Transmara Sugar Company Limited v Ombasa [2022] KEHC 3154 (KLR)

Transmara Sugar Company Limited v Ombasa (Civil Appeal 33 of 2021) [2022] KEHC 3154 (KLR) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 3154 (KLR)

Republic of Kenya

In the High Court at Migori

Civil Appeal 33 of 2021

RPV Wendoh, J

May 12, 2022

Between

Transmara Sugar Company Limited

Applicant

and

James Ondara Ombasa

Respondent

Ruling

1. The application for consideration is one dated 18/6/2021 filed on 22/6/2021 by the appellant. The appellant is seeking:-a)Spent.b)Spent.c)That pending the hearing and determination of the appeal, this court be pleased to order stay of execution of delivered on 27/4/2021 in Migori CMCC 14/10/2016 and all consequential orders emanating therefrom.d)Costs of this application be provided to.

2. The grounds upon which the application is premised are found in the body of application and the supporting affidavit of Rajesh Bhargava, the legal manager of the appellant. He deponed that the applicant was sued in Migori CMCC No. 1410 of 2016 between Jared Ondara Ombasa vs Transmara Sugar Co. Ltd; that judgement was delivered on 27/3/2021 and the applicant was ordered to pay the sum of Kshs. 444, 978/= with costs plus interest.

3. Being dissatisfied with the judgement and decree, the applicant preferred the instant appeal (RB-1A) which has a high chance of success; that the applicant is apprehensive that the respondent will execute at any time since its previous counsel inadvertently failed to seek a stay of execution as negotiations were on going; that the applicant came to know of this judgement on 10/6/2021 when there was a threat of execution.

4. It was further deponed that the applicant ought not to suffer due to the inaction of its previous Counsel on record. It is apprehensive that if the decretal sum is paid to the Respondent, it may never be recovered and the appeal will be rendered nugatory and hence the applicant will suffer substantial and irreparable harm; that the applicant is willing to provide a security for costs through a bank guarantee and/or depositing title documents of its movable assets as security for stay to be granted.

5. The application was opposed. The 1st respondent filed a replying affidavit dated 28/9/2021. He objected to the issuance of a bank guarantee as security for due performance of the decree. The Respondent suggested that the decretal amount be deposited in court and/or in the alternative in a joint interest savings account of the advocates. He further deponed that the applicants’ major shareholders are foreigners who might flee Kenya at any time leaving him without any recourse in the event the appeals is dismissed.

6. On 9/11/2021, this court directed that the application be canvassed by way of written submissions. It is only the applicant who complied, through the firm of Wachira Wekhomba Aim Advocate. I have considered the said submissions, the application and affidavits filed therein.

7. The application is one of stay pending appeal. Order 42 Rule (6) (1) and (2) makes provision for stay pending appeal as follows:-(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.(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 ultimate be binding on him has been given by the applicant.”

8. The four (4) salient ingredients that the applicant should establish for orders of stay of execution to issue are: -a)that the applicant will suffer substantial loss if stay is not granted;b)That the application has been filed without unreasonable delay;c)The applicant is willing to furnish security for the due performance of the decree;d)The applicant has an arguable appeal.

9. On the issue of substantial loss, it is the applicant’s submission that if the money is paid to the respondent, the respondent cannot repay the money as it believes the respondent is a pauper who may not be in a position to refund the decretal sum. In the case of Silverstein v Chesoni(2002) 1 KLR 867 cited inSuperior Homes (Kenya) Limited vs Musango Kithome (2018) eKLR the Court of Appeal held as follows:-“…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”

10. The assurance that the appellant will not suffer substantial loss is the ability of the respondent to refund the decretal sum if the appeal succeeds. In Superior (Homes) Kenya Limited vs Musango Kithome (supra), the court held:-“…The law, however, appreciates that it may not be possible for the applicant to know the respondent’s financial means. The law is therefore that all an applicant can reasonably be 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 have shifted to the Respondent to show that he would be in a position to refund the decretal sum.”

11. A similar finding was made in Kenya Posts & Telecommunications Corporation v Paul Gachanga Ndarua (2001) eKLR as follows:-“…Of course, ordinarily the burden was on the Corporation to show that were its appeal to succeed, the success would be rendered nugatory because the respondent would be unable to restore the decretal sum if that sum was immediately paid out to respondent immediately. But in a case such as this where it is alleged that the respondent has no known assets, the evidential burden must shift to him to show that he has assets from which he can refund the decretal sum. That must be so because the property a man has is a matter so peculiarly within his knowledge that an applicant such as the Corporation may not reasonably be expected to know them. He did not do so. An undertaking to give security by way of a bank or insurance bond is, in the circumstances of this matter, not sufficient.”

12. The appeal challenges the award of the decretal amount which the outcome thereof is not known until the substantive appeal is heard and determined. The respondent did not attempt to rebut the claims that he is a pauper and may not be able to repay the decretal amount in the event the appeal succeeds. In the absence of even an affidavit of means from the respondent to explain his ability to repay, then the court is left to believe that indeed the respondent may not repay the decretal amount in the event the appeal succeeds. The applicant will therefore suffer substantial loss and the appeal will be rendered nugatory if the order of stay is not granted. I find that the appellant has demonstrated that it will suffer substantial loss.

13. On whether there was unreasonable delay in bringing this application, the applicant alleges that it was threatened with execution on 27/4/2021. The instant application for was filed on 22/6/2021. The delay in filing this application for stay of execution was coupled with the fact that the applicant’s previous Counsel was allegedly negotiating with the respondent’s Counsel. This fact has not been denied by the respondent. There being a memorandum of appeal on record, I find that the delay of 2 months is excusable owing to the reasons tendered before this court. I find that there was no unreasonable delay.

14. On security for the due performance of the decree, the appellant averred that it is willing to abide by the court orders in regard to security for due performance of the decree. On 25/6/2021, this court directed that the applicant provides a bank guarantee for the decretal sum within 10 days. The applicant confirmed in its submissions that the order has been complied with. The respondent did not refute this statement. I find that the applicant has fulfilled this condition and provided security for the due performance of the decree.

15. Whether the applicant has an arguable appeal: the applicant is disputing the award of damages in the sum of Kshs. 444,987/= arising out of an alleged breach of contract. This is arguable.

16. In the end, I make the following orders:-a.That an order of stay of execution of the judgement and decree delivered on 27/3/2021 in Migori CMCC No. 1410 of 2016 and all consequential orders thereto do issue pending the hearing and determination of this appeal.b.The appellant is allowed 60 days to file a record of appeal.c.Costs of this application do abide the outcome of the appeal.

DATED, DELIVERED AND SIGNED AT MIGORI THIS 12THDAY OF MAY, 2022R. WENDOHJUDGERuling delivered in the presence of:-Aim for the ApplicantNo appearance for the RespondentNyauke Court Assistant