Platinum Credit Limited & another v Omwenga [2022] KEHC 13411 (KLR)

Platinum Credit Limited & another v Omwenga (Civil Appeal E171 of 2022) [2022] KEHC 13411 (KLR) (20 September 2022) (Ruling)

Neutral citation: [2022] KEHC 13411 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil Appeal E171 of 2022

JN Mulwa, J

September 20, 2022

Between

Platinum Credit Limited

1st Appellant

M/S Wamoja Chilson Shikanga t/a Antique Auctioneers

2nd Appellant

and

Perister Kwamboka Omwenga

Respondent

Ruling

1. The appeal before the court is against the trial court’s ruling issued on the March 10, 2022 whereof the court granted to the respondent Perister Kwamboka Omwenga (then applicant) an interlocutory mandatory injunction directing the 1st appellant (applicant) to release its collateral for a loan drawn to the respondent, Motor Vehicle Reg No C 097S, and a temporary injunction restraining the applicant from interfering with the respondents possession of the vehicle pending hearing and determination of the suit.The above order/ruling is the subject of the appeal herein filed on the March 23, 3022.

2. By the application before the court is dated March 23, 2022. It is brought under provisions of order 42 rule 6 and order 51 rule 1 of the Civil Procedure Rules, as well as section 3A of the Act. The applicants/appellants seek orders;1. Spent2. Spent3. Spent4. That there be a stay of proceedings in Milimani Commercial Court Civil Case No E 12499 of 2021 – Perister Kwamboka Omwenga v Platinum Credit Limited and another pending hearing and determination of the appeal herein.

3. On the March 24, 2022, the court (Hon Dorah Chepkwony J) upon a certificate of urgency granted a stay of execution of the order issued on the March 10, 2022 pending hearing and determination of the application.I have considered the supporting affidavit sworn by Richard Simbala the legal officer at the 1st applicant’s/appellant’s office sworn on March 23, 2022 and the grounds for the application.

4. It is the applicant’s case that the interlocutory mandatory injunction was granted when it was not sought, that it was contrary to the courts finding that the respondent had breached the contract that occasioned the repossession of the motor vehicle, that being a secured creditor, the applicant had lost all its contractual rights over the motor vehicle; the only collateral and therefore is exposed to suffer loss, and gross injustice, and that the appeal would be rendered nugatory, as the orders, if not stayed would occasion loss and irreparable damage as the vehicle may be disposed off and the unpaid balance of Kshs 1,230,016. 83 may never be recovered.The applicant is also willing to deposit security as the court may determine.

5. In opposing the application, a replying affidavit was sworn and filed by the respondent on the March 29, 2022. It is averred that the orders sought were in response to a contempt of court orders by the appellants issued on the February 22, 2022 preserving the subject of the suit and therefore an order of injunction would disturb the preservation of the subject matter, that would in effect cause grave detriment to the respondent.It is deposed that the subject motor vehicle is a commercial vehicle, and the continued holding of the same causes loss at Kshs 8000 per day, thus causing double loss for the respondent as she cannot get any income to repay the outstanding amount.

6. The respondent further avers that the applicants have not met conditions for stay orders under order 42 of the Civil Procedure Rules, nor provided security for the value of the vehicle estimated at Kshs 4. 5 million and that the continued holding of the vehicle would cause it to depreciate, and being vandalized at the storage yard hence may be wasted by the time the appeal is heard and determined.It is further deposed that as the vehicle is co-owned by both parties, there is no risk that it would be sold or released to third parties and therefore would not affect the rights of either, and the execution of the court orders would not render the appeal nugatory.

7. I have considered the parties depositions in their affidavits and written submissions. The issues that in my view arise for determination are three fold:-1. Whether stay of execution of the orders dated March 10, 2022 pending hearing and determination of the appeal would be appropriate in the circumstances.2. Whether the trial court proceedings ought to be stayed pending hearing and determination of the appeal.3. Which party ought to bear costs of the application

8. The events leading to the repossession of the motor vehicle are well stated in the appellant’s submissions; being default in repayment of the loan granted by the applicant to the respondent upon agreed terms, and a default clause of repossession if instalments are not paid in time or as agreed. I have observed that as at October 13, 2021, the outstanding sum was Kshs 1,239,186. 94, and as at November 17, 2021 the outstanding amount was Kshs 1,053,279. 70.

9. I have also read the trial court’s ruling. It is stated that in setting aside the repossession order, and warrants and seizure, the outstanding loan was Kshs 1,239,186. 94; but also added that auctioneers charges had not been paid, and what had been paid by the respondent was also disputed as well as the market value of the motor vehicle; these being arguable issues for trial in the appeal. Whether stay of execution of the orders dated 10/3/2022 should issue 10. Order 42 rule 6(1) provides the conditions upon which a party must comply with, thus:-1. Substantial loss must be demonstrated.2. Security for due performance of such decree or order as may ultimately be binding on the applicant3. Whether application was brought within reasonable time, and without undue delay.

11. Substantial loss is the cornerstone for an order of stay to be granted – RWW vs EK [2019] e KLR, where the court rendered;“The purpose of an application for stay of execution pending appeal is to reserve the subject matter in dispute so that the rights of the appellant who is exercising the undoubted right of appeal are safeguarded and the appeal, if successful, is not rendered nugatory… The court is also called upon to ensure that no party suffers prejudice that cannot be compensated by an award or costs.”

12. The vehicle ordered to be released to the respondent by the trial court is the only collateral offered to the appellant, making an income of Kshs 8000/= per day as alleged by the respondent. The applicant/appellant submits that if released to the respondent there will be nothing to prevent her from disposing of the vehicle, which is a well founded fear due to the arrears on the loan, hence open to suffer substantial loss.

13. The respondent on the other hand submits that as the vehicle is jointly registered, the respondent cannot sell the same, and the continued holding of the vehicle by the applicant continues to cause substantial loss including depreciation and vandalization at the storage yard; and therefore by the time the suit and appeal are fully heard and determined, the vehicle will have been wasted and of no value to the detriment of the applicants.

14. The parties interests must be considered as well as the prejudice to each by any order that the court may issue. There is no dispute that whatever loss or damage that may be occasioned to the applicants may not be compensatable by an award of damages. The only issue in my view, is whether the respondent would be financially able to compensate the applicant should the appeal succeed, if the vehicle is released to her, taking into account the arrears on the loan, which continues to attract interest and other charges as captured in the loan agreement.

15. The 1st appellant is a secured creditor, and its rights are anchored in statute and in the loan agreement. It is its right to enforce the terms of the agreement if default occurs, including repossession of the vehicle and sale to recover the loan arrears.It is trite that a court cannot rewrite a contract between parties who enter into an agreement unless fraud or an illegality exists – Danson Muriuki Kihera v Johnson Kabungo [2017] eKLR, Margaret Njeri Miruri v Bank of Baroda (Kenya) Ltd [2004] e KLR.

16. Substantial loss as rendered in the case Mukuma v Abuoga [1988] KLR, is what has to be prevented by preserving the status quo because such a loss would render the appeal nugatory. The court of appeal in Kenya Shell Limited v Kibiru [1986] KLR 410 held that :“… if there is no evidence of substantial loss to the applicant, it would be a rare case when an appeal would be rendered nugatory by some other event… without this evidence, it is difficult to see why the respondent should be kept out of their money”

17. In respect of the matter before me, it is clear that the respondent has defaulted in repayment of the loan which the subject vehicle was offered as collateral in terms of the contract. The respondent has not demonstrated in my view, that she is ready to pay the balance of the loan, stated as Kshs 1,230,016. 18/=.To allow the vehicle to be released to the respondent pending hearing and determination of the appeal would no doubt prejudice the applicants interest as the vehicle may not be kept in good condition. Depreciation and other factors would at the end be detrimental to the applicant’s interests in the said vehicle, as a secured creditor.Further, in considering whether or not to grant the stay orders, the court should weigh the pros and cons including expeditious disposal of the appeal, and if the said appeal demonstrates prima facie merits, based on the material presented to the court.

18. I have perused the grounds upon which the appeal is premised. I am persuaded that a prima faciecase has been shown. This is also the position stated in the ruling of the trial court when it plainly rendered that when granting a temporary injunction to the respondent, it had established that it was the respondent’s breach of contract that had occasioned the repossession of the subject motor vehicle, and that the respondent was still indebted to the 1st appellant.

19. The court has not been told that the 1st appellant would not be financially able to compensate the respondent should the pending appeal be unsuccessful. I am persuaded that the applicant has made out a case for the grant of an order of stay of execution of the trial court’s order/ruling given on the March 10, 2022, but upon terms that shall appear herebelow.Stay of trial court’s proceedings pending hearing and determination of the appeal

20. For the interest of justice and circumstances of each case, the court may, upon its discretion grant an order for stay of proceedings pending appeal. In considering whether to allow or not, the court must consider whether the appeal raises prima facie merits with chances of success –Kenya Commercial Bank Limited v Kenya Pipeline Company Limited [2017] e KLR, and whether the said appeal is arguable, the scarcity and optimum utilization of Judicial time, among other conditions. I need not repeat what I have already determined above.

21. The principles for the grant of stay of proceedings are ably stated in Global Tours and Travel Limited, where the court held;1. It is a judicial discretion2. Need for expeditious disposal of the case3. Prima facie merits of the intended appeal.4. Scarcity and optimum utilization of Judicial time5. Whether application was brought expeditiously.

22. The cardinal rule is that such an order ought not to be granted unless the proceedings are very clear beyond all reasonable doubt that such an order should be granted. Such power ought to be sparingly exercised, and in very exceptional cases. However, if the proceedings are shown to be frivolous and manifestly groundless, or that no cause of action is exhibited, it would not be proper to stay the proceedings. A perusal of the impugned ruling dated March 10, 2022 shows that the said orders are prejudicial to the applicants/appellants interests in the motor vehicle subject of the appeal, as no doubt it exposes the applicants interest therein as a secured creditor to risk to loss and damage.

23. In my considered view, it is not enough that the logbook to the vehicle is jointly registered and held by the applicant, because whereas the vehicle my not be disposed off legally to a third party, it is possible that it may be misused and exposed to other factors that would cause depreciation and under valuation by the time the appeal is heard and determined. On the other hand, the appellants have not sufficiently demonstrated what prejudice they would suffer should the case proceed to finality. In reality, conclusion of the trial court’s case would be in the interest of both parties, as the parties rights over the vehicle would be determined.

24. A stay of proceedings order is a grave judicial action which interferes with the right to a litigant to have their cases disposed off expeditiously, as well as their rights to access to justice to be heard without delay and fair trial – Kenya Wildlife Services v James Mutembei [2019] e KLR. See also Re Global Tours & Travel Limited (Supra).In the premises, and having carefully considered submissions by both parties, I find no sufficient reasons to persuade me to stay the proceedings in the trial court pending hearing and determination of the appeal.

25. I have noted from material placed before the court that the outstanding loan balance as at November 17, 2021 was Ksh 1,053,279. 70. This sum has not been disputed by either party, save to state that the loan balance is disputed by the respondent, but giving no further particulars as to what had been paid, or in it’s view, what the loan balance was at the material time.By the trial courts impugned order, the repossession orders, the warrants of attachment and notification of sale of the subject motor vehicle were set aside. These basically orders gave the respondent possession of the vehicle unconditionally pending hearing and determination of the suit. This order/ruling leaves the 1st appellant exposed to risk of losing both the collateral as well as the balance of the loan as may be ultimately determined by the trial court, upon which the vehicle is the only collateral in terms of the agreement executed by the two parties. What then is the position of the 1st appellant?

26. Section 3A of the Civil Procedure Act provides the court inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the court process. Nothing in the Act limits or otherwise affects the said inherent powers of the court in its endeavor to dispense justice or prevent abuse of the process –Stephen Boro Gitiha v Family Finance Building Society and 3 others [2009] e KLR.It is not the interests of the respondent that ought to be protected. The applicant has been kept away from its money to the tune of Kshs 1,230,016. 83 as at March 23, 2022. The respondent wishes to have her cake and eat it, by her failure to repay the loan advanced to her by the applicant and also keep possession of the motor vehicle; the only collateral. There is no gainsaying that the applicants have continued to suffer substantial loss, that if not addressed by this court, may never be recoverable by the time the appeal is heard and determined.

27. I am urged by the applicants to consider the motor vehicle as sufficient security pending hearing and determination of the appeal, and cited is the case; Platinum Credit Limited v Ahmed Buntu Haji Ahmed & another [2022] e KLR. In the case, the court heed, inter alia, that “… order 42 rule (2) gives the court discretion to make such orders as to security as would meet the ends of justice, bearing in mind the peculiar circumstances of the parties before it. In this instance, I am of the considered view that the motor vehicle is, itself sufficient security”.

28. In the circumstances of this case, the holding in the above case may not play or offer an even paying ground to both parties. Their individual interests ought to be considered. It is a balancing act, and one party’s right should not defeat or derogate the right of the other – Samrir Trustee Limited v Guardian Bank Limited [2007] e KLR.

29. It may be argued that the court ought to give orders as may be requested by a party and no other that has not been expressly requested for; as is the case in the instant application where it is alleged that the trial court gave orders that had not been sought for by the respondent.In the caseSafaricom Limited v Ocean View Beach Hotel Ltd & 2 others [2009] e KLR, the court expressed itself that the overriding objective of the Act stated at section 1A and 1B and 3A “is so called because depending on the facts of each case, and circumstances, it overrides provisions and rules which might hinder its operation and therefore prevent the court from acting justly, now and not tomorrow”. The above argument was captured by the Court of appeal in Munyi v Mwangi and another [2022] KECA 29 (KLR). It is therefore imperative that a court seized with a matter may give any other order as the justice of the matter may present to avoid injustice to the parties; that is why litigants in their pleadings would most of the times pray for an order “as the court may deem fit to grant.”

30. Consequently, the appellant’s application dated March 23, 2022 succeeds partially as hereunder:1. There shall be a stay of execution of the trial court’s ruling dated March 10, 2022 in Milimani CMCC No E 12499 of 2021 pending the hearing and determination of the appeal upon the following conditions that;2. The respondent Perister Kwamboka Omwenga shall deposit a sum of Kshs 1,230,000/= in an interest earning account in joint names of both Advocates for the parties within the next 30 days at Kenya Commercial Bank (KCB) any branch, as the parties may agree.3. Upon compliance by the respondent with order (2) above, the applicants shall release the subject motor vehicle Reg No KCY 097C to the respondent forthwith.4. In default by the respondent of (2) above, the orders of the trial court dated 10/3/2022 shall stand stayed automatically and unconditionally.5. The court declines to stay proceedings in the trial court, and directs that the said proceedings be fast tracked to achieve expeditious disposal and determination.6. The appellants are likewise directed to progress the appeal by filing the Record of appeal within the next 60 days of this ruling.7. As the application succeeds partially, each party shall bear own costs.Orders accordingly.

DATED, DELIVERED AND SIGNED AT NAIROBI THIS 20THDAY OF SEPTEMBER, 2022J. N. MULWAJUDGE