Bake ‘N’ Bite (Nrb)Limited v Daniel Mutisya Mwalonzi [2015] KEHC 4745 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL  NO.  411   OF 2014

BAKE ‘N’ BITE (NRB)LIMITED….  APPELLANT/APPLICANT

VERSUS

DANIEL MUTISYA MWALONZI…RESPONDENT/DEFENDANT

RULING

By a Notice of Motion  dated 25th September 2014 , the appellant Bake N Bite Limited brought an application seeking from this court orders:-

That  there  be temporary stay of  execution pending  the hearing  and determination  of the application.

That there be stay of execution of enforcing the whole judgment entered on 29th August 2014 in civil Case NO.  1622 of 2013  pending  the hearing  and determination  of this appeal.

The application is brought  under the provisions  of Oder 42  Rule 6 (1), (2), (3), Oder 51 Rule 1  of the Civil Procedure Rules   2010 and Section 3A of  the Civil Procedure Act, Article  159  of the Constitution  of Kenya  and all other enabling provisions  of the law.

The application is predicated  on the grounds that :-

The appellant  had lodged  an appeal against the  judgment  of the Honourable court  delivered on 29th August, 2014  and had indeed  filed memorandum of appeal to wit, Nairobi HCCA No. 411 of 2014.

The trial  court  on 29th August 2014 categorically  ordered  that any further  application  for stay shall not  be entertained  which was  contrary to the Civil Procedure Rules  2010 and Principle  of  Natural Justice  which order in itself  amounted  to condemning  a party unheard.

That the appellant/applicant  was likely to commence  execution of the  judgment  at any time.

If the  execution proceedings commence the appellant will suffer substantial irreparable  loss  and damage.

The appellant/applicant is ready and  willing  to deposit  the entire   judgment  sum  of kshs  60,000/- plus the special damages  of kshs 3,000 and doctor’s  charges  of kshs  5,000 aggregating  to kshs 68,000 in court as security.

This application has been brought   without any undue  delay before the same court.

The application  is further  supported by the  affidavit  of Seif Mohammed  and other  grounds  as contained  in the parties  written submissions.

In his supporting affidavit, the deponent Mr Seif Mohammed Seif deposes that he is  the Managing director of the appellant/applicant company and that  the company challenges  the judgment  of the Chief Magistrate at Milimani Commercial Courts In C.C. No. 1626/2013  delivered  on 29th August 2014.

Further, that the court did  reject  any attempt  by the applicant to get a stay of execution in the lower court pending  the filing  of this appeal and  that being dissatisfied  with the said judgment wherein  the respondent Daniel Mutisya  Mwalonzi  was awarded  kshs 68,000 special and general damages, he has appealed  and also applied  for copies of proceedings and judgment  in the said court.  He avers that the appellant  has serious  triable  issues  to raise and be canvassed  on appeal  which appeal has high chances  of success particularly with regard  to ground  No. 1 of the Memorandum  of Appeal  which challenges  judgment  for  non- compliance  with Section 35  of the Evidence Act.

That the execution of decree in the lower court was imminent and that unless stay is granted, the appeal shall be rendered nugatory and that it is the appellant’s right to appeal.  Further, that the appellant is willing to deposit in court as security for the entire judgment of shs 68,000.

The respondent Daniel Mutisya Mwalonzi opposed the application by the appellant and swore an affidavit on 21st October 2014.

He contends  that the appeal does not  raise any triable  issues  hence it  has no chances  of success.  He also  supports  the judgment  of the trial court  which awarded  shs 68,000/- which  was not an excessive  estimate  and that  the application seeks  to deny him his  lawfully obtained  judgment.  He maintains that the  application is mischievous, misconceived, frivolous, vexatious  and merely intended  to buy time    and frustrate  the plaintiff’s right  to enjoy the fruits  of his judgment.  He urged  the court to deposit  the decretal sum  in a joint   interest  account  in the name of both advocates  pending  the hearing  and determination  of the application.  He prays that the application be disallowed.

When  parties  advocates appeared  before  me on 23rd October 2014  they agreed  to  dispose  of the application by way of written  submissions.

The appellant  filed-their submissions  on 4th November 2014  whereas  the respondent  filed his  on 2nd December 2014.

The submissions by both parties’ advocates mirror the depositions in the rival affidavits with each relying on past decisions and  law  as enacted.   The appellant/applicant relies on Order 42 Rule 6 (2) of the Civil Procedure Rules and the principles set out in the said provisions which he outlined as:-

If  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

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

In their  view, the grounds for stay of execution  are now  settled  law as  was held  in the Court of Appeal  decision  of Equity Bank Ltd vs  West Link MBO Ltd (2013)  e KLR that an appeal does not  operate  as a bar to execution of judgment hence a party seeking stay of execution pending  appeal  must therefore demonstrate  that they  are not  using the appeal  to delay justice.  They must  not only show  that they have  an arguable  appeal but also that they have  come to  court without  undue delay.

They also relied  on Tarbo Transporters  Ltd  vs Absalom Dora Lumbani (2012) e KLR  wherein  justice  Gikinyi J held that stay  of execution pending appeal  is granted  at the discretion of  the court upon  demonstration  by the applicant that the application has been brought  without  unreasonable delay.

They referred to Elena Dondoladoya  Korir vs Kenyatta University (2012) e KLR where justice   Nzioki Wa makau set out the criteria used  to determine grant of stay of execution pending appeal

“ the application must meet  a criteria  set out  in precedent  and the criteria  is  best captured  in the case of  Halal & another  vs Thornton  & Turpin (193) Ltd  KLR  365 where the  Court of Appeal  Gicheru JA, Chesoni & Cockar Ag JA that:

“The High Court’s discretion to order stay of execution of its order or decree is fettered by three conditions.

Sufficient cause.

Substantial loss would ensue from a refusal to grant stay.

The  applicant must furnish  security

The application must be made without unreasonable delay.

In addition, the applicant must demonstrate  that the intended  appeal will be  rendered  nugatory  if  stay is not granted  as was held  in Hassan  Guyo Wakalo vs Straman EA Ltd (2013) e KLR as follows:-

“In addition the applicant must prove that if the orders sought are not granted and his appeal eventually succeeds, then the same shall have been rendered nugatory.  These twin principles go hand in hand   and failure to prove one dislodges the other.

Counsel for the appellant submits that the application was filed only seven days after the delivery of judgment in the lower court hence it was filed timeously.

In their  submissions  paragraph 7, it is  stated that  the respondent worked as a casual employee and therefore  is unlikely to repay back  the decretal  sum once  paid out  to him, which in  effect  will occasion  substantial  loss to the applicant  should  execution of decree proceed  pending  the appeal.

He maintained that the  appeal herein has overwhelming  chances of  success as shown by the grounds contained  in the Memorandum of Appeal .

Further, that the respondent’s replying affidavit  is a mere denial  and does  not raise  substantial  objections  to the  application  for stay.

In his brief  submissions  the respondent  through his counsel  Onguti and Company  Advocates  equally avers that  Order 42 Rule  6(2) of the Civil Procedure  Rules must be satisfied  and that unfortunately  the applicant  in this appeal has  not satisfied  the court on the  condition  that it shall suffer   substantial  loss  if the amount  of shs  68,000 is paid out to the respondent.

On the submissions  that the respondent  if paid  the decretal sum shall not  be in a position  to repay the same  should  the appeal succeed, it is contended  by the respondent  that in Sofinac  Co. Ltd vs Nelphaat  Kimotho Mutuu (2013)  e KLR  Odunga J  held  inter alia

“  The appellant’s  belief that the respondent  will be unable to repay the same is solely based on the appellant’s lack of knowledge  as to the respondents’ financial capability and does not give  rise to  the presumption that the respondent will be unable  to repay  the sum.  There must be factors that led to  that presumption.  The law  of evidence  places the onus of proof on the party  making the allegation  and a mere  averment  that due to the  respondents’ social and economic  status  she is unlikely  to be able to refund   the money is not tenable  in Law”.

The respondent also relied on Stephen Wanjohi vs Central Glass Industries Ltd HCC 6726/91 Nairobi where the court held that;-

“ Financial inability  of a decree  holder is  not a reason or allowing a stay…………”.

That   the applicant had not  demonstrated  any peculiar  circumstances that necessitate   withholding of the decretal sum from  the respondent  decree holder.

That the applicant  had merely stated  that they will suffer  substantial  loss but  not  demonstrated what loss  as  was held in the Kenya Shell case that proof of loss  is the corner stone  of granting  of an application for stay:

“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 corner stone of both jurisdiction 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”

The respondent submits  that the  appeal  does  not raise  triable issues worth of determining  by the court and that  they have  not fulfilled  the condition of  furnishing security  for the due performance  of decree.  He cited Republic vs Attorney General & 2 others exparte (COFEK) & Stephen Mutoro that “…….one of the conditions for the grant of an order for stay is that an applicant should provide security” and Equity Bank Ltd vs Taiga Adams Company Ltd (2006) e KLR that:

“…………of even greater  impact is the fact  that an applicant has not offered security at all, and this is one  of the  mandatory tenets  under which the  application is brought……….let  me conclude  by stressing  that all the  four, not one  or some, must  be met before  this court  can grant  an order  of stay………”  which  principle  was also emphasized  in Carter  & Sons  Ltd vs Deposit Protection  Fund Board  & 3 others CA Nairobi 291/1997.

He submitted  that it is the respondent  who will be greatly prejudiced by  a stay as he will be kept away from his fruits of a lawful judgment  that it is  in the interest of justice  that stay sought be refused  with  costs as  the application is an abuse of the court process.

Determination:

The conditions for the granting of a stay of execution pending appeal are now settled.  An order of stay of execution is a discretionary one.  However that discretion is fettered by the conditions   or pre-requisites encapsulated in Order 42 Rule 6(2) of the Civil Procedure Rules.  These condition are that:

The application must be made without undue delay;

The applicant must demonstrate that they will suffer substantial loss unless the order sought staying execution is granted; and

That the applicant should provide such security as may be ordered by the court.

On the first condition and whether the appellant/applicant herein has filed this application without undue delay, It should be noted that the judgment in CM CC 1626 was delivered on 29th August 2014.  The appeal was filed on 4th September 2014 and the application filed on 25th September 2014.

In my view, the application was filed    within reasonable time within 30 days of the date of judgment, which is also statutory period under Section 79G of the Civil Procedure Act, within which an appeal from the subordinate court should be filed to the High court as a matter of right.  I am therefore satisfied that the application was filed timeously.

Regarding the  second condition  of substantial  loss that is likely tobe suffered  by the applicant  if stay is not granted, the applicant   has submitted  that the respondent being a casual worker, it is  unlikely  that he will be in a position  to refund the decretal  sum of shs 68,000/- should the appeal succeed, which  will in  effect render the appeal nugatory.  The respondent rubbishes that submission as a mere allegation and that it has not been proved that he is not in a position to refund the money if paid and the appeal succeeds.

This  court noted that the applicant did not state  on oath  in any  of the depositions that the respondent  is a person of no means  and that  he will be incapable  of refunding  the shs 68,000/- if he is  paid and  the appeal succeeds.  The applicant’s advocate only raised the issue of incapacity to reimburse the money in his submissions.  This  court finds that submissions of counsel on factual  issues are not  evidence and the counsel  for a party cannot  be allowed to introduce  factual evidence  in his submissions, which  facts  were not  deposed  by his client.  To do so would be allowing advocates to adduce evidence on behalf of their clients.  And for reasons that the fact of the respondent’s impecunity was only raised in the submissions, he could not have been expected to react to it in his replying affidavit.

The applicant has maintained in their application and supporting affidavit that they will suffer substantial loss if the money as decreed by the lower court is paid out to the respondent and the appeal succeeds.  They did not indicate or specify what kind of loss they will suffer if the amount of shs 68,000/- is paid before the appeal is heard and determined.

Indeed, demonstrating what substantial loss is likely to be suffered, is the core to granting a Stay of execution of decree pending appeal.

In this case, the applicant has not complained that the amount of shs 68,000/- is so substantial that if paid out, its operations will be crippled and or completely grounded.  Neither  has it  proved that the  respondent who was a casual worker is so impecunious  that if  paid  the said  money, he would not be in a position to reimburse  it if the appeal succeeds  or that such reimbursement  would be with difficulties.

From the evidence in the lower court, the appellant company deals in bakery business and has several branches in the country.  How would  payment of shs 68,000/- to a casual worker (then as we are not told  what the  respondent  does currently  or what  assets  he has  or does not  have)  would ground  a company  like the  appellant.

In Daniel Cheptulu Rotich & 2 others vs Emirates Airline Civil Case No. 368/2001, Musinga J held, and I agree that:-

“ It is not enough for an applicant  to merely state that it is likely  to suffer substantial  loss, it must  make effort to demonstrate how the  same is likely  to occur……” substantial  loss” is  a relative term and  more  often than not  can be  assessed by the totality  of the consequences  which  an applicant  is likely to suffer if  stay of execution is not granted and  the applicant is therefore  forced to pay  the decretal sum”.

In James  Wangalwa  & another  vs  Agnes Naliaka Cheseto (2012 ) e KLR  the court  held that the applicant “ must  establish other factors  which  show that 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”

In Jeny Luesby vs Standard Group Ltd (2014 ) e KLR it was held that granting of stay  pending appeal is at  the discretion of the court on  sufficient  cause being established  by the applicant .  The incidence of the legal burden of proof on matters which the applicant must prove lies with the applicant “.

…………sufficient  cause  being a  technical  as well as a legal requirement  will depend  entirely on the  applicant  satisfying  the court that  the substantial  loss may result  to the applicant  unless the order is  made, and therefore the court may  direct for the deposit of such security  for the due performance  of the decree  or order  as may ultimately  be binding  on the applicant where an applicant  has been able to  satisfy the court that  the application has  been made  without  unreasonable   delay. ………….The  fact that  execution  process  is in motion  or the attached properties  have been sold does not  in itself  amount to substantial loss under Order 42 Rule 6 of the Civil procedure Rules”.

I reiterate that the applicant has failed to demonstrate that it will be totally ruined in relation to the appeal if it pays over the decretal sum to the respondent, and that  it will be reduced into a mere explorer in the justice process if it does what the decree commands it to do without any prospects of recovering the money should the appeal succeed.  In a money decree, substantial loss lies   in the inability of the respondent to refund the decretal sum should the appeal succeed.  Yet as  I have stated  above, there was no such averment on oath and it  only emerged  in written submissions  which as  I have alluded  to above , is not evidence.

It is trite law that he who alleges must prove (see Sections 107,108, 109 of the Evidence Act).  Real and cogent evidence  must  be tendered  by way of affidavit  not by way of submissions  by counsel  for the applicant  that the  respondent  is not possessed of any sufficient  means to refund  the shs 68,000/-  should the appeal succeed.

The appellant  also alleges  that it has  an appeal  which raised  triable issues  with high chances of  success especially on  ground one of  the Memorandum  of Appeal.

This court  has pronounced  itself  in several decisions  that under  Order  42 Rule  6 (2) of the Civil Procedure Rules, the applicant  in seeking orders  of stay pending  appeal  from the subordinate court to  the High Court, the applicant is not  required to prove that they have  an arguable  appeal, unlike if it  was an  application before the Court of Appeal seeking stay  of execution  of decree of the  High Court  pending appeal to  the Court of Appeal.  This is exemplified in several decisions  including  Nakuru  HCC 211/98- Maritha Njeri Wanyoike  & 3 others vs Peter  Machewa Mwangi &  5 othersand  the appellant’s  own authorities  cited in support  of this application namely, Equity  Bank Ltd vs  West Link Mbo Ltd (supra).

In this case, the applicant has not discharged its legal burden of proving that the respondent is not possessed of means to refund the money.  Therefore, the respondent cannot  be burdened  to discharge  the evidence  that indeed  he has means  to refund  the money if the same  is paid  to him and the appeal succeeds.  Had the  applicant  discharged  that  burden, then  the respondent would have   been required, conversely, to provide  an affidavit of means  and  in default, the court  would be  right  in concluding  that indeed, he would not be in a  position to refund  the decretal sum.

In my view, based on the above expositions, the respondent should only be restricted to accessing the fruits of his lawfully obtained judgment for sufficient cause, which has not been shown to the satisfaction of   this court.  As I have  stated, the  prospects  of success of the appeal alone  cannot be  used to  deny  the respondent  the execution  of decree  as reliance   on that would  be tantamount  to summarily urging the  appeal and determining it at  the interlocutory  stage  without  giving  both parties, an opportunity  to ventilate on its  merits  and demerits .  In Jason Ngumba case (2014) e KLRthe court held that

“……………….here, it is not  really a question  of measuring  the prospects of the  appeal itself, but rather, whether  by  asking  the applicant  to do what the judgment  requires, he will become  a pious explorer in the judicial  process”.

Nonetheless, what  was stated  in the case of  Absalom Dora  vs Tarbo  Transporters (2013) e KLRis relevant as  well that:-

“the discretionary relief of stay of execution pending appeal is designed on the basis that no one would be worse off by virtue of an order of the court: as such order does not introduce any disadvantage, but administers the justice that the case deserves.  This is in recognition  that both parties have rights; the appellant to his appeal which  includes  the prospects  that the  appeal  will not be rendered nugatory; and the  decree  holder  to the decree  which includes  full benefits  under the  decree.  The court in balancing the two competing rights focuses on their reconciliation which is not a question of discrimination.”

This court has many options of balancing out the parties rights in this case.  Where it decides to grant stay it can do so on terms.  Noting that  the applicant has offered  to deposit security for due performance of decree in order to insulate the respondent/decree holder  from any loss  should  the appeal be  rendered in his  favour, I order that the decretal sum of shs 68,000/- plus all party and party costs  of the suit  in the court below  to be agreed  upon if not to be  assessed and deposited  in this  court  within 21 days  from  the date  hereof, as a condition precedent  to stay of  execution of decree  in CMCC 1626/2013 pending hearing  and determination  of the appeal, upon which  the said monies  shall be  held  as security  for performance of decree which  may ultimately be binding upon the appellant.  In default, the orders of stay herein granted lapses and the respondent shall be at liberty to execute   decree.  I further  order that   upon depositing of  such decretal sum in court, the  appellant shall take all  the necessary  steps to complete  the process of  readying this appeal  for hearing and disposal  within the  next 90 days  from the date  of such deposit  and in default, the orders of stay shall  automatically lapse after 90 days  from the date  of deposit and the  respondent  may apply  for release  of the deposited funds.

Dated, Signed and Delivered at Nairobi this 21st day of April, 2015.

R.E. ABURILI

JUDGE

21. 4. 2015

21/4/15

Coram: Aburili J

Court Clerk Kavata

Mr Kaburu holding brief for Abuga for the appellant

No appearance   for respondent (date given in court)

Court – Ruling read and delivered in open court as scheduled.

R.E. ABURILI

JUDGE

21/4/2015