Total Energies Marketing Kenya PLC v Ernest N. Mwaura t/a Melion & Agro Hydrolinks [2023] KEHC 25156 (KLR)

Total Energies Marketing Kenya PLC v Ernest N. Mwaura t/a Melion & Agro Hydrolinks (Civil Appeal E073 of 2023) [2023] KEHC 25156 (KLR) (Commercial and Tax) (10 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25156 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Appeal E073 of 2023

FG Mugambi, J

November 10, 2023

Between

Total Energies Marketing Kenya PLC

Appellant

and

Ernest N. Mwaura t/a Melion & Agro Hydrolinks

Respondent

Ruling

Brief Facts 1. The dispute between the parties herein arises from what appears to be an agency agreement. The applicant appointed the respondent to assist it obtain a purchaser for its property, LR No 209/ 15789 situate on 3rd Ngong Avenue, Nairobi. It was agreed that the applicant would pay the respondent a commission of 2% of the selling price upon successful conclusion of the sale.

2. The respondent accepted the offer and secured a purchaser who paid a sum of Kshs 400,000,000/ for the property. This meant that the respondent was thus entitled to a commission of Kshs 8,000,000/=, being 2% of the selling price.

3. On April 21, 2022, the applicant made a part payment of Kshs 4,000,000/= directly to the respondent’s bank account but declined to pay the balance of Shs 4,000,000/=, prompting the suit at the subordinate court. Judgment was entered in favour of the respondent vide a joint ruling delivered on March 17, 2023.

4. In the said ruling, the subordinate court allowed the respondent's application dated September 9, 2022 for summary judgment in favour of the respondent for the sum of Kshs 8,000,000/= (adjusted to Kshs 4,000,000/=) together with interest and costs. The court dismissed the appellant’s application dated November 9, 2022 for amendment of the defence.

5. Dissatisfied with the ruling the appellant filed a Memorandum of Appeal in this court and an application dated 6th June 2023. The same was brought under article 50 of the Constitution, sections 1A, 1B and 3A of the Civil Procedure Act; order 42 rule 6 (1) and order 51 rule 1 of the Civil Procedure Rules 2010.

6. The application seeks to stay the execution of the ruling and decree of the subordinate court (Hon SA Opande) in Nairobi CMCC No E356 of 2022. The application was premised on the grounds on the face of it and supported by the Supporting Affidavit sworn by Boniface Abala on June 6, 2023. The applicant’s Written Submissions are also dated June 6, 2023.

7. The application was opposed vide a replying affidavit sworn by Ernest Mwaura, the respondent, on June 22, 2023 as well as written submissions dated July 17, 2023 which both restate the facts.

Analysis 8. In determining whether the applicant has made out a case for grant of orders of stay of execution, I am guided by the provisions of order 42, rule 6(2) where the power of the Court is fettered by the following three conditions in the following words:“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 appellant unless the order is made and;b.That the application has been made without unreasonable delay; andc.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 appellant.”

9. The threshold for exercising this power is well settled and summarized by the Court of Appeal in the case of ButtvRent Restriction Tribunal, (1982) KLR 417. The necessary considerations are as follows:“(i)The power of the court to grant or refuse an application for a stay of execution is a discretionary power. The discretion should be exercised in such a way as not to prevent an appeal.(ii)The general principle in granting or refusing a stay is; if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should that appeal Court reverse the Judge’s discretion.(iii)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.(iv)The Court in exercising its discretion whether to grant [or] refuse an application for stay will consider the special circumstances of the case and unique requirements. The special circumstances in this case were that there was a large amount of rent in dispute and the appellant had an undoubted right of appeal.(v)The Court in exercising its powers under order XLI rule 4 (2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security for costs as ordered will cause the order for stay of execution to lapse.”

10. On the first consideration as to whether the application has been made without unreasonable delay, it is a fact that the impugned ruling was delivered on March 17, 2023. This application for stay of execution was brought on June 6, 2023, roughly 80 days later. No explanation has been given by the applicant as to why the application was not filed any sooner although the Memorandum of Appeal was filed one (1) month after the impugned ruling, on April 17, 2023. Be that as it may, I do not find the 80-day interval to be an overwhelming hindrance to the grant of the application.

11. As to whether the court is satisfied that substantial loss may result to the appellant unless the order is made, this is a question that must be determined by performing a delicate balancing act between the right of the respondent to the fruits of his judgment and the right of the applicant on the prospects of his appeal. This should not involve an interrogation of the prospects of the appeal itself, but rather, an interrogation as to…whether by asking the applicant to do what the judgment requires, he will become a pious explorer in the judicial process (See: Nicholas Mutuku MwasunavPatricia Mueni Kilonzo, [2022] eKLR.

12. Substantive loss in my view refers to the financial loss that an applicant is likely to face in executing the decree should he be successful. It also includes the difficulty, inconvenience and delay with which an applicant may have to go through in executing a decree in such an eventuality. I agree with the position adopted in Bungoma High Court Misc Application No 42 of 2011; James Wangalwa &anothervAgnes Naliaka Cheseto that:“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.’’

13. I also find the observation of the Court in Kenya Posts & Telecommunications Corporation v Paul Gachanga Ndarua, Civil Appln No Nai 367 of 2001 and ABN Amro Bank,NKvLe Monde Foods Limited, Civil Appln No 15 of 2002 to be sound. This observation is to the extent that the law cannot presuppose that the applicant would be in a position to speak to the respondent’s finances.

14. The Court held, and rightly so, that all that an applicant can be reasonably expected to do is to:“…. swear, upon reasonable grounds, that the respondent will not be in a position to refund the decretal sum if it is paid over to him and the pending appeal was to succeed but is not expected to go into the bank accounts, if any, operated by the Respondent to see if there is any money there…In those circumstances, the legal burden still remains on the applicant, but the evidential burden would then, in those circumstances, where the applicant has reasonable grounds which grounds must be disclosed in the application that the respondent will not be in a position to refund the decretal sum if the appeal succeeds, have shifted to the respondent to show that he would be in a position to refund the decretal sum.”

15. The applicant states that the respondent is impecunious and doubts his to pay the decretal amount should the applicant succeed in its appeal. In rebuttal the respondent attached two (2) title deeds which are allegedly valued at Kshs 24 million shillings to rebut the reference to ‘impecunious’ by the applicant.

16. There is no valuation report in respect of the properties. Moreover, while the respondent avers that the bank statements that the applicant relied on to show a bank balance of Kshs 7,000/= in the respondent’s account was a bank statement for April 2022 to June 2022.

17. The respondent has not given any further evidence by way of later bank statements, a statement of means or sworn an affidavit to prove his source of income or how he would otherwise be able to pay the decretal amount should the appeal succeed. I say this noting that under Order 42 rule 6 the Court is not required to hold an enquiry as to the likelihood of success of an appeal at this point. For these reasons I am not convinced that the respondent has established that he is in a position to refund the decretal sum if the same is paid over to him.

18. The applicant has stated that it is ready and willing to abide by any reasonable terms that the court may place on the requirement for security. The Court (Gikonyo J,) recognized the rationale for security in Arun C SharmavAshana Raikundaliat/aRaikundalia & Co. Advocates & 2others, (2014) eKLR where it was held that:“The purpose of the security needed under Order 42 is to guarantee the due performance of such decree or order as may ultimately be binding on the applicant. It is not to punish the judgment debtor.”

Determination 19. For all the reasons that I have stated, it is my view that this a case where a stay ought to be granted but on conditions. Accordingly, the order which commends itself to me and which I hereby grant is that there will be stay of execution pending the hearing and determination of the intended appeal on condition that:i.The applicant deposits the amount of Kshs. 4,000,000/= in a joint interest earning account in the names of the advocates in the matter, in a financial institution to be agreed upon in the next 21 days;ii.In default of this the orders for stay shall be deemed to have lapsed and the respondent shall be at liberty to execute;iii.In the meantime, the Record of Appeal shall be filed and served within 30 days of this ruling. Thereafter parties shall appear before the court on a date to be agreed upon, for purposes of taking directions on the expeditious disposal of the appeal.iv.The costs of the application shall follow the appeal.

DATED, SIGNED AND DELIVERED IN NAIROBI THIS 10TH DAY OF NOVEMBER 2023. F. MUGAMBIJUDGE