Britam General Insurance (K) Ltd v Paul Mumia Makau t/a Wharton Consultants [2022] KEHC 15334 (KLR)

Britam General Insurance (K) Ltd v Paul Mumia Makau t/a Wharton Consultants (Civil Appeal E649 of 2021) [2022] KEHC 15334 (KLR) (10 November 2022) (Ruling)

Neutral citation: [2022] KEHC 15334 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil Appeal E649 of 2021

CW Meoli, J

November 10, 2022

Between

Britam General Insurance (K) Ltd

Applicant

and

Paul Mumia Makau t/a Wharton Consultants

Respondent

Ruling

1. The motion dated October 7, 2021 by Britam General Insurance Company (K) Ltd (hereafter the applicant) seeks that pending the hearing and determination of the appeal the court be pleased to stay the execution of the judgment and decree rendered in Nairobi Milimani SCCC No. 602 of 2021. The motion is expressed to be brought under Section 1A, 1B, 3A & 95 of the Civil Procedure Act (CPA) and Order 51 of the Civil Procedure Rules (CPR), inter alia, on grounds on the face of the motion as amplified in the supporting affidavit sworn by Hope Wambugu.

2. To the effect that being aggrieved and dissatisfied with the whole judgment of the court delivered in Nairobi Milimani SCCC No. 602 of 2021 on September 23, 2021 in favour of Paul Mumia Makau t/a Wharton Consultants (hereafter the Respondent), the Applicant has preferred an appeal which has a high chance of success. She goes on to express apprehension that the respondent with proceed with execution at any time occasioning prejudice to the applicant; that the applicant intends to expedite the hearing of the appeal and has since applied for typed copy of proceedings and moved diligently and expeditiously to file the instant motion. The deponent goes on to express the applicant’s willingness to abide by any conditions on security that may be set by the court.

3. The Respondent opposes the motion through a replying affidavit dated October 15, 2021. He takes deposes therein that the appeal lacks merit; that the motion is premature as no warrants of execution have been issued or extracted; and that the condition for grant of stay of execution of a liquidated sum, is deposit of security of which has not been offered by the applicant. He also asserts that he is currently employed in a multinational company, has various assets and a known place of abode and hence in the unlikely event that the appeal should succeed, he would be in position to refund the decretal sum. He concludes by asserting that it would be fair and just that, if stay of execution is to be granted, half the decretal sum should be paid out to him, and the balance thereof be deposited in joint interest earning account pending hearing and determination of the appeal.

4. In a brief rejoinder the applicant filed a further affidavit deposed by Edinah Masanya a legal associate of the applicant, reiterating the contents of the affidavit in support of the motion and contending that the respondent has failed to demonstrate his capacity to repay the decretal sum should the appeal succeed and therefore it is in interest of justice that the motion be allowed as prayed.

5. The motion was canvassed by way of written submissions. As regards the applicable principles, counsel for the Applicant anchored his submissions on the provisions of Order 42 Rule 6 of the Civil Procedure Rules. On the issue of substantial loss he called to aid the decision in Dickson Muricho Muriuki v Timothy Kangondu Muriuki & 6others [2013] eKLR to assert that the Respondent has not proven his ability to repay decretal sum and should the appeal succeed. That on account of the foregoing the Applicant is likely to suffer substantial loss. Addressing the court on security, counsel expressed the applicant’s willingness to provide such security as the court may order. In conclusion it was submitted that the Applicant has satisfied all conditions necessary for grant of stay of execution pending appeal as such the motion ought to be allowed as prayed.

6. On behalf of the Respondent, counsel submitting on the sole issue of substantial loss, and placing reliance on several decisions including James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR and Pamela Akinyi Opundo v Barclays Bank of Kenya Ltd [2011] eKLR argued that the respondent is not indigent and is able to refund the decretal sum should the appeal succeed . He prayed for the motion to be dismissed with costs.

7. The court has considered the material canvassed in respect of the motion. The Respondent’s affidavit material referred to merits of the appeal and or issues that are a preserve of the appellate court. It is pertinent to state that at this interlocutory stage, the court is not concerned with the merits of the appeal. However,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.

8. The Applicant’s 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”.

9. 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.”

10. The decision of Platt Ag 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)”

11. 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)

12. Earlier on, Hancox JA in 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.”

13. In its affidavit, the Applicant expresses apprehension that Respondent may be unable to repay the decretal sum should the appeal succeed. The Respondent on his part contended that he is currently in stable employment with a multinational company, has various assets and a known place of abode and that in the unlikely event that the appeal should succeed he would be in position to refund the decretal sum. In the oft cited case of National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Anor. (2006)eKLR the Court of Appeal stated that:“This court has said before and it would bear repeating that while the legal duty is on an Applicants to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it is unreasonable to expect such Applicants to know in detail the resources owned by a respondent or the lack of them. Once an Applicant expresses a reasonable fear that a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly within his knowledge – see for example Section 112 of the Evidence Act, Chapter 80 Laws of Kenya.”

14. The judgment of the lower court was for a sum of Kshs. 810,401/- with costs and interest. This is a substantial sum. Upon the Applicant expressing apprehension about the Respondent’s capacity to repay, the burden shifted on the Respondent to controvert the assertion by proving his own means. Looking at the material proffered by the Respondent in that regard, the court agrees with the Applicant that the Respondent’s demonstrated net earnings Kshs.176,000/-, relative to the amount in the decree Kshs. 810,401/- is not demonstrable of ability to refund the decretal sum. As stated in the Shell case, substantial loss as would render the appeal nugatory is what must be prevented.

15. Difficulty in the recovery of decretal sums upon a successful appeal, not just the impossibility of recovery, is a relevant factor in considering the likelihood of substantial loss to an applicant. Or in the alternative, and in proper cases, such demonstrated difficulty would qualify as sufficient reason (as anticipated in Order 42 Rule 6(1) of the Civil Procedure Rules) to be considered by the court. Whatever the case, in the exercise of its discretion, the court must balance the competing interests of the parties so as not to prejudice the matter pending appeal. In Nduhiu Gitahi & Another v Anna Wambui Warugongo [1988] 2 KAR, the court citing the decision of Sir John Donaldson M. R. in Rosengrens-vs- Safe Deposit Centres Limited [1984] 3 ALLER 198 and others, held that:“We are faced with a situation where a judgment has been given. It may be affirmed, or it may be set aside. We are concerned with preserving the rights of both parties pending that appeal. It is not our function to disadvantage the Defendant while giving no legitimate advantage to the Plaintiff……It is our duty to hold the ring even-handedly without prejudicing the issue pending the appeal…”

16. The court notes that the Applicants have complied with the initial order attached to interim stay of execution by depositing into court the sum of Kshs. 150,000/-. In view of all the foregoing, the Court will grant the motion dated 7. 10. 2022 on condition that the Applicant deposits the entire decretal sum into a joint interest earning account within 45 days, and for this purpose the sums deposited into Court are to be released forthwith to the Applicant. Costs will be in the cause.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 10THDAY OF NOVEMBER 2022C.MEOLIJUDGEIn the presence of:For the Applicant: Mr. RatemoFor the Respondent: Ms. Mugoh/b for Mr. WambuguC/A: Carol