Masumali Meghji Insurance v AAR Insurance Kenya Limited [2018] KEHC 2367 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MOMBASA

CIVIL APPEAL NO 99 OF 2018

MASUMALI MEGHJI INSURANCE............APPELLANT

VERSUS

AAR INSURANCE KENYA LIMITED.......RESPONDENT

(Being an appeal from the ruling and decree of the subordinate court, Hon. Makori CM, made on 18th May, 2018 in Mombasa CMCC No. of 2017)

RULING

1. The Appellant was Defendant in the CMCC. No. 1139 of 2017 (MSA)  wherein the Plaintiff sued claiming for a liquidated sum arising from a  contractual arrangement between themselves being payment for  provision of medical services. The case was summarily decided and the  appellant (Applicant) ordered to satisfy the full Decretal amount  awarded being Kshs. 12,555,291. 30 plus costs and interest thereon.

2. The Appellant/Applicant being dissatisfied with the ruling of the  learned trial magistrate, Honourable Makori, C.M delivered on 18th  May,  2018, has appealed against  the same and  applied for  a stay of  execution.  The learned trial magistrate granted a stay of execution for  30 days. By computation of time this lapsed on 19th June, 2018. This  application dated the 7th June, 2018 was filed in court on 12th June,  2018 when it was placed before Hounorable Justice P. J. Otieno, J who  declined to order ex-parte orders and directed that the matter be  served for hearing on a date fixed on priority  basis. The matter was  fixed for hearing on 5th July, 2018 whereby the same did not proceed  and the court ordered that there be no execution pending hearing the  application on merit.

3. In the meantime the respondent instructed an auctioneer on 27th   July, 2018 to attach the goods belonging to the appellant whereby  they were proclaimed on the same date application for warrants of  attachment having be lodged on 24th July, 2018

4 The application (Notice of Motion) dated the 7th June, 2018 seeks for  the following orders;-

(a) spent:

(b) spent :

(c)There be stay of execution of the ruling and decree of  Honourable  court ( Hon. Makori, C.M) made on 18th May, 2018   in Mombasa  CMCC No. 1139 of 2017, AAR Insurance Kenya Limited Vrs Masumali Megliji Insurance Brokers   Limited pending the hearing and determination  of the appeal    filed  herewith.

(d) Costs of the application to abide the appeal.

The same is supported by ten (10) grounds and the affidavit of HAFSA  SAID, a Financial Controller of the applicant in which he deposes on  12 paragraphs. The salient grounds thereof are that;

(1) The stay granted for 30 days would expire on 17th June, 2018  (spent).

(2) The applicant would suffer irreversible loss if execution were to  take place and the whole amount became due and payable that it would  close the Appellant’s business.

(3) The respondent would be adequately compensated with an award  of costs and interest if the appeal failed.

The affidavit repeats the same grounds and expands on the same,  annexing the lower court pleadings.

5. The application was opposed by the Respondent which has filed an  eleven (11) paragraph Replying Affidavit, the salient paragraphs  therein being:-

(a) Paragraph 6;

“That the appellant has not adduced any ground that warrants the stay of execution as the contents of paragraph 7  pleads inability to pay as a  lump sum as compared to substantial loss”.

A perusal of paragraph 7 clearly demonstrates that the appeal does not  raise any triable issues and has no chance of success.

(b) Paragraph 7 gives details of means the Respondent has that can  satisfy any costs should the appeal succeed.

6. The Appellant has filed its submissions and its case is that it has   demonstrated that its application for stay has satisfied the three  requirements  namely;

(a)That there will be substantial loss if stay is not granted and execution proceeds;

(b) that there has  been no unreasonable delay inMaking the application.

(c) that  security has been offered for due  performance of the decree.

Supported with case law, the appellant opines that it is a brokerage  business where it earns commission which trickles in  slowly, hence it  cannot pay a  lump sum to satisfy the  decree if so ordered, as it  would trigger  winding up and business would close. Further,  according  to counsel, it is enough for his client to claim that it will  furnish security. He concludes that by that submissions he has laid a  case  for the grant of stay of execution of decree.

7. The Respondent has refuted these claims and the import of his  submissions is that a definition of substantial loss takes the trajectory  against the Respondent whom when paid the  decretal sum and the  appeal  succeeds, he will be unable to refund the money. This is  demonstrated by citations of

- NETSOL (K) LTD –V- FILMCO AGENCIES LTD (2012) e KLR;

- MASISI MWITA –V- DAMARIS WANYIKA NJERI (2016) e KLR AND OTHERS.

Counsel accuses the Appellant that instead, it is the one that has  admitted impecunity if it is called upon to satisfy decree hence it has   failed the first test.

In its affidavit, the Respondent has instead stated that it has a strong  ability to refund the decretal sum if the appeal succeeds. Counsel contents that the other grounds be ignored since the applicant has failed to demonstrate substantial loss.

8. What this court has to consider is what the dispute before the trial  court  was and the supporting evidence thereof.

The case was a simple money claim or a delayed payment of Ksh  12,555,291. 30, which was allegedly withheld by the appellant.

From the record of appeal filed in court at page 4 is the plaint where  a glance at paragraphs 6,7,8 and 9 summarise the cases for respondent  whereas the same is rebutted by the defence at page 31 at paragraph  7,8,and 9 thereof.

According to the Defendant, there were two policies, being medical  and assets, where the letter was underwritten by Fidelity Insurance  and it is claiming the balance was paid there and it is yet to be  recovered from the Mombasa County Assembly. This is refuted in the  reply to defence at page  33 of the record and buttred by a letter dated  19th October, 2015 from  Mombasa  County Assembly claiming full payment and which to date, upon  perusal of the record has not been  refuted by either a contract signed between the parties or otherwise  (See pages  15,16,17,18,19,20,21,22,23,24,25 and 26) which resolves  the payment  as regards  medical insurance which is the claim in the  plaint.

9. The memorandum of appeal does not seek to terminate the suit but rather to take to trial issues of Fidelity Insurance responsible for  assets insurance. With these evidence authorized by the parties, it is unlikely that they will testify differently. It is my view that to this  extent, an appeal based on these facts is frivolous and is unlikely to  succeed.

The trial magistrate was confronted with the same documents and  had this to say at page 4 of his ruling:

Paragraph 4:

“Applying the test laid above, what remains in this matter is  whether there is a defence worth to proceed to a full trial. The  issue being whether the County Assembly paid the Defendants. Annextures 1,2 and 3 show that the County Assembly paid the Defendant in the months of  February, March, April and June, a  total of Kshs. 26,271,535. 30 less withholding tax. Annexture No. 4 confirms payment for the provisions of medical Insurance to its client, Mombasa County Assembly. In view of such payment. There will be  nothing to go for trial “on”.

It was on this basis that the trial magistrate stuck out the defence and entered judgment for the amount claimed.

I find and  hold likewise, that there is  nothing  on the main cause of  action to go for trial on that issue even if the appeal were to be allowed  other than aspects to go for trial in which case it  would affect the  Respondent .

The appeal has therefore slim chances of success and this disentitles the applicant the orders sought.

I accordingly dismiss the application dated the 7th June, 2018 and discharge the earlier orders of stay granted on 5th July, 2018.

10. I now turn to the Application by way of Notice of Motion dated 2nd  August, 2018, where the applicant is seeking to have the Respondent  punished for contempt of court wherein the following are cited for punishment.

- the Managing Director

- Head of legal and

- the Respondents advocate, Mr. Mbichire Martin

They have been cited to show cause why they should not be punished  for contempt of court.

11. I am informed that  the Hounorable court, on 5th July,2018 ordered  that  there should be no execution pending  the determination  of the  application  dated 7th June, 2018. But on 27th July, 2018, the  Respondents undertook the first process of attachment by  proclaiming the applicant’s goods. The applicant displayed the  proceedings of 5th July, 2018, the Decree signed on 19th July, 2018,  application for warrants received on 24th July, 2018 in the name of  Mbichire and Co. Advocates, warrants of attachment sent to Makini  Auctioneers in which it is said that the Plaintiff/Respondent pointed  out the Application dated 25th September,2018, warrants issued on 25th  July 2018 and the  actual proclamation dated 27th July,2018.

12. It is now statutory and trite law that knowledge of a court order is  sufficient notice to restrain a Decree Holder from carrying out   execution proceedings. It is clear from the documents listed in (11)  above that the  senior officers of the plaintiff, and their advocates were  aware of the court orders as the advocate attended  court through proxy  and executed the order of court by filing his reply on behalf of the  client   and on  his own behalf in opposition of the application.

I have read through the pleadings and the submissions and come to  the conclusion that the respondents are contemptuous and ought to  be punished in accordance with the law.

This remedy exists out for the benefit of the parties but the dignity of  the court which requires that all parties called upon do submit to its  authority. It is not even for the person executing its functions it is worth  noting that if parties are let to  flagrantly disobey court orders, there  would be a vacuum which can only be filled  with a banana republic-a  free for the  mighty. The question then becomes, where will the meek  and weak run to for their disputes to be resolved?

13. I therefore find that the application dated 2nd August, 2018 has merit  and the same is allowed with the following orders;

(a) Declaration that all actions taken towards execution of Decree after 5th July, 2018 are a nullity and the same are set aside   except the Decree and certificate of costs.

(b) The Plaintiff /Respondents shall pay the auctioneers costs, if  any are claimed.

(c) The managing Director of the plaintiff, the financial Controller  and the Head of Legal, be and are hereby fined Kshs. 100,000/=  to be paid forth with.

(d) The plaintiff/Respondent’s advocate, Mr. Mbichire be and  is hereby fined Ksh 50,000 to be paid forthwith.

(e) In default, parties to arraigned in court on 20th October, 2018  to show why they cannot be sentenced to serve prison terms.

Orders accordingly.

Ruling delivered, dated and signed this 19th day of October, 2018.

LADY JUSTICE D. O. CHEPKWONY

In the presence of;

No appearance for the Applicant

Adala, counsel holding brief for Mr. Mbichire, counsel for the Respondent

C/clerk- Beja Nduke