.
55. The two affidavits sworn in support of the application merely state that the court did not consider the evidence tendered at trial, without disclosing which particular pieces of evidence the judge did not consider and how such pieces of evidence if considered on appeal, would change the outcome of the case.
56. In view of the foregoing, it is my finding that the Applicant has failed to demonstrate, with sufficient evidence, that the intended appeal is arguable.
57. It is important to note that this court has the unfettered discretion to grant extension of time within which a party may file and serve a Notice of Appeal but the same may only be exercised judicially and based on reasonableness and fairness, as was held by the court in the case of Evans Mungasia Annoh –vs- Sierra Flora Limited [2022] eKLR, that: -
“This court has unfettered discretion in enlarging time for the various situations that may arise in the course of proceedings. However, that discretion is to be exercised in a fair and just manner and the court should not be whimsical or capricious in making such a decision. The discretion must be exercised based on sound reasons that are logical, legal, and reasonable based on the peculiar circumstances of each case. What is clear as daylight is that enlargement of time is not a right to any party or Applicant”.
58. In the premises, I find that the reason given for the delay in lodging the appeal has not been sufficiently demonstrated. It is also my finding that the Applicant has failed to demonstrate that the intended appeal is arguable and therefore has high chances of success if the application is granted.
Disposition
59. In view of the above conclusions this court finds the 1st Defendant’ Application dated 22nd November 2021 to be without merit. Consequently, the same is hereby dismissed with costs to the Respondents.
60. It is so ordered.
SIGNED DATED and DELIVERED IN VIRTUAL COURT
THIS 23RD JANUARY 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant
Ms. Ochieng for the 1st Defendant/Applicant
Kioko h/b Mumia for the Plaintiff/1st Respondent
Doreen h/b for Ms. Muthee for the 2nd Defendant/2nd Respondent