Jubilee Insurance Company of Kenya Ltd v Liberty Auto Mart Ltd [2022] KEHC 15304 (KLR)

Jubilee Insurance Company of Kenya Ltd v Liberty Auto Mart Ltd (Civil Appeal E474 of 2022) [2022] KEHC 15304 (KLR) (Civ) (11 November 2022) (Ruling)

Neutral citation: [2022] KEHC 15304 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E474 of 2022

JK Sergon, J

November 11, 2022

Between

The Jubilee Insurance Company of Kenya Ltd

Appellant

and

Liberty Auto Mart Ltd

Respondent

Ruling

1. This ruling is predicated on the Notice of motion dated July 1, 2022 taken out by appellant/applicant and supported by the grounds set out on its body and the facts stated in the affidavit of Beatrice Muriithi. The applicant sought for an order for leave to appeal out of time against the judgment and decree delivered on May 20, 2022 in Milimani CMCC No E915 of 2021 and a further order for a stay of execution of the aforementioned ruling pending the hearing and determination of the substantive appeal.

2. The respondent opposed the motion by filing a notice of preliminary objection dated July 28, 2022 and put forward the following grounds:a.The appeal was filed out of time without seeking leave first through a miscellaneous application.b.A party is not allowed to file an appeal out of time and then seek regularization.c.The application for stay of execution is based on an incompetent appeal.d.The applicant should have made the application in the trial court.

3. When the motion came up for interparties hearing the appellant’s advocate chose to rely on the averments made in its supporting affidavit while the respondent chose to rely on preliminary objection and their brief oral arguments.

4. I have considered the grounds laid out on the body of the motion; the facts deponed in the affidavit supporting it; the preliminary objection.

5. I will first make a determination on the preliminary objection which is premised on the argument that the appeal was filed out of time without seeking leave first and that the application for stay of execution is based on an incompetent appeal.

6. In reply thereto, Mr Ombati argued that they sought for leave to file the appeal out of time hence the preliminary objection is misplaced.

7. Reference is made to the case of Mukisa Biscuit Company v West End Distributors Limited (1969) EA 696 cited in the submissions by the respondent, where the court defined the term ‘preliminary objection’ in the following manner:“A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised in any fact that has to be ascertained or if what is sought is the exercise of judicial discretion.”

8. The appellant has appealed against a decision by the lower court which found that the defence dated March 1, 2021 constituted a mere denial thereby striking it out. This falls within the armbit of pleadings under order 43 and any appeal arising from the striking out of pleadings does not require the leave of the court. The appeal is thus of right according to order 43 (y) of the Civil Procedure Rules. This court has jurisdiction to hear the appeal herein.

9. In light of the above this court finds that the preliminary objection is without merit and is consequently dismissed with costs to the appellant.

10. Turning to the merits of the instant motion, the orders being sought in the motion are two-fold: first is the order seeking for enlargement of time to appeal and for leave to appeal out of time against the impugned judgment and decree.

11. Section 79G of the Civil Procedure Act stipulates that an appeal against the decision of a subordinate court shall be lodged within 30 days from the date of the decree or the order being appealed against. The provision further stipulates that an appeal can be admitted out of time where sufficient cause has been shown.

12. Moreover, under the provisions of section 95 of the Civil Procedure Act and order 50, rule 5 of the Civil Procedure Rules, the courts have power to enlarge the time required for the performance of any act under the Rules even where such time has expired.

13. In the case of Thuita Mwangi v Kenya Airways Ltd [2003] eKLR the Court of Appeal illustrated the conditions to be met in deciding whether to extend the period for filing an appeal out of time and which I shall address hereunder.

14. Under the first condition touching on length of delay, while it is apparent from the record that no copy of the impugned ruling was availed to this court, the parties are in agreement that the impugned judgment was delivered on April 1, 2022 which is close to three (3) months prior to the filing of the motion. In my mind, while there has clearly been a delay in filing the motion, I do not find the delay to be inordinate.

15. Concerning the reasons for the delay, the applicant explained that the delay was occasioned by the fact that the applicant became aware of the ruling upon service of the decree dated May 20, 2022 and by the time the decree was served upon the applicant, the time allowed for lodging an appeal had lapsed.

16. As relates to the condition on whether or not an arguable appeal exists, it is the applicants’ assertion is that the intended appeal raises several arguable grounds of appeal with good chances of success against the judgment of the trial court delivered on April 1, 2022.

17. Upon my perusal of the grounds of appeal raised in the draft memorandum of appeal annexed to the motion, I note that the appeal is challenging the finding of the trial court on striking out the appellant’s defence which they believe had raised triable issues. I am therefore satisfied that the applicant has demonstrated arguable points of law and fact in their appeal.

18. In addressing the final condition on prejudice, the applicant asserts that no prejudice will be suffered by the respondent if the application is granted.

19. Upon my perusal of the record, it is apparent that the judgment was in favour of the respondent herein and against the applicant. It therefore follows that the respondent is lawfully entitled to enjoy the fruits of his judgment. Suffice it to say that it would not be in the interest of justice to lock out the applicant who is aggrieved by the judgment of the trial court on striking out of its defence. I therefore find it reasonable for the applicant to be given the opportunity of challenging the subordinate court’s in striking out of the appellant’s defence.

20. The second prayer is for stay of execution of the decree pending appeal, for which the guiding provision is order 42, rule 6(2) of theCivil Procedure Rules which sets out the conditions to be satisfied for such an order to be granted.

21. The first condition being that the application must have been brought without unreasonable delay has already been addressed hereinabove.

22. The second condition touches on substantial loss to be suffered by the applicant.

23. The applicant on its part is apprehensive that if the decretal amount is paid to the respondent, the likelihood of recovering the amount from the respondent should the appeal succeed is slim.

24. The question on who has the burden of proof on the issue of refund of the decretal sum was discussed by the Court of Appeal in the case of National Industrial Credit Bank Ltd v Aquinas Francis Wasike & another [2006] eKLR when it held that:“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…”

25. In the absence of anything to ascertain the respondent’s financial capacity to refund the decretal sum, I am satisfied that the applicant has reasonably demonstrated that it will stand to suffer substantial loss if the order for a stay of execution is not granted.

26. Under the final condition which is the provision of security for the due performance of the decree or order, the applicant states that it is ready and willing to abide by the terms that may be set by this court attendant to the relief sought.

27. In making an order for the provision of security, this court must balance the interest of the parties. In the present instance, it is noteworthy that the respondent has not shown any pressing need that would require payment of part of the decretal amount to him at this stage.

28. In the end therefore, the motion dated July 1, 2022 is found to be meritorious and hence it is allowed in terms of the following orders:i.The applicant is granted leave to file and serve the memorandum of appeal out of time within 14 days from today’s date.ii.There shall be an order for stay of execution of the ruling and decree issued on May 20, 2022 pending the hearing and determination of the appeal on the condition that the applicant deposits half the decretal sum in an interest earning account in the joint names of the advocates or firms of advocates within 45 days from the date of this ruling. In default of which the stay order shall automatically lapse.iii.Costs of the motion shall abide the outcome of the appeal.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 11TH DAY OF NOVEMBER, 2022. ……………………….J K SERGONJUDGEIn the presence of:……………………………. for the appellant……………………………. for the respondent