Rai Plywoods (Kenya) Limited v Sub-County Cooperative Officer, Turbo & Soy, Commissioner for Co-Operative Development & Attorney General [2019] KEHC 270 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT ELDORET

PETITION NO. 25 OF 2016

RAI PLYWOODS (KENYA) LIMITED...............................................................PETITIONER

-VERSUS-

SUB-COUNTY COOPERATIVE OFFICER, TURBO & SOY.................1ST RESPONDENT

COMMISSIONER FOR CO-OPERATIVE DEVELOPMENT................2ND RESPONDENT

ATTORNEY GENERAL...............................................................................3RD RESPONDENT

RULING

[1]This ruling is in respect of the Petitioner’s application dated 25 March 2019. That application was filed pursuant to the provisions of Articles 50(1) and 159 of the Constitution of Kenya, 2010, Sections 1A, 1B, 3, 3A and 63(e) of the Civil Procedure Act, Order 42 Rule 6(1), and 51of the Civil Procedure Rules, 2010, for orders that:

[a] Spent

[b] Spent

[c] That there be stay of proceedings and/or further proceedings and/or writing of judgment and/or any action in this matter pending the hearing and determination of the intended appeal to the Court of Appeal filed vide Notice of Appeal dated 12 March 2019 against the decision made herein on 12 March 2019.

[d] That costs of the application be in the cause.

[2] The application was predicated on the grounds set out in the application and its Supporting Affidavit wherein it was contended that, when the Petitioner’s witness, Mr. Philip Varghese, testified herein on 5 December 2018, he inadvertently left out crucial documents intended to support the Petitioner’s case; and that although an application dated 21 December 2018 was made, for leave to have the case re-opened and have the said documents produced, the application was heard and dismissed on 12 March 2019. Being dissatisfied with the decision of the Court, the Petitioner filed a Notice of Appeal on 13 March 2019. It was therefore the averment of the Petitioner that there is need, in the circumstances, to have the suit stayed pending the hearing and determination of the appeal. It was further the contention of the Petitioner that the proposed appeal raises serious legal issues for determination, and hence the need to grant the orders sought.

[3] The Respondents opposed the application and relied on the Replying Affidavit sworn by Roselyn Rae, the County Co-operatives Officer in charge of Uasin Gishu County. Her contention, in the main, was that the Petitioner is merely out to amend its evidence and fill gaps in respect of issues raised in cross-examination by the Respondents. It was further the averment of the Respondents that the intended appeal is only meant to delay the trial to the prejudice of the members of the Plywood Sacco members who have been unable to enjoy any financial services from the Sacco Society as long as this suit remains pending; and that, in any case, the Petitioner has not satisfied the conditions for grant of stay of proceedings.

[4] David Olang’o, the Sub County Co-operative Officer for Turbo also filed a Replying Affidavit, sworn by him on 17 September 2019, averring that Plywood Sacco is currently undergoing a financial crisis because the Petitioner has withheld a total of Kshs. 66,944,091/= since 2012; and that the membership has since gone down because of dismissals and retrenchment from around 704 members in 2016 when the Petition was filed to 200 members currently. He further stated that the 500 members who have been retrenched have not been able to access their savings, and are piling pressure on the Sacco officials for payment. It was thus the averment of Mr. Olang’o that the membership and the Sacco at large are prejudiced and that any further delay in the disposal of this Petition would have the effect of severely crippling the Sacco.

[5] The application was urged by way of written submissions, pursuant to the directions given herein on 26 June 2019. In its written submissions filed on 3 July 2019, the Petitioner submitted that the purpose of the stay order sought herein is to preserve the subject matter of the intended appeal, which would otherwise be rendered nugatory should the matter proceed to conclusion before the appeal is disposed of. According to the Petitioner, it would be difficult for it to undo the damage or loss that may arise from the dismissal of the suit, in the event of a successful appeal, as it risks parting with over Kshs. 330,000,000/=,should the Court find in favour of the Respondents.

[6] Counsel relied on Easy Coach Limited vs. Patrick Watani Maende & 2 Others [2018] eKLR and in the Matter of Global Tours and Travels Limited, Nairobi HCWC No. 43 of 2002, in urging the Court to allow the application in the interest of justice. Further, it was submitted that the Petitioner has satisfied the requirements for stay of proceedings; and that it was under no obligation to prove substantial loss or furnish security as there is no decree yet awaiting execution. Reliance was placed on Re Global Tours Case (supra) and Jeremiah Matoke vs. Kenya Commercial Bank Ltd,Nairobi HCCC No. 290 of 2002 to support this argument.

[7] On behalf of the 2nd and 3rd Respondents, submissions were made, which submissions were adopted on behalf of the 1st Respondent, that no good reason had been given why the proceedings in this case should be stayed, and that the issue can still be argued substantively on appeal, should a determination be made against the Petitioner. According to Counsel for the Respondents, the Petitioner is least interested in the expeditious disposal of this suit because it is enjoying the interim orders issued in its favour herein; adding that this is a classic example of delaying tactics by the Petitioner for the sole purpose of frustrating the Respondents, and in particular the members of the Plywood Sacco Society.

[8] It was further the submission of the Respondents that the grant of an order of stay would not only be against the interest of justice but would also fly in the face of the overriding objective of the Civil Procedure Act; which is to facilitate affordable and expeditious resolution of disputes. Counsel likewise relied on Global Tours & Travels Ltd (supra) but for the holding that in an application of this nature, the Court should weigh the pros and cons of granting or not granting the order; bearing in mind such factors as the need for expeditious disposal of cases, the prima facie merits of the intended appeal and the optimum utilization of judicial time. Counsel also cited Kenya Wildlife Service vs. James Mutembei [2019] eKLR and Kenya Power & Lighting Company Ltd vs. Esther Wanjiru Wokabi [2014] eKLR for the proposition that stay of proceedings is a grave matter and has to be distinguished from stay of execution, because it interferes with the right of a litigant to conduct his litigation. Accordingly, the Respondents prayed that the Petitioner’s application be dismissed with costs. In the alternative, it was proposed that the Petitioner be required to furnish security in the sum of Kshs. 330,000,000/= by way of a court deposit as a condition for granting stay.

[9] In a rejoinder to the Respondent’s written submissions, Counsel for the Petitioner filed supplementary submissions on 3 October 2019. In particular, it was submitted that no evidence has been availed to the Court to demonstrate that Plywood Sacco is facing financial crisis; or that the crisis is attributable to the Petitioner herein. Further, the Petitioner questioned the allegation that the membership of the Sacco has been dwindling, or that the reduction of its members has been caused by the Petitioner. Counsel added that whatever in-house problems Plywood Sacco may be having, if any, cannot be used as a reason to deny the Petitioner the order sought of stay of proceedings. She reiterated that the conditions for stay of execution are not applicable to stay of proceedings pending appeal; and therefore that the Respondents’ demand that the Petitioner furnishes security ought to be disregarded.

[10] As pointed out herein above, the application is expressed to have been filed under Order 42 Rule 6of theCivil Procedure Rules, among other provisions of the law. It seeks stay of proceedings pending the hearing and determination of an interlocutory appeal. Hence, Sub-rule 1 of the aforementioned provision stipulates that:

"No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside."

[11] Thus, as rightly pointed out by Counsel for the Petitioner, there is a distinction between the conditions for grant of stay of proceedings and stay of execution, for which the applicable provision is Sub-section (2) of Rule 6. It is for this reason that in the Matter of Global Tours & Travels LimitedWC No. 43 of 2002,Ringera, J. (as he then was) expressed the view that:

“From a textual analysis of Order 41 rule 4 of the Civil Procedure Rules, it appears that the court has a discretion to order stay of proceedings pending appeal from its order or decree and that such discretion is unfettered. The strictures that sufficient cause be shown and that no order of stay should be made unless the court is satisfied that substantial loss may result to the applicant and that the application has been made without unreasonable delay and further that such security as may be ordered for the due performance of the order or decree has been given are on a plain reading of the rule applicable only to applications for stay of execution only.”

[12] Likewise, in Jeremiah Matoke vs. Kenya Commercial Bank Ltd (supra), it was held that:

“…regarding stay of proceedings not execution of the decree or order, pending appeal, the issue of substantial loss need not feature or be argued. Not even security for due performance…”

[13] The rationale for the distinction is clear in the following excerpt from Halsbury’s Laws of England, 4th Edition, Vol. 37 at page 330:

“The stay of proceedings is a serious, grave and fundamental interruption in the right that a party has to conduct his litigation towards the trial on the basis of the substantive merits of his case, and therefore the court’s general practice is that a stay of proceedings should not be imposed unless the proceeding beyond all reasonable doubt ought not to be allowed to continue.”

[14]Accordingly, in determining what the interests of justice require in the instant application, it is imperative to balance the interests of the parties; and in this respect, the holding in Global Tours & Travels Limited,which I entirely agree with, is pertinent, namely that:

"...whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of justice... the sole question is whether it is in the interest of justice to order a stay of proceedings and if it is, on what terms it should be granted. In deciding whether to order a stay, the court should essentially weigh the pros and cons of granting or not granting the order. And in considering those matters, it should bear in mind such factors as the need for expeditious disposal of cases, the prima facie merits of the intended appeal, in the sense of not whether it will probably succeed or not but on whether it is an arguable one, the scarcity and optimum utilization of judicial time and whether the application has been brought expeditiously."

[15]With the foregoing in mind, I have given due consideration to the application, and note that, indeed, the Petition has been pending for three years now. It is also manifest that there are issues of attrition and the grim financial situation of thePlywood Sacco,as painted by the Respondents, to bear in mind.It is nevertheless the case that the application was filed within two weeks of the ruling dated 12 March 2019; and therefore was filed without unreasonable delay. I also note that the matter is due for defence hearing. What this means is that should the matter proceed to hearing and determination, the appeal, if successful, will be rendered nugatory. Hence, in Easy Coach Limited vs. Partick Watani Maende & 2 Others(supra) it was held thus:

“…the appeal in this case could be rendered nugatory if the proceedings in the trial court proceeded to conclusion and determination before the appeal is heard. The appellant may have been compelled to satisfy a decree of the trial court without indemnity or contribution by the intended 3rd parties. Although the High Court may set aside the proceedings of the trial court, substantial loss may have been occasioned by way of execution of any judgment obtained by the plaintiff against the appellant, as to make it impossible to reset the parties to the original positions and restart the hearing with the 3rd parties enjoined. It is, with respect not just a question of setting aside the testimonies of the two or three witnesses who have testified as there is nothing to stop the trial court from proceeding to full hearing and determination and judgment in the matter which may then be executed to the detriment of the appellant who seeks to bring in 3rd parties in accordance with the Civil Procedure Rules. Section 1A of the Civil Procedure Act, moreover seeks the just, expeditious, proportionate and affordable resolution of disputes. A retrial occasioned by successful appeal after the trial has closed and judgment rendered would only escalate costs.”

[16] In the light of the foregoing, I am convinced that, having balanced the interests of both sides to the subject application, the interest of justice would best be served by allowing the application and granting the orders sought. Accordingly, it is hereby ordered that further proceedings herein be stayed pending the hearing and determination of the intended appeal and that the costs of the application be in the cause.

It is so ordered.

DATED, SIGNED AND DELIVERED AT ELDORET THIS 4TH DAY OF DECEMBER, 2019

OLGA SEWE

JUDGE