Tsusho Capital Kenya Limited v George Ouma Oketch [2017] KEHC 3372 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL APPEAL NUMBER 27 OF 2017

TSUSHO CAPITAL KENYA LIMITED. ……………………… APPLICANT

VERSUS

GEORGE OUMA OKETCH. ……….……………………….RESPONDENT

RULING

This is an application dated 31st January, 2017 brought by Tsusho Capital Limited the application against the Respondent George Ouma Oketch brought under Order 22 Rule 22, Order 42 Rules 4 and 6, Order 50 Rule 4, Order 51 Rule 1 of the Civil Procedure Rules, 2010, Section 3, 3A and 100 of the Civil Procedure Act and allow the enabling provisions of the law, seeking orders that: -

1. That the Honourable Court be pleased to order a stay of execution of the ruling issued by the Honourable Court on 12th January, 2017 by Honourable D O Mbeja pending the hearing and determination of this Application.

2. That this Honourable Court be pleased to stay the execution of the ruling obtained herein pending the full hearing and determination of the Applicant’s Appeal, High Court Civil Appeal No. 27 of 2017.

3. That this Honourable Court be pleased to issue an injunction preventing the Respondent from dealing with vehicle registration No. KBU 399J Mercedes Benz Compressor (the “vehicle”) in a  manner prejudicial to the rights of the applicant pending full hearing and determination of the Applicant’s appeal, High Court Civil Appeal No. 27 of 2017.

The application is premised on the grounds that: -

a) Ruling herein was entered on the 12th January, 2017 by the Honourable D. O. Mbeja in with the Respondent’s application dated 17th June, 2017 was allowed.

b) The Applicant being aggrieved and dissatisfied with the said ruling has preferred an appeal from the same to the extent that the said ruling permanently restrains the Applicant from interfering with the vehicle yet the Respondent continues to be in default of his obligations under an Auto Loan Agreement dated 26th April, 2013 (“the Agreement”),

c) In this regard the Respondent has fallen back on payments due to the Applicant under the Agreement and the monies owed by the Respondent continue to accrue interest.

d) Pursuant to interim orders issued by the Honourable court on 17th June, 2016, the vehicle has since been returned to the Respondent’s custody.

e) That the Applicant is apprehensive that if the stay is not granted, the Respondent may deal with the vehicle in a manner prejudicial to it and if the appeal is successful, it may not be able to recover the same from the Respondent.

The application is supported by a supporting affidavit of Rebeccah Niwagaba Advocate sworn on 31st January, 2017 in which she reiterates the grounds of the application.

The application which was brought under Certificate of urgency was heard ex-parte and Thuranira J, certified the same as urgent and directed that it be heard on priority basis.

The Respondent George Ouma Oketch filed a replying affidavit sworn on 13th March, 2017 in which he deponed that the appellant and Respondent were parties to a loan agreement dated 27th April, 2013 whereby the applicant advanced him a financing facility of Kenya Shilling On Million, Seven Hundred and Forty-seven, One Hundred Ninety Five (Ksh.1,747,195/-), towards to purchase a motor vehicle registration Number KBU 399J, Mercedez Benz Compressor. The said amount was paid directly to the Motor vehicle dealer and repayable in 48 equal monthly instalments of Ksh. Fifty Six Thousand Six Hundred and Sixty, Sixty Nine Cents (Ksh.56,660. 69/-). That sometime on or about 9th June, 2016 with approximately ten (10) months left in the loan agreement, Valley Auctioneers Limited came to his compound and seized the suit vehicle, purporting to repossess it on instructions of the Appellant.

He depones further that consequently, he sought courts protection by filing at the Nairobi Chief Magistrate’s Court Civil Suit No. 3891 of 2016 where simultaneous with the Plant he brought an application under certificate of urgency seeking the restraining orders.

The Respondent depones that the application as framed is defective and bad in-law as there is no provision of the law that provides for “execution of ruling.” That in any event the Appellant’s prayers for stay of execution have been overtaken by events since the Appellant returned the suit motor vehicle in compliance of the court’s ruling. The motor vehicle is in his possession.

He avers that the appellant has not demonstrated any loss whatsoever let alone substantial loss that it shall suffer if its application herein is not granted. That the Appellant has all along been deliberately reluctant to provide accounts of sums thus far received by itself in repayment of the loan which he avers are far in excess of its entitlement per the agreement. That in the absence of accounts that are solely with the Appellant it is him who shall suffer if the court’s finding is that this misconceived application has left to stand on.

He further avers that the application is predicated on an appeal that is by and of itself premature and incompetent having been preferred by the applicant in lieu of participating in the proceedings before the lower court, which proceedings are still alive and pending hearing and final determination. That the appeal has got neither a legal no factual basis and therefore unlikely to succeed. Further he depones that the appeal is based on a misapprehension by the Appellant of the said ruling of the learned Hon. Magistrate. Failure by the Appellant to file a defence and/or counter claim in CMCC No. 3891 of 2016 was but an observation in the course of the ruling.

The genesis of these proceedings is an agreement dated 26th April, 2013 between the Applicant Tsusho Capital Kenya Ltd and the Respondent George Ouma Oketch in which: -

“1. The company agrees to lend to the Borrower and the Borrower shall borrow from the company a sum of Kenya Shillings One Million Seven Hundred and Forty Seven Thousand One Hundred and Ninety Five shillings Only (Kshs.1,747,195. 00) (hereinafter referred to as “the loan”) upon and subject.

Application

a) The Loan shall be applied towards the purchase of a (new/used) vehicle shoes particulars are set out in Schedule of this agreement (hereinafter called “the Vehicle”).

b) The purchase price of the vehicle in Kenya Shilling Two Million One Hundred and Eight Three Thousand One Hundred and Ninety Five Shillings Only (Ksh.2,183,195. 00) Only.

Repayment

1) The Borrower agrees and undertakes to repay the loan at the rate of Kenya Shillings Fifty Six Thousand Six hundred and Sixty Shilling and Sixty nine cents only (Ksh.56,600. 69) per month payable on the 30th day of every month commencing on 30th May, 2013 and thereafter on each subsequent month until payment in full of the loan with the final payment due on 30th April, 2017, together with floating interest thereon at the rate of 23. 50% per annum, which rate is subject to revision at the sole discretion of the company.”

It appears that the respondent defaulted in the repayment and the

Respondent threatened to or repossessed the motor vehicle. This action by the applicant prompted the Respondent to file Milimani Commercial Court civil suit no. 3891 of 2016. Consequently, the Respondent filed an application seeking orders to restrain the applicant from selling and or disposing the motor vehicle or interfering with the respondent quiet possession and further to restore to the Respondents the motor vehicle registration No. KBU 399J. This is the application which was granted precipiting the present application at the High Court.

By consent of counsel for both parties, the parties filed respective submissions, Mr. Alwagaba for the Applicant submitted that the main issue for determination is whether this court should grant the orders sought and in particular vacate the order for permanent injunction restraining the Applicant from interfering with the vehicle as the same would mean that the Applicant will not repossess the vehicle now or in the future. He submits that such an order can only be granted at the conclusion of a suit and not when the application is made pending the hearing of the suit. He submits that the objective for temporary injunction is to maintain the status quo until the issues are determined at the hearing of a suit.

Mr. Odhiambo for the Respondent submitted that the order of the court was fully implemented and the subject motor vehicle is in the possession of the Respondent and that in effect there is nothing that this court can stay, as the application has been overtaken by events. Counsel further submits that the Applicant has not shown that the implementation of the order causes or will cause him any pecuniary loss or even any substantial loss.

From the application and submissions the main issue for determination by this court is whether this court should issue a stay of execution of the order dated 12th January, 2017, restraining the applicant from repossessing or in any way interfering with the possession of the same by the Respondent.

The ground upon which  a court can order a stay of execution of a lower court order are set out in Order 42 Rule 6 of the Civil Procedure Rules which states: -

“O.42 Rule 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 form ay 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 appeals 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 persona aggrieved by an order for stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.”

The granting or refusal of a stay of execution pending the hearing of an appeal is discretionary and the court will consider and balance the interest of the applicant and those of the respondent and make orders that will ensure that justice is done. The applicant must however, satisfy the court that he will suffer substantial loss, the application has been made without undue delay and that he is ready to provide such security for the due performance of the decree, in Bungoma High Court Misc. Application No. 42 of 2011, James Wangalwa & Another Vs Agnes Naliaka Cheseto held that: -

“The applicant must establish other factors which show that the execution will create a state of affair 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….”

In the present application the main suit is proceeding for hearing on the merit before the trial magistrate. The orders made on 12th January, 2017 were only made to bar the Respondent from repossessing and or interfering with the possession of the motor vehicle subject of the suit. If the order was made to permanently restrain them from repossessing the said vehicle, that was in error as an application made in the course of a hearing or order made in such application ought to last until the suit is heard or finalized on merit.

In the present application I am not satisfied that the applicant will suffer any substantial loss if the order is not set aside or reviewed. The vehicle will be under the custody of the Respondent pending the hearing and determination of the suit. There is no evidence that it will be devalued substantially or that the applicant will suffer any substantial loss. I, therefore, do not find merits in the application which is hereby dismissed with costs.

Dated, signed and delivered in Nairobi this 18th day of September, 2017.

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S N RIECHI

JUDGE