WILLIAM NZILU MALONZA VS ABSA BANK KENYA PLC AND KEYSIAN AUCTIONEERS

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MACHAKOS

CIVIL APPEAL NO. E273 OF 2024

WILLIAM NZILU MALONZA .............................................. APPELLANT/APPLICANT

VERSUS

ABSA BANK KENYA PLC...............................................................1^ST RESPONDENT

KEYSIAN AUCTIONEERS ............................................................ 2^ND RESPONDENT

RULING

Introduction:

>> >> >>>>”).</><>>>><><>>>></><><>></><><>><>><>></><>><>><><>><>><>><>>>><>><> ><>>> ></></><>><><>><>></><><>></><><>>>, ><>><>>>>>>>><>><>><>>>></><><>></><><>></><><>></><><>></><><><>"></></><><> id="_Hlk194959576">satisfied two preconditions for grant of an injunction under Order 42(6) (6) of the Civil Procedure Rules, to wit, that there is before the court a valid appeal and secondly, that the court is exercising its appellate jurisdiction.

Whether he has met the threshold for grant of temporary injunction pending appeal and has cited the case of Patricia Njeri & 3 others V. National Museum of Kenya [20041 eKLR, which reiterated the principles governing or guiding grant of a temporary injunction pending appeal as follows:-

1. An order of injunction pending appeal is discretionary and will not be exercised where an appeal is frivolous.
2. In cases where a grant of injunction is likely to inflict greater hardship or prejudice, a court should decline to exercise discretion in favour of an Appellant.
3. An appellant must demonstrate that unless an injunction is granted the appeal is to be rendered nugatory or academic.
4. The Applicant argued that the traditional principles for grant of an injunction as set out in the case of Giella V. Casman Brown [79731 EA 358 are to be considered and proceeded to submit under various heads on whether the Appeal was frivolous, whether the Appeal will be rendered nugatory and hence irreparable damage, fraud and concealment of evidence by the Respondents, whether the Respondents acted in good faith, whether the Respondents issued the requisite notices, whether a Forced Sale Valuation of the suit property was undertaken. I will consider each of the above under my analysis and determination herein.

Respondent’s submission

1. The Respondents submitted on one major issue on whether the application raises arguable grounds of appeal. The Respondents sought to bring to the attention of this court the fact that, this Appeal having minimal chances of success and does not meet the threshold required for a stay of execution under Order 42 Rule 6 of the Civil Procedure Rules. The circumstances of this case reveal that the Appellant has acted in bad faith by failing to make any loan repayments, despite enjoying the benefit of a temporary injunction. The Appellant has taken no meaningful steps to regularize the loan account or demonstrate willingness to honour the contractual obligations under the charge instruments. Instead, the Appellant has resorted to tactics aimed at delaying the Bank's lawful right to realize its security.
2. Allowing this appeal would only serve to penalize the Bank, which has acted within the law while rewarding the Appellant's inaction and disregard for their obligations. Judicial time, which is a valuable resource, ought to be preserved for cases with substantive issues warranting judicial intervention. In this instance, the Appellant has failed to establish any compelling grounds to warrant a stay or justify a reversal of the trial court's decision.
3. The Respondent further submitted on whether the Appellant is likely to suffer substantial loss unless this application is allowed under Order 42 Rule 6(6) of the Civil Procedure Rules, on whether the absence of data in the Bank's Statement of Account from 1st January 2010 and 18^th July 2019 renders the financial figures in the case unascertainable, on whether the forced sale valuation of the suit property was conducted in compliance with the law and on whether the statutory notices issued by the Bank to the Appellant were in strict compliance with the requirements of the law.
4. This court will consider the Respondents’ submission on whether the Appellant is likely to suffer substantial loss unless this application is allowed. The rest of the issues submitted on by the Respondent can be determined at the trial of the appeal.

Analysis and Determination

16.   I have considered the application, the supporting affidavit, the replying affidavit, the further affidavit and the rival submissions filed by Parties’ counsel as well as the judicial decisions relied upon. In my view, the major issue for determination is : Whether the Applicant/Appellant has met the criteria for grant of orders under Order 42 Rule 6 of the Civil Procedure Rules under which his application is premised.

1. The Appellant has approached this court under Order 42 Rule 6 of the Civil Procedure Rules, claiming that substantial loss would be suffered unless the order sought is granted. The Appellant further contends that the absence of data up to 2019 from the Banks Statement of Accounts renders the figures in this matter unascertainable. Additionally, the Appellant argues that the forced sale valuation was not conducted, and that the statutory notices required under the law were not properly issued.
2. Order 42 Rule 6 of the Civil Procedure Rules,2010 provides as follows:-
3. 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.
4. No order for stay of execution shall be made under subrule (1) unless—
5. 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
6. 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.
7. Notwithstanding anything contained in subrule (2), the court shall have power, without formal application made, to order upon such terms as it may deem fit a stay of execution pending the hearing of a formal application.
8. For the purposes of this rule an appeal to the Court of Appeal shall be deemed to have been filed when under the Rules of that Court notice of appeal has been given.
9. An application for stay of execution may be made informally immediately following the delivery of judgment or ruling.
10. Notwithstanding anything contained in subrule (1) of this rule the High Court shall have power in the exercise of its appellate jurisdiction to grant a temporary injunction on such terms as it thinks just provided the procedure for instituting an appeal from a subordinate court or tribunal has been complied with.
11. In Vishram Ravji Halai vs. Thornton & Turpin Civil Application No. Nai. 15 of 1990 [1990] KLR 365, the Court of Appeal held that whereas the Court of Appeal’s power to grant a stay pending appeal is unfettered, the High Court’s jurisdiction to do so under Order 41 rule 6 of the Civil Procedure Rules is fettered by three conditions namely:-
12. establishment of a sufficient cause,
13. satisfaction of substantial loss and
14. the furnishing of security.

10.   Further the application must be made without unreasonable delay.

    To the foregoing, Justice Odunga in Michael Ntouthi Mitheu v Abraham  Kivondo Musau [2021] eKLR held that:

“I would add that the stay may only be granted for sufficient cause and that the court in deciding whether or not to grant the stay and that in light of the overriding objective stipulated in sections 1A and 1B of the Civil Procedure Act, the Court is no longer limited to the foregoing provisions. The courts are now enjoined to give effect to the overriding objective in the exercise of its powers under the Civil Procedure Act or in the interpretation of any of its provisions. According to Section 1A (2) of the Civil Procedure Act: “the Court shall, in the exercise of its powers under this Act or the interpretation of any of its provisions, seek to give effect to the overriding objective.”

1. Under Section 1B some of the aims of the said objective are; the just determination of the proceedings; the efficient disposal of the business of the court; the efficient use of the available judicial and administrative resources; and the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
2. In Stephen Boro Gitiha vs. Family Finance Building Society & 3 Others Civil Application No. Nai. 263 of 2009, Nyamu, JA on 20/11/09 held inter alia that the overriding objective overshadows all technicalities, precedents, rules and actions which are in conflict with it and whatever is in conflict with it must give way.
3. The same Judge in Kenya Commercial Bank Limited vs. Kenya Planters   Co-Operative Union Civil Application No. Nai. 85 of 2010 held that:

“where there is a conflict between the statute (overriding objective principle) and a subsidiary legislation (rules of the court) the statute must prevail. Although the rules have their value and shall continue to apply subject to being O2 complaint, the O2 principle is not there to fulfil them but to supplement them where they prove to be a hindrance to the O2 principle or attainment of justice and fairness in the circumstances of each case.”

23.   It therefore follows that all the pre-overriding Objective decisions must now be looked at in the light of the said provisions. This does not necessarily imply that all precedents are ignored but that the same must be interpreted in a manner that gives effect to the said objective. What is expected of the court is to ensure that the aims and intendment of the overriding objective as stipulated in section 1A as read with section 1B of the Civil Procedure Act are attained. It is therefore important that the court takes into consideration the likely effect of granting the stay on the proceedings in question. In other words, the court ought to weigh the likely consequences of granting the stay or not doing so and lean towards a determination which is unlikely to lead to an undesirable or absurd outcome. What the court ought to do when confronted with such circumstances is to consider the twin overriding principles of proportionality and equality of arms which are aimed at placing the parties before the court on equal footing and see where the scales of justice lie considering the fact that it is the business of the court, so far as possible, to secure that any transitional motions before the court do not render nugatory the ultimate end of justice.

24.   The court, in exercising its discretion, should therefore always opt for the lower rather than the higher risk of injustice.

25.  In Butt Vs. Rent Restriction Tribunal [1979], the Court of Appeal gave pointers on what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court stated thus:

i.  The power of the court to grant or refuse an application for a stay of execution is a discretionary, and the discretion should be exercised in such a way as not to prevent an Appeal.

ii.  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.

iii.  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.

iv.   Finally, the court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirements.

Application brought without unreasonable delay

26.    On the first criterion as to whether the Applicants/Appellants has brought this application without unreasonable delay. The ruling before the trial court was delivered on 4th October 2024. The Memorandum of Appeal dated 14th October 2024 was lodged in court on 15th October 2024 while the instant application dated 18th October 2024 was filed in court on 18th October 2024 which was fourteen days after delivery of the ruling. In the circumstances, I find that application has been brought without unreasonable delay.

Substantial Loss

27.   The second criterion on whether the Applicant/Appellant has demonstrated that he is bound to suffer substantial loss if orders of stay of execution is not granted. The question that follows is what comprises substantial loss. In Silverstein Vs Chesoni (2002)1 KLR 867 it was held that:

“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”

28.  The Appellant/Applicant has submitted that the 1^st Respondent did not provide evidence on the exact amount due, if any; it fraudulently withheld and or disclosed a complete bank statement; it failed to adhere to the procedure provided for in respect of service statutory notices; it failed to undertake a forced sale valuation of the suit property. The question to be asked is whether given the foregoing facts, the Respondents should be allowed to extinguish the Appellant's equity of redemption and if so, whether the consequence thereof will occasion an irreparable injury to the Appellant.</><>>> ></><><><>"></></><>><>>> ><><><>“></>:</><><><>></></><><><>></></><><><><><><>></></></></></><>>>.</><>>> ><><><>“></></><><><>"... ></></></><>>>><><>"</><><>></></><><>>> ><>>>, ><>><>></><><>“ ></></><><>></><>><><> > ></></><>><><>><>></><>>> ></><> </><><><>"></></><><>>> ></><><><>"></></><><>><>><>></><><>></><><> >>>></><>< > </><><>>> >> >>><>><>>> ></><><><>“></></><><><>></></><><><>></></><><><>></></><><>>> <>>></><><><>“></></><><> href="http://resolver.caselaw.kenyalaw.org/resolver/akn/ke/judgment/kehc/2012/1094" target="_blank">James Wangalwa & Another v. Agnes Naliaka Cheseto (supra) the three (3) conditions for granting stay of execution pending appeal must be met simultaneously. They are conjunctive. It is my finding that the Applicant herein, though he brought this application without undue delay and adequately demonstrated the substantial loss that he would suffer, did not furnish or offer security for the performance of the order, in the event he was unsuccessful in the Appeal.

“The purpose of the security under Order 42 is to guarantee due performance of such decree or order as may ultimately be binding on the Applicant. It is not to punish the judgment debtor….civil process is quite different because in civil process the judgment is like a debt hence the applicant become and are judgment debtors in relation to the respondent. That is why any security given under order 42 rule 6 of the civil procedure rules acts as a security for the performance of such decree or order as may ultimately be binding on the Applicants. I presume the security must be one which can serve that purpose.”

Disposition

1. I am satisfied based on the above decisions that this court has the jurisdiction to grant an injunction pending appeal.  The Applicant has satisfied the first and second requirements for grant of an injunction.  The subject matter is land where the Applicant resides. If it is sold, it will be put out of reach of the Applicant and I take into account the sentimental value placed on land in Kenya.
   
2. The upshot is that after a careful review and evaluation of the material before the Court and having regard to all the circumstances and the applicable law and the fact that the 1st Respondent is holding the title to the suit property as security for the loan. I will make no order as regards security in this matter. I exercise my discretion and allow the application for stay in terms of prayer three of the Notice of Motion dated 18th October 2024 and a further order that the proceedings before the trial court be stayed pending the hearing and determination of the appeal herein.
3. Costs of the application to abide the outcome of the Appeal.
4. It is so ordered.

RULING WRITTEN, SIGNED & DATED AT MACHAKOS THIS 6^TH MAY  2025  

NOEL I. ADAGI

JUDGE

DELIVERED VIRTUALLY ON TEAMS AT MACHAKOS THIS 6^TH MAY 2025

In the presence of :

Ms. Muluvi hb for Mr. Mutua, SC.... for Appellant/Applicant

Mr. Mbira hb for Mr. Kamiti ....... for Respondents

Milly Grace....... Court Assistant