GIDEON LISTER KAARIA V NATIONAL BANK OF KENYA LIMITED [2011] KEHC 45 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL APPEAL 8 OF 2009

GIDEON LISTER KAARIA……………………… APPELLANT/APPLICANT

-AND-

NATIONAL BANK OF KENYA LIMITED………….…………RESPONDENT

RULING

The appellant brought this application by Chamber Summons dated 24th March, 2009,by virtue of Order XL, Rule 4 of the earlier edition of the Civil Procedure Rules. This application carries one main prayer (No.2), namely, that –

“This Court be pleased to stay execution of the decree/Judgment given by the Principal Magistrate, the Hon. Mr. Kirui in Mombasa CMCC 3643 of 2006 on 23rd November, 2007 till the hearing of the appeal.”

The several grounds proffered in support of the application may be thus summarized:

(i)an ex parte Judgment was entered on 23rd November, 2008;

(ii)on 14th January, 2009 the Principal Magistrate dismissed the applicant’s application for the setting aside of the ex parte Judgment;

(iii)but the Principal Magistrate stayed execution of the decree – pending the filing of a formal application for stay;

(iv)in the meantime, the applicant moved quickly to lodge an appeal;

(v)the appellant also filed a formal application for stay of execution of the Judgment/decree pending appeal;

(vi)while allowing the application for stay, the Principal Magistrate imposed certain conditions:  in particular, depositing in Court the full amount of the decretal sum, and the auctioneer’s costs;

(vii)the appellant contended that the said conditions “are too harsh and amount to a denial of the application for stay”;

(viii)the order to pay the deposit “is harsh, punitive and extremely unconscionable…”;

(ix)the auctioneer “has proclaimed the appellant’s land where he resides with his family which is sufficient security for the decree-holder.”

The applicant has sworn a twenty-paragraph affidavit in support of the application.

George Ojiambo, the Nkrumah Road, Mombasa Branch Manager of the respondent, swore a replying affidavit on 18th May, 2009 deponing, inter alia, as follows:

(i)the respondent’s Advocates had filed an application for summary Judgment, which had been duly served upon the appellant’s Advocates;

(ii)the appellant’s Advocates failed to appear in Court on hearing day, and the application was allowed in favour of the respondent;

(iii)the lower Court ordered that the applicant do deposit the decretal sum in Court within 30 days, and also pay auctioneers’ cost within the same period of time;

(iv)the property that was not attached, is not sufficient security in terms of the law.

Learned counsel, Mr. Adhoch for the applicant, submitted that the appeal in this matter had been lodged timeously on 23rd January, 2009, just 10 days after the Ruling of the Principal Magistrate on 14th January, 2009. Counsel submitted that the said appeal was by no means frivolous, being based on the audi alteram partem rule: no person should be judged unheard; Judgment had been entered against the appellant  ex parte, without affording him an opportunity to be heard in contestation of the matters alleged against him, and even though he had “a sound defence on record and several affidavits which the Magistrate ignored.”

Counsel urged that “unless a stay of execution is granted, the appellant is likely to suffer irreparable harm and damage and his appeal will be rendered nugatory.” Counsel noted the fact that auctioneers dispatched by the respondent’s Advocates have already proclaimed, in exercise of rights attached to the Judgment and decree, plots Nos.2352 and 4229 “together with improvements thereon which include [a] one-storeyed building and another separate one.” The buildings described in the proclamation are the residence of the appellant where he lives with his family; these properties had not been given as security for the loan claimed by the respondent in the plaint, and are being proclaimed only on account of the ex parte Judgment.

Counsel submitted that an auctioning of the appellant’s home, while an appeal is pending, would cause him extreme hardship, and such action “is punitive especially bearing in mind that the appellant is being punished for mistakes of counsel for the respondent who did not do all that is necessary to notify him about the hearing of the application for summary Judgment”.

Counsel submitted that upon the appellant filing an application for stay of execution pending appeal on 27th January, 2009 the Principal Magistrate allowed it on 11th March, 2009 but “under such harsh and unconscionable conditions that it amounted to taking away with one hand and giving with the other”: as a condition of the grant, the Court ordered the appellant to deposit the full decretal amount and auctioneer’s costs with the Court within 30 days, and this would have meant that the appellant would have to raise Kshs.1,000,000/=. Learned counsel urged that “there is no justification for making these harsh conditions especially where, as in this case, the respondent Bank has recovered its full principal loan after realizing the security, Nyandarua/Ndemi/1474 for the sum of Kshs.450,000/= which is twice the amount originally borrowed…” Counsel submitted that there was no hardship on the part of the respondent Bank that could justify the conditions imposed, in particular, as the respondent’s auctioneers had already proclaimed the appellant’s residence; it would no longer be possible for the appellant to tamper with, or alienate the proclaimed goods.

In the foregoing circumstances, counsel urged that the appellant was entitled to an order of stay without any conditions, to enable him to pursue his appeal without undue anxiety; and in support, he cited a similar, earlier decision of the High Court (Mbogholi Msagha, J), in Central Kenya Limited v. Trust Bank Limited & 4 Others, Nairobi HCCC No.3590 of 1995.

Learned counsel, Mr. Mogaka for the respondent, urged that the application be dismissed, for the appellant had not shown “what loss, if any, he stands to suffer”; but that, instead, “it is the respondent who will suffer substantial loss as it will be unable to recoup the massive losses it has so far suffered…”

Counsel relied on earlier decisions: Maria Eyer Felshin v. Zvubdeb Higb David & Another, Malindi HCCC No. 76 of 2002 in which Etyang, J held:

“Further denial to the plaintiff [of an opportunity] to realize even that which is admitted would result in substantial loss and damage to her. It would not be fair and just to the plaintiff….consequently I hold that the defendants have failed to satisfy the Court that substantial loss may result to them unless [an] Order of stay of execution is made.”

Counsel also relied onShah v. Mbogo & Another [1967]E.A. 116 in which the following passage appears in the Ruling of Harris, J (at p.123):

“I have carefully considered, in relation to the present application, the principles governing the exercise of the Court’s discretion to set aside a Judgment obtainedex parte.This discretion is intended so to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but is not designed to assist a person who has deliberately sought, whether by evasion or otherwise, to obstruct or delay the course of justice. In my opinion, applying those principles to the facts before me and taking everything into account, the Society has not made out a sufficient case on the merits to justify the setting aside of the perfectly regular order ofJuly 8, 1966, and accordingly the motion must be refused.”

Counsel, in the instant matter, urged that the appellant had been granted a conditional stay by the lower Court, to the effect that there shall be a stay of execution of the decree pending the hearing of the appeal: subject to the appellant depositing the decretal sum in Court within 30 days; yet this security had not been deposited in Court.

Learned counsel submitted too, that the applicant’s appeal was itself not arguable; for the appellant “has not shown in [his] memorandum of appeal that this appeal has any chances of succeeding.”

Counsel submitted that, had the appellant deposited the security as ordered, and then his appeal succeeded, he  would suffer  no  prejudice  “as he would  be

refunded the said amount, as the respondent is capable of refunding the said sum.”

It is the applicant’s case, at this stage, that he has a weighty appeal that rests on failure by the lower Court to observe the principle of audi alteram partem, while holding him to a burdensome obligation. No comprehensive response to this claim has come from the respondent, even when the respondent contends the applicant has no appeal case with any chances of success.

The application has contested the ex parte Judgment, as a decision wanting on merits. True it is, of course, that the respondent would claim vested rights founded upon the said ex parte Judgment. So this Court must weigh up the claims on both sides, and, in its discretion, determine the location of the substance of legitimacy.

Whereas the respondent’s case, at this stage, rests on a presumption of validity of the ex parte Judgment and of its terms as to lodgment of security, the applicant contends that the burden of the said security is oppressive to him, and will deny him the opportunity to present a case for judicial determination.

I have given consideration to such competing claims, in a broad context, taking into account the nature of the applicant’s indebtedness; the respondent’s presumptive entitlement, on the basis of the ex parte Judgment; the security involved in the commercial relationship between the parties; the history of the relationship between the parties; the mutual standing of the parties and their capabilities – the applicant as an individual, and the respondent as a reputable banking institution; and I have come to the conclusion that justice will be achieved only on the basis of a hearing of the appeal. The appeal, therefore, must not be rendered nugatory by upholding material obstacles on the applicant’s path.

I will allow the instant application, and make specific Orders as follows:

(1)I hereby stay the execution of the decree/Judgment given by the Magistrate’s Court in CMCC No. 3643 of 2006 on 23rd November, 2007 till the hearingand determination of the appeal.

(2)Civil Appeal No. 8 of 2009 shall be listed for mention within 14 days of the date hereof, for directions for hearing on the basis of priority.

(3)The costs of this application shall be in the appeal.

Orders accordingly.

SIGNED at NAIROBI ……………………………….

J.B. OJWANG

JUDGE

DATEDand DELIVERED at MOMBASA this 7th day of December, 2011.

H.M. OKWENGU

JUDGE