Sana Industries Limited & Attorney General v Robert Ayunga & Samuel Thuo [2017] KEHC 2356 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KIAMBU

CIVIL APPEAL NO.  108 OF 2017

SANA INDUSTRIES LIMITED…........................................... 1ST APPELLANT

ATTORNEY GENERAL ………………..………………… 2ND APPELLANT

VERSUS

ROBERT AYUNGA…………………………………….. 1ST RESPONDENT

SAMUEL THUO ……………………………………......2ND RESPONDENT

RULING

1. The Application before the Court is a Notice of Motion dated 25/07/2017. In the main it seeks an order for stay of execution of the judgment delivered by the Honourable B. J. Bartoo in Thika CMCC No. 945 of 2014.

2. The judgment in the lower Court was delivered on 14/03/2017. Counsel for the 1st Appellant immediately applied for a stay of execution. The 1st Appellant was granted a 30-day stay of execution. Before the expiry of the thirty-days, the 1st Appellant moved the lower Court vide a Notice of Motion dated 27/04/2017 seeking for stay of execution pending the hearing and determination of this appeal.

3. That application was heard inter parties and the Learned Trial Magistrate delivered a ruling thereon on 22/06/2017. The Notice of Motion was, by objective standards, successful: the Learned Trial Magistrate ruled as follows:

In the best interests of justice and to allow the appeal to proceed, the 1st Defendant’s [1st Appellant’s] application is allowed as per prayer 3. The 1st Defendant to comply with the evidence that it will deposit the half share of the judgment (sic) in a joint [interest] earning account to be opened by both advocates.

4. The 1st Appellant did not comply with the orders of the lower Court. Instead, it filed the present Application in this Court on 26/07/2017.

5. The pivotal argument by the 1st Appellant is that if it complies with the orders of the lower Court “it stands to deposit its operational funds in the joint advocates account and which will have an adverse effect on its day to day operations in these hard economic times.”

6. The Application is supported by the Supporting Affidavit of Fadhlun Mohamed, a director of the 1st Appellant. She depones that due to forthcoming elections, “business is at an all time low and the order granted in this matter is aimed at the 1st Appellant depositing a large sum of money in the names of the Advocates for the Parties and which monies are really needed for the day to day operations of the company.”

7. Instead, the 1st Appellant wants the order substituted with an order for stay conditioned on the 1st Appellant giving a bank guarantee.

8. Counsel for the 1st Appellants urged me to give a new stay of execution arguing that the 1st Appellant has satisfied all the conditions for the grant of stay:

a. The Application was brought without any delay and immediately the 1st Appellant appointed new counsel to represent them;

b. On substantial loss, Counsel for the 1st Appellant argued that if the amounts are deposited as ordered by the Court, the 1st Appellant’s business will be run down due to the prevailing economic conditions; and

c. Finally, Counsel submitted that the 1st Appellant is willing to furnish a bank guarantee in lieu of the cash deposit.

9. The Respondents are vehemently opposed to the Application. They filed a Replying Affidavit sworn by the 1st Respondent. Counsel for the Respondents argued that the Application is a clear abuse of the process of the Court. This is because, Counsel argued, the 1st Appellant had brought a similar application in the Court below and it had been 100% successful. Rather than comply with the orders of that Court, Counsel argued, the 1st Appellant chose to file a similar application in this Court.

10. Counsel for the Respondents pointed out that the parties had already opened the Joint Interest bearing account – but that instead of depositing the amounts, the 1st Appellant changed advocates and rushed to this Court. Counsel argued that the allegations that 1st Appellant did not know the orders of the lower Court were not believable.

11. Further, Counsel for the Respondents argued that the 1st Appellant has not demonstrated any substantial loss at all. He argued that the 1st Appellant is a big company which employs many people and generates millions of shillings in income per day. Counsel expressed incredulity that the company would be unable to deposit Kshs. 1. 2 Million in an account in compliance with the Court orders.

12. Finally, Counsel for the Respondents expressed fears that the 1st Appellant is owned by foreigners who might flee Kenya at any time leaving the Respondents without any recourse in the event they are successful on appeal.

13. In response, Counsel for the 1st Appellant dismissed the notion that the company is owned by foreigners and pointed to the Affidavit by one of the directors of the company as evidence.

14. While I agree that any appellant has a right to approach this Court for a stay of execution pending an appeal, I must state that it is improper for an appellant who has been successful on such an application in the lower Court to approach the High Court for a similar order. Indeed, the level of impropriety rises very close to an abuse of the process of the Court. It verges on shopping for a forum that will give the litigant the orders it seeks.

15. To its credit, the 1st Appellant did disclose to this Court that a similar application had been made in the lower Court and orders granted. But this disclosure does not cure the impropriety. The appropriate course of action, in my view, would have been for the 1st Appellant to go back to the same Court to seek variation of the orders due to changed circumstances if it realized after the order was given that it was unable to comply with it. Coming to this Court an attempting to get a more favourable order is improper. This would be enough reason for me to dismiss this Application.

16. But there is more. The 1st Appellant correctly points out the requirements for the grant of an order for stay of execution by this Court. These are derived from the terms of Order 42 Rule 6 of the Civil Procedure Rules. The conditions to be met by an Applicant in order to be entitled to an order for stay are encapsuled in that Rule in the following terms:

6. (1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except appeal case of 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 applicationand 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.

(2)  No order for stay of execution shall be made under sub-rule (1) unless—

(a) The court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; and

(b) Such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant.

17. The law regarding the grant of stay of execution is well established in Kenya. Among the legion of authoritative cases establishing it, the judges of the Court of Appeal were both concise and emphatic in Rhoda Mukuma v John Abuoga:

It was laid down in M M Butt v The Rent Restriction Tribunal, Civil Application No Nai 6 of 1979, (following Wilson v Church (No 2) (1879) 12 Ch 454 at p 488) that in the case of a party appealing, exercising his undoubted right of appeal, the court ought to see that the appeal is not rendered nugatory. It should therefore preserve the status quo until the appeal is heard.

Granting a stay in the High Court is governed by Order XLI rule 4(2), the questions to be decided being – (a) whether substantial loss may result unless the stay is granted and the application is made without delay; and (b) the applicant has given security.

18. Hence, under our established jurisprudence, to be successful in an application for stay, an Applicant has to satisfy a four-part test. He must demonstrate that:

a. The appeal it has filed is arguable;

b. It is likely to suffer substantial loss unless the order is made. Differently put, it must demonstrate that the appeal will be rendered nugatory if the stay is not granted;

c. The application was made without unreasonable delay; and

d. It has given or is willing to give such security as the court may order for the due performance of the decree which may ultimately be binding on it.

19. It would appear that the Respondent does not dispute that the Memorandum of Appeal as filed raises arguable points of law or fact. On my part, I have perused the Memorandum of Appeal and I am unable to say that the grounds of appeal enumerated are in-arguable. It is important to recall that to be eligible for a stay of execution, one is not required to persuade the Appellate court that the filed appeal has a high probability of success. All one is required to demonstrate is the arguability of the appeal: a demonstration that the Appellant has plausible and conceivably persuasive grounds of either facts or law to overturn or vary the original verdict. Here, the 1st Appellant complains that the lower Court’s judgment went against established legal doctrines in finding liability for malicious prosecution. It also complains that the damages awarded were excessive and were arrived at by application of the wrong principles of law.

20. But what is the substantial loss that the Appellant is likely to suffer if the order is not granted? The Applicant sought to establish substantial loss by arguing that it will suffer irreparably if it paid the amount of Kshs. 1. 2Million into the interest-bearing account ordered by the Court or if it had to pay the decretal sums. This is because, the 1st Appellant argues, due to the prevailing economic conditions, it needs the money for its operational activities.

21. I would be willing to accept that this argument, if proved, could, in principle, establish substantial loss. However, other than the averments in the affidavits of Fadhlun Mohamed, there is nothing that has been presented to the Court to demonstrate that, indeed, the Company is undergoing an anomalous economic situation that would make it difficult to raise the amounts the Court required of it. No financial statements of the Company were attached; only bare statements by a director.

22. There are two ways one can take the argument: one is that the allegations are simply not proved and that they are therefore unavailing to demonstrate substantial loss. The second one is that the allegations themselves cement the need to have the 1st Appellant pay the decretal amount or otherwise guarantee it since by its very own admission, the 1st Appellant is in financial trouble. Without any documentary or other proof, it would be too much to ask the Court and the Respondents to simply believe that the financial problems are temporary and that they will be over by the time the appeal is determined.

23. On this score, I would decline to grant stay of execution anyway even if I were exercising my discretion in the first instance. However, as I already pointed above, I would decline to grant the request for stay for another reason: that the lower Court, in exercise of competent jurisdiction, already entertained a similar application and granted the orders sought. It would, therefore, be improper for this Court to entertain a similar application. For the record, I should point that I have analysed the Notion of Motion filed in the lower Court and the one filed in this Court. While requesting for similar orders, it is noteworthy that the main ground upon which the 1st Appellant sought the orders in the lower Court were that it feared that the Respondents would be unable to refund any decretal amounts paid to them. In this Court, however, the ground mutated to the one reproduced above: that payment of any decretal amount will cripple the operations of the 1st Appellant. This in itself, in my view, goes to the credibility of the arguments urged by the 1st Appellant respecting their application for stay before this Court.

24. For these reasons, the Notion of Motion dated 25/07/2017 is dismissed in its entirety. In addition, the 1stAppellant shall pay the costs of this Application.

25. Orders accordingly.

Dated and delivered at Kiambu this 2ndday of November, 2017.

……………………………………

JOEL NGUGI

JUDGE