Samiyan Kaur Devinder Singh v Speedway Investments Ltd & another [2014] KECA 355 (KLR)

IN THE COURT  OF APPEAL

AT NAIROBI

CORAM: OUKO, M’INOTI & MOHAMMED JJ.A.

CIVIL APPLICATION NO. 194 OF 2014 (UR 153/2014)

BETWEEN

SAMIYAN KAUR  DEVINDER SINGH.....................APPLICANT AND

SPEEDWAY INVESTMENTS LTD........................1STRESPONDENT

CFC STANBIC BANK  LTD..............................2ND  RESPONDENT

(Application for an order for maintenance of status quo pending the lodging, hearing

and  determination of an intended appeal from  the ruling of the

High  Court of Kenya at Nairobi (Ogola,J.)

dated 5th  December, 2013

in

HCCC NO. 553 OF 2010)

**************

RULING OF THE COURT

On  5th December, 2013,  Ogola, J. delivered a ruling  in   which  he dismissed an application by the  applicant, Samiyan Kaur  Devinder Singh, for an injunction to restrain   the respondents, Messrs Speedway Investments Ltd and CFC Stanbic Bank Ltd, from selling, transferring, alienating,charging, wasting, damaging,   disposing off or otherwise interfering with her  ownership and  enjoyment of Apartment No  C6 on  LR No. 330/667,  Masanduku Lane, Lavington, Nairobi, (the  suit property) pending the  hearing and determination of HCCC No. 553  of 2010.

In a postscript to the ruling, the learned judge made  some  startling disclosure and made a further order in the following terms:

“I further direct that this matter should   henceforth be heard  before a different judge. I have   realized  in  the cause   (sic) of these  proceedings that  I have had a contractual relationship with this 1st  defendant, and I may not bring the required independence in  the discharge of further duties herein.”

Aggrieved  by  the  dismissal of her  application, the   applicant  filed  a Notice of Appeal and followed it up with an application under rules  1(2) and 5(2)(b) of the rules  of this Court, seeking an order for the  maintenance of the status quo  pending the  hearing and  determination of her  intended appeal. It  was  common ground,  after  hearing both Mr.  Naeku, learned counsel for the  applicant and  Mr. Ogunde, learned counsel for the  2nd respondent, that  the  status quo,  the  maintenance of which the applicant seeks, is her  continued quiet possession and  occupation of the  suit property pending the  hearing and determination of the  appeal.

The  applicant’s draft memorandum of appeal lists  seven  grounds of appeal. The very first  ground  of  appeal faults  the learned  judge  for continuing to  hear   and  determining the application that was  before him, even  after he  had realised that he  had  had  a contractual relationship with one of  the parties  in  the   dispute  before  him.   The applicant contends therefore that her intended appeal is arguable and is not frivolous as it raises a   fundamental question  whether   her right  to a fair  hearing  by an independent and impartial tribunal guaranteed  by   Article  50   of  the Constitution was violated.

The short background to  the  application before us is as follows. On 6 th October  2006    the    applicant  entered into    an   agreement  with  the  1 st respondent for the  sale  of the  suit property. The agreed purchase price  was Kshs.6,200,000, which the  applicant subsequently paid  in  full before taking possession of the  suit property.

The dispute between the  parties was  triggered by  the 1st respondent’s failure to register the  lease in respect of the  suit property in the  name  of the applicant.  As it turned out, the  2nd respondent who was  the financier of the 1st  respondent, advised the  applicant that it held  a legal  charge over  the  suit property and  therefore the same could  not have  been  sold  to her by  the  1st respondent without the consent of the 2nd respondent. The    latter consequently demanded that the applicant should pay for the suit property the  prevailing market price  of Kshs.12,500,000, failing which she  would be evicted therefrom and  the  suit property sold  to  other buyers. This  threat prompted the  applicant to file HCCC No 553  of 2010  in which she sought the injunction earlier referred to.

Ogola,  J. found that as of the  date  of the  sale  agreement between the applicant and  the  1st  respondent, the suit property was  free of all encumbrances and  that the  2nd    respondent’s security documents over  the suit property were  registered after the  sale agreement. However the  learned judge further found that the  sale  agreement reserved to  the  1 st  respondent the  right to  charge the  land  on which the  suit property stood  as security for financing the  development, and  that without registration of the  lease  in the name  of the  applicant, she  had  no  proprietary right over  the  suit property. Accordingly the  learned judge concluded that there was no prima facie case made  out  to  justify an  injunction and  proceeded to  dismiss the  application.

Before reaching that  conclusion, the   learned  judge  expressed himself  as follows regarding the  conduct of the 1st respondent:

“I must, however, note that the 1st defendant’s conduct in this matter  appears shrouded in  mystery and  fraud. The

1st  defendant must account to the plaintiff in terms of the sale  agreement between it and  the plaintiff dated 6th October, 2006. This  Court cannot and  shall  not sanction commercial theft, regardless of how it is couched.”

In opposing the  application before us, Mr. Ogunde contended that the 2nd  respondent holds  a  legal  charge over the  suit property and that upon default by the 1st  respondent in payment of the  debt secured by the  charge, the 2nd respondent was at liberty to  realize the  security.  Learned counsel further submitted that although the  2nd respondent’s  charge over  the  suit property was registered after the  sale agreement between the  applicant and the  1st respondent, the  applicant had  not noted her  interest on the  title and therefore  the   2nd respondent  had   no  notice  and was not  bound by  the applicant’s alleged interest. Mr. Ogunde concluded by submitting that in the circumstances  of  this application,  granting  the   orders sought by the applicant would amount to  an  undue restriction  of the  right to  enforce  a legally registered security and would be inimical to the  interests of justice.

In  this application, as  in all   applications  under  Rule   5(20(b), the applicant has to  establish that she  has  an arguable appeal, one  that is not frivolous and  which stands to be rendered nugatory, in the  event it succeeds and   there  is no preservatory  order.  (See TRUST  BANK LIMITED & ANOTHER V INVESTECH BANK LTD & 3 OTHERS, CIVIL APPLICATION NO. NAI 258  OF 1999 and  EAST AFRICAN POWER MANAGEMENT LTD V THE  OWNERS OF  THE VESSEL “VICTORIA  EIGHT”,  NBI CIVIL APPLICATION NO. 245 OF 2009.  She   does   not  have to establish  a multiplicity of arguable issues;  even  one bona  fide arguable issue  will  suffice.

(See KENYA HOTEL PROPERTIES LTD V WILLISDEN INVESTMENTS LTD & OTHERS, CIVIL APPLICATION NO. NAI 24  OF  2012). It must also  be remembered that  an  arguable  appeal  is  not  necessarily one   that  must succeed on  appeal. It is  an  appeal that ought to  be  heard on  merit.  (See

JOSEPH GITAHI GACHAU & ANOTHER V PIONEER HOLDINGS LTD & 2 OTHERS, CIVIL APPEAL NO. 124  OF 2008).

We have  anxiously considered the  application before us.  The  same  is brought principally under Rule  5(2)(b) of the  Court  of Appeal Rules.  Under that rule   the   Court  has  power to  issue  an  injunction or  to  order stay of execution or  stay of proceedings. The  applicant could  not apply for stay of execution of the  order of Ogola,  J.  because the  same  was  a negative order, one that dismissed her  application for injunction and  thus  incapable of being executed. (See  RFS V. JDS,  CIVIL APPLICATION. NO  NAI 114  OF 2014 (UR  89  OF 2012). She could  have  applied for an injunction, but  for reasons that we cannot fathom she opted to  apply for an order for the  maintenance of the  status quo.  The challenge of issuing such  an order normally lies  in its uncertainty  because what constitutes the  status quo  at any  given time is highly contentious and contested. In this  case however, it is common ground that the  applicant seeks  quiet possession and occupation of the  suit property pending the  hearing and determination of her intended appeal.

In addition to rule  5(2)(b) the  applicant has also invoked rule  1(2) of the Court of Appeal Rules, 2010 which provides that nothing in the Court of Appeal Rules  shall  be  deemed to  limit or  otherwise affect the  inherent power of the  Court to make  such  orders as may  be necessary for the  ends  of justice or to prevent abuse  of the  process of the  Court. In the  circumstances of this  case,  we do not consider the  applicant’s prayer for an order for maintenance of the  status quo pending the  hearing and determination of the intended appeal fatal. If we are  satisfied that the  ends of justice will  be best served by issuing a preservatory order pending the hearing   and determination of the  intended appeal, we have  basis under Rule 1(2)  to issue such an order. (See  DHIMAN V. SHAH (2008) KLR, 165).

Whether or not an intended appeal will  be rendered nugatory depends on the  particular circumstances of each case.  (See  RELIANCE BANK LTD V. NORLAKE INVESTMENTS LTD (2002) 1 EA 227). In the  application before us the  applicant has  paid  in full the  agreed purchase price  and  has  been  in possession of the  suit property for the  last five years. She is threatened with eviction unless  she pays  the  current market price  for the  suit property, which is several times more  than  the  agreed purchase price, which she has  in any event paid   in  full. It is  a  bit simplistic in  our  view   to  assert  that merely because her  ultimate loss is quantifiable in monetary terms, she should lose the  suit property as she  waits for her  appeal to  be  heard and  determined. The  Court  has  to  consider the  respective inconvenience and  hardship that each  of the   parties  stands to  be  exposed  to.  (See   ORARO & RACHIER ADVOCATES V. CO-OPERATIVE BANK OF KENYA LTD, C.A NO NAI. 358 OF 1999).

We  are  satisfied that the  applicant has  placed before us  an  arguable appeal,  one that  cannot by any stretch of  imagination  be  described  as frivolous. The primary issue  that she has  raised regarding her  right to  a fair trial by an independent and  impartial tribunal is a substantial issue, granted the  disclosure by the learned judge that he had  contractual relationship with one  of the  parties in the  application before him  and  still proceeding to  hear and  determine the  application. There  is a fundamental question whether in light of the  disclosure by the  learned judge, justice was done  and  seen  to be done  in this  case.

We have  concluded that the  applicant’s intended appeal implicates a fundamental principle of our  justice system to such  an extent that we would be  abdicating our  responsibility if we  do  not grant a preservatory order. As Lord Buckmaster  stated in   SELLAR V. HIGHLAND RAILWAY CO.1919

S.C. (H.L.) 19:

“The  importance of  preserving  the  administration  of justice from anything  which can  even by remote imagination infer  a  bias or  interest  in  the Judge  upon whom  falls the solemn duty of  interpreting the law  is so grave that any small  inconvenience experienced in its preservation may be cheerfully endured.”

More recently, this  Court in  SERAH NJERI MWOBI V. JOHN KIMANI NJOROGE, C.A NO 314  OF 2009 (MOMBASA) reiterated the  principle in these  terms:

“It is  a  tenet of a  fair  trial that all  parties to a  dispute must have   the right to due  process of  law  in  order to resolve the dispute, and  due process  of law requires that the parties be given a hearing before an unbiased and impartial decision  maker as part of the resolution process. The   reason  is  clear to  us. In  a  constitutional order  like ours,  grounded  on   the  rule of law,  it  is imperative that judges make decisions according to law, unclouded by personal bias or conflicts of interest. Accordingly, this  in  our view   is  the  basis   upon which when  a Judge is appointed to the bench, he/she takes an oath to uphold the Constitution and  administer justice without  fear  or  favour.  Public confidence  in  the administration  of justice is indispensable. It  is not enough  that   judges be impartial,  the   public must perceive them to be so.”