Translakes Limited v Mellech Engineering & Construction Limited [2016] KEHC 3536 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL NO.  107 OF 2016

TRANSLAKES LIMITED …………………............……..APPELLANT

VERSUS

MELLECH ENGINEERING &

CONSTRUCTION LIMITED ……………………....….RESPONDENT

KENYA COMMERCIAL BANK…………………..………GARNISHEE

RULING

By  a Notice of Motion dated  11th March 2016   the applicant  Translakes Limited  seeks  from this court  two main orders namely: Leave of  court to enlarge   time within which a memorandum  of appeal should have been  filed and  secondly, stay of  execution  pending appeal.  The application  which  was  brought under  certificate of  urgency on  14th March  2016   was brought under the provisions  of Sections 1A, 1B 63(e) and 75(h) of the Civil Procedure  Act, Order   42 Rule  6 of the Civil Procedure  Rules, 2010 and Order  51 Rule  1 of the Civil Procedure Rules, 2010 and all other enabling provisions of the law.

The grounds upon which  the  application is predicated  on are, more importantly: that the  applicant  was not aware of the  judgment  which  was  delivered  on 23rd  February 2016 by Honourable  Usui until  8th March  2016  when the applicant  attended court for hearing of  the plaintiff’s  application dated  3rd  March 2016; that the applicant had  drafted  and filed grounds of opposition  to the aforesaid   application based on  the grounds that  it had only been served on 7th March  2016  at 4. 00pm yet  it  was to be  heard  the following day ; that the applicant  was denied a fair hearing after its  application  was rejected  and the respondent’s  application allowed; that unless stay is granted, the orders of  23rd  February  2016  and those of  8th March  2016  by Honourable  Usui will be  executed  adversely  to the applicant and  that the applicant shall suffer substantial  loss resulting  from payment  of kshs  3,000,000 thus occasioning  the  applicant a hard  time in resuming  back to  a stable running of its  operations; that  the applicant has  an arguable  appeal  with probability  of success   since  it  was  denied  the right to a fair trial as the applicant’s  advocates did not know  about the judgment as they were not served  and were being punished  for mistakes  of the plaintiff’s  counsel; that  the plaintiff is unlikely to suffer  any prejudice  if the application  herein is allowed; and, finally, that the delay  in filing  this application  is not so  inordinate  or so great  as to be inexcusable.

The application by the applicant is supported by the affidavit  of Jacktone V Hongo  sworn on  14th March  2016  and a further  affidavit sworn by Daniel  Ochieng  Mwaya  on 31st  March  2016  and filed on the same day.

In the supporting affidavit of Jacktone V Hongo, it is deposed that he is the director of the applicant company.  That he learnt of the  judgment  delivered on  23rd February  2016  allowing  the release of  shs  3,000,000 held by the Garnishee to the plaintiff’s advocates pending commencement  of execution  proceedings   to recover  the balance; that  upon learning of  the same, he instructed their  advocates  to file an  application for enlargement   of time and  seek stay  of the entire  judgment; that they shall suffer substantial loss if stay  is not  granted and that the applicant  is ready to comply  with any  order that the court  may make  as provided for under Order 42  Rule  6  of the Civil  Procedure  Rules; that the applicant offers a bank guarantee  as security  for the due performance  of decree  pending the hearing  and determination of  the intended  appeal; that the applicants  were  denied the right of fair  trial as  its advocates  were  not aware of the judgment; that the application  was filed  without undue  delay; that the respondent  shall not  suffer  any prejudice  if  this application is allowed.  The applicant annexed to the application a copy of memorandum of appeal as intended.

The applicant filed a  further affidavit  sworn on 31st  March  2016  by Daniel Ochieng  Mwaya a director of the applicant  company contending that   on 16th  July 2015  the  trial magistrate  Mr Usui  failed to exercise  judicial discretion  and administer  fair  trial when  she denied  the defendant/applicant’s advocates an  adjournment  on the basis that the advocate  handling  the matter and possessed of the intricate knowledge  of the matter had an official appointment  with the President  of the Court of Appeal inCA 65 of 2015   Grace  Wairimu Soroka  V Chaka  Limited & 5 Others as shown by  the attached cause list  marked  “DO1; that despite those compelling  reasons, the trial  magistrate refused   to grant an  adjournment  and proceeded with  the hearing  of the matter exparte; that the  trial magistrate  instead  of exercising  judicial  fairness went  ahead  and struck from the record  the applicant’s  advocate  who was  holding brief at the time. He attached  copy of defence claiming that they were denied   fair administration of justice; that thereafter counsel for the applicant filed an  application dated 27th July  2015  seeking  a stay of  the proceedings/execution  of the orders of 16th July 2015  pending  the hearing and   determination of the application ( as attached ); that  the applicant   believes that it has  suffered great injustice  in light  of  execution of the judgment  made on  23rd  February  2016  as it  was not served  with notice of judgment  yet the respondent proceeded to  extract decree  without following the  proper laid  down procedure  under  Order  21 Rule  7(2)  and  Rule 8(2)  of the Civil Procedure  Rules which require  approval of a decree by the adverse party; that the  applicant   has suffered   prejudice  as all its money held  in the  bank account   was  hoarded and that  it  was denied  access; that the  matter  was  settled  two years  ago hence   there is  no reasonable  cause of  action; that the respondent  had frozen  and withdrawn   money from the applicant’s  account No. 1103280619 and  1119341175  held by the  Garnishee Kenya  Commercial Bank  at its Milimani  and Salama  Branches  respectively; and that the  respondent had    taken  full and  unfair  advantage  of the situation and  obtained court orders to freeze  the applicant’s accounts  as shown by  stay orders  at  Kisumu  Law Courts.

The respondent  filed a  replying  affidavit on 5th April 2016  sworn by Gerald  Wamalwa  the Managing  Director  of the Respondent  company contending that  the applicant’s  application dated  11th March  2016  is  misplaced, is an abuse  of the court process  and that the applicant  had not  come to court with  clean hands  as it is  being  economical  with the  truth; that  the orders sought  are incapable  of being  granted.  That the judgment  by the Honourable  magistrate  Usiu subject  of the intended  appeal  was  rescheduled and  was to be   delivered  on notice by the  court  which notice   by the court  was duly  done  on the court’s  notice board; that it  was not the duty of the respondent’s  advocates to serve the applicant  with a  notice of judgment  but that  the court; and that the  allegations  in paragraph 7 of the  affidavit  are therefore  misplaced; that shs  3,000,000 was attached  pursuant to an order  of the subordinate  court and with  the knowledge of the applicant  on 4th September  2012 and the  order  was never appealed  against; shs  3,000,000 has already  been released to the respondent by the Garnishee; that the  respondent will suffer prejudice if the orders sought   are granted; that  the further affidavit   sworn by   Daniel Ochieng  Mwaya  on 31st March  2016    introduces  new matters  that  were not before  the subordinate  court hence   those are  extraneous  matters to the intended  appeal; that the applicant  and Garnishee’s advocates   were invited  to fix a hearing  date but  they declined  hence the respondent took a date and gave a 2 months  notice for the hearing  and that  there  was no protest  or indication of  previous  commitment  indicated  on the hearing  notice; that it   was the applicant’s advocate  holding brief  on 16th July 2015  who sought  leave to  withdraw from acting  in the matter and that it is not  true that  the court initiated  her withdrawal and that the court  only recorded the wishes of  the applicant’s  advocate  and properly  proceeded with the hearing of the  matter; that the application dated  3rd March  2015   was the respondent’s application  seeking for  release of the shs 3,000,000; that the application dated  27th July 2015   was dismissed; that  the decree  has not been extracted  and that the provisions  of Order  21 Rule  8 of the Civil Procedure  Rules  2010  are not coached  in  mandatory terms; that  the attachment  for the  money  was made   pursuant  to a court order  which  was not appealed  against hence allegations of hoarding  are  made in bad faith and preposterous; that paragraphs 11 to 13 of the affidavit   by the applicant are meant to spoil the good name of the respondent’s   advocate hence they should be struck out as they are unsupported by facts; that the applicant  has not  satisfied conditions for granting  of stay pending appeal and that the application for stay is baseless and brought  without a  shadow  of an excuse; that there is no evidence that  the intended  appeal is not  frivolous  and or that if stay is  not granted, then the appeal, if successful would be  rendered  nugatory.  That  the information  supplied  to this court  is scanty and distorted and incapable  of assisting  this court  to determine  whether there is any  merit in  the application otherwise the court  would be  exercising  its discretion in the dark.

The parties’ advocates  urged  the application  dated  11th March  2015  orally  before me on 5th April 2016   with Mr  Langat  appearing  for the applicant   whereas  Miss  Mathenge represented  the  respondent.

In his submissions, Mr Langat stated that the judgment  in the lower court  was delivered  in their  absence  on 23rd February  2016  without any  notice being  served  on them  and they only learnt  of the judgment on 8th March  2016  when they  were served  with a certificate of urgency application  seeking to have the shs  3 million earlier attached  released to them  by the Garnishees.  Mr Langat  lamented  that  application  dated  3rd March  2016   was allowed  without  according them   an opportunity to be heard in that although they  filed grounds of opposition thereto, they were not granted   leave to file their  replying affidavit  and that the  court did not  consider their  grounds.  It was submitted that the release of shs 3 million to the respondent occasioned the applicant undue hardship.  He also lamented that they filed a defence which was never considered by the trial court.  That as the advocate in conduct of the applicant’s defence, he   was engaged in a highly contentious matter before the Court of Appeal.  He therefore  send his  colleague  Ms Tessie  Marienga  who gave reasons for Mr Langat’s  absence  since  the date  was not taken  by consent  but the trial  magistrate  refused  her a chance  to cross examine  the witness.  That   he then   filed an application to set aside the proceedings of 16th July 2015 but that   the said application is still pending.

Mr Langat   further submitted that the decree   was never send to him for approval contrary to Order 21 Rule 8 of the Civil Procedure Rules.  That the   release  of shs 3 million by the Garnishee to the respondent  has occasioned substantial  loss to  the  applicant who is a  developer  and who has  obligations  of paying  workers’ salaries  and  stamp duty  hence if  stay is denied, it stands to suffer  irreparably.  Further, that they wish to bring to the attention of the appellate court circumstances under which their defence was not considered by the trial court.  Mr Langat  relied on the case  of Edward Kamau & Another Vs Hannah Mukui Gichuki [2015] eKLR wherein this court  is said to have made it  very clear  on the application of Order 21 Rule  8 of the Civil Procedure Rules  and laid  a basis for  extension of time to appeal.  Further  reliance   was placed on Sameer Africa Ltd  V Aggraval & Sons Ltd  [2013] e KLR  and the Ugandan  case of Sinnabulya V Sekibaala  CA 6/2003  [2013] UG HC LD 23.

Referring to the  affidavit of  Gerald  Wamalwa , Mr Langat  maintained that his firm had no knowledge of the date of  judgment  and that therefore  the respondent had  stolen a match on the applicant and that the  integrity  of the proceedings of  16th July 2015  is in question since  the advocate who held Mr  Langat’s brief   was never  allowed to withdraw  her appearance.  He  maintained that  the intended appeal  is not  frivolous   and that they have fulfilled  conditions  for stay under  Order  42 Rule  6  of the Civil Procedure  Rules in that the  3 million  withdrawn from  his client’s account can be  converted  into  security for the due performance  of decree.

In a serious contest, Mr Mathenge counsel for the respondent   opposed the application relying on the replying affidavit sworn by Gerald Wamalwa on 4th April 2016.  He conceded  that indeed  there  was no notice  of delivery  of judgment  which  was delivered  on 23rd February 2016  and that the respondent’s  clerks  only found a notice on the court’s doors. That the  respondents,  after  judgment   was delivered, filed  an application for release of shs 3 million  and served  the application on  the applicant’s  counsel but  that  the latter had not disclosed  to this court   why they  never argued  their grounds of opposition which  they filed.  Mr Mathenge also submitted that the lower court  record was not here for this court to appreciate what went on in the lower court.  He vehemently denied that the lower court ever denied the applicant a chance to be heard.  He also submitted that the draft memorandum of appeal does not mention any ground on the applicant’s defence and that indeed, the applicant proceeded with the case yet they had no defence   on record.  That the respondent’s counsel invited the applicant’s counsel to attend a hearing of the suit 2 months prior to 16th July 2015 and there   was no protest.  Further, that there was no evidence that proceedings of 16th July 2015 were unconscionable.  That counsel for the applicant applied to withdraw from appearance.

Further, Mr Mathenge submitted that the applicant’s application dated 27th July 2015   was dismissed by the trial court.  Mr Mathenge  maintained that  there  was no decree appealed  against  and that the  applicant had not substantively explained  what they  were appealing  against.  He stated  that there   was an attachment   before judgment  so the shs  3 million  was procedurally  released  as it had been frozen  since 2012  hence the  alleged substantial  loss had not been  demonstrated by the applicant herein.  Further, that the form of security alleged had not been demonstrated.

On leave  to appeal out of time, Mr Mathenge   left it  to the discretion of the court but   maintained  that  conditions  for stay pending  appeal had not been fulfilled  hence that  prayer  should be  dismissed.

In a brief  rejoinder, Mr Langat submitted, clarifying  that their  client’s application  dated  27th July  2015   has been set  for hearing  on 6th August  2015    and that it   has not been heard and  determined.  He also stated that the Court of Appeal imposes dates on litigants    hence on 16th July 2015 he was engaged before the Court of Appeal.  He also stated that even  after release of shs  3 million  there  was a balance since the judgment  of 23rd February  2016   was for shs  4,313,325. 20 hence  there   was still the  danger  of further  execution for the balance  thereof.  He also clarified that their grounds of opposition to the respondent’s application in the lower court   were only on points of law and that they applied for leave to file a replying affidavit which leave was declined by the trial court.

After hearing   both parties’ advocates on the application dated 11th March 2016, I directed that  the lower court file  Milimani  CMCC 5157/2012  be availed  to this court to enable  me  peruse and appreciate  the proceedings  that took place  subject  matter of the  intended  appeal and  stay of execution  of decree pending  the intended  appeal.  I set the  mention  date  for  19th April  2016  by which  time the  lower court  file had  not been availed.  The matter was further slated for 26th April 2016.  Again on the latter date the file had not been submitted to this court.  I set   the mention  date for  28th April 2016 and directed  Honourable Mrs Wangila the Deputy Registrar  to personally take up the issue of the lower court with the lower court judicial staff and  report progress  on 28th April 2016.  On the latter  date, the lower court  file  was  availed  and I gave  ruling date  for 5th July  2016  at 2. 30 pm.  I also directed the applicant’s counsel present to serve the respondent’s counsel as the latter were absent.

I have carefully considered  the application dated  11th March  2016  the grounds thereof, the  supporting  and further  affidavit,  the replying affidavit  and both parties’ advocates  rival oral  submissions  together with the cited cases.  I have  also perused   the lower court  record  Milimani CMCC 5157/2012  albeit  with difficulty  since the  proceedings  and judgment are  not yet typed  and reading   the trial magistrate’s  handwriting  is not  without  challenges.

What I gather from the lower court trial record is that both parties to the dispute are limited liability companies incorporated under the Companies Act (Cap 486) Laws of Kenya.  The  plaint dated  4th September  2012  avers  that the  two entered into a construction/development  agreement  wherein the plaintiff  was to  construct  housing units for the defendant at an agreed  consideration of  shs  10,857,147. 30.  Later, the parties did on 17th April 2012 agree to terminate the contract and the defendant was to settle any monies due and owing to the plaintiff by 23rd July 2012.  The defendant  is then alleged   to have  been supplied with a list of  all the suppliers of  building  materials but the defendant  refused to honour terms  of the agreement by failing to  pay monies due to the suppliers  hence exposing the plaintiff  to multiple  suits by those suppliers.  The amount due   was shs  4,313,325. 20  which the plaintiff claimed  from the defendant together  with interest   at 25%  from  23rd July 2012  until payment  in full, costs of the suit and  any other relief the court may  deem just and fit to grant.

Before prosecuting the suit in the court below, the plaintiff sought and obtained orders of attachment before judgment vide Notice of Motion dated 4th September 2012.  The defendant was said to have closed shop in Nairobi to an unknown location and its only known asset was its KCB Milimani Branch Account No. 1103280619 hence the urgency of the matter. The trial court granted orders freezing the said named defendant’s account on 4th September 2012 on an exparte basis.

On 7th September 2012  the defendant entered  an appearance  through  the law firm  of Lumumba and Lumumba  advocates  whereas Kale  Maina  & Bundotich  advocates  filed  notice of appointment of advocates for the Garnishee KCB. In the  intervening  period, the plaintiff  learnt  that the defendant held another  KCB Salama House Nairobi account No.1119341175  with  funds hence  it sought  for another freezing   order on that account vide  an application dated  19th September  2012  under certificate of urgency and that application  was allowed on 19th September   2012.

On 18th September  2012, the defendant’s  counsel filed  notice of preliminary objection  to the entire  suit on the  ground that   there  was no  written authority  for the filing of  suit  on behalf of the defendant   by Ondabu and Company advocates  and that the supporting affidavit of Gerald  Wamalwa  was defective   hence the entire  suit should be struck out.  The record shows that the preliminary objection was heard on merit and   dismissed by the trial court   on 23rd May 2013 by Andayi W. Francis Senior Principal Magistrate.

On 21st  August  2012  the defendant  filed an application seeking  to discharge the orders   which froze  its bank account No. 1103280619 on the ground that the defendant  had made full  payments  to the plaintiff’s  suppliers  as per the further agreement  of 28th May  2012  where   a sum of  shs  5,594,649. 10  had been paid.  The court also notes that  on 26th September  2012   the earlier  two freezing  orders  were varied  by consent whereby only shs  3,000,000/-  in the KCB  Salama Branch  was frozen temporarily   until  8th October  2012.

On the latter  date, parties’  advocates  informed the court  that they  were  negotiating  out of court  and sought  for another date  12th October  2012 on which date parties’  advocates informed the court that they   were still negotiating.  As at19th October  2012  no settlement   was forthcoming that is when  the  preliminary objection   was argued   and a ruling   delivered on   23rd  May  2013  dismissing  it  with  costs.

On 4th November 2013  the applicant’s  counsel reported that he had  instructions that  the  matter had  been settled  and so  requested that a consent be recorded.  Mr Kimeria holding brief for  Mr Odhiambo  for the plaintiff/respondent  sought for a  further mention  which  was given as  18th January  2013  on which  date Mr  Ondabu for  the plaintiff stated that they had agreed  that the  matter  proceeds.

This court further notes that there is no order dispensing with interpartes   hearing of the applications wherein   interim orders of freezing    of the applicant’s bank accounts were issued.  In addition, the application by the applicant seeking for discharging of the freezing orders was never heard interpartes though it   was certified as urgent.  The court further notes that the defendant’s defence was never filed on record.  Only a Memorandum of Appearance was filed.  Also, I note that   the plaintiff/respondent never applied for judgment against the defendant/applicant in default of defence. Nonetheless on 16th July  2015, the suit proceeded to hearing  when PW1 Gerald Reuben  Wamalwa  testified  and the  plaintiff’s case  closed .  On that date, Miss Marienga held brief for Mr Langat and was recorded as saying the parties are negotiating to settle the matter.  Mr Odongo  for plaintiff responded that  parties  had been negotiating  since  2013  but no offer by  the defendant  for consideration  hence negotiations  broke down.  The court then directed the matter to proceed for hearing at 11. 00 am the same day.  At  11. 00 am after PW1 had  been sworn, Ms Marienga for Mr Langat  informed  the court  that she  had no further  instructions  to proceed  in the  matter  as Mt Langat    was held up at the Court of  Appeal.  The court remarked that the parties were informed earlier that the matter would be proceeding; hence the application to adjourn   was rejected early.  Matter to proceed. The hearing then proceeded with the court noting that the defendant   was not present.  Submissions   were reserved for 24th July 2015.

On 27th July 2015  the court  certified  an application dated  27th July 2015  which sought for  stay of  proceedings as urgent   for interpartes  hearing on 6th August  2015.  That application was canvassed  by way of written  submissions  and  vide a  ruling  delivered on 7th October  2015  the trial  magistrate  dismissed it had proceeded  to set  the suit for  judgment on 19th  November  2015.  However, judgment was delivered on 23rd February 2016 on which date only the respondent/plaintiff’s advocate was present.  There was no appearance by the defendant’s counsel.

The court record does not show when that date of 23rd February 2016    was given   and neither is there any evidence of notice to the parties’ advocates notifying them of the judgment date.

Soon  after the  judgment   date, the plaintiff’s counsel  filed an application under  certificate of urgency seeking  for release  of the shs 3,000,000 which had  been  frozen in the defendant/applicant’s  KCB  account  at Milimani  Branch and that  application was allowed  on 8th March 2016.  There  are grounds  of opposition  filed on the same date  of 8th March  2016  bur Mrs Mathenge   for the defendant sought for  indulgence  on the ground that judgment  had been delivered without notice  to them  and that their earlier   application  had never been prosecuted as  parties  were  still negotiating.  They were to seek instructions to put in documents. The trial magistrate proceeded to grant orders for release of shs 3,000,000.

This court also notes that  there is a  draft decree  on record  applied for  by  the  plaintiff/respondent’s  counsel  on 26th February  2016  but is not signed.  On that draft decree is a certificate of stated costs.  That is the long and short history of this matter.  With the above in mind, the  question is  whether this  court should;-

Grant to the applicant  leave to appeal out of time; and

Whether I should grant a stay of execution of judgment of 23rd February 2016 pending   the filing, hearing and determination of the intended appeal.

On the first question  of leave to appeal  out of time, I note  that the  respondent did not  put up  any opposition to that prayer for leave  to file an  appeal out of  time and left it to court  to decide  in its own  discretion. The power to grant  leave to appeal  out of time  is a discretionary power  donated  to this court by  Section 79G  of  the Civil Procedure  Act Cap 21 Laws of Kenya  which enacts  that:

“ Every  appeal from a subordinate  court to the High Court  shall be filed within  a period of  30 days  from the date of the  decree  or order appealed against, excluding  from such period any time which  the lower court may certify as having been  requisite  for the preparation and delivery  to the appellant  of a copy  of the decree or order.

Provided that an appeal may be admitted out of time if the appellant   satisfied the court that he had a good and sufficient cause for not filing the appeal in time.”

In the instant  case, judgment was delivered on 23rd February  2016  and this application  was lodged  on 14th March  2016  just about 17  days from the date when  judgment   was delivered.  That being  the case, and  as  the appeal is  challenging judgment  of  23rd February  2016, in the view of this court, that  prayer is  superfluous  since the  appeal No. 107  of 2016    filed on   14th March  2016   was filed within 30 days of  the date of  judgment  in the lower court which is  the period  stipulated  in Section  79G of the Civil Procedure  Act.  The only thing that I can  do is to order  that the appellant  herein  do pay court fees  for filing  of the said  Memorandum of Appeal dated  11th March 2016  in the event  that such fees   was not collected by the registry when the Memorandum of Appeal  was filed on 14th March 2016.  I must however mention that  even if the  above situation   was not prevailing, I would, in the circumstances  of this  case   have granted  such leave  to appeal out of time  for  reasons that  my meticulous  perusal  of the lower court  shows that there are  several irregularities  in the manner  in which that case was handled by the trial court from the beginning to  the end,  which, in my  humble  view, deprived  the appellant  an opportunity for a fair  hearing  contrary to the provisions of Article  50(1)  of the Constitution.  Some of those  irregularities  are: i.The two applications for  freezing  of  the appellant’s  bank accounts  with KCB  were  never  heard and  determined  interpartes; ii. There is no order on record confirming  the exparte/temporary  orders freezing  the two accounts  pending hearing  and determination  of the   said suit;iii. The appellant’s application to set aside/discharge the freezing orders was never heard and determined; iv. Although there was no defence filed by the defendant/applicant herein, there  was no  application by the plaintiff  for judgment  in default of  defence. The suit proceeded to hearing as if there was a defence on record. v. After the  hearing of  the suit  on 16th July 2015, judgment   was set for 19th November  2015  after  dismissal  of the application for  stay of proceedings  of  16th July 2015 on 14th September 2015. However, judgment was never delivered on 19th November 2015.  It was delivered on 23rd February 2016.  No notice of judgment   was ever served on any of the parties’ advocates.  As to whether the notice was found by the plaintiff’s clerks on the court door is not in my view, notice to the parties since no such notice   was exhibited in court.  One can  only appeal if they  know or  are made  aware of  a judgment  which they  can then make an informed  choice  as to whether  to appeal or  not.

Consequently, I would find  that there is sufficient  reason why the appeal could not  have been filed  within  30 days  of the date of judgment and  I would, without  hesitation  grant leave  and enlarge  such period  to a further   21 days  from date  of this ruling  to enable  the appellant  file and  serve the respondent  with a Memorandum of Appeal.

On the  second  question of whether  I should grant  to the appellant  herein stay  of execution  of the judgment  of 23rd February  2016   pending hearing  and determination of this appeal, the applicable   law is  Order  42 Rule  6 of  the Civil  Procedure  Rules  which  sets  out three conditions  that should  be fulfilled  by the  applicant  before stay is granted.  These are:

That substantial loss will be suffered by the applicant if stay is denied.

That  the application was filed  without unreasonable  delay; and

That  such security as the court  may order for the due performance of  such decree  or order   as may ultimately  be binding  upon the applicant  has  been given  by the applicant.

Starting  with the second  condition of whether  the application for stay   was filed  timeously, I find  that in view of my discovery and finding that  there  was indeed  no notice of  judgment to the parties; there is no  way the applicant   could have known of the judgment  in order to seek  for stay.  Nonetheless, the application for stay was lodged within  30 days  of the date of  delivery  of judgment.  The application   was filed on  14th March  2016  which  was  within  19 days of the date  of  judgment.  That, in my view, was within reasonable  time  considering that the applicant  was only made aware of the judgment   when its  advocates  were  served with  the application for  release  of the  shs 3,000,000 which had earlier  been frozen by  the court.

On the 1st condition to be  fulfilled, the applicant   is required  to satisfy the court that  substantial loss may result  to the applicant   unless the order of stay  is made; the  applicant contended that it is a developer  and that  unless the stay is  granted  and the  unfreezing  of its  accounts  is made, then it  will suffer irreparably as it will not pay stamp duty and  workers.  On the other hand, the  respondent contended that the  shs  3,000,000 had been frozen   in 2012   and that there had   been no challenge  by the applicant.  It is  also contended  that  the appeal  has no merit since the Memorandum of Appeal  does not  mention anything  to do with  the applicant’s  defence  which  the trial magistrate  had found was non existent.  Further, that there  was no merit  in the stay application  since it  had been overtaken  by events  when the trial court ordered  for the release  of the frozen sums.

The applicant  nonetheless countered those arguments of the respondent’s counsel with the  submission that the respondent had not  drawn any decree for approval  and that  according to   the judgment  of 23rd February  2016, there  was  still an outstanding  sum of money  to be settled  which would  necessitate  further  execution.

Having considered the above  rival  positions, in line with  the record  which I have  taken substantial  judicial  time to  peruse, I find that indeed the claim exceeded 3,000,000/- hence  payment of the above   sum from the frozen accounts would  not settle the decree. Secondly, the issue of  whether or  not the appeal  has any merit  is not  for this court  at this stage  to determine  since it would  in my view  prejudice  the outcome of the appeal.  However, this is not to say  that this  court cannot  examine  the record  and comment  on the  manner  in which the matter  was handled  by the trial  court, on the face of it as I have  already stated above.  There  are so many irregularities on record which   may have occasioned lapses that may have  prejudiced the applicant and which  the court on appeal, may have  to determine as stipulated  in Section 78  of the Civil Procedure  Act.  On that basis alone, I would  find that  the appeal herein is not  frivolous.

There  was  also an argument  that no decree was drawn  and or sent to the applicant’s  counsel for approval before  execution.  The record speaks for itself that there is a draft decree but not signed or sealed.  It  was never  shown by the  respondent that it sent  that draft ‘decree’ to the applicant’s  counsels for approval as  espoused  in Order  21 Rule  8  of the Civil Procedure  Rules.

In my view, although the respondent  contended that  the  above provisions are not  mandatory, failure to comply with the  provisions thereof  would lead to  execution by ambush and  a party can execute a decree which contains orders  which do not agree with the judgment and get away with it.  If that   were not  the case, there would be no need  for the Rules  Committees to make Order  21 Rule  8 of the  Civil Procedure Rule and there would  be  no need for notice of judgment  before execution of decree even to a party who did  not enter appearance   and  or file   defence in cases where  exparte   judgment  is entered.  My  exposition in the  case of Edward  Kamau Vs  Hannah Mukui Gichuki & Another [2016] e KLR  is a useful guide to this argument.

In my humble view, a party who is not given  an opportunity to examine a draft decree  before execution is ousted  from  accessing justice.  Further, it is my humble view that  the release  of shs  3 million   was, in my view, in execution  of the judgment  of part of  decree for the sum  awarded  in the judgment  since  the freezing  order   was a temporary  move  to preserve  the subject matter  of the suit  until  the suit   was heard  and determined . It  was  therefore  necessary that  the application for release of  shs  3 million   be made  only after  decree is approved  and  sealed.  The shs  3 million  was not and could not have been outside  the decretal  sum. As  was stipulated  in Branco Arabe Aspanol V Bank of  Uganda [1999] 2 EA 22, The administration of  justice should  normally  require that the substance  of all disputes  should  be investigated  and decided  on their  merits  and that errors, lapses  should not  necessarily  debar  a litigant   from the  pursuit of  his rights  and unless  a lack of adherence  to rules renders the appeal process  difficult  and inoperative, it would seem that the main purpose  of litigation, namely the  hearing and determination of disputes should be  fostered  rather  than hindered.

I must  however  clarify that the issue  of failure  to draw decree  can be rectified  and necessary  processes  followed .  Failure  to comply  with procedures  in drawing  of a decree  cannot  nullify a judgment  or render  an appeal nugatory.  The applicant  complains  that  if stay is not  granted, it  will  suffer  substantial  loss as a developer  and that it  will be  unable  to pay its  workers  and stamp duty.  However, there is absolutely  no evidence  before the court that  since 2012  when the  shs 3,000,000 which is only part  of the judgment   sum  was   frozen, four  years  later, the appellant had been  grounded from operating.  If that were so,  then the  appellant, in my  view, would have been  vigilant and proactive  in prosecuting its  application for  discharge/setting  aside of  the freezing  orders  which  was only issued  on a temporary  basis and which  was never  heard and or  determined  interpartes.  In addition, it has not been demonstrated that if stay is not granted  and the appeal is successful, it shall be  rendered  nugatory or that  the respondent is not   possessed  of sufficient  means to  recompense   the appellant. In the end, I find that the applicant has not demonstrated what substantial loss it will suffer if stay is not granted.

On security for due performance of decree, the applicant submitted that the shs 3 million released to the respondent   can act as security.  However, in paragraph 6 of the supporting affidavit by Jacktone V. Hongo, it is deposed that the applicant is ready to offer a bank guarantee as security for the performance of the decree pending hearing and determination of the intended appeal.  On the other hand, the applicant’s counsel’s affidavit  in support of certificate  of  urgency  sworn on 11th March  2016 by  K.H. Langat at paragraph  6 states that the applicant  would be willing to abide by any conditions of  the court  as  and when the  same applies  or  is required of them.

From the above  differing positions, it is  left to the court to  exercise  its discretion on what  would be  suitable  security  for the due  performance  of  decree if it grants  stay of executions of judgment  pending  appeal.

Having assessed  the conditions  for grant of stay of  execution pending appeal, I note that although the applicant has  not demonstrated that it  will suffer substantial loss if stay is not  granted, the circumstances  of this case  compel this court   to exercise  its discretion in favour of the applicant and  grant stay of execution of decree/judgment  made on  23rd February 2016   pending hearing  and determination of this appeal for the  following  reasons:-

That the  applicant  has all  along maintained  that it  paid  and settled  all the outstanding  sums due to the   plaintiff/respondent  and its  suppliers  which is  a triable  issue.

That the proceedings in the lower court were riddled  with irregularities  which I have  pointed out  above and  which could  have  prejudiced  the appellant’s right  to a fair hearing.

Consequently, I grant  stay  of execution  of judgment  delivered on 23rd February 2016  pending  hearing and determination of this appeal  conditional upon:

the applicant providing  a bank guarantee  for a sum of kshs  3. 5  million from a reputable  Kenya Commercial  Bank within 21 days from the date hereof. As there is no evidence that should the appeal succeed, the respondent  would not  be in a position to recompense  shs  3,000,000 already  released to it from the frozen funds, I decline to order for return  of the same.

Upon condition (a) above  being fulfilled, any order  in force that  froze the  applicant’s  accounts shall stand discharged/vacated.

Costs of this application shall be in the main appeal.

Dated, signed and delivered in open court at Nairobi this 18th day of July 2016.

R.E. ABURILI

JUDGE

In the presence of:

Mr Kariuki for the applicant

Ms Mathenge for Garnishee and holding brief for Ondabu for Respondent

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