Takaful Insurance of Africa Ltd v Sidi [2023] KEHC 25535 (KLR)

Takaful Insurance of Africa Ltd v Sidi (Miscellaneous Application E029 of 2022) [2023] KEHC 25535 (KLR) (14 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25535 (KLR)

Republic of Kenya

In the High Court at Malindi

Miscellaneous Application E029 of 2022

SM Githinji, J

November 14, 2023

Between

Takaful Insurance of Africa Ltd

Applicant

and

Elina Sidi Saro aka Regina Sidi Saro aka Hellina Sidi

Respondent

Ruling

1. Before this court for determination is the Applicant’s notice of motion application dated 25th May 2022 brought under Section 1A and 1B of the Civil Procedure Act; Order 22 rule 22 (1), Order 42 rule 6(1) (2), and Order 51 of the Civil Procedure Rules, 2010. The Applicant seeks the following orders; -1. Spent.2. Spent.3. That pending the hearing and final determination of the appeal there be an order of stay of execution of proceedings herein most specifically staying the execution of the judgment and decree of the honourable court made on the 22nd day of April 2022 and the proclamation dated 19/5/2022 and served upon the Appellant on 20/5/2022 in CMCC No. E42 of 2022. 4.That pending hearing and determination of the appeal, judgment entered herein be stayed in the first instance and the warrants of attachment/proclamation served upon the Appellant be lifted and there be an order of stay of execution in CMCC No. E42 of 2022. 5.That pending hearing and determination of the appeal, we pray for an order lifting the warrants of attachment and the proclamation ensuing and issued upon the Appellant in CMCC No. E42 of 2022. 6.That an order do issue declaring the proclamation made with respect to CMCC No. E42 of 2022 as irregular and fatally defective and incapable of execution as the same is null and void ab initio.7. That the proceedings in E42 of 2022 be deemed irregular and or improper and void ab initio and judgment entered with respect to CMCC No. E42 of 2022 be set aside.8. That the auctioneer’s costs for Proclamation be borne by the respondents.9. That the costs of this application be provided for.

2. The application is premised on the grounds listed on its face and supported by the affidavit sworn on 25th May 2022 by Okoth Mackonah, the Applicant’s legal officer. According to the Applicant, following a claim in CMCC No. 125 of 2018 filed by the Respondent against one Feisal Mohamed, the Applicant instructed the firm of Machuka & Co. Advocates to file a defence. However, upon discovery that the said defendant had cancelled his policy with the Applicant herein, the Applicant filed an application to cease acting for the defendant. The said application was allowed vide a consent dated 21st March 2018. The Respondent was directed to pursue her claim directly against the said defendant.

3. That despite the foregoing, the Applicant was served with a proclamation notice on 20th May 2022 by Moran Auctioneers following a declaratory suit no. E42 of 2022. To the Applicant therefore, the proclamation notice was ill advised and made in bad faith considering that there was no cause of action against the Applicant. The applicant is apprehensive that if the stay orders are not granted execution will proceed to their detriment and the appeal will be rendered nugatory.

4. In opposing the said application, the Respondent filed a Replying Affidavit sworn on 10th June 2022 by Geoffrey Kilonzo, counsel for the Respondent. According to Mr. Kilonzo, interlocutory judgment in the declaratory suit was entered on 22nd April 2022 for the sum of Kshs. 1,113,828/-. Prior to that, the Applicant had been served and entered appearance on 21st March 2022. The Applicant however failed to file a defence within the statutory limits. They filed their defence on 25th April 2022. According to Mr. Kilonzo, the allegations that the defendant had cancelled his policy were unfounded and that since the Applicant did not file any declaration repudiating liability, they were bound to compensate the Respondent.

5. Mr. Kilonzo added that the consent order referred to did not discharge the Applicant from any liability but that it was only to stop the firm of Machuka & Co. Advocates from acting for the defendant. To counsel, this court has no jurisdiction to lift the warrants of attachment issued by the trial court. The Applicant has failed to meet the requirements for granting orders of stay.

6. Parties agreed to canvass the application by way of written submissions which I have carefully considered. I find that the issues for determination are; -i.Whether an order for stay pending appeal is merited.ii.Whether this court can and should lift the warrants of attachment.iii.Who should bear the costs.

7. Order 42 rule 6(1) and (2) of the Civil Procedure Rules provides as follows: -6(1).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.6(2)No order for stay of execution shall be made under subrule (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; andb.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.

8. Further to the above, stay may be granted for any other sufficient cause and the Court in deciding whether or not to grant the stay will be guided by the overriding objectives stipulated in sections 1A and 1B of the Civil Procedure Act.

9. It follows therefore that the applicant herein was obliged to satisfy the conditions set out above. That is (a) substantial loss may result to the applicant unless the order is made, (b) the application has been made without unreasonable delay, and (c) such security as the court orders for the due performance of such decree or order as may ultimately be binding on the applicant has been given.

10. In Butt v Rent Restriction Tribunal [1979] eKLR, the Court of Appeal stated what ought to be considered in determining whether or not to grant stay of execution pending appeal. The court explained that the power of a court to grant or refuse an application for stay of execution is discretionary, and the discretion should be exercised in such a way so as not to prevent an appeal; That if there is no other overwhelming hindrance, stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judgment; That a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the Applicant at the end of the proceedings; and finally, the court will consider the special circumstances of the case and its unique requirements.

11. It is also well established that the purpose of stay pending appeal is to preserve the substratum of the suit.

12. As to what amounts to substantial loss, it was observed in James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR that:“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 ... 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.”

13. I have also gone through the decision of the Court of Appeal cited to me by the Respondent, Kenya Shell Limited v Benjamin Karuga Kibiru and another [1986] eKLR where the judges explained; -“It is usually a good rule to see if Order XLI Rule 4 of the Civil Procedure Rules can be substantiated. 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. Substantial loss in its various forms, is the corner stone of both jurisdictions for granting a stay. That is what has to be prevented. Therefore, without this evidence it is difficult to see why the respondents should be kept out of their money…

14. It is not sufficient by merely stating that the sum of Shs. 20,380. 00 is a lot of money and the applicant would suffer loss if the money is paid. What sort of loss would this be? In an application of this nature, the applicant should show the damages it would suffer if the order for stay is not granted. By granting a stay would mean that status quo should remain as it were before judgement. What assurance can there be of appeal succeeding? On the other hand, granting the stay would be denying a successful litigant of the fruits of his judgement.”

15. The judgment sought to be stayed was made on 22nd April 2022 and the present application filed on 25th May 2022. Undoubtedly this does not amount to unreasonable delay. The Applicant however failed to demonstrate how execution, a lawful process, would cause them substantial loss. The Applicant was only apprehensive that they will not be able to recover the decretal sum since to them the Respondent has no capacity to refund the decretal amount if paid. In my view, it is not sufficient to merely state that. In the circumstances I am not convinced that substantial loss has been demonstrated by the Applicant.

16. Order 42 rule 6 above requires an Applicant to offer security for the due performance of the decree and the Court is entitled to take into account the fact that no such security has been offered in deciding an application thereunder. I agree with the position in Mwaura Karuga t/a Limit Enterprises vs. Kenya Bus Services Ltd & 4 Others [2015] eKLR, where it was held that:“… the security must be one which shall achieve due performance of the decree which might ultimately be binding on the applicant. The rule does not, therefore, envisage just any security. The words ‘’ultimately be binding’ are deliberately used and are useful here, for they refer to the entire decree as will be payable at the time the appeal is lost. That is the presumption of law here. Therefore, the ultimate decree envisaged under order 42 rule 6 (2) (b) of the Civil Procedure Rules includes costs and interest on the judgment sum unless the latter two were not granted-which is seldom. The security to be given is measured on that yardstick.”

17. In the present case, the Applicant did not provide or express its intention to provide any security for the due performance of the decree. In the given circumstances I see no basis for staying the judgment and decree pending appeal. Having denied the prayer for stay of execution in this case, I need not consider whether the warrants of attachment should be lifted.

18. The outcome is that the application dated 25th May 2022 lacks merit and is hereby dismissed with costs to the Respondent.

RULING READ, SIGNED AND DELIVERED VIRTUALLY AT MALINDI THIS 14THDAY OF NOVEMBER, 2023. S.M. GITHINJIJUDGEIn the Presence of; -1. Mr Kilonzo for the Respondent2. Mrs Machuka for the Applicant – absent