S.B.C Kenya Limited v Mahamud Sheikh Omar t/a Mapenya General Stores [2017] KEHC 1481 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYAAT NAIROBI

CIVIL APPLICATION NO. 490 OF 2017

S.B.C KENYA LIMITED...............................................APPLICANT

VERSUS

MAHAMUD SHEIKH OMAR T/A

MAPENYA GENERAL STORES.............................RESPONDENT

RULING

By way of a Notice of Motion dated 15th September, 2017 the Applicant moved this Court seeking orders for stay of execution of the judgment delivered on 17th August, 2017, in CMCC No. 3586/2013, awarding the Respondent the sum of Kshs. 4,771,730/=, pending the hearing and determination of the intended Appeal. The application is supported by the Affidavit of CAROLINE MORAA ASUMA, the Human Resource Officer of the Appellant. The grounds of the Application are that there is imminent danger of execution while the Appellant’s appeal is likely to succeed, that the Applicant will suffer substantial loss if execution is not stayed, that the application has been brought without unreasonable delay and that the Applicant is willing to secure the decretal amount with a bank guarantee or insurance bond.

The application is opposed by the Respondent who filed a Replying Affidavit dated 29th September, 2017 and sworn by MAHAMUD SHEIKH OMAR, the Respondent herein. It is deponed that the application is unmeritorious and the same has only been brought with the intention of denying the Respondent the fruits of the judgment. The Respondent avers that he is man of means with properties worthy over Kshs. 20M and thereby capable of reimbursing the decretal sum in case the Appeal succeeds. I have noted that the Respondent dwelt alot in responding to the grounds of appeal as contained in the Memorandum of Appeal. At this stage, the Court is not allowed to consider the merits of the Appeal. See Housing Finance Company of Kenya v Sharok Kher Mohamed Ali Hirji & another [2015] eKLRwhere the Court held that,

“We cannot over emphasize that at this stage we are not required to go to the merits of the case as tempting as it may be or consider whether the issues will be successful in favour of the appellant, lest we embarrass the trial judge.”

The Appellant filed written submissions dated 16th October, 2017. The Respondent did not file written submissions but filed a list of authorities dated 17th October, 2017. The application was canvassed orally in court on 17th October, 2017.

I have read and considered the written submissions of the Appellant as well as the oral submissions and the authorities cited by both counsels. Even though the Respondent submitted that the application should not have been a civil application but rather an application within the appeal, I take note of that, but as submitted by the Applicant, that was a technical error that this court can overlook in view of Article 159 of the constitution.

The principles for granting a stay of execution are provided for under Order 42 Rule 6 of the Civil Procedure Rules which are;

(a)That the application has been made without unreasonable delay;

(b)That security has been offered.

(c)That substantial loss may result to the Applicant unless the order for stay is made.

The corner stone of the jurisdiction of the court under Order 42 Rule 6 of the Civil Procedure Rules is that substantial loss would result to the applicant unless a stay of execution is granted. What constitutes substantial loss was broadly discussed by Gikonyo J in the case of James Wangalwa & Another vs Agnes NaliakaCheseto HC Misc No. 42 of 2012 OR {2012} eKLR where it was held inter aliathat:-

“No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself , does not amount to substantial loss. Even when execution has been levied and completed, that is to say, the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process.

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, a question that was aptly discussed in the case ofSilverstein vs. Chesoni, {2002} 1 KLR 867…………….the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the appeal nugatory”

The Appellant is apprehensive that the Respondent would not be in a position to reimburse the decretal sum in the likely event the appeal succeeds. In response, the Respondent claims to be a man of means and worthy over Kshs. 20M in real estate assets. He has annexed to his Replying Affidavit, 6 copies of title deeds and two copies of valuation reports for two of the titles whose total forced values is the sum of Kshs. 16,125,000/=. In the written submissions, the Appellant casts doubt on the practicality of executing against two of the titles where one is encumbered and another has valuation report done at the request of a bank, suggesting possible charge. The Appellant is also concerned about executing against immovable properties whose process is complicated and tedious.

Even though the Respondent has availed copies of title deeds and valuation reports, I am not fully convinced that, that is enough commitment on capability and willingness to reimburse the decretal amount in such a way that the Appellant will not suffer substantial loss in case the appeal is successful. I find the Appellant concerns to be genuine that some of the titles are charged and it is a matter of fact that the process of execution against immovable properties could be cumbersome and tedious.

On whether or not the application was brought without undue delay, I am satisfied that there was no delay.  The application was filed on 15th September, 2017. The Judgment had been delivered on 17th August, 2017 and the Appellant had obtained temporary 30 day stay orders on the same day. The instant application was filed before the lower court stay orders had expired. There was no unreasonable delay.

As security for the due performance of the decree in case the appeal fails, the Appellant has offered to secure a bank guarantee or insurance bond or any other security as the court may deem fit.

For an order of stay of execution to be granted, the court has to be satisfied that the applicant has met the provisions of Order 42 rule 6. This was well emphasized in the case of Elena D.Korir vs Kenyatta University(2012) eKLR where Justice   Nzioki Wamakau had this to say:-

“the application must meet  a criteria  set out  in precedents  and the criteria  is  best captured  in the case of  Halal & another  vs Thornton  & Turpin Ltd where the  Court of Appeal  (Gicheru JA, Chesoni & Cockar Ag JA) held that “The High Court’s discretion to order stay of execution of its order or decree is fettered by three conditions, namely:-Sufficient cause, Substantial loss would ensue from a refusal to grant stay, the  applicant must furnish  security, the application must be made without unreasonable delay.”

Further in considering whether to grant a stay of execution , the Court of Appeal in the case of Housing Finance Company of Kenya v Sharok Kher Mohamed Ali Hirji & another [2015] eKLRstated that ,

“ In seeking to balance the interests of the respective parties, the approach we have always taken in determining whether or not to grant a stay of execution is to ensure that applicants are not denied their opportunity to ventilate their legal cases as afforded under the laws through the appeal process, with the possibility of success, while at the same time, respondents are not denied the fruit of judgment in their favour and their rights are safeguarded.”

The circumstance of this case call for the exercise of my discretion in favour of allowing the application.  At the same time, the Respondent has decree which has to be secured for ease of execution in case the Appeal is not successful. Therefore, in allowing the application, I will direct the Appellant to deposit half of the decretal amount in a joint interest earning account to be opened by both counsels pending the hearing and determination of the Appeal. The money to be deposited within 60 days from the date of this ruling failure of which the stay order shall lapse.

It is so ordered.

Dated, Signed and Delivered at Nairobi this 15thDay of November, 2017.

…………………………….

L. NJUGUNA

JUDGE

In the Presence of

…………………………. For the Applicant

……………………….For the Respondent