King Investment Management Co Ltd v Rivatex East Africa Limited [2024] KEHC 10975 (KLR)

King Investment Management Co Ltd v Rivatex East Africa Limited (Civil Case 17 of 2020) [2024] KEHC 10975 (KLR) (20 September 2024) (Ruling)

Neutral citation: [2024] KEHC 10975 (KLR)

Republic of Kenya

In the High Court at Eldoret

Civil Case 17 of 2020

RN Nyakundi, J

September 20, 2024

Between

King Investment Management Co Ltd

Plaintiff

and

Rivatex East Africa Limited

Defendant

Ruling

1. The applicant approached this court under a certificate of urgency seeking the following orders;1. Spent2. Spent3. That this Honourable court be pleased to stay any further proceedings and or hearing and or consideration of the Plaintiff's/Applicants application dated 14th March 2024 and or execution of any orders for issuance of letter of credit and any consequential orders with regard to the issuance of letter of credit pending the hearing and determination of the appeal challenging the ruling dated 14th February 2024. 4.That the court be pleased to issue any other or further orders and or directions it may deem fit, fair, and just in the interest of justice to all parties and participants.5. That costs of this application be in the course.

2. The application is premised on the grounds set out therein and the contents of the affidavit sworn in support of the application.

Applicant’s case 3. In a nutshell, the applicant contends that this court made a ruling on 14th February 2024 in favour of the Plaintiff/Respondent and awarded costs and the defendant/Applicant being dissatisfied with the ruling intends to appeal against the whole decision and has filed the requisite notices and requests on time. The Applicant/Defendant contends that the said Ruling dismissing the Defendants/Applicant’s insistence on a "Security" being provided as per contract, before the "Letter Of Credit "can be raised has had the effect of relieving and insulating Plaintiff/Respondent from its obligations to meet the terms of the contract. Based on the said ruling the Plaintiff/Respondent has, by an application dated 14th March 2024, sought orders to execute and implement the obligation on the Defendant/Applicant to get the "Letter Of Credit", without the Plaintiff/Respondent needing to provide the antecedent "Security".

4. It is the applicant’s case that the Defendant/Applicant is 100% Government State Corporation, a part of Moi University. It is fully funded by taxpayers' money. If the "Letter Of Credit "is issued then it will mean public funds have been used imprudently, especially without "Security" for performance by the Plaintiff. The Applicant/Defendant, urged that it has already filed the requisite (i) Notice of Appeal dated 21st February 2024 (ii) Applied for copies of the typed proceedings dated 21st February 2024 (iii) Reminder dated 3rd May 2024 and (iv) Drawn up a memorandum of Appeal.

5. Unless there is a stay of execution pending the hearing and determination of the Applicant's/Defendant's intended Appeal against the whole of the Orders issued on 14th February 2024 the Applicant/Defendant's Appeal will be overtaken by events and rendered nugatory. Further, taxpayers' money will have been exposed to the risk of loss and waste as the letter of credit will have been made without the contractual security performance of the Tender obligations and as insurance to the public. The "Security" precedent to the making of the "Letter Of Credit" is meant to be for an insurance the public against the risk of non-performance of the contract by the Plaintiff/Respondent. The public funds will have been unlawfully and imprudently applied and used. The public officers in the Defendant's/Applicant's establishment including its chief Executive, responsible for processing the "letter Of Credit", without "Security” will be exposed to the risk of personal liability for surcharge. criminal, and civil culpability for issuing an unsecured "Letter Of Credit" to the tender contract. Additionally, the Applicant will have been treated unfairly by being asked to meet all the terms of the contract whilst on the other hand the Plaintiff/Respondent will have been relieved of all obligations in the agreed terms of the Tender contract, especially the material term to provide a "Security" as a condition antecedent to getting a to get "letter Of Credit". The Applicant/Defendant will face a situation of having the court having re-written the Tender contract and its terms as between the Defendant/Applicant and the Plaintiff/Respondent.

6. The Applicant/Defendant is ready, able, and willing to abide by this Honourable Court's orders taking into account public funds and the justice of the matter. He deponed that the Applicant/Defendant has an arguable Appeal and has high chances of success. If the orders sought in this Application are not granted, the same will be rendered futile as the subject matter will have been dissipated. The Respondent/Plaintiff stands to suffer no irreparable prejudice if the orders of stay are granted. If the stay is granted, and if thereafter appeal fails, in favour of the Respondent/Plaintiff, then the contract will proceed from where it was as of 14th February 2024 with no injury that is irredeemable. Inversely, the Applicant/Defendant and the tax- paying public will suffer irreparable loss and prejudice if the stay is not granted to give a chance to the Appeal to enable the Appellate Court determine whether or not the court's judgment and ruling of 14th February 2024 had the meaning that the Plaintiff/Respondent/Contractor did not need to provide a "Letter Of Credit "as a condition to being availed a "Letter Of Credit". The applicant prayed the court to allow the application as prayed.

Respondent’s case 7. The respondent opposed the application vide a replying affidavit dated 10th June 2024 sworn by Lucy Zhang. The respondent contends that it is not party to any appellate proceedings and therefore the application is an abuse of the court process as it has been filed without any cause of action. Further, that this court having made a decision vide the judgment delivered on 17th May 2023, it is now functus officio. She urged that the application be dismissed with costs.

8. Counsel for the respondent filed submissions in opposition to the application. Counsel reiterated the contents of the replying affidavit and urged that Order 2 Rule 15(b) provides for applications or pleadings which may be deemed to be frivolous or vexatious. He stated that at the time of this application there were no proceedings pending before this court so as to trigger stay of any further proceedings. Counsel pointed out that the application dated 14th March 2024 pertained to the application for certificate of costs/order against the government which was issued on the said date. The same us a matter of procedure and compliance with Section 21 of the Government proceedings act and Order 29 rule 3 of the Civil Procedure Rules. He maintained that there was no pending proceeding as the same was an administrative procedure.

9. Counsel urged the court to dismiss the application as it is baseless and is an abuse of the court process, intended to delay the plaintiff from enjoying the fruits of the judgement.

Determination 10. The cardinal issue being advanced by the applicant/defendant in the original suit is that of stay of execution as premised in Order 42 Rule 6(1) as read with (2) of the Civil Procedure Rules. The conditions precedent set out in sub-section (2) detailing the threshold which must be met by the applicant before this court can exercise judicial discretion to grant the remedy of stay of execution or proceedings or a decree of this court.2. 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; andb.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.3. Notwithstanding anything contained in sub rule (2), the court shall have power, without formal application made, to order upon such terms as it may deem fit a stay of execution pending the hearing of a formal application.”

11. The applicant seeks stay of any further proceedings or consideration of the plaintiff’s application dated 14th march 2024. Additionally, the plaintiff seeks stay of any orders for issuance of a letter of credit pending the hearing and determination of the appeal changing the ruling dated 14th February 2024. The applicant annexed a Notice of Appeal dated 21st February 2024 as proof that there is an intended appeal.

12. This rule has been interpreted and construed in various case law enunciated by the superior court for instance in Butt v Rent Restriction Tribunal 1979 eKLR, the court held as follows:“It is in the discretion of the court to grant or refuse a stay but what has to be judged in every case is whether there are or not particular circumstances in the case to make an order staying execution. It has been said that the court as a general rule ought to exercise its best discretion in a way so as not to prevent the appeal, if successful from being nugatory, per Brett, LJ in Wilson –vs- Church (No. 2)12 Ch D (1879) 454 at P. 459 in the same case, Cotton LJ said at p 458:“I will state my opinion that when a party is appealing, exercising his undoubted right of appeal this court ought to see that the appeal is successful, is not nugatory. (See also Shell Ltd V Kibiru and Another (1986) 1 KLR 410)

13. More specifically and on point, the comparative case of West Trust London Ltd versus Rothschild Trust (2012) EWCA Lord Justice Pattern gave a further refinement of similar provisions like our Order 42 Rule 6 of the Civil Procedure Rules to the effect that:“The grant or not of a stay of execution pending appeal is, of course, an exercise of some discretion vested in the court but it has to be exercised on established principles. The authorities indicate that the mere fact that a party intends to file an appeal is not sufficient of itself to justify the imposition of a stay in relation to the original judgment. The parties seeking stay must be able to demonstrate that if the stay is not granted, it will suffer serious, perhaps irremediable damage as a consequence if it is able to demonstrate that then that has to be set against the effect on the successful party below in not being able to enforce its judgment pending the appeal.”

14. The Court of Appeal in Stanley Kangethe Kinyanjui versus Tony Ketter & 5 others (2013) eKLR expressed itself on this issue that:“whether or not an appeal will be rendered nugatory depends on whether or not what is sought to be stayed if allowed to happen is reversible; or if it is not reversible whether damages will reasonably compensate the party aggrieved.”

15. The applicant in this matter Rivatex East Africa Limited respectively requests stay of execution pending the disposition of the intended appeal against the ruling dated 14th February, 2024. Without addressing the merits of the defendants/applicants’ claims essentially, the so purported impugned ruling was filed and ruled in favour of the instant Applicant. The claims for committal to civil jail of the managing director of the defendant company was initiated by the Plaintiff/Respondent and the court in its finding established that the remedy so applied for was not ripe to be granted. Arguing the sole issue on stay of execution learned counsel submitted that the court has the discretionary powers to grant the application to stay proceedings pending the determination of the appeal. Furthermore, he submitted that the conditions for granting a stay of execution or proceedings with regard to the application being filed without undue delay placing reliance on the ruling dated 14th February, 2024.

16. From the available evidence before this court the defendant/applicant as merely demonstrated an intention to file an appeal but without more probative steps having been taken to even initiate a Notice of Appeal at the registry of that apex court. By the position of the law as enunciated in a plethora of authorities i.e. Chris Mungai N. Bichage –vs- Richard Nyagaka Tongi & 2 other eKLR, Wasike –vs- Swala (1984) eKLR and RWW –vs- EKW (2019). No valid appeal has been entered against the judgment of this court. In the circumstances, there is no basis for granting a stay of execution pending appeal as it is trite law that one cannot place something on nothing and accept it to stand.

17. One of the most fundamental grounds in which the application for stay of execution is rooted revolves around whether the defendant/applicant has an arguable appeal and if so, denial of an order of stay will render the appeal nugatory or completely ruin the applicant placing him in a position where an award of damages will not remedy his/her rights. See James Wangalwa & another –vs- Agnes Naliaka Cheseto Misc Application No. 42 of 2011 (2012) eKLR, Tabro Transporters Ltd –vs- Absalom Dova Lumbasi (2012) eKLR and Chris Munga N. Bichage –vs- Richard Nyagaka Tongi (supra).

18. Interestingly, for purposes of seeking stay of execution reference was also made to the ruling dated 14th February, 2024 by the applicant’s learned counsel but fortunately, following the dismissal of the contempt proceedings against the managing director of the judgment debtor, there has been no seizure of the applicants’ property nor has there been any attachment or sale thereof. There is a mandatory aspect of the judgment as whereas a property aspect in the primary judgment of the court delivered on 17th May, 2023 which is not yet ripe to be brought to fruition. As observed by learned authors in the 3rd edition of words and phrases legally defined by John B. Saunders which reads as follows:“Execution means quite simply the process for enforcing or giving effect to the judgment of the court and it is completed when the judgment creditor gets the money or other thing awarded to him by the judgment.”

19. Further, it is my considered view that there can be no application for a stay of execution or proceedings in this court where there is no appeal. Since the appeal as submitted by the defendant/applicant is against the ruling of 14th February, 2024 or any such impugned judgment delivered by this court

20. With regards to the application dated 14th March 2024, this court cannot interfere with the same as it was in compliance with Section 21 of the government Proceedings Act and Order 29, rule 3 of the Civil Procedure Rules. As at this moment, there are no pending proceedings in this matter before this court. As a general rule, it is important to refer to an existence of an appeal on the record. That is not the case here.

21. In the same strength, I have considered the rival submissions and affidavits adverted to in support of the application for stay of execution and/or proceedings by this court. First and foremost, the final judgment of this court delivered on 17th May, 2023 decided the justiciable issues as between the defendant/applicant and the Respondent with finality. Whether the court should exercise this discretion to grant a stay of execution or proceedings pending an intended appeal, it is not clear from the defendant/applicant whether it is aggrieved with the interlocutory ruling dated 14th February, 2024 or its substantive judgment pronounced on 17th May, 2023.

22. The essential question is whether the risk of injustice to the defendant/applicant is to the impugned decrees arising out of both decisions or as a matter of emphasis as indicative in the submissions is all about the ruling of 14th February, 2024. What this means, the applicant has failed to demonstrate that it would be ruined if the stay is not granted. In the second test the standard and burden of proof under Section 107(1), 108 and 109 of the Evidence Act within the rubric of the interest of justice requires that on a balance of probabilities, there is some prospect of succeeding in the appeal. The court in Swain versus Hillman (2001) 1 ALL ER 91 stated that:“This court has on more than on one occasion accepted that the words ‘a real chance of success’ are to be interpreted to mean the applicant for leave must show that there is a realistic as opposed to a fanciful prospect of success. So for the applicant to succeed on this application, it is necessary for him or her to show that should leave for stay of execution be granted, he/she would have a realistic chance of success in his/her substantive appeal”

23. As to whether the defendant/applicant will suffer substantial loss or irreparable loss if the order of stay of execution is not granted, it relies on an instrument referenced as letter of credit which was one of the critical documentary evidence in interpreting the commercial contract with the Plaintiff/Respondent. The issue of substantial loss being one of the cornerstone in applications under Order 42 Rule 6 of the Civil Procedure Rules calls for evidential material by an applicant to show that any such denial of stay, the underlying loss would not be compensated by an award of damages. In the persuasive dicta in Kohinoor Sugar Mills Ltd. Lahore versus Kohinoor Textile Mills Ltd. Lahore (1996 SCMR 1883) observed on what constitutes substantial loss as follows:“Mere reference of the word substantial loss will accrue if stay is not granted is not sufficient compliance of the duty cast on the applicant seeking stay of the execution decree without elaborate such ground or grounds. There is no doubt that substantial loss is different from irreparable loss as for as satisfaction of the court is concerned, but that by itself does not absolve an applicant from expressly stating the fact leading to substantial loss being sustained in absence of stay of execution of decree.”

24. In the context of Order 42 Rule 6 (1) & (2) of the Civil Procedure Rules, it is my considered view that all conditions precedent required to be fulfilled by the Applicant for grant of stay of execution remain in the realm of conjecture for it follows that the filing of a valid Appeal is a necessity for seeking stay of proceedings or execution of the decree.

25. In this case I have no hesitation to rule that there is no merit to warrant the grant the orders as prayed against the respondent.

26. It is so ordered.

DELIVERED, DATED AND SIGNED AT ELDORET ON THIS 20TH SEPTEMBER 2024……………………………………….R. NYAKUNDIJUDGE