KWALITY CANDIES & SWEETS LIMITED & HUTCHINGS BIEMER LIMITED V CORN PRODUCTS KENYA LIMITED [2009] KECA 305 (KLR)

REPUBLIC OF KENYA

IN THE COURT OF APPEAL OF KENYA

AT NAIROBI

Civil Appli 110 of 2009 (UR 70/09)

KWALITY CANDIES & SWEETS LIMITED ........... 1ST APPLICANT

HUTCHINGS BIEMER LIMITED ............................. 2ND APPLICANT

AND

CORN PRODUCTS KENYA LIMITED ……….……. RESPONDENT

(Application for stay of execution of the part of the Ruling and Orders of (Lady Justice

Lesiit) dated 23rd May, 2008 requiring the Applicants to deposit a sum of Kshs.3 million in

Court within 30 days of that ruling

in

H.C.C.C. NO. 634 OF 2006)

****************

RULING OF THE COURT

This is an application under rule 5(2)(b) of the Court of Appeal Rules, for principally an order of stay of execution of the orders of the superior court made on 23rd May, 2008 in Nairobi High Court Civil Case No. 634 of 2008, in which, pursuant to an application for summary Judgment under the provisions of Order XXXV rule1, of the Civil Procedure Rules, that court granted leave to defend a liquidated demand of Kshs.6,192,603. 30, conditional on the applicant, as defendant, depositing in court a sum of Kshs.3,000,000/=.

There are two applicants, namely Kwality Candies & Sweets Limited (1st applicant)and Hutchings Biemer Limited, (2nd applicant).  Corn Products Kenya Limited, the respondent, as plaintiff in Nairobi High Court Civil Case No. 634 of 2006 aforesaid, made a liquidated demand in its plaint, of Kshs.6,192,603. 30 for goods sold and delivered to the 1st applicant at its request and guaranteed by the 2nd applicant.  In a joint written statement of defence both applicants denied the claim and averred on the main, firstly, that the goods supplied were of unmerchantable quality, and secondly, that proper accounts of the amounts due, if any, had not been done.

The application for summary judgment was filed about 3 months after defence had been filed.  In her ruling, Lesiit, J. held, inter alia, that it was not possible to tell exactly how much money was owing from the applicants to the respondent. That notwithstanding, she granted the applicants conditional leave to defend the suit.

In the motion before us, the applicants contend, and it was the submission of their counsel, Mr. S.M. Kariuki, that upon a finding that the sums which may be due from them was not immediately ascertainable, leave to defend should have been unconditional.  Learned counsel also made mention of the fact that both applicants are under receivership for failure by them to meet their obligations under a debenture or debentures executed by them in favour of third parties.  We did not appreciate that point considering the wording of the applicants’ notice of appeal.

In their notice of appeal dated 6th June, 2008, the applicants state, as material, as follows:-

“NOTICE OF APPEAL

TAKE NOTICE, that 1st and 2nd Defendants herein being dissatisfied with part of the Ruling and Order of the Honourable Lady Justice Lesiit delivered and dated 23rd May, 2003 compelling them to deposit in court security of Kshs.3 million within 30 days failure to which the summary Judgment Application be deemed to have been granted.  They intend to appeal to the Court of Appeal against that part of that Ruling.”

In view of the wording of the aforesaid notice no issue outside the part of the ruling against which they say they are aggrieved about is for consideration herein.

The respondent was represented by Messrs. K.K. Katwa and H. Sigei, on behalf of Messrs Nyairo and Company, Advocates who are on record for the respondent.  In his submissions before us, Mr. Katwa urged, firstly, that the applicants had not filed a valid notice of appeal on the basis of which this Court would exercise the jurisdiction to grant the orders sought.  It was his submission further that the wording of rule 5(2)(b), above, presupposes that the notice of appeal therein mentioned must be a valid notice.  In his view no order relevant to the matter before this Court was made on 23rd May, 2003 as by then Nairobi High Court Civil Case No. 634 of 2006, was not in existence.  We agree that the applicants’ notice of appeal appears to be defective to the extent that the orders against which an appeal is intended were not made on 23rd May, 2003, but on 23rd May, 2008.  We do not wish to deal with the issue at this stage and we think that the issue should be left to the bench which will eventually hear the intended appeal.  The second issue Mr. Katwa submitted on was with regard to the receivership of both applicants.  We have already ruled on it and we find no necessity of revisiting it.  The third issue learned counsel submitted on was with regard to the principles guiding the Court in applications of this nature, which we now deal with before considering that submission.

Two principles guide the court in applications under rule 5(2)(b), above.

For an applicant to succeed he must, first, show that his appeal or intended appeal is arguable, or differently put that it is not frivolous.  An applicant needs only to show at least one arguable point.  The second principle, is that the applicant, must, in addition, show that unless he is granted a stay, or injunction as the case may be, the success of his appeal or intended appeal will be rendered nugatory.  It is not enough for the applicant to establish only one of the aforesaid two principles.

Mr. Katwa’s submission on the second principle was that no prejudice was likely to be caused to the applicants which would not be compensated by damages or interest if the Court declines to grant the orders sought and they were eventually to be successful in their intended appeal.  In his view the money to be deposited would not be accessible to them.  Consequently, he said, the respondent would be the one which will suffer prejudice as it will not execute the judgment in their favour.  He summised that the applicant’s problem is inability to pay money which is owing to the respondent.

We have considered this matter.  On the assumption that the applicant’s intended appeal is arguable it is our view that the success of that appeal will not be rendered nugatory if we deny the applicants the order of stay prayed for herein.  By ordering the applicants to deposit the Kshs.3,000,000/=Lesiit, J. was exercising judicial discretion.  At this stage it is not our duty to consider and determine whether or not the exercise of that discretion was proper.  Our duty is confined to considering the effect of such deposit on the applicants, if they comply with the order and eventually they were to succeed in their intended appeal.  The money, if deposited, will remain so deposited until the trial court or this Court on appeal orders otherwise.  If the applicants eventually succeed in their intended appeal, the money will be paid back to them.  If they fail in that appeal, the money will most likely be paid over to the respondent to the extent as shall be shown to be due to it.  So, as rightly pointed out by Mr. Katwa, no damage, incapable of being remedied by an award of damages, interest or costs is likely to be occasioned to the applicants if they comply with the condition imposed by Lesiit, J.

Having come to the foregoing conclusions, it is quite clear that the applicants have not satisfied both principles for the grant of orders of stay.  That being our view of the matter, it follows that the application by motion dated 21st April, 2009 and filed on 22nd April, 2009, must fail.  Accordingly, it is ordered dismissed with costs to the respondent.

Dated and delivered at Nairobi this 5th day of June, 2009.

S.E.O. BOSIRE

..........................

JUDGE OF APPEAL

P.N. WAKI

............................

JUDGE OF APPEAL

J.G. NYAMU

............................

JUDGE OF APPEAL

I certify that this is a true copy of the original.

DEPUTY REGISTRAR