Charles N. Ngugi v ASL Credit Limited [2022] KEHC 1951 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL MISC.APPLICATION NO. E488 OF 2021

CHARLES N. NGUGI................APPLICANT

VERSUS

ASL CREDIT LIMITED.......RESPONDENT

RULING

This ruling relates to the Applicant’s Notice of Motion dated 10th September, 2021 seeking the following orders;-

1. Spent.

2. Spent.

3. Spent

4. THAT this Honourable court be pleased to grant the applicant leave to appeal out of time against the judgment delivered by Hon. Obura (Mrs.) CM on the 26th June, 2021.

5. THAT this Honourable court be pleased to issue an order for stay of execution of the judgement entered and delivered herein against the applicant on 26th June 2021 pending the hearing and determination of the intended appeal

6. THAT the costs of this application be provided for.

The application is premised on the grounds on the face of the application and the supporting affidavit of CHARLES N. NGUGI, the applicant herein sworn on 10th September, 2021. The applicant’s case is that he wishes to appeal against the judgement/decree of Hon. A. M. Obura (Mrs.) delivered on 26th June, 2021 in Milimani Commercial Court Case No. 8535 of 2016, but the permitted time has lapsed. The delay in filing the appeal was not intentional but was caused by his previous advocates who failed to follow his instructions to file the appeal and became uncooperative. The applicant contends that his intended appeal is an arguable and meritorious and will therefore be rendered nugatory if stay of execution is not granted.

In his submissions, the applicant contends that his appeal is arguable and meritorious with a high chance of success. He has made reference to the case of STANLEY KANGETHE KINYANJUI VS TONY KETTER & OTHERS [2013] eKLRas cited in KENYA NATIONAL EXAMINATIONS COUNCIL V REPUBLIC & 20 OTHERS [2021] eKLR.According to the applicant, he will not only be denied the right to be heard but will suffer substantial loss if the application is disallowed. The applicant has further sought to rely on the finding in CENTURY OIL TRADING COMPANY LIMITED VS KENYA SHELL LIMITED NAIROBI [2008] eKLR and the case of SHABBIR ALI JUSAB V ANAAR OSMAN GAMRAI & ANOTHER [2014] eKLR.

The applicant argues that there are good and sufficient reasons for this court to exercise its discretion and grant leave to file his appeal out of time. While making reference to the case of BELINDA MURAI & OTHERS VS AMOS WAINAINA [1978] KLR 278 submit that the delay was as a result of mistake on his advocates and therefore should not be visited on him. Additionally, it has been submitted on behalf of the applicant that two months’ delay is not inordinate and that the applicant took all the necessary steps and diligently followed up on the matter. On costs the applicant submits that costs follow the event and as such with the grant of the orders sought, the respondent ought to pay costs.

In opposition, the respondent filed a Replying Affidavit sworn on the 27th September, 2021 by DANIEL WANDERA, the head of legal office at the respondent’s office. While acknowledging that indeed judgment was delivered on 25th June, 2021.  It is averred that there is no plausible explanation for the two and half months’ delay in filing the intended appeal or any action at all. The respondent contends that the applicant was only jolted to action after being served with proclamation letters by the auctioneer on 31st August, 2021 and refutes the argument that the intended appeal has high chance of success for the reason that the applicant confirmed default in a Commercial Hire Purchase facility.

The respondent identified two issues for determination by this court:

I. Is the Applicant required to file a substantive appeal and seek orders to have it admitted out of time or should he seek leave to institute appeal in a miscellaneous application?

II. Is there good and sufficient cause for not filing the appeal in time?

On the first issue, the respondent maintains that the present application is incompetent and ought to fail since the applicant failed to file a substantive appeal first. Reference was made to the case of EVANS KIPTOO V. REINHARD OMWONYO OMWOYO (2021) eKLR where Justice Olga Sewe was in agreement with the reasoning of Emukule, J. in GERALD M’LIMBINE VS. JOSEPH KANGANGI [2008] eKLR, where he stated that

“My understanding of the proviso to section 79G is that an applicant seeking “an appeal to be admitted out of time” must in effect file such an appeal, and at the same time seek the court’s leave to have such an appeal admitted out of the statutory period of time.  The proviso does not mean that an intending appellant first seeks the court’s permission to admit a non-existent appeal out of the statutory period.”

On the second issue, the respondent’s submission is that extension of time is an equitable remedy reserved for a deserving applicant and since the applicant has failed to demonstrate a good and sufficient cause for not filing the appeal in time, the same ought not be granted. To this end the respondent has cited the case of MOMBASA COUNTY GOVERNMENT —VS- KENYA FERRY SERVICES & ANOR (2019) eKLR, where at paragraph 25 the Supreme Court held that;

25]Concerning extension of time, this Court has already set the guiding principles in the Nick Salat Case as follows:

“… it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extensionand whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.

“… we derive the following as the underlying principles that a Court should consider in exercising such discretion:

1. extension of time is not a right of a party. It is an equitable remedythat is only available to a deserving party, at the discretion of the Court;

2. a party who seeks extension of time has the burden of laying a basis,to the satisfaction of the Court;

3. whether the Court should exercise the discretion to extend time, is a consideration to be made on a case- to- case basis;

4. where there is a reasonable [cause] for the delay, [the same shouldbe expressed] to the satisfaction of the Court;

5. whether there will be any prejudice suffered by the respondents, ifextension is granted;

6.  whether the application has been brought without undue delay; and

7.   whether in certain cases, like election petitions, public interest  should be a consideration for extending time”[emphasis supplied]

On the second limb of the application, the respondent submits that there must be an appeal already filed for the court to be moved under Order 42 Rule 6 of the Civil Procedure Rules and since there is no proper appeal in the present suit, the orders of stay sought cannot be granted. In the alternative, the respondents have submitted that the applicant has not offered any security for stay orders sought.  Consequently, the respondent has urged the court to direct that the decretal sum be deposited either with the Respondent's advocates as a stake holder or in a joint account held by the parties' advocates as security for the due performance.

Analysis and determination;

Section 79G of the Civil Procedure Act is the operative part in answering the question whether the prayer to enlarge time to file the appeal is merited. Section 79G of the Civil Procedure Act provides that:

Every appeal from a subordinate court to the High Court shall be filed within a period of thirty days from the date of the decree or order appealed against, excluding from such period any time which the lower court may certify as having been requisite for the preparation and delivery to the appellant of a copy of the decree or order:

Provided that an appeal may be admitted out of time if the appellant satisfies the court that he had good and sufficient cause for not filing the appeal in time.

From the provision above, it is noteworthy that the phrase used is “an appeal may be admitted out of time”. This therefore means that an appeal may indeed be admitted out of town.  However, the intended appeal ought to have already been filed before or together with an application seeking leave to extend time for filing an appeal. In MUGO & OTHERS VS. WANJIRU & ANOR [1970] EA 482 the court stated as follows:-

“Clearly, as a general rule the filing and service of the notice of appeal ought to be regularised before or at least at the same time as an application is made to extend the time for filing the record and the fact that this has not been done might be a reason for refusing the application or only allowing one on terms as to costs. But it does not mean that such an application must be refused.”

I have perused the file and noted that the applicant did file his notice of appeal together with the present application dated 10th September, 2021. The decision whether or not to grant leave to appeal out of time or to admit an appeal out of time is an exercise of discretion just like any other exercise of discretion by the court. Some of the factors that aid Courts in exercising the discretion whether to extend time to file an appeal out of time were suggested by the Court of Appeal in THUITA MWANGI V KENYA AIRWAYS LTD [2003] eKLR. They include the following:

i) The period of delay;

ii)  The reason for the delay;

iii)The arguability of the appeal;

iv)The degree of prejudice which could be suffered by the if Respondent the extension is granted;

v)The importance of compliance with time limits to the particular litigation or issue; and

vi) The effect if any on the administration of justice or public interest if any is involved.

The judgment was delivered on 26th June, 2021 while the present application was filed on 10th September, 2021, two (2) months after the lapse of the 30 days stay of execution granted by the trial court. The appellant has submitted that the delay was occasioned by his former advocate’s failure to act on his instruction. There is however no evidence on record to show that the applicant was not indolent and indeed followed up on the judgment with the registry. Nevertheless, I am inclined to allow the applicant leave to file his intended appeal noting that two (2) months is not inordinate. In my view whether one files the appeal first and seeks extension of time or files the application for extension of time contemporaneously with the Memorandum of appeal amounts to the same thing.  The appeal cannot be heard until time is enlarged. These are just semantics which do not affect the core issue of extending time.  Section 79G permits the extension of time to file an appeal. Once the delay is convincingly explained, then time ought to be enlarged.

An application for stay invokes the discretionary powers of this court under Order 42 Rule 6(1) of the Civil Procedure Rules, 2010 that empowers the court to stay execution, either of its judgement or that of a court whose decision is being appealed from, pending appeal. The conditions to be met before stay is granted are provided for under Rule 6(2) of Order 42 and states as follows:

“No order for stay of execution shall be made under sub rule (1) unless–

a. the court is satisfied that substantial loss may result to the applicant unlessthe 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.”

The Court of Appeal in Butt v Rent Restriction Tribunal [1982] KLR 417gave guidance on how a court should exercise discretion and held that:-

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

2. 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 that appeal court reverse the judge’s  discretion.

3. 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.

4. The court in exercising its discretion whether to grant [or] refuse an application for stay will consider the special circumstances of the case and unique requirements.  The special circumstances in this case were that there was a large amount of rent in dispute and the appellant had an undoubted right of appeal.

5. The court in exercising its powers under Order XLI rule 4(2)(b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion.  Failure to put security for costs as ordered will cause the order for stay of execution to lapse.”

Substantial loss is a factual issue which must be raised in the supporting affidavit and further supported by evidence. The applicant has not demonstrated the substantial loss he will suffer should the court disallow his prayer for stay. In the case of Machira T/A Machira & Co. Advocates vs East Africa Standard [2002] eKLR Kuloba J. as he then was held that an applicant’s ground for substantial loss must be specific and detailed as it is not enough merely stating that substantial loss will result or that if the appeal is successful it will be rendered nugatory. The applicant annexed a copy of the decree. The total sum including interest is Kshs.4,787,954/35. There is a certificate of costs for Kshs.265,358/-. The total amount being claimed from the applicant is quite substantial.  I am satisfied that execution of the decree will cause the applicant substantial loss.  Even if the respondent is capable of refunding the money, the court has to consider whether it is fair and just to allow execution to continue which process will naturally cause the applicant some financial burden.

Order 42 rule 6 requires the provision of security as a pre-condition for allowing a request to stay execution.  The dispute arises from the purchase of  a motor vehicle on hire purchase. The applicant was a guarantor to the other three defendants before the trial court.  It is evident that the loaned amount of over Kshs.Three million (KShs. 3,000,000) was not paid.  The vehicle was repossessed and sold for Kshs.1. 3 million.  The amount owing is attracting interest.  The applicant cannot have a blanket stay of execution without providing reasonable security.  The applicant has not stated that he is willing to provide security and has conveniently evaded that issue yet the application is also brought under Order 42 Rule 6 of the Civil Procedure Rules.   The applicant admit that he was the guarantor to the hire purchase agreement.

I do find that the applicant is entitled to pursue his appeal.  I do allow the application dated 10th September, 2021 in the following terms:-

1. Leave is granted to the applicant to file appeal out of time against the judgment delivered in Milimani CMCC 8535 of 2016.

2. The applicant to file and serve his Memorandum of Appeal within fourteen (14) days hereof.

3. Execution of the Judgment/decree in Milimani CMCC 8535/2016 is hereby stayed pending the hearing and determination of the appeal.

4. The applicant to deposit a sum of Kshs.1. 5 million (Kshs. One Million Five Hundred Thousand) in a joint account of both advocates within sixty (60) days hereof.

5. In default of complying with order number four (4), the orders staying execution shall lapse and the respondent shall be at liberty to execute.

DATED AND SIGNED AT NAIROBI THIS 2ND DAY OF MARCH, 2022

.............................

S. CHITEMBWE

JUDGE