Patrinick Products Ltd v Zingo Investment Limited [2016] KEHC 6845 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL NO. 300   OF 2015

PATRINICK PRODUCTS LTD……… …………………APPELLANT

VERSUS

ZINGO INVESTMENT LIMITED ………....…………..RESPONDENT

RULING

Vide  a notice of motion  dated 17th June  2015  and filed in court on      19th June 2015  under certificate  of  urgency, the  appellant/applicant  Patrinick  Products  Limited seeks  from this court orders:

Spent

Spent

That this court be pleased to substitute security to set aside the exparte judgment in CMCC 7680 of 2013 of cash with a deposit of title to land.

That the court be pleased to direct that Auctioneers fees   in CMCC 8680 of 2013 be taxed.

That  the court be pleased to extend  the time for filing of the defence, witness statements and all documents and such pleadings  filed on 7th May 2015  be deemed  as duly filed  in the extended  period.

That the court be pleased to grant any other orders that it deems provided for.

The application is brought  under  the  provisions  of Article 159(2) (d)  of the Constitution, Section 3A, 75 of the  Civil Procedure  Act  and  Order 51 Rule  1 and Order  43  Rule 1, Order  41 rule  2 and Order 10 Rule  11 of the Civil Procedure Rules  and all other enabling laws. The application is predicated on the grounds that

The appellant/applicant  is in hardship as is  not in a position  to raise  the required  amount being  kshs  1,725,206 on or before 22nd June  2015 as condition to set  aside  the exparte judgment.

The appellant/applicant without prejudice to the above is ready and willing to offer two land titles being title No.  THIKA MUNICIPALITY BLOCK 18/983 and MWEIGA BLOCK 5 /MUTHUINI/575 as security in place of cash; the Auctioneers fees amounting to kshs 265,430 is arbitrary, exorbitant and inconsistent with the provisions of Rule 55 (1) of the Auctioneers Rules 1997 (LN 120/1997 & LN144/2009).

The appellant /applicant  in furtherance  to (b) above undertakes to supplement  any balance  if any of the  security, by way of cash to be  deposited  into court  or an  interest  bearing  account.

Unless a stay of execution is granted, the appellant/applicant stands to suffer irreparable loss as the respondent will proceed to auction the appellant/applicant.

The applicant has acted timeously and without inordinate delay in pursuing this application.

The appellant/applicant has a strong case and in fact has a counterclaim corroborated on record   by the respondent’s own list of documents and hence fundamental trial issues.

The respondent   suffers no prejudice whatsoever as the exparte judgment has already been set aside.

It is in the interest of justice   that the appellant/applicant is not condemned unheard.

Unless this application is allowed the exparte judgment will completely lock out the appellant/applicant from defending the claim against   it.

The application is further  supported  by an affidavit  sworn by  Patrick  Mwangi Mureithi the Managing  Director  of the appellant/applicant Company on 18th June 2015  providing  the factual history of two matters CM CC 7680 and 7909 of 2013  wherein exparte  judgment   was entered  against  him and he was ordered by a decree  of the Chief Magistrate’s  court at Milimani to pay kshs  3,767,818 and when  he sought  to set aside  the said  exparte judgment against him, the court granted him the orders  conditional upon him depositing  security for both matters  within 21 days  from 14th April 2015  and in default  thereof  execution would proceed.

The applicant further complains that the auctioneer who had only been instructed to proclaim its property were seeking kshs 557,830 in both suits which according to it, is excessively high and unjustified. That following  the order  for deposit  of security, it applied  for  variations  of the said orders  but  by a ruling made on  22nd May 2015 Honourable Ngetich (Mrs) Chief Magistrate  only extended  the period for the depositing  of security  by a further  30 days  but rejected  the prayer for substitution  of security  and since  it was   not in a financial position to  raise the security ordered by  the trial court, it had to file this appeal and the application herein. That the applicant’s director  is a businessman with  dependants being children in  primary school and university  hence  he was incapable of raising that  amount of security  within the  short period  of time hence  his plea for  substitution  of the security from cash to title  to his two parcels of land  whose value exceeds the decretal sum that he was ordered  to deposit  in court by about  kshs  400,000/- as evidenced by the valuation  reports filed in court. That since he was not served with summons to enter appearance, unless the orders sought herein are granted, he stands to suffer unheard yet he has a strong case against the respondent.  The applicant annexed several exhibits to his affidavit including pleadings in the lower court, copies of titles to land, land valuation reports, Auctioneers proclamation forms, and statement of account for Zingo Investments among others.

The application was opposed   by the respondent through a replying affidavit sworn by Robert Njoka Muthara the Managing Director of the respondent company.  Mr  Muthara contends  that  the appellant/applicant  is  a dishonest  man since  after entry of judgment  in both  suits  he went to visit the  respondent  and asked  the respondent  to call off execution process  to enable  the applicant  pay the debt  within  21 days  but which he defaulted.

Further, that the trial  court did  grant  the appellant  extension  of 30 days to deposit  security  which he  again  proposed to settle  but  reneged  and  that therefore  the proposal  to substitute  the security  of cash  with titles  to land was a  ploy of defeating  the course  of justice  considering  that none of  the properties was registered  in the  appellant/applicant’s names.

Further, that in any event the applicant filed defence out of time after the period he was granted had expired hence he could not sanitize the disobedience of court orders by lodging this application.  He maintained that auctioneers charges were correct, justifiable and consistent   with the provisions of the law.  The respondent urged this court to dismiss the applicant’s application with costs.

In a rejoinder to the respondent’s  replying affidavit, the applicant  filed a supplementary  affidavit  with leave of court on 3rd July 2015 denying the contention  by the respondent that the application was in any way intended to delay the matter before  the  subordinate court but that it  was the respondent’s refusal to  have the security substituted  that  had delayed  determination of the  matters.  He also clarified that he wished that the cash security to be deposited in court be substituted with title to land security.  That  he was not in a position to raise  the cash within a short  period  of time hence the  respondent’s  insistence was only meant  to  punish  the applicant.  Further, that  there was no inordinate  delay  in filing this application as his  advocate  was waiting  for certified copies of  proceedings  and ruling  which had nonetheless  not been availed  as at the time of filing of the  application for stay of execution.  The applicant  also  maintained  that he had a strong  defence against  the respondents claims and that he wished the security  to be  deposited  in court so that  he could be heard on the merits  of the claims  against   him and that  he was advised  to file  this  application for substitution of security since he  could not  raise  cash money within the shortest  period  of time granted  by the court.  He denied ever knowing of the existence of the cases lodged in the subordinate court and or meeting the respondent and asking him to call off the execution process.

The  applicant also maintained  that  his wife   was ready to give her  title  to land as  security and that  she was  willing to come  to court .  Further, that he had proved that it was the respondent who owed him money vide   bounced cheques issued all amounting to kshs 566,120.

When the matter  came up  before Honourable  Onyancha J on            19th June 2015 under certificate  or urgency, he granted  interim  stay of the ruling of Honourable Ngetich CM in CMCC 7680/2013  and directed  service of  the  application upon the respondent.  When the matter came up before me on    25th June 2015 for interpartes mention.  I granted temporary stay upon the decretal sum being deposited in court within 21 days.  On 27th November 2015 the applicant reported that he had deposited kshs 3,060,000 short of kshs 149,000 to cover this appeal and HCCA 299/2015.  He sought 14 days to complete the deposit and by 15th October 2015   he had deposited the entire decretal sum into court.  The parties also agreed to have the application disposed of by way of written submissions.

The appellant/applicant filed theirs on 15th September, 2015 whereas the respondent filed theirs on 2nd October 2015, which submissions I have carefully read and considered.

It is  however worth noting that  the applicant  seeks, substantively, for the  substitution  of security ordered by the  trial court from cash deposit  to title  to land documents  since it is alleged that  he is experiencing  financial hardships  hence unable to raise the decretal sum which will in essence ousts him from the judgment seat of having  a fair hearing  before the  trial court.  That being  the   case, would  this court be in  order  to make such  an order  at this interlocutory stage of  the appeal  without  in effect  determining  the entire  appeal  in a summary manner?  The  answer  is that  indeed, to  substitute  security  at this stage would  be tantamount  to determining  the appeal  summarily without  according  both parties  a hearing  on the merits of appeal.  It is for  that reason that this  court did insist  that the  appellant, in order to enjoy status  quo in the lower court, must  deposit  the whole of the decretal sum being security  for the due  performance  of decree as required  under Order  42 Rule 6 (2) of  the Civil Procedure Rules.

The appellant did deposit the said decretal sum as ordered by this court pending hearing and determination of this application interpartes.  Since it appears that what the appellant was essentially concerned about was the period   within which he was to deposit the security, and the appellant having complied with orders of this court for depositing if security, this court would find no injustice in holding at this stage that the appellant had indeed deposited security for the due performance of decree.

But for stay of execution pending appeal to issue, the applicant must meet two other conditions.  The first being that he should   demonstrate to the court that he shall suffer substantial loss if the stay is not granted and that the application was made without unreasonable delay.  Beginning  with the latter  condition, it is not  in dispute that  the order  which is being challenged  was made  on 29th May 2015 and this application  was filed  herein on 19th June 2015  which was  within 30 days  of the delivery  of the impugned  ruling.  That being the case, and as 30 days is the statutory period allowed for appeals from the subordinate court to the High Court,  assuming it was legitimately filed, I find that the application herein was made without unreasonable delay.

On whether  the applicant shall suffer substantial  loss  if stay of execution is declined, the applicant  contended that he was  in financial difficulties and  that unless stay was granted  and the ruling of the court stayed, he would  lose the  right to defend  the suit yet  he had a  good defence, coupled  with a counterclaim that raises  serious  triable issues.

The court  notes that the Memorandum of Appeal  raises many  more issues than the issue of security  deposit before  the appellant  is allowed  to defend  the suit in the  lower  court.  This is further emphasized in the submissions filed by the respondent which in essence concern the merits of this appeal.  That being  the case, and the  appellant  having  deposited  the decretal sum in this court; to  fail to stay the  ruling  of the trial court  would amount to  allowing the respondent to proceed  with execution  of decree  since  the setting  aside of  exparte  judgment  was conditional upon the appellant  depositing  security in the form of  the whole  of the decretal sum  within a stipulated period of  time.  That in itself would oust the appellant from a hearing.

Accordingly, I grant the appellant/applicant  orders staying  the ruling  of Honourable Ngetich (Mrs) Chief Magistrate) delivered n 22nd May 2015  and  all consequential orders  pending  hearing and determination  of this appeal on merits.

I further order  that the decretal sum deposited  in this court as  security shall be deposited in a joint interest  earning  account  to be opened  and operated   by both parties  advocates  within 21 days  from the date  hereof  unless  such period  is enlarged  by this court.  The said sums shall be held until further orders of this court on its disposal upon an appropriate application.

The appeal herein shall be fast tracked for disposal in the following manner:-

The appellant to file and serve record of appeal within 90 days from the date hereof.

The Executive Officer  of the Chief  Magistrate’s Court  to submit to his court  the  original trial record   within 90 days from  the date hereof .

Upon submission  of the said  trial record, the Deputy Registrar  of this court  to place the  file herein before a  judge   for admission of  the appeal not  later than  7 days of the date of receipt of the lower  court record.  Upon such admission, the appellant to cause the appeal to be listed for giving of directions on appeal as stipulated in Order 42 Rule 13 of the Civil Procedure Rules.

And finally, that this appeal shall be heard within 9 months from the date hereof unless such period is enlarged by this court on sufficient cause being shown.

The issue of auctioneer’s charges can only be dealt with at the trial stage by the court.  Similarly, the prayer  for enlargement  of time cannot  be granted by this  court as  it is the trial court  that has the jurisdiction to hear and  determine  that issue.  Accordingly, I reject prayers No. 3, 4, and 5 of the Notice of Motion   dated 17th June 2015.

Costs of the application shall abide the outcome of the appeal herein.

Dated, signed and delivered in open court at Nairobi this 20th day of January, 2016.

R.E. ABURILI

JUDGE

Coram Honourable R.E. Aburili J.

C.A. Adline

Mr Mworia for appellants/applicant

Miss Mumo holding brief for Mr Murrithi for respondent

COURT- Ruling read and delivered in open court as scheduled.

R.E. ABURILI

JUDGE

Mr Mworia – this appeal is being heard with CA 299/2015.  We pray that the orders herein do apply to the CA 299/2015.

Miss Mumo-   That is so.

R.E. ABURILI

JUDGE

COURT- This ruling to apply to CA 299/2015 as appropriate.

R.E. ABURILI

JUDGE

20/1/2016