Wilson Kanyi Kareithi v Mount Pleasant Limited, SBI International Holding, AG Kenya & Benhur Milton Mulonzia [ [2016] KEHC 4191 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL   NO.  385 OF 2015

WILSON KANYI KAREITHI………………………………….APPELLANT

VERSUS

MOUNT PLEASANT LIMITED …………………….…….1ST RESPONDENT

SBI INTERNATIONAL HOLDING

AG KENYA …………………………………………………2ND RESPONDENT

BENHUR MILTON MULONZIA………………………….....3RD RESPONDENT

RULING

Vide  a Notice of Motion  dated  13th August  2015  and filed in court on the eve date, the applicant/appellant  Wilson Kanyi Kareithi seeks  from this court  orders for  stay of  execution of the ruling, proceedings, orders  and all consequential orders made  on 4th April  2015  in Milimani CM CC 5/2014 pending  hearing and determination  of the 5th interested  party’s appeal.  He also prayed for costs of the application.

The grounds  upon which  the application is predicated are that; the trial  magistrate declined to  stay proceedings pending appeal; that the trial court  unilaterally ordered  for  release  of shs  1,935,742. 00 deposited in court on 11th March 2014  by the 2nd  respondent  despite  finding that there  was no evidence  to prove that  either  party  was a director/shareholder  of Mount Pleasant Company  and without  a review application; there is a  dispute over  the directorship of Mount  Pleasant Company between the appellant  and Muchemi Mwangi; that the  applicant shall suffer irreparable  loss  unless  stay is granted  as the release  of funds will prejudice the applicant’s  interests  in the matter  and leave the company indebted  to creditors  as  the money  risks  being withdrawn  by illegitimate  directors  while the issue of disputed directorship has not been resolved.  The appellant  has an arguable  appeal with high chances  of success; the applicant has a legitimate  claim and  will be prejudiced; he is willing  to abide by any  directions of the  court as  the amount involved  is deposited in court; the respondents  will not suffer  any prejudice  if the  orders of stay are granted, the application has been made within  reasonable  time and without undue  delay.

The application is supported by the  affidavit  sworn by the  appellant  Wilson Kanyi  Kareithi  reiterating  the grounds  in support of the application and annexing  as exhibits  copies of the  impugned  ruling, and  order of 11th August  2015; application upon which the orders of  4th August 2015  were made; consent filed  on 31st March 2014; and searches  from Registrar  of companies  showing  the Directorship and shareholding of Mount  Pleasant   Limited.

The application is opposed.  The  1st respondent  company Mount Pleasant  Limited  filed a  replying affidavit  sworn  by Mucemi Mwangi a director  of the company  contending  that the appellant   failed to disclose  material  information within his knowledge that would assist  the court to arrive  at a just and expeditious determination of the application before it; that  the allegation  that there exists  a dispute as to the directorship of the 1st respondent is false  and only intended to subvert a loan agreement dated 31st  October  2012  which ushered  in Frank David  Gitura Kariithi and Mucemi Mwangi. Further, that there  were no proceedings  for determination of any dispute  relating to the directorship  of the  1st  defendant; that the CR12 annexed  by the applicant are not genuine; that the applicant participated  in the  lower court  proceedings  as an interested  party and never contested  the deponent’s  authority to sue on behalf  of the 1st respondent  company as its director; that  there is no ground upon which the  balance  of the contractual sum  which  was admitted could not be released  to the 1st respondent; that  the 1st respondent and  its directors  risked being listed  as defaulters  with Credit  Reference Bureaus owing to the company  accounts   being overdrawn  substantially as shown by a demand  issued  by Co-operative Bank of Kenya as annexed and admitted by the appellant in his paragraph 9 of his  supporting affidavit; that the 1st respondent is indeed indebted  to creditors; that  the 1st  respondent’s entitlement  to the money in question is not  contested  but that  it is clear that the appellant  has developed  a personal interest  in the money  deposited  in court for the  benefit  of the 1st respondent which claim  if any should be  pursued  through  an independent  cause; and that the  order of 4th August  2015  should be  enforced  to minimize  irreparable  loss to  the 1st respondent  including loss of  opportunities  and the cost of  money owed  to the creditors  if stay is granted.

The 1st  respondent through its director Mr Mucemi Mwangi also filed a  Notice of Preliminary objection on a point  of law  dated  24th August  2015  and  filed on 25th August  2015 contending that;

The Memorandum of Appeal dated 12th August 2015 is incompetent, a nullity and not allowed by law and should be struck out.

The appellant did not seek leave or obtain leave before filing his appeal as required by the law.

That the appellant be condemned to pay costs of the application.

The parties agreed to canvass the application dated 12th August 2015 by way of written submissions.

The appellant/applicant  filed his on  12th October 2015 challenging   the preliminary  objection  dated 24th August  2015  and his submissions  on his application dated  12th August  2015   were filed  on 3rd November  2015.

The  1st respondent’s submissions on the preliminary objection are dated  29th October  2015  and filed on  30th October  2015  whereas  its submissions   on the application dated  12th August  2015  is dated  2nd December 2015.

It is  a general principle  of law that  a preliminary objection is determined  in  limine because  of its  preliminary significance and if found  to be meritorious, it might determine  the whole  suit  or appeal herein  and therefore  there would  be absolutely no  reason why the court should  determine  the merits  of the application.

The 1st respondent has raised the objection as to the competence  and therefore  legality  of the entire  appeal  contending that the appellant’s  Memorandum of Appeal dated  12th August 2015  emanates  from the ruling  and orders  made by the  lower  court  as a consequence  of an  application made under Section 1A,1B and 3A of the Civil Procedure  Act, 2010.  Further, that appeals  from such orders  do not  fall within the  category of appeals that  lie  as of right and therefore  the appellant  required  to seek and  obtain  leave of court prior  to filing  the appeal.  In this case, it is submitted that no such leave was sought and or obtained.

Further, that the pronouncement by the trial court that “Right of appeal within 30 days”, cannot be construed as granting leave. That leave  must expressly be  sought and obtained, and  that the onus  was on the  appellant  to show to this court incontrovertible  proof that leave  was indeed sought and obtained  in the lower court.  That the record does not show that leave was sought or obtained.  Consequently,  it was submitted by the 1st  respondent    that the appeal  is  incompetent, a nullity  and not allowed  in law  hence it  should be struck out with  costs.

In opposing    the preliminary objection filed by the 1st respondent, the appellant/applicant submitted that the preliminary objection  was a non starter and only intended  to derail the proper  determination  of the matter and to cloud  the issue  in a veiled attempt  to dissuade  the  court from  determining the real question in issue.  That the preliminary Objection is unmerited, frivolous, unjustified and an abuse of the court process and only intended to delay the just determination of the matter.

The appellant invited the court to determine this matter on its merits and avoid technical objections that do not serve the greater need for justice, relying on Sections 1A, 1B and 3A of the Civil Procedure Act.  It was also submitted that the 2nd and 3rd respondents had not objected to the application and that the 1st respondent   did not apply for review of the ruling of 4th August 2015. The rest of the submissions by the appellant go to the merits of the application for stay pending appeal.

Having  considered the brief rival  submissions by both parties to this  application on the competence of the  appeal and therefore  the application  for stay pending appeal, I am  in total agreement  with the 1st  respondent  that this appeal  and therefore  the application has absolutely  no competence   and is for dismissal  for the reasons that : Order  43 of the Civil Procedure  Rules  lists other provisions of the  Civil Procedure  Rules in respect  of which  appeals can be preferred from orders  made there under. Section 1A, 1B,3A  and 63 of the Civil Procedure Act and  “ all other enabling  provisions  of the law” under which  the application  dated  25th May 2015   was brought seeking  for release of shs  1,935,742,00 the  1st  respondent is not included in Order  43  of the Civil Procedure  Rules.  In the absence of leave having been obtained to file this appeal, it follows that this appeal and therefore the application are all incompetent and must be struck out.  Section 75 of the Civil Procedure Act provides that:

(1) An appeal shall lie  as of right  from the following  orders  and shall also lie  from any other  order with leave of the court  making such order of the court to which an appeal would  lie if leave were granted…..

(h) any order made under rules from which an appeal is expressly allowed by the Rules.”

Clearly, this appeal is not against a judgment since the substantive matter  in the lower court has not been determined.  It therefore  follows that an appeal  from an order  or ruling under Sections 1A,1B,3A of the Civil Procedure Act  can only  be brought  with leave  of the court  first being  sought either  at the  time of  delivery of such ruling or by way of an application  filed  within 14 days  from the date  of delivery of the ruling.  (see CA Nyeri 14/2013; CA 88/1996; CA 215/2010.

In CA 105/98 KCB Ltd V Esipeya the Court of Appeal   held that leave to appeal was necessary where there is no express right of appeal flowing from the rules under Order 43 of the Civil Procedure Rules and Section 75 of the Civil Procedure Act.

In Nyutu Agrovet V Airtel Networks Ltd [2015] e KLR the court held that leave to appeal does not constitute the right of appeal.  That the right of appeal must precede leave.  Citing with approval Ringera J (as he then was) in Nova Chemicals Ltd V Alcon International Ltd HC Miscellaneous Application 1124/2002, where the learned judge held that:

“The point of departure must be the recognition that the right of appeal, with or without leave, must be conferred by statute and the same is never to be implied.”  …… and even Section  75  of the Civil  Procedure  Act giving this court jurisdiction to hear  appeals from the High Court, should be read to mean that  these provisions  of the law also confer  the right of appeal on the litigants.

The power or authority to hear an appeal is not synonymous with the right of appeal which a litigant should demonstrate that a given law gives him or her to come before this court.  To me, even if jurisdiction and the right to appeal may be referred to side by side or in the same breath, the two terms do not mean one and the same thing.  It is not in dispute that jurisdiction as well as the right of appeal must be conferred by law, not by implication or inference.  If the  power and authority  of or  for a court to  entertain a matter (jurisdiction ) is not  conferred  by law then that court has  no business  to entertain the matter(see Owners  of Motor Vessel “ Lillian S” V Caltex Oil (K) Ltd [1989] KLR 1. ”

Having  examined Section 75  of the Civil Procedure Act and Order  43  of the Civil Procedure Rules  which  provisions  specify the orders  from  which parties have a right of appeal without leave, which  implies that  in certain other orders  a party would  require  leave of  the court  to file  an appeal, in my humble view, the order allowing release of funds deposited in court to the 1st respondent is not listed as one which is appealable as a matter of right.  That being the case, leave of court ought to have been sought and obtained whether at the time of delivery of the ruling or within 14 days by way of a formal application, as the order was not exempt from the requirement of leave under order 43(b) of the Civil Procedure Rules.  Without that leave, therefore, the court herein is deprived of jurisdiction to hear and determine the appeal and any other interlocutory applications like the instant one, since it is the leave to appeal that confers this court with jurisdiction to hear this appeal and application for stay pending appeal.

Further, I am not persuaded that jurisdictional issues fall into the category of procedural technicalities.  They proceed to the root of the matter and without jurisdiction, the court cannot and would not do no one more thing than down its tools.  ( SeeOwners  of Motor Vessel “ Lillian S” V Caltex Oil (K) Ltd(supra).

As  correctly submitted  by the 1st respondent and   espoused in the above  Court of Appeal decision  of Nova Chemicals Ltd V Alcon International Ltd HC Miscellaneous Application 1124/2002citing Ringera   J, leave to appeal  from an order is different from the right of appeal; such  that whereas a right of appeal  emanates  from statute  or the  Rules, the leave  on the other hand  is a power conferred on the court which power is discretionary. In this case, as no right of appeal existed, the trial magistrate’s pronouncement  at the end of her  ruling that: “ Right  of appeal within 30 days” in my humble  view did not  by any stretch of imagination  amount to leave to appeal from  her order.  The reason for my conclusion is that the right of appeal accrues from statute and is not left to the discretion of the court to pronounce or confer.  It is an express right under Section 79G of the Civil Procedure Act.  It therefore follows that since the order  appealed from  herein did not  fall under  Section 75  of the Civil Procedure  Act or  Order 43  of the Civil Procedure Rules, the appellant/applicant  should have  sought  and obtained leave to appeal either  upon pronouncement  of the  ruling/order or by filing of an application seeking  leave to  appeal  within 14 days  of such  delivery of the ruling.  I am  further fortified  on this point by the decision of the Court of Appeal in CA Nairobi 86/2015  Peter Nyaga Meirake V Joseph Mutunga where the Court of  Appeal stated that :

“Without leave of the High Court, the applicant was not entitled to give Notice of Appeal.  Where, as in this case, leave to  appeal is  necessary by dint  of Section 75  of the Civil Procedure  Act and  Order 43  of the Civil Procedure  Rules, the procurement  of leave to appeal  is sine  qua non to the lodging of the  Notice of Appeal.  Without leave, there can be no valid Notice of Appeal.  And without a valid Notice of Appeal, the jurisdiction of this court is not properly invoked.

In short, an application for stay in an intended appeal against an order which is appealable only with leave and which leave has not been sought and obtained is dead in the water.”

Albeit the applicant urged this court to determine the merits of the matter and ignore the objections raised which in his view were procedural technicalities, and whereas Iam in agreement that procedural technicalities should be sacrificed at the altar of substantive justice, in Kakuta Maimai Hamisi V Persi Pesi Tobiko &  2 Others [2013] e KLR  the Court  of Appeal stated that:-

“ The right  of Appeal goes to the  jurisdiction  and is so fundamental that  we are  unprepared  to hold that  absence of statutory donation  or conferment  is a mere procedural  technicality  to be ignored by parties  or a court  by pitching  tent at Article  159 (2) (d) of the Constitution.

We do not consider Article 159(2) (d) of the Constitution to be a panacea, nay a general white wash that cures and mends all ills, misdeeds and defaults of litigation.”

The same Court of Appeal in Mumo Matemu V Trusted  Society of Human Rights Alliance  & 5 Others  CA 290 of 2012  stated in a five judge  bench that:

“ In our view it is a  misconception  to claim, as it  has been in recent  times with increased  frequency, that  compliance with rules of  procedure  is antithetical  to Article  159 of the Constitution and the overriding  objective  principle  of Section 1A and 1B of the Civil Procedure Act Cap  21 Laws of Kenya and Section 3A  and 3B of the Appellate Jurisdiction Act Cap 9) Procedure is also a hand maiden of just determination of cases.”

Therefore, based on the above  authoritative  pronouncements and my exposition on of this matter, I find that the  preliminary objection   as taken by the 1st respondent  challenging  the competency of this appeal and hence  the application for  stay  pending appeal is  sound and  merited  in law and it did not require  any evidential  depositions  or discretion of this court.  It was a pure point of law that went to the jurisdiction of this court to hear and determine an appeal.(See Mukisa Biscuit Manufacturer Ltd vs West End Distributors Ltd(1970) EA. 469).

Accordingly, I find this appeal and the application for stay highly incompetent and the same are hereby struck out.  Costs follow the event and are in the discretion of the court.  In this case, I note that the appellant and 1st respondent are closely related.  The appellant is a major shareholder and a director of the 1st respondent company.  In order  to avoid escalation of this dispute  and  to promote  reconciliation between  the appellant and his  co-Directors in the 1st respondent’s  company, I order that each  party bear  their own costs of this appeal as struck out and  of the application  for stay, which is also struck out. And in the spirit and letter of the Constitution as espoused  under Article  159 of the Constitution, I  implore  the appellant   and the 1st respondent  and its other  directors  to embrace  Alternative Dispute Resolution Mechanisms  especially mediation to resolve  their  differences which in my view  are very minor and capable  of an  amicable  settlement.

Dated, signed and delivered in open court at Nairobi this 6th day of July 2016.

R.E ABURILI

JUDGE

In the presence of :  Miss Mwaniki h/b for Mr Omondi for the appellant/applicant

Mr Kibathi for the 1st Respondent

N/A for 2nd Respondent

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