N.T Express Laundromatt Ltd & another v Mayfair Bank Limited [2022] KEHC 10515 (KLR)

N.T Express Laundromatt Ltd & another v Mayfair Bank Limited (Civil Appeal E802 of 2021) [2022] KEHC 10515 (KLR) (Civ) (17 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10515 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E802 of 2021

JK Sergon, J

June 17, 2022

Between

N T Express Laundromatt Ltd

1st Applicant

Mourine Wanjiku Thiongo

2nd Applicant

and

Mayfair Bank Limited

Respondent

Ruling

1. This ruling relates to the Notice of Motion dated 6th December, 2021 taken out by the 1st and 2nd appellants/applicants and supported by the grounds set out on its body and the facts stated in the affidavit of advocate Alfred Mwarimu Namu, the Director of the 1st appellant. The order being sought is as follows:i.Spent.ii.Spent.iii.That this Honourable Court be pleased to restrain the respondent and/or its agents and/or servants and/or employees from attaching the appellants’ property pending the hearing and determination of the appeal.iv.That the costs of the application be provided for.

2. The respondent replied to the Motion by way of the replying affidavit sworn by its Head of Legal Department, Lynette Kamande, on 8th February, 2022, to which the 2nd applicant and Alfred Mwarimu Namu each rejoined with supplementary affidavits they swore on 2nd March, 2022, followed by a further affidavit sworn by Lynette Kamande on 28th March, 2022.

3. At the interparties hearing of the Motion, the parties were directed to put in written submissions.

4. I have considered the grounds laid out on the body of the Motion; the facts deponed in the supporting and opposing affidavits respectively; and the rival submissions.

5. The background of this dispute is short and straightforward. The respondent at the request of the 1st appellant, through its director, the 2nd appellant offered the 1st appellant a term of loan of ksh.10,460,000/= vide the letter of offer dated 23rd November 2018. The 2nd appellant gave a personal guarantee to discharge all obligations and liabilities owed to the respondent by the 1st appellant.

6. The respondent was prompted to file this suit before the trial court to recover the outstanding amount. The record shows that the 2nd appellant approached the respondent to have the matter settled out of court and to have the loan terms restructures thus giving rise to the detailed letter of variation dated 27. 6.2020.

7. The parties entered into a consent dated 19. 10. 2020 whereby a six (6) months moratorium period was granted to allow the appellants ample time to regularize their finances. The monthly repayments were lowered in order to allow the appellants meet their repayment obligations. One of the terms of the consent allowed the respondent to commence execution process as the last resort to recover the outstanding amount in case the appellants defaulted.

8. The appellants filed an application before the trial court dated18. 10. 2021 whereof they sought to have the consent judgment set aside. The court herd and dismissed he application vide its ruling delivered on 3rd December 2021. The appellants being aggrieved filed this appeal and the instant application contemporaneously.

9. Before I deliberate on the merits of the instant Motion, I will address my mind to a preliminary issue raised by the respondent, which is whether the substantive prayer sought in the instant Motion has been overtaken by events.

10. In her replying affidavit, Lynette Kamande states on behalf of the respondent that the Motion serves no useful purpose for the reason that the applicants’ assets have since been attached and that some of them have been realized.

11. Upon my perusal of the record, I observed that the respondent did not bring any credible evidence to support the averments made above and hence I am not satisfied to find that the instant Motion has been overtaken by events.

12. On the merits thereof, the application currently before this court concerns itself with the granting of an order for a stay of execution in form of an injunctive order.

13. Order 42, Rule 6(2) of the Civil Procedure Rules, 2010 sets out the conditions to be met when it comes to an application for a stay of execution as follows:a)The application must be brought without unreasonable delay;b).The applicant must demonstrate that substantial loss may result; andc)Provision should be made for security.

14. The first condition is whether the application was timeously filed.

15. The applicants state that there has been an inordinate delay in presenting the instant Motion. The respondent did not specifically address this court on this condition.

16. Upon my perusal of the record, I note that the impugned ruling was delivered on 3rd December, 2021 whereas the instant Motion was brought sometime on or about the 6th day of December, 2021. In my view, the Motion has been brought without unreasonable delay.

17. This brings me to the second condition of substantial loss. On their part, the applicants state that unless the injunctive stay order sought is granted, the respondent will continue with the execution process, thereby resulting in irreparable loss to the applicants and rendering the appeal nugatory.

18. The applicants further state that the respondent does not stand to suffer any prejudice that cannot be compensated by an award of costs, if the Motion succeeds.

19. On the part of the respondent, it is stated and submitted that the parties had entered into a consent before the trial court on payment of the outstanding loan sum of Kshs.10,771,082. 54 owed to the respondent by the applicants, and that the said consent was adopted as an order of the court, thereby disposing of the suit.

20. It is also stated and submitted by the respondent that the execution process is therefore lawful and justified.

21. In response, the applicants state and submit that the consent order was entered into through misrepresentation and trickery, and that there had been no participation on their part in the lower court proceedings, and hence it is not in any way true that the consent order disposed of the suit. however, it is apparent from record that the applicant has not presented the particulars of misrepresentation, fraud and or trickery on the part of the respondent.

22. The applicants further state and submit that they filed an application seeking to have the consent order set aside but that the same was dismissed by the trial court, and hence the present appeal.

23. Upon my perusal of the record, I observed that the subject of the consent order constitutes one of the grounds of appeal in the applicants’ memorandum of appeal and is therefore an issue for determination on appeal and not at this stage.

24. On the question of substantial loss, the legal position is that execution is a lawful process and hence a party cannot simply argue that a stay of execution is necessary in order to halt or prevent execution. It is on this basis that the court in the case of James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR cited in the submissions by the respondent, rendered itself thus:“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…”

25. Further to the above, the legal position is that substantial loss entails that which has to be prevented by maintaining the status quo of the parties involved, otherwise the appeal will be rendered nugatory.

26. Upon considering the rival positions taken by the parties above, I am of the view that in the circumstances of this case, that the appellants have not demonstrated the manner in which they stands to suffer substantial loss if an order for a stay of execution is denied. In short, the appellants failed to lay the cornerstone of the application for stay.

27. On the third condition, the applicants have not made any proposals on the provision for security for the due performance of the decree.

28. As the respondent rightly pointed out in its submissions, the law is clear that the provision of security for the due performance of the decree is a mandatory requirement in the granting of an order for a stay of execution.

29. In the end therefore, I find the Notice of Motion dated 6th December, 2021 to be without merit. The same is ordered dismissed with costs abiding the outcome of the appeal.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 17TH DAY OF JUNE, 2022. .................................J. K. SERGONJUDGEIn the presence of:.................... for the 1st and 2nd Appellants/Applicants.................... for the Respondent