Associated Mercantile & Allied Services Ltd & Joseph Muturi Gitau, Samuel Ndiba Kihara Mary Wairimu (sued in their capacity as Chairman,Secretary and Treasurer of Shangilia Baba na Mama Self Help Group v Isaac Onywere Kabesa [2016] KEHC 5804 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL NO.  59   OF 2010

ASSOCIATED MERCANTILE & ALLIED

SERVICES LTD ……………………………………………………….1ST APPELLANT

JOSEPH MUTURI GITAU

SAMUEL NDIBA KIHARA

MARY WAIRIMU (Sued in their capacity as chairman,

Secretary and treasurer of

SHANGILIA BABA NA MAMA SELF HELP GROUP…...............….2ND APPELLANT

VERSUS

ISAAC ONYWERE KABESA ………………………………………...RESPONDENT

RULING

This ruling determines the appellant/applicant’s application dated      23rd June  2015 brought under  the provisions  of Order 22 Rules 22(1) and (3) Order 42 Rule  6(1) and (2) of the Civil Procedure  Rules, Sections 1A,1B and 3A  of the Civil procedure Act  Cap 21  Laws of Kenya.

The application seeks for stay of execution of the judgment delivered in Milimani CMCC 643 of 2009 pending the hearing and determination of this appeal.  It also seeks for costs of the application.  The said application is premised on the grounds that:-

The judgment in Milimani CM CC 643 of 2009 was delivered on 13th February 2015.

The applicants filed application dated 25th February 2015 which was dismissed on 18th June 2015.

The applicants have appealed against the said judgment vide Civil Appeal No. 59 of 2015.

The applicants are ready to deposit the entire decretal sum in court or in an interest earning account in joint names of the advocates on record pending hearing and determination of the appeal.

The application was further supported by the affidavit sworn by Samuel Ndiba Kihara the Managing Director of the 1st appellant and secretary of the 2nd appellant sworn on 23rd June 2015.  It is further supported by a supplementary affidavit sworn on 16th July 2015 by the same deponent Samuel Ndiba Kihara.

The applicants  aver that  the application  was made  without  undue  delay after the dismissal  of their application for stay in the  lower court; that they stand to  suffer substantial loss if the execution  proceeds  against them and that the appeal  shall be rendered nugatory; that  the respondent  is not a person of means and therefore  would not be  in a position to refund  the decretal sum in the event  the appeal succeeds  and   that the appeal  has high chances of  success since  the evidence on record  shows that  the applicants did not ever receive  any monies  from the respondent and finally  that it  would be in the interest  of justice that the orders  sought  be granted.

The supplementary affidavit annexes  a certified copy of the ruling  delivered on  18th June  2015  by Honourable  Ngugi, dismissing  the applicant’s application for stay  pending appeal on the grounds that the applicant’s  advocate  did not file submissions  to the main suit  which  is denied  and that the appellants  are willing to deposit  the entire  decretal sum in court or  in an  interest  earning account in a joint  account with his and the respondent’s advocate pending  the hearing and determination  of this appeal.

The application for stay of execution pending appeal  was opposed  by the respondent who filed  grounds of objection dated  14th  September  2015  and filled in  court on  15th September  2015 contending  that:

The application is frivolous   and vexatious.

The application is untenable in law.

The application does not meet the requirements of law and   practice regarding application for stay of execution.

The appeal is not arguable and has no chances of success.

The application is meant to delay the decree holder from enjoying the fruits of his judgment.

The decree concerns out of pocket money paid to the appellants thereby demonstrating the respondent’s ability to meet any financial obligation.

The parties agreed and filed written submissions to dispose of the application.  The applicants filed theirs on 9th November 2015 whereas the respondent filed his on 10th November 2015.

In the applicant’s submissions, it is contended, in addition to the grounds and supporting and supplementary affidavits  filed and relied on that the respondent has not filed any replying affidavit to controvert the facts relied on in support of the application. Further, that the  applicant has satisfied  the requirements of the  law Under  Order 22 Rule 22(1) and  (3)  and Order 42  Rule 6 (1) and (2)  of the Civil Procedure Rules and all the conditions  thereon  for the grant  of stay of execution of decree pending  appeal.  The applicants relied on Fidelity Commercial Bank Ltd V Agritools Ltd & 2 Others and Hussein Banji & Another.  Milimani HCC 1677/2000(unreported) where the  court found the 2nd objector  had not satisfied  the conditions  under the law for stay of  execution  but nonetheless exercised his discretion and granted the  applicant a conditional stay of execution.  They  also relied  on James Kariuki Nganga  t/a Ndarugu  Merchants V Joseph Ngae Njuguna &Another Milimani HCC 575/2003 (unreported)where the judge dismissed  an application for stay pending appeal  because  the applicant  did not  aver  in the supporting  affidavit  that the  plaintiff had no means to  pay back  the decretal amount.  They contended  that in this case they had sworn to that fact   of inability  by  the respondent to pay back the  money should   the appeal herein  succeed, which deposition has not been  controverted  by an affidavit  from  the respondent or any other  evidence.  They urged the court to exercise its discretion and grant them stay of execution of decree of the lower court pending the hearing and determination of this appeal.

In his opposing submission, the respondent  contended  that the court  can only entertain the matter  and hear  a party if that  party is properly  before  the court; that the procedural and legal  requirements  under Order  42 Rule  2 (sic) and 22 Rule 22(1) of the  Civil Procedure  Rules require that “ a certified  copy  of the decree” be filed  together with the application  but that no such copy of the  certified  decree  is annexed to  the application; hence it is not  possible for  this court to  determine how much  is the decretal sum and  as no execution proceedings  are in place  to compel this court to issue stay orders.

Further, that there are no sufficient grounds advanced to warrant stay orders since the fact of filling of an appeal is not sufficient cause and neither is the offer for depositing of the decretal sum.

On substantial loss, it  was  submitted that the applicants  had not satisfied  the requirement since  they received  the money from the  respondent  as out of pocket  and  for the purchase  of a plot from the  applicants, and that  therefore  having paid  shs 224,100 to the applicants is a clear  indication that he was  possessed  of  means.  It  was further submitted that the  Memorandum of Appeal  contains  wild and  unsubstantiated  allegations  as it  contains  grounds which are unrelated to the matters that  were before the court for trial and therefore laughable  since the  trial court  gave clear  and concise  reasons  when entering  the judgment  in his favour  and hence it is unfair to accuse the trial court without  justification.

The respondent urged the court to find the application for stay unmerited and dismiss it with costs.

I have carefully perused and considered the appellant/applicant’s application for stay of execution pending appeal.  I have also considered the grounds of opposition and the respective parties’ advocates rival submissions on the matter.  The only issue for  determination   is whether the  applicant  warrants  a grant of  the orders of stay of  execution of decree  in the subordinate  court pending  the hearing and determination of the appeal  herein.

The applicable law relating to stay of execution of decree pending appeal is Order 42 Rule 6 of the Civil Procedure Rules and not Order 22 Rule 22 of the Civil Procedure Rules.  The latter provisions relate to stay by a court to which a decree has been sent for execution and in this case, it would be the subordinate/trial court.  The applicants have  already demonstrated that  they  did file  an application  for stay   before the trial court   which application  was dismissed  on 18th June 2015  hence the  filing of this application  as required  under Order 42 Rule 6  of the Civil Procedure  Rules.  That being the  case, I find  the objection by the  respondent  on the ground that  the  provisions  of Order 22 Rule 22  of the Civil Procedure for a  certified  decree to be annexed  being unfounded.

As stated above, the relevant  provisions  that the court  must employ in determining whether  or not to grant  the appellant/applicant stay of execution orders pending   hearing and determination of  the appeal is Order 42 Rule 6  of the Civil Procedure  Rules  which provides that:

No appeal  or second appeal shall operate  as a stay of execution of 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 from 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  fro whose decision  the appeal  is preferred  my apply  to the appellate  court to have such order  set aside.

No order for stay of execution shall be made under Subrule (1) unless:

The court  is satisfied  that substantial  loss may result to the  applicant unless the order is made and the  application has been made without  unreasonable  delay; and

Such security as the court orders for due performance of such decree or order as may ultimately be binding on him has been given by the applicant.

My appreciation of the above  provisions  of  the law is that the court  has  unfettered discretion  to grant a stay of execution  pending appeal if sufficient  cause is shown.  Such stay is obviously to be granted upon such terms as to security as the court considers fit in the circumstances.

The  court must  also satisfy itself  that the application has been made without  unreasonable  delay and that  substantial  loss may result to the  applicant  unless  the order is made.  Madan JA in MM Butt V The Rent  Restriction Tribunal CA Nairobi 6/1979 stated as  follows regarding  the first requirement  that an applicant  has to  show that  there will be  substantial  loss if  stay is not  granted.

“ It is  in the discretion of the court to grant  or refuse a stay  but what  has to be  judged  in every case  is whether there are  or not  particular circumstances  in the case  to make an order  staying  an execution.  It has been said that the court   as a general rule   ought to exercise its best discretion in a way so as not to prevent the appeal, it successful, from being nugatory…….per Brett L.J. in Wilson V Church No. 212 CH D 1879 454. ”

In this  case, what  the applicant  needs to establish  is that if the money is paid out in  execution of the  decree then the intended  appeal  will be rendered  nugatory.  Albeit no  decree  is attached  to the application  and neither  is the judgment  annexed, the submissions filed by  the respondent   show that the amount  claimed or  alleged to  have been paid  by the respondent to the appellant  is kshs 224,100.

In Kenya Shell V Karuga (1982-1988) 1 KAR (1022) Platt JA stated that:

“……….is it usually a good rule to see if Order 41 Rule 4 (now Order 42 Rule 6) 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.”

The applicants  have stressed  how they will suffer  substantial  loss because  no money  was paid to them, and that the  respondent  is not  possessed of  the means to reimburse  them the judgment  sum if  it is paid  in execution of the decree  and the appeal herein which is said to  have high  chances of  success succeeds.  It is for  that  reason that the appellants  are more than ready, able and  willing to deposit  the whole decretal sum into a joint  interest  earning account   to be operated   by both  parties advocates   until the  appeal is heard  and  determined  on its merits.

The respondent  on the other hand  maintains  that the stay orders  sought are not  deserved, the appeal is frivolous  and vexatious  and that since the money  claimed  was liquidated,  it had not been demonstrated  that he is s a man of  no means to repay the money should the  appeal be successful.

The purpose of an order for stay of execution pending appeal is to secure the interest of the appellant so that his appeal, if successful, is not rendered nugatory.  It is therefore essential for an applicant to show that he will be unable to recover the decretal sum from his adversary if his appeal succeeds.  It is not  sufficient  to make a  wild allegation  of the  respondent’s inability to repay the decretal sum should the appeal succeed, even if  the respondent  has not shown  any affidavit  of means  since the  court can often times, be misled  into relying  on sweeping statements  that the respondent is not  a person of   means to  grant stay, in the absence of   any evidence  to that effect.  However, this is not to say that the respondent has no duty to demonstrate even by way of title to land or motor vehicle or business license that indeed he has the capacity to repay the  decretal  sum should the appeal  succeed. Once the allegation of lack of means is made against him, the burden of proving otherwise shifts to him, which in this case  he did not.  It is not  for this court  to conclude that he has no means  since on the face  of it, nothing  was produced  to show that he is not  a person  of means  or that he is  a man of straw.

I would therefore in the circumstances exercise  my discretion, bearing  in mind the  fact that   while the  respondent   has the right  to enjoy the fruits of his lawfully obtained judgment, the appellants too have a corresponding  right to ventilate  their complaints challenging  the judgment  of the trial court  before the appellate  court for consideration.

Accordingly, I allow the application for stay and order that there shall be an order  of stay of  execution  of the judgment and decree of  the trial court in Milimani CMCC 643/2009 made on  13th February  2015 pending  hearing  and determination of this appeal conditional  upon the appellants depositing  all the decretal sum into a joint interest  earning account  to be opened by  both parties  advocates within 21  days from the date hereof   in order  to secure interests of both the appellants  and respondent.  Such sums shall be so held until further orders of this court as to its disposal.

The costs of this application shall abide the outcome of the appeal and in any event to the successful party.

Dated, signed and delivered at Nairobi this 9th day of February 2016.

R.E. ABURILI

JUDGE