Kenya Orient Insurance Company Ltd v Choga (Suing on Behalf of the Estate of Katana Ngalia Mwaro) [2023] KEHC 25154 (KLR)

Kenya Orient Insurance Company Ltd v Choga (Suing on Behalf of the Estate of Katana Ngalia Mwaro) (Civil Appeal E002 of 2020) [2023] KEHC 25154 (KLR) (10 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25154 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Appeal E002 of 2020

OA Sewe, J

November 10, 2023

Between

Kenya Orient Insurance Company Ltd

Appellant

and

Simeon Yaah Choga (Suing on Behalf of The Estate of Katana Ngalia Mwaro)

Respondent

Ruling

1. Before the Court for determination is the Notice of Motion dated 17th August 2023. It was filed by the appellant under Section 3A of the Civil Procedure Act, Chapter 21 of the Laws of Kenya as well as Order 42 Rule 6 of the Civil Procedure Rules, 2010 for the following orders:(a)Spent(b)Spent(c)The Court be pleased to order stay of execution pending an appeal to the Court of Appeal from the Judgment of the subordinate court, delivered on 20th August 2020 in Mombasa CMCC No. 1574 of 2018: Simeon Yaah Choga (suing on behalf of the Estate of Katanan Ngalia Mwaro) v Kenya Orient Insurance Company Limited and the Judgment of this Court delivered on the 19th July 2023 awarding damages of Kshs. 1,246,897/= plus costs and interest to the respondent.(d)The costs of and incidental to the application be provided.

2. The application was based on the assertion that the Court delivered its Judgment on 19th July 2023 affirming the decision of the subordinate court dated 20th August 2020 in Mombasa CMCC No. 1574 of 2018; and that the appellant has since filed an appeal against the decision. It was further averred that the appellant applied orally for stay of execution pending appeal; and that the request was granted for 30 days pending the filing of a formal application. The order was to lapse on 18th August 2023; a day after the instant application was filed. It was therefore the assertion of the appellant that, unless stay of execution is granted, the appellant stands to suffer substantial loss. The appellant pointed out that it is ready to provide such security as the Court may order for the due performance of the decree.

3. The application was supported by the affidavit of Sylvester Kivuva, sworn on 17th August 2023 and the documents annexed thereto. At paragraph 5 of the said affidavit, the appellant gave its grounds for the apprehension that it stands to suffer substantial loss. In particular, the appellant averred that the decretal sum is a huge amount; and therefore the respondent will not be able to reimburse the funds in the event of a successful appeal because he is impecunious. In addition, the appellant maintained that none of the defendants in the primary suit was, at the material time or any time at all, insured by it within the meaning of Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act, Chapter 405 of the Laws of Kenya. In effect, the appellant contended that it has an appeal with overwhelming chances of success and that the appeal will be rendered nugatory unless the orders sought are granted.

4. Among the documents annexed to the appellant’s Supporting Affidavit are a Notice of Appeal dated 29th July 2023 and a draft Memorandum of Appeal. The appellant also relied on the letter dated 30th September 2023 by which counsel for the respondent called for the payment of the decretal sum together with costs, failing which execution would proceed. Thus, the appellant reiterated the stance that it is ready to provide such security as the Court may order for the due performance of such decree or order as may ultimately be binding on the appellant.

5. The respondent opposed the application vide his Replying Affidavit sworn on 28th September 2023. In his view the appellant does not have an arguable appeal for reasons that a second appeal is limited to issues of law and not facts; yet the appellant seeks to raise the same fact-based issues that have already been determined by the lower court and in this appeal. The respondent further averred that the appellant has not satisfied the conditions set out in Order 42 Rule 6 of the Civil Procedure Rules; and therefore that the application is merely intended to delay the enjoyment of the fruits of his judgment. Thus, the respondent prayed for the dismissal of the instant application with costs.

6. In a Supplementary Affidavit sworn by Sylvester Kivuva on 4th October 2023, the appellant responded to some of the assertions made by the respondent, particularly at paragraph 4 of the Replying Affidavit as to the arguability of the proposed appeal. Thus, the appellant averred that the Court of Appeal has a much wider jurisdiction under Article 164(3) of the Constitution than it had under Section 64(1) of the repealed Constitution. At paragraph 6 of the Supplementary Affidavit, the appellant maintained the stance that it has complied with the provisions of Order 42 Rule 6 of the Civil Procedure Rules. It added that it has every right under Articles 48 and 164 of the Constitution to appeal against the decision of the Court.

7. The application was canvassed by way of written submissions, pursuant to the directions given herein on 17th August 2023. Accordingly, the appellant relied on the written submissions dated 11th October 2023 and submitted, on the authority of R K C and Another (suing through their mother and next friend M N M v C C M [2021] eKLR that an inquiry for purposes of stay pending appeal under Order 42 Rule 6 of the Civil Procedure Rules is not an inquiry about the merits of the appeal, but rather the loss which will be occasioned by the satisfaction of the decree in the event the appeal succeeds.

8. The appellant made submissions on the current jurisdiction of the Court of Appeal as provided for in Article 164(3) of the Constitution and urged the Court to find that any restrictions thereto, as alluded to by the respondent, would be unconstitutional. The appellant then proceeded to submit on the parameters set out in Rule 6 of Order 42 and urged the Court to find that sufficient cause has been shown by the appellant to warrant the issuance of the orders sought. Counsel relied on Focin Motorcycle Co. Limited v Ann Wambui Wangui & Another [2018] eKLR to press the argument that the respondent had the evidential burden of proving that he has the resources to refund the decretal sum in the event of a successful appeal; which burden the respondent failed to discharge.

9. The respondent relied on his written submissions dated 2nd October 2023. He similarly relied on R K C & Another (suing through their mother and next friend M N M) v C C M (supra) for the guiding principles in such applications. He added that the appellant cannot front the probability of success of the intended appeal as a ground for seeking stay of execution pending appeal; and that the Court has to strike a balance between the right of appeal and the right of the respondent to enjoy the fruits of his judgment. In the respondent’s view, the instant application has no merit and therefore ought to be dismissed with costs.

10. In the premises, the single issue for determination is whether the appellant has given justifiable cause for the grant of an order of stay of execution pending appeal. In this regard, Order 42 Rule 6(2) of the Civil Procedure Rules states:“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 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”.

11. It is clear, therefore, that for an order of stay of execution pending appeal to be granted, the court must be satisfied that substantial loss is anticipated by the applicant; that the application was made without unreasonable delay, and that the applicant is ready to provide such security as the court may impose. Hence, the three conditions must be met simultaneously. In the instant matter, there is no dispute that the application was brought without unreasonable delay; granted that it was filed within the 30 days’ window provided to the appellant on 19th July 2023. In addition, the appellant expressed its readiness to comply with any order as to security as the Court may make. Accordingly, the only question to pose is whether the appellant has proved the likelihood of it suffering substantial loss. I must point out at this stage that, for purposes of Order 42 Rule 6, Civil Procedure Rules, the Court is not obliged to consider the merit or otherwise of the intended appeal; and therefore the appellants’ averments and submissions in that regard as set out in the supporting and supplementary affidavits as well as in the appellant’s written submissions were to no avail.

12. In terms of substantial loss, the appellant averred that steps towards execution have already been taken by the respondent as indicated by the letter dated 30th September 2023. It also contended that decretal the sum of Kshs. 1,246,897. 00/= is a substantial sum; and therefore once paid to the respondent, he will not be in a position to reimburse it in the event that the appeal is successful. Lastly, the appellant contended that payment of the sum will destabilize its financial standing. On the other hand, the respondent urged the Court to note the period that has elapsed since the cause of action arose; and the fact that concurrent findings of fact have been made by the lower court and this Court. He accordingly urged that his right to the fruits of his judgment be taken into consideration as well.

13. It is now settled that execution, per se, is no reason for the court to grant a stay of execution; and that a successful litigant has a right to enjoy the fruits of his or her judgment. In James Wangalwa & Another v Agnes Naliaka Cheselo [2012] eKLR, for instance, it was held that:“No doubt, in law, the fact that the process of execution has been put in motion or is likely to be put in motion, by itself does not amount to substantial loss. Even when execution has been levied and completed, that is to say the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under order 42 Rule 6 of the CPR. This is so because execution is a lawful process.The applicant must establish other factors which show that the 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. This is what substantial loss would entail, a question that was aptly discussed in the case of Silvester –vs- Chesoni [2002] 1 KLR 887, and also in the case of Mukuma –vs- Abwoga quoted above. The last case, referring to the exercise of discretion by the High Court and the court of Appeal in the granting stay of execution, under Order 42 of the CPR and Rule 5(2)(b) of the court by Appeal Rules respectively emphasized the centrality of substantial loss thus: -“…the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss of what has to be prevented by preserving the status quo because such loss would render the appeal nugatory?

14. The appellant having raised its apprehension about the respondent’s impecunity, the evidential burden shifted to the respondent to prove his means. The Court of Appeal pronounced itself in this regard in the case of National Industrial Credit Bank Ltd v Aquinas Francis Wasike & another [2006] eKLR thus: -“…This Court has said before and it would bear repeating that while the legal duty is on an applicant 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 an applicant 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…”

15. No attempt was made by the respondent to allay the appellant’s apprehension. It is therefore my finding that the appellant has complied and proved all the ingredients set under Order 42 Rule 6(2) the Civil Procedure Rules. Accordingly, the application dated 17th August 2023 is hereby allowed and orders given as hereunder:(a)That an order of stay of execution of the Judgment of the subordinate court, delivered on 20th August 2020 in Mombasa CMCC No. 1574 of 2018: Simeon Yaah Choga (suing on behalf of the Estate of Katanan Ngalia Mwaro) v Kenya Orient Insurance Company Limited and the Judgment of this Court dated the 19th July 2023 be and is hereby granted pending the hearing and determination of the appellant’s intended appeal to the Court of Appeal, on condition that the entire decretal sum be deposited in a joint interest earning account in the names of counsel on record herein within 15 days from the date hereof.(c)The costs of the application to be borne by the applicant.It is so ordered.

DATED, SIGNED AND DELIVERED VIA EMAIL AT MOMBASA THIS 10th DAY OF NOVEMBER 2023OLGA SEWEJUDGE