Albert Osooro Orwaru & Newton Kungu Warui v Hellen Beverline Mubadi [2022] KEHC 1408 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL DIVISION

CIVIL APPEAL NO. E110 OF 2021

ALBERT OSOORO ORWARU.................................1ST APPLICANT/APPELLANT

NEWTON KUNGU WARUI......................................2ND APPLICANT/APPELLANT

-VERSUS-

HELLEN BEVERLINE MUBADI........................................................RESPONDENT

RULING

1. The motion dated 5th March, 2021 by Albert Osooro Orwaruand Newton Kungu Warui (hereafter the Applicants) seeks to stay execution of the judgment and decree in Milimani CMCC No. 9588 of 2019 issued in favour of Hellen Beverline Mubadi (hereafter the Respondent), pending the hearing and determination of the appeal herein. The motion is expressed to be brought under Section 3A of the Civil Procedure Act, Order 42 Rules 1 & 6 and Order 51 Rule 1 & 3 of the Civil Procedure Rules. On grounds, among others that, being dissatisfied with the judgment of the subordinate court, the Applicants have preferred an appeal.

2. The affidavit in support of the motion is sworn by Kevin Ngure who describes himself as the Senior Claims Manager at Directline Assurance Co. Ltd, at whose instance the claim in the subordinate court was being defended and is therefore conversant, competent, and duly authorized to swear the affidavit pursuant to his employer’s right of subrogation to defend, settle or prosecute claims filed against or in the insured’s name under the said parties’ mutual policy of insurance. The gist of his deposition is that the appeal herein is meritorious and arguable with a high chance of success, and that unless an order to stay execution pending appeal is granted by this court, the Respondent is likely to execute thereby rendering the appeal “hopeless.” The deponent further avers that the Respondent will not suffer any prejudice that cannot be compensated by way of costs if the order sought is granted. Finally, he expresses willingness by the Applicant to provide security by way of a bank guarantee.

3. The motion is opposed by the replying affidavit sworn by the Respondent. The Respondent views the motion as frivolous, vexatious, and an abuse of the court process. She deposes that the Applicants have failed to demonstrate substantial loss and/or that the appeal will be rendered nugatory if the orders sought are denied. Concerning the appeal, she swears that it does not disclose any triable issues, and that if granted, the orders sought will cause her prejudice and inconvenience through the delay of the fruits of her judgment. In response to the Applicant’s offer of security, the Respondent states that it is more prudent that the court orders the Applicants to furnish security by way of deposit of the decretal sum in a joint interest earning account.

4. The motion was canvassed by way of written submissions.  As regards the applicable principles, the Applicants’ counsel anchored his submissions on the provisions of Order 42 Rule 6 of the Civil Procedure Rules. Counsel submitted that the motion was filed timeously, after the delivery of the impugned judgment. On substantial loss, he submitted that the Respondent did not furnish the court with any evidence to prove her financial standing or ability to refund the decretal sum in the event the Applicants’ appeal were to succeed. Further, citing Bake‘N’ Bite (Nrb) Limited v Daniel Mutisya Mwalonzi [2015] eKLR and Kenya Revenue Authority v Sidney Keitany Changole & 3 Others [2015] eKLR, counsel submitted that the appeal is arguable as it raises serious questions of law and fact. In conclusion counsel expressed the Applicants’ willingness to provide security by way of a bank guarantee owing to the adverse economic effects of the pandemic and thus urged the court to allow the motion.

5. On behalf of the Respondent, similarly citing the applicable principles under the provisions of Order 42 Rule 6 (2) of the Civil Procedure Rules, the decision in Sankale Ole Kantai & Co. Advocates v Housing Finance Co. (K) Ltd [2014] eKLR,it was submittedthe court ought to judicially exercise its discretion under the former provisions. Further relying on  among others, the decisions in James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR, and Everlyn Jebitok Keter v Henry Kiplage Muge & 2 Others [2011] eKLR the Respondent’s counsel argued that it was not enough for the Applicant to allege that prejudice will be occasioned if stay is not granted; that the Applicants were duty-bound to precisely demonstrate the prejudice to be suffered if stay of execution is not granted; and that the mere fact that the process of execution is likely to be initiated by the Respondent does not amount to evidence of substantial loss. Concerning provision of security, the Respondent cited the decision in Arun C Sharma v Ashana Raikundalla t/a Raikundalla & Co. Advocates & 2 Others [2014] eKLRto assert that the court ought to order security in the form of deposit of the decretal sum. In conclusion it was submitted that motion has not met the requisite threshold for the grant stay and the motion ought to be dismissed with costs.

6. The court has considered the material canvassed in respect of the motion. First, it is pertinent to state that at this stage, the Court is not concerned with the merits of the appeal. It is trite that the power of the court to grant stay of execution of a decree pending appeal is discretionary, however the discretion should be exercised judicially. See Butt v Rent Restriction Tribunal [1982] KLR 417.

7. The Applicants prayer for stay of execution pending appeal, is brought under Order 42 Rule 6 of the Civil Procedure Rules which provides that:

“(1)  No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except appeal case of 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”.

8. The cornerstone consideration in the exercise of the discretion is whether the Applicants have demonstrated the likelihood of suffering substantial loss if stay is denied.  One of the most enduring legal authorities on the issue of substantial loss is the case of Kenya Shell Ltd v Kibiru & Another [1986] KLR 410. The principles enunciated in this authority have been applied in countless decisions of superior courts, including those cited by the parties herein. Holdings 2, 3 and 4 of the Shell case are especially pertinent.  These are that:

“1. …..

2. In considering an application for stay, the Court doing so must address its collective mind to the question of whether to refuse it would render the appeal nugatory.

3. In applications for stay, the Court should balance two parallel propositions, first that a litigant, if successful should not be deprived of the fruits of a judgment in his favour without just cause and secondly that execution would render the proposed appeal nugatory.

4. In this case, the refusal of a stay of execution would not render the appeal nugatory, as the case involved a money decree capable of being repaid.”

9. The decision of PlattAg JA, in theShell case, in my humble view set out two different circumstances when substantial loss could arise, and therefore giving context to the 4th holding above.  The Platt Ag JA (as he then was) stated inter alia that:

“The appeal is to be taken against a judgment in which it was held that the present Respondents were entitled to claim damages…It is a money decree. An intended appeal does not operate as a stay.  The application for stay made in the High Court failed because the gist of the conditions set out in Order XLI Rule 4 (now Order 42 Rule 6(2)) of the   Civil Procedure Rules was not met. There was no evidence of substantial loss to the Applicant, either in the matter of paying the damages awarded which would cause difficulty to the Applicant itself, or because it would lose its money, if payment was made, since the Respondents would be unable to repay the decretal sum plus costs in two courts… (emphasis added)”

10. The learned Judge continued to observe that: -

“It is usually a good rule to see if Order XLI Rule 4 of the Civil Procedure Rules can be substantiated. 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.”(Emphasis added)

11. Earlier on, Hancox JAin his ruling observed that

“It is true to say that in consideration [sic] an application for stay, the court doing so must address its collective mind to the question of whether to refuse it would,... render the appeal nugatory. This is shown by the following passage of Cotton L J in Wilson -Vs- Church (No 2) (1879) 12ChD 454 at page 458 where he said:-

“I will state my opinion that when a party is appealing, exercising his undoubted right of appeal, this court ought to see that the appeal, if successful, is not rendered nugatory.”

As I said, I accept the proposition that if it is shown that execution or enforcement would render a proposed appeal nugatory, then a stay can properly be given.  Parallel with that is the equally important proposition that a litigant, if successful, should not be deprived of the fruits of a judgment in his favour without just cause.”

12. The Applicants have claimed that unless the order to stay execution is granted, the Respondent is likely to execute the judgment of the subordinate court thereby rendering the appeal “hopeless”. The Respondent in her submissions has argued quite correctly that the Applicants have failed to demonstrate the prejudice to be suffered by them if stay of execution is denied. The mere fact that the process of execution is likely to be or has been initiated by the Respondent is not evidence of substantial loss. Execution in satisfaction of a decree is a lawful process, and the Applicants were duty bound to demonstrate how substantial loss would arise in this instance, by showing, either that if the appeal were to succeed, the Respondent would be unable to refund any monies paid to her under the decree, or that payments in satisfaction of the decree would occasion difficulty to the Applicants. They have not discharged this duty through affidavit depositions, only alluding to the issue in their submissions. As stated in the Shell case, without a demonstration of substantial loss, it would be rare that any other event would render the appeal nugatory and justify keeping the decree holder out of her money.

13. It is therefore not enough for the Applicants to casually aver that execution will render the appeal “hopeless”. Substantial loss in its various forms, is the cornerstone of the jurisdiction for granting stay. That is what must be prevented. Therefore, without this evidence, it is difficult to see why the execution process should be stayed.  In the court’s view, the Applicants have not demonstrated substantial loss and likelihood of the appeal being rendered nugatory. In the circumstances, the motion dated 5th March 20211 is devoid of merit and is hereby dismissed with costs.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 17TH DAY OF MARCH 2022

C.MEOLI

JUDGE

In the presence of:

For the Applicants: Absent

For the Respondent:  Ms.Muthoni

C/A: Carol