Kikomi (1993) Limited v Trust Bank Ltd (In Liquidation) [2022] KEHC 12959 (KLR)

Kikomi (1993) Limited v Trust Bank Ltd (In Liquidation) (Civil Suit 966 of 1999) [2022] KEHC 12959 (KLR) (Commercial and Tax) (9 September 2022) (Ruling)

Neutral citation: [2022] KEHC 12959 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit 966 of 1999

A Mabeya, J

September 9, 2022

Between

Kikomi (1993) Limited

Applicant

and

Trust Bank Ltd (In Liquidation)

Respondent

Ruling

1. This is the plaintiff’s application dated October 21, 2021 brought, inter alia, pursuant to order 42 rule 6(1) & (2) of the Civil Procedure Rules.

2. The plaintiff sought a stay of execution of the judgment delivered on September 18, 2020 pending the determination of the appeal filed against it.

3. The grounds thereof were that judgment was entered on September 18, 2020 in favour of the defendant for kshs 79,000,000 together with interest at court rates from January 10, 2006 until payment in full.

4. An oral application for stay was made and granted for 30 days. The same was extended on October 22, 2020 following the filing of an application dated October 21, 2020. The same was extended from time to time thereafter pending the hearing of the said application.

5. The plaintiff was aggrieved by the judgment and intends to appeal to the Court of Appeal. A Notice of Appeal has been filed and typed proceedings applied for. The plaintiff was apprehensive that unless a stay of execution is ordered, the defendant will proceed to execute thereby rendering the appeal nugatory.

6. The plaintiff contended that its appeal is premised on the grounds that the charge and debenture registered over its properties are void and unenforceable. That the defendant continues to hold the disputed securities over the plaintiff’s properties as such if the appeal were to fail, then the said securities would be adequate security to guarantee due performance of the said judgment.

7. The defendant opposed the application through grounds of opposition and a replying affidavit sworn on November 23, 2021 by Stanley Milimu, a bank resolution specialist employed by the Kenya Deposit Insurance Corporation (KDIC).

8. The defendant contended that the plaintiff had not demonstrated that it would suffer substantial loss if the stay is not granted. It had not made any reasonable offer to provide security for a stay of execution. That the defendant ought to be allowed to enjoy the fruits of its judgment and that there was undue delay in making the application.

9. The defendant had requested for an offer for security but there was no response. That it is not disputed that the defendant disbursed funds to the plaintiff and holds a security over LR no Kisumu Municipality/Block 4/159. That the plaintiff defaulted on the loan repayment and the judgment was entered after the matter had dragged for more than 20 years.

10. The defendant argued that it had been prevented from realising its security for more than 20 years following the plaintiff’s default and that KDIC has an obligation to the defendant’s depositors and the judgment sum would go a long way in discharging those obligations. Alternatively, that the plaintiff should pay at least half the judgment sum as security.

11. This is an application for stay. The applicable principles are that; an applicant must prove that he/she will suffer substantial loss unless a stay is granted, that the application has been made without unreasonable delay and should offer security for the due performance of such decree or order as may ultimately be binding on him/her.

12. The application was made on October 21, 2021. That was 32 days after the judgment. The court finds that there was no inordinate delay in making the application.

13. The second consideration is whether the appellants have illustrated that they will suffer substantial loss if the stay is not granted.

14. The plaintiff argued that its intended appeal will be rendered nugatory in the event that the stay orders are not granted and that there is more than sufficient security to guarantee the judgment of kshs 79,000,000/- as L R no Kisumu Municipality/Block 4/159 is valued at kshs 2,670,000,000/-.

15. In Mukoma v Abuoga (1998) KLR 645 , it was held: -“Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory.”

16. The plaintiff stated that it did not have the amount decreed against it. That if the decree is executed, the appeal will be rendered nugatory. I have considered that the defendant was liquidated. If the amount is paid over, the same will be distributed to the claimants and were the appeal to succeed, there was no averment that the same would be refundable.

17. That being the case, I am satisfied that substantial loss has been demonstrated.

18. On security, it was not disputed that the securities held by the defendant are valued far in excess of the decreed amount. The defendant continue to hold those securities. If the appeal is unsuccessful, the defendant can dispose-off those securities and recover the decreed amount.

19. In Housing Finance Company of Kenya v Sharok Kher Mohamed Ali Hirji & another [2015] eKLR, the Court of Appeal stated: -“In seeking to balance the interests of the respective parties, the approach we have always taken in determining whether or not to grant a stay of execution is to ensure that applicants are not denied their opportunity to ventilate their legal cases as afforded under the laws through the appeal process, with the possibility of success, while at the same time, respondents are not denied the fruit of judgement in their favour and their rights are safeguarded.”

20. The court associates itself with the foregoing. In the present case, if the execution proceeds and the appeal is successful, there may never be a refund as the monies would have been paid over to the depositors of Trust Bank. On the other hand, the property belonging to the plaintiff continue to be encumbered by the defendant and would be available for sale upon the appeal failing.

21. Accordingly, balancing the interest of the parties, I find that the justice of the matter lies in allowing the application. The same is allowed. There shall be a stay of execution pending appeal. The costs shall be in the appeal.

It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF SEPTEMBER, 2022. A MABEYA, FCIArbJUDGE