Vanilla Glassmart General Hardware Limited v Pasha Enterprises Limited [2022] KEHC 625 (KLR)

Vanilla Glassmart General Hardware Limited v Pasha Enterprises Limited (Civil Appeal E026 of 2020) [2022] KEHC 625 (KLR) (4 May 2022) (Ruling)

Neutral citation: [2022] KEHC 625 (KLR)

Republic of Kenya

In the High Court at Machakos

Civil Appeal E026 of 2020

MW Muigai, J

May 4, 2022

Between

Vanilla Glassmart General Hardware Limited

Applicant

and

Pasha Enterprises Limited

Respondent

(Being an appeal from the judgment and decree by Hon. E.H. Keago (CM) in the Chief Magistrate’s Court at Machakos in Civil suit No. 405 of 2015 delivered on 5 th November, 2020)

Ruling

Notice of Motion dated 19thJanuary,2021 1. The Appellant/Applicant filed the application seeking for the following orders:(i)(Spent)(ii)That pending the hearing and determination of this application interpartes there be a stay of execution of the Courts decree and/or judgment in CMCC No. 405 of 2015 (Machakos) Pasha Enterprises Limited v Vanilla Glassmart General Hardware Limited.(iii)That pending the hearing and determination of the Appeal herein there be a stay of execution of the Courts decree and/or judgment in CMCC No. 405 of 2015 (Machakos) Pasha Enterprises Limited-Vs- Vanilla Glassmart General Hardware Limited.(iv)That costs of this application be in the cause.

2. The Application is based on the following grounds:(i)That the subordinate court delivered its judgment in this matter on 05/11/2020. (ii)That the Appellant/applicant being aggrieved by the said judgment has now appealed to this Court.(iii)That the Appellant is on the verge of being executed against now that the initial stay granted by the Subordinate Court has lapsed.(iv)That if the stay of execution is not granted, the Applicant shall suffer substantial loss.(v)That the Applicant is ready and willing to abide by any orders as to security that this Honourable Court may deem fit to grant.(vi)That unless the sought orders are granted, the appeal will be rendered nugatory.(vii)That the Appellants appeal has overwhelming chances of success.

Supporting Affidavit sworn on 19th January, 2021 3. The Appellant/Applicant sworn an affidavit and deposed- that the judgment was entered against him on 5/11/2020 in the CMCC No. 405 of 2015 and he has since filed an Appeal which is yet to be determined; that he is willing to furnish a bank guarantee for the due performance of such order or Decree as may ultimately be binding; that unless the orders are granted the Appeal will be rendered nugatory; that the Appeal has high chances of success; that he stands to suffer substantial loss if stay is denied in that it would be difficult to recover the decretal sum from the respondent in the event the Appeal succeed and that the Respondent has already commenced the preliminary steps towards execution

Replying Affidavit dated 27th January,2021. 4. That the Trial Court arrived at the correct findings after evaluating the evidence and submissions from both sides and the Appellants Appeal has no chance of success whatsoever as the claim in the lower Court was for liquidated sum of Kshs. 450,117/- and as per page 2 of the judgment, the Appellant did not tender any evidence in his defence despite having issued cheques in purported payment of the sums due which cheques were dishonoured by the bank.

5. That this application has been brought with the sole intention of denying the respondent from enjoying the fruits of a lawful obtained judgment.

6. That the Applicant has not demonstrated what substantial loss he will suffer if the stay pending appeal is not granted.

7. That there was deliberate, intentional and inordinate delay in filing this application and the discretion of the Court should not be exercised in favour of the Appellant who has been indolent.

8. That the Respondent is a financially stable and prominent company dealing in all kinds of hardware and building materials and it gave the Appellant goods on credit and it is therefore capable or refunding the decretal sum to the Appellant in case the Appeal is successful.

9. That the decretal amount is Kshs.747,194/- and it continues to attract interest at court rates and costs of the suit amount to kshs 148,172/ making a total sum of kshs.895,366/-

10. That if the application is allowed then the Respondent should be paid kshs.500,000/- and the balance be deposited in a joint account in names of both Counsel.

11. That there are sufficient reasons advanced to warrant granting the orders sought and the application should be dismissed.

Submissions Appellant/Applicant’s written Submissions 12. The Appellant/Applicant’s submitted that the application meets the legal threshold for stay pending appeal in terms of Order 42 rule 6(1) of the Civil Procedure Rules as it was filed without unreasonable delay.

13. The Applicant is willing and ready to provide such security as the Court may deem fit to order so as to guarantee the availability of the judgment/decretal sum in the event that the appeal does not succeed.

14. The Appellant submitted that he stands to suffer substantial loss if stay is denied at this stage as it would be difficulty to recover the decretal sum from the Respondent in the likely event that the appeal succeeds and the appeal which has overwhelming chances of appeal will be rendered nugatory; the Respondent stated that its financially stable but did not exhibit any documentary proof in support. In support the Appellant cited the case of National Industrial Credit Bank v Aquinas Francis Wasike and Anor [2006] eKLR the Court of appeal stated that:“This court has said before and it would repeat that while the legal duty is on an Applicant to prove the allegations that an appeal would be rendered nugatory became a Respondent would be unable to pay back the decretal sum, it is unreasonable to expect such Applicant to know in deal the resources owned by a Respondent to the lack of them. Once an Applicant expresses a reasonable fear that a Respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the Respondent to show what resources he has since that is matter which is peculiarly within his knowledge – see for example section 112 of the Evidence Act, Chapter 80 Laws of Kenya.”

15. The Appellant submitted that the Respondent herein has not disclosed or shown what resources it has.

Respondent/ Written Submissions 16. The Respondent submitted that the Appellant/Applicant has not offered any proof that it will suffer substantial loss if the money/decree is executed against it as there is no evidence that the company will collapse if it pays the Respondent the sum of Kshs.895,366/- and no bank statement have been annexed to demonstrate the financial status of the Applicant/Applicant.

17. That it is not agreeable to the Appellant/Applicant furnishing of a bank guarantee as the amount on the bank guarantee shall not earn interest and proposes that the decretal sum should be deposited in a fixed account in the joint names of both advocates.

18. In the case of Kenya Shell Limited v Kibiru & another HCCA No. NAI 97 of 1986 where the Court held that;“The refusal of a stay of execution would not render the appeal nugatory as the case involved a money decree capable of being repaid.”

19. In the case of Beth Eul Muiruri Benjamin v Development Bank of Kenya [2006] eKLR where the court ordered the Defendant to deposit the entire decretal amount including the taxed costs in a joint interest earning account of both counsel.

Determination 20. The Court is called upon to consider the application for stay of execution of the judgment of the Trial Court pending appeal on merit.

21. Order 42 Rule 6 CPR 2010 provides for stay of execution to be granted subject to the following grounds/conditions;

Substancial Loss 22. The issue is whether the Applicant/Appellant shall suffer substantial loss if the stay of execution is not granted. The difficulty deposed is that if the decretal amount is paid to the Respondent before the appeal is heard and determined in the event of success of the appeal, it will be difficult to recover the decretal amount from the Respondent. Also if the stay of execution pending appeal is not granted the appeal which the Appellant takes the view has high chances of success will be rendered nugatory.

23. The Respondent submitted that the Appellant did not provide any evidence that if the Company paid Ksh 895,366/- the Company would financially collapse. The Respondent submitted that it is a financially stable and prominent hardware Company and would comfortably refund the decretal amount in the event of successful appeal.

24. This Court considered the following authority;Hon. Odunga J. in Republic v The Commissioner for Investigations and Enforcement 'ex-parte’ Wananchi Group Kenya Limited, Miscellaneous Civil Application no. 51 of 2013, observed that:“(43)It is therefore not sufficient to merely state that the decretal sum is a lot of money and the applicant would suffer loss if the money is paid. In an application of this nature, the applicant should show the damages it would suffer if the order for stay is not granted since by granting stay would mean that the status quo should remain as it were before the judgement and that would be denying a successful litigant of the fruits of his judgement which should not be done if the applicant has not given to the court sufficient cause to enable it to exercise its discretion in granting the order of stay.” (Emphasis added).

25. In Tabro Transporters Ltd v Absalom Dova Lumbasi [2012] eKLR for the proposition that:“In law, the fact that the process of execution is likely to be put in motion, by itself, is not a ground for granting stay of execution. The Applicant must show that substantial loss will occur if the execution is not stayed. But what does substantial loss entail?...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…”

Whether to grant stay of execution pending appeal 26. The Court, in RWW v EKW [2019] eKLR, addressed its mind to the purpose of a stay of execution order pending appeal, in the following words:“The purpose of an application for stay of execution pending an appeal is to preserve the subject matter in dispute so that the rights of the appellant who is exercising the undoubted right of appeal are safeguarded and the appeal if successful, is not rendered nugatory. However, in doing so, the court should weigh this right against the success of a litigant who should not be deprived of the fruits of his/her judgment. The court is also called upon to ensure that no party suffers prejudice that cannot be compensated by an award of costs.”

Unreasonable Delay 27. The Applicant submitted that the impugned judgment by the Trial Court was delivered on 5/11/2020. The Appellant/Applicant filed Memorandum of Appeal on 18/11/2020 and the instant application for stay of execution was filed on 19/01/2021 and therefore, the appeal was filed without delay and within the statutory timelines there was no unreasonable delay.

Furnish Security 28. The Applicant has pleaded that he is willing to offer any security as may be ordered by court. The applicant offered a bank guarantee for due performance of such order or decree.

29. The Respondent refused the bank guarantee as there will be no interest earned.

30. The Respondent argued that the decree is a money decree and in their view the appeal is lodged with sole intention of denying Respondent fruits of its judgment.

Arguable Appeal 31. As to what constitutes an arguable appeal, the Court of Appeal in Nairobi Women’s Hospital v Purity Kemunto [2018] eKLR:-“To say that an appeal is arguable is another way of saying that it is not frivolous and that it raises a bona fide issue deserving full consideration by the Court. Even one bona fide issue will satisfy the requirement, for the law does not look for a multiplicity of arguable issues.”

32. From the above consideration of circumstances under Order 42 Rule 6 CPR 2010, this Court takes the view that an aggrieved party has a legal right of appeal and therefore the grant of the application of stay of execution is necessary to maintain status quo of the subject matter of the appeal and not render the appeal nugatory.

33. From the pleadings and submissions filed by parties, the appeal was filed without undue delay, the Appellant is willing to provide security but the proposed security is opposed by the Respondent. On the merits of the appeal, that is premature to determine at this stage until the appeal is heard for determination.

DispositionIn the circumstances, this Court grants the stay of execution on the following conditions;1. The Appellant/Applicant to pay the Respondent within 90 days of delivery of the Ruling ½ decretal amount and the balance be deposited in a joint interest earning account held by advocates on record of each party to these proceedings/appeal2. Thereafter, the parties/Counsel may file Written Submissions and exchange within 21 days each party and obtain a mention date from DR/MHC/Registry.3. Each Party to bear its own costs.

DELIVERED SIGNED & DATED IN OPEN COURT ON 4TH MAY 2022 (VIRTUAL CONFERENCE)M.W. MUIGAIJUDGE