Republic v Kenya Medical Supplies Authority & 2 others; Nairobi Enterprises Limited (Exparte); Medox Pharmaceuticals Limited (Interested Party) (Judicial Review Application 313 of 2017) [2022] KEHC 15528 (KLR) (Judicial Review) (17 November 2022) (Ruling)
Neutral citation:
[2022] KEHC 15528 (KLR)
Republic of Kenya
Judicial Review Application 313 of 2017
AK Ndung'u, J
November 17, 2022
Between
Republic
Applicant
and
Kenya Medical Supplies Authority
1st Respondent
Public Procurement Administrative Review Board
2nd Respondent
Chief Registrar Pharmacy and Poisons Board
3rd Respondent
and
Nairobi Enterprises Limited
Exparte
and
Medox Pharmaceuticals Limited
Interested Party
(Being an application for an order of stay of execution against the Ruling of Justice AK Ndungu delivered on July 7, 2022 in Civil Case No E431 of 2022.
Judicial Review 313 of 2017
)
Ruling
DIVISION - Introduction
1.The Applicant, aggrieved by the Ruling delivered on July 7, 2022, by this court, Justice AK Ndungu, where the court dismissed the Applicant’s Application dated January 13, 2022 which sought stay of execution and for liquidation of costs in the sums of Kshs 2,468,757.21/= awarded to the Interested party to be paid in instalments until payment in full, filed this instant Application seeking stay of execution pending hearing and determination of its Appeal - Court of Appeal, Civil Case No E431 of 2022.
The Application
2.In the instant matter, by way of a Notice of Motion dated July 18, 2022, brought pursuant to Sections 1A, 1B, & 3A of the Civil Procedure Act; order 22 Rules 22, as well as order 42 Civil Procedure Rules, 2010, the Applicant sought the following Orders:I.Spent.II.Spent.III.Spent.IV.That pending the hearing and determination of Nairobi Court of Appeal, Civil Case No E431 of 2022; the Honourable Court be and is hereby pleased to issue an order of stay of execution against the Ruling of Justice AK Ndungu delivered on July 7, 2022; and all consequential decrees or orders arising therefrom.V.That the Honourable court be and is hereby pleased to issue any further directions or orders as may be appropriate to give effect to the Orders sought herein; andVI.That the costs of this Application be provided for.
Applicant’s Case
3.The Application was supported by grounds on the face of it, and the Applicant’s Supporting Affidavit sworn by Rajan Rajnikant Dhanani on July 18, 2022; wherein it was deponed that the Applicant has lodged a merited appeal against the impugned Ruling - the same being Nairobi Court of Appeal, Civil Case No E431 of 2022 - which appeal is pending hearing and determination.
4.The Applicant averred that it is exposed to grave irreparable harm, that would render its Appeal nugatory as it stands to suffer substantial loss on account of the imminent execution against it. Also, that the Applicant has a merited Appeal with an overwhelming chance of success, which appeal would be rendered nugatory in absence of stay orders hitherto granted while it pursues its Appeal at the Court of Appeal.
5.Further, the Applicant stated that this Application is brought with sufficient promptitude and without delay; and that the Applicant is ready and willing to abide by any Orders for security, as may be directed by this Honourable Court, within a reasonable time.
6.Additionally, that absolutely no plausible prejudice can be suffered by the Respondent in having this Application allowed and the Orders herein granted as the Appeal stands to be aptly determined on its merits.
Interested Party’s Case
7.The Respondent did not lodge any response to this Application. However, the Interested Party opposed the Application, through its Replying Affidavit dated August 1, 2022. The Interested Party, in the main, contended that the orders sought cannot be granted since the Applicant has not met the requirements of order 42 rule 6 (2) of the Civil Procedure Rules, 2010.
8.The Interested Party contended that it is trite law that merely the fact that the Interested Party intends to proceed with execution proceedings on the taxed costs is not by itself a ground for granting stay of execution since the Interested Party is entitled to the fruits of its judgment.
9.Further, that the Applicant has not demonstrated that the intended Appeal is arguable; and that it is trite law that the power of the court to grant or refuse an Application for stay of execution is a discretionary power. That the Applicant has not brought out any of the grounds that would entitle the Court to exercise its discretionary power.
10.The Interested Party averred that it has neither been shown that the court misapprehended the facts, nor took into account irrelevant considerations, nor been shown that the court misdirected itself on the law; but that the Court properly exercised its discretion in accordance with the facts and the law.
11.Additionally, that it is trite law that the security envisaged under Order 42 Rule 5 (l) of the Civil Procedure Rules, 20l0 is the entire decretal amount. The Interested Party submitted that the purported security deposited by the Applicant, was less than ten percent of the decretal sum and could not reasonably be considered to be security for the decretal amount. That therefore, on grounds of having placed security, the appeal has no chance of succeeding, as the Applicant has not offered security to guarantee the performance of the Decree, in the event that the appeal fails.
12.The Interested Party also submitted that the provision of security for the performance of the decree by the applicant is expressly provided for under Order 42 Rule 6 (l) of the Civil Procedure Rules, 2010. That it is trite law that a decision on whether a court should allow a party to settle a decree by instalments is also on exercise of discretionary power of the court.
13.That in making an Order for payment of decretal sum by instalments, and especially where the decree holder has not consented to liquidation of the decretal sum by instalments, a court must act on sufficient cause that the judgment debtor is obligated under Order 21 Rule 12 (2) of the Civil Procedure Rules, 2010 to show.
14.That an Applicant, who seeks the exercise of the court's discretionary power to allow him to settle a decree by instalments, must show that the granting of the Application will not cause prejudice to the Respondent; and that the conduct of an Applicant is a factor that is considered by the court when it exercising its discretionary power.
15.It was also the Interested party’s averment that the law requires the Applicant to go beyond merely asserting that it will suffer substantial loss if the orders sought are not granted. That the Applicant is required by law to demonstrate through affidavit evidence that it will suffer substantial loss if stay is not granted and that such was not done in this instance.
16.Additionally, that the Applicant has not explained in what manner the intended appeal would be rendered nugatory if a stay of execution is not granted. That it is trite law that an intended appeal cannot be rendered nugatory if stay is not granted, if what is sought to be stayed is reversible. Also, that the Applicant has not demonstrated through affidavit evidence that the damage that it might suffer -as a result of a failure to grant the orders sought -cannot be reasonably compensated by way of damages.
Applicant’s Submissions
17.In supporting the Application, the Applicant filed its written submissions dated August 24, 2022. It posited that the Application herein has merit and ought to be allowed as the Applicant has satisfied the criteria/elements for grant of a stay of execution pending appeal as stipulated under Order 42 Rule 6 of the Civil Procedure Rules, 2010. That the elements are, in general; Substantial loss likely to be suffered, Application be brought without unreasonable delay, Security provided for, and Court’s discretion.
18.On the first limb under Order 42 Rule 6 – whether the Applicant shall suffer substantial loss if stay of execution is not granted – the Applicant submitted that it is worth noting that the order for stay is intended to preserve and protect the subject matter of the dispute, so as to avoid a situation where should the appeal be successful, it is rendered nugatory. The cases of Rhoda Mukuma v John Abuoga [1988] eKLR and Antoine Ndiaye v African Virtual University [2015] eKLR were relied on.
19.Notably, that substantial loss does not represent any particular mathematical formula, rather, it is a qualitative concept which refers to any loss, great or small, that is of real worth or value as distinguished from a loss without value or a loss that is merely nominal. Reliance was placed on the cases of Tropical Commodities Suppliers Ltd v International Credit Bank [in Liquidation] Kampala Miscellaneous Application No 379 of 2003 and Antoine Ndiaye v African Virtual University (supra).
20.That substantial loss is a relative term and more often than not can be assessed by the totality of the consequences which an applicant is likely to suffer if stay of execution is not granted. The cases of Nesco Services Limited v CM Construction (EA) Limited [2019] eKLR and Daniel Chebutul Rotich & 2 others v. Emirates Airlines Civic Case No. 368 of 2001 were relied upon.
21.Resultantly, that in assessing whether or not an Applicant has satisfied this requirement, courts of law ought to be guided by the substantial loss likely to be occasioned on the Applicant, in failure to grant the stay of execution. That in the instant matter, the substantial loss likely to be occasioned on the Applicant is very apparent as indeed the Applicant has every reason to be genuinely apprehensive that the Respondent will not be in a position to refund the decretal sum if the subject Appeal succeeds as her means are unknown to the Applicant. To that extent, grant of stay of execution will indeed mitigate the irreparable prejudice likely to be visited on the Applicant.
22.On the second limb under Order 42 Rule 6 – on whether the Application has been brought without unreasonable delay – the Applicant maintained that the Application has been brought with sufficient promptitude and without unreasonable delay, thus satisfying the second limb with respect to grant of Stay of Execution. Particularly, that the Honourable Court delivered its Ruling on July 7, 2022, while the Applicant thereafter filed the Application herein on July 18, 2022 which was 11 days from the date of delivery of the impugned Ruling. Reliance was placed on the cases of Kenya Nut Company Limited v Sarah Nanjala Wambogo [2017] eKLR; Christopher Murage Wahome v Cecilia Njoki Ngunjiri [2020] eKLR; and, William Isaboke Onsare v Benjamin Kakuti Kisilu [2021] eKLR.
23.On the third limb under Order 42 Rule 6 – on Security – the applicant averred that the issue of security is discretionary, and it is upon the court to determine the same depending on the particular circumstance; moreover, that in certain circumstances the Court can grant stay of execution of its orders without demanding that the Applicant furnish the Court with security for the due performance of the orders. Reliance was placed in the cases of RWW v EKW [2019] eKLR; HGE v SM [2020] eKLR; and, Tabro Transporters Ltd v Absalom Dova Lumbasi [2012] eKLR.
24.That in this instant matter, the Applicant being a going concern, will be gravely prejudiced and lose the benefit of its capital reserves, if it were to deposit in Court the decretal sum; and thus it invites honourable court in exercising its discretion, to find as such. Further, that the Applicant already deposited the sum of Kshs 200,000/= which this Honourable Court ought to consider as security for the decretal sum. Nonetheless, the Applicant maintains that it remains ready and willing to abide by any conditions imposed at the Court's discretion for grant of stay to allow it prosecute its appeal.
25.In sum, the Applicant submitted that it is in the interests of justice that the orders herein are granted without need for grant of the security in light of the circumstances of this case. However, that the applicant concede that it is willing to comply with any directions that the honourable court may give.
26.On granting stay of execution, the Applicant conceded that such orders are on court’s discretion. Nonetheless, that the discretion should be exercised in such a way as not to prevent an appeal and that in that regard, courts have gone ahead to grant stay of execution. The cases of Butt v Rent Restriction Tribunal [1979] eKLR; and Kariuki Njuri v Francis Kimaru Rwara (suing as Administrator of Estate of Rwara Kimaru alias Benson Rwara Kimaru (Deceased) [2020] eKLR were relied on.
27.Further, that the honourable court is expected to balance the interests of the successful litigant and the Applicants' unfettered right to file an appeal to fully ventilate their grievances. That therefore, in that regard, the honourable Court has discretion to consider other factors, such as: good cause, interest of justice - why stay should be granted. Reliance was placed on the case of Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd [2019] eKLR.
28.Additionally, that in exercising its discretion, the Honourable Court ought to be concerned with preserving the rights of both parties pending an appeal, and as such the Court ought not to disadvantage the Applicant while giving no legitimate advantage to the successful litigant. The cases of Stephen Kiarie Chege V Pamela Amoiya Obonde [2020] eKLR; Nduhiu Gitahi and Another v Anna Wambui Warugongo [1988] 2 KAR were relied on.
29.Further, that in exercising its discretion, the Court ought to weigh the likely consequences of granting the stay or not doing so; and lean towards a determination which is unlikely to lead to an undesirable or absurd outcome. That is, to consider the twin overriding principles of proportionality and equality of arms. -The honourable court ought to always opt for the lower rather than the higher risk of injustice. Reliance was placed on the cases of Awale Transporters Ltd v Kelvin Perminus Kimanzi [2020] eKLR; and Suleiman v Amboseli Resort Limited [2004] 2 KLR 589.
30.Notably, the Applicant submitted that whether or not the appeal has merit is not a consideration for grant of stay under Order 42 Rule 6, and the same ought not to be considered in determining this instant Application. The case of Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd (supra) was relied upon.
31.The Applicant urged this Honourable Court to grant the Stay of Execution to prevent the Applicant's appeal being rendered nugatory. That even the lower risk of injustice shifts towards the grant of the interim orders sought herein.
32.It was the Applicant’s submission that the Court ought to exercise its discretion to grant the stay of execution as sought herein pending hearing and determination of the Appeal. That in this instant case, no plausible prejudice can be suffered by any of the adverse parties in having this Application allowed and the Orders herein granted, as should the appeal fail, the Respondents will be at liberty to go ahead and execute against the Appellant by virtue of the Ruling.
33.As to costs the Applicant contended that costs follow the event. The case of Jasbir Sing Rai & 3 others v Tarchan Sing Rai & 4 others [2014] eKLR was relied upon.
Interested Party’s Submission
34.In rejoinder submissions, the Interested Party submitted as follows; On the first condition under Order 42 Rule 6 (2) of the Civil Procedure Rules 2010, on proof of substantial loss, the Applicant has not adduced any evidence through its supporting affidavit to prove that it would suffer substantial loss if the order of stay of execution is not granted. The cases of James Wangalwa & another v Agnes Naliaka Cheseto (2012) eKLR; Kenya Shell limited v Kibiru [1986] KLR 410 410, also reported as Kenya Shell Limited v Benjamin Karuga Kibiru & Another (1986) eKLR; Coastal Bottlers Limited v Commissioner of Domestic Taxes NRB Civil Application No 91 of 2008 (2009) eKLR; and Machira t/a Machira & Co Advocates v East African Standard (2002) eKLR were relied upon.
35.Further, that the Applicant has also failed to provide security for satisfaction of the decree in support of its Notice of Motion application dated July 18, 2022, which is also an express requirement of the aforesaid Order 42 Rule 6 (2) of the Civil Procedure Rules 2010. That the security envisaged under Order 42 Rule 6 (1) of the Civil Procedure Rules 2010, is the entire decretal amount. That the purported security deposited by the Applicant could not reasonably be considered to be security for the decretal amount. Reliance was placed on the cases of Gianfranco Manenthi & Another v Africa Merchant Assurance Co. Ltd (2019) eKLR; Arun C Sharma v Ashana Raikundalia t/a Rairundalia & Co Advocates & 2 others (2014) eKLR; and Mwaura Karuga t/o Limit Enterprises v Kenya Bus Services Ltd & 4 others (2015) eKLR.
36.To the Interested Party, the Applicant’s aforesaid Notice of Motion application dated July 18, 2022 is ripe for dismissal having failed to meet the aforesaid requirement of Order 42 Rule 6 (2) of the Civil Procedure Rules 2010. The said Application also fails on the ground that the purported appeal does not raise any arguable issues.
37.It is submitted that the intended appeal appears to have lost sight of the fact that the Court exercises a discretionary power in determining an application or an order for the payment of a decretal sum in instalments. Also, that the intended appeal does not raise any matter that would place it within the ambit of the conditions set out as would justify any interference by the Court of Appeal with the impugned decision of this court. United lndia Insurance Co Ltd, Kenindia Insurance Co Ltd & Occidental Fire & General Insurance Co Ltd v East African Underwriters (Kenya) Ltd (1985) eKLR case was relied upon.
38.The Interested Party contended that the court's discretion to allow a judgment debtor to liquidate the decretal sum through instalments is governed by law, to wit, the provisions of Order 2l Rule 12 (2) of the Civil Procedure Rules 2010. That considering the fact that the Interested Party did not consent to the liquidation of the decretal sum by instalments, the Judgment debtor was obligated by the aforesaid Order 2l Rule 12 (2) of the Civil Procedure Rules 2010 to show sufficient cause to be entitled to the orders sought in its Notice of Motion application dated January 13, 2022.
39.That the Applicant did not, in asking the Court to allow it to liquidate the decretal sum by instalments, disclose through affidavit evidence its financial status to the court to demonstrate that it could not pay the entire decretal sum at once. That the Applicant did not place its financial statements before the Court to enable it [the Court] to make an independent assessment of whether or not the Applicant is able to pay the decretal sum at once. That the principles regarding what amounts to "sufficient cause": -(a)The debtor is unable to pay in lump sum.(b)The debtor can pay by reasonable monthly instalments.(c)The application is made in utmost good faith."The cases of Freight Forwarders Ltd v Elsek & Elsek (K) Ltd (2012) eKLR; African Banking Corporation Limited v Florence Wangari Wangai (2012) eKLR; and Hildegard Ndalut v Lelkina Diaries Limited & another (2005) eKLR were relied upon.
40.In the end, the Interested Party sought the Notice of Motion application dated July 18, 2022 be dismissed with costs
Issue for Determination
41.Having considered the materials on record, the issue for determination is whether an order of stay pending appeal is merited.
Analysis and Determination
42.Where the orders granted by the High Court which are the subject of an appeal to the Court of Appeal, be it in judicial review proceedings or civil proceedings, are capable of being executed, the same are amenable to stay of execution. The court in the case of Republic v Retirement Benefits Appeals Tribunal Ex-parte Heritage A.I.I. Insurance Company Limited Retirement Benefits Scheme [2017] eKLR cited Republic v University of Nairobi Civil Application No Nai 73 of 2001 (CAK) [2002] 2 EA 572 where the Court of Appeal granted a stay in respect of a matter that arose from a judicial review application.
43.In the instant case, it is clear that all that this Court did in the Ruling appealed from was to dismiss the Applicant’s Application for payment of the decretal sum by instalments. Moreover, the Applicant’s Application for judicial review orders had been dismissed.
44.In the cases of Yagnesh Devani & others vs Joseph Ngindari & 3 others Civil Application No Nai 136 of 2004; Mombasa Seaport Duty Free Limited v Kenya Ports Authority Civil Application No Nai 242 of 2006; and William Wambugu Wahome v The Registrar of Trade Unions & others Civil Application No Nai 308 of 2005, the Court of Appeal held that where the High Court has dismissed an application for judicial review, the Superior Court does not grant any positive order in favour of the Respondents which is capable of execution.
45.In the present case, the intended appeal is directed at the decision disallowing the Notice of Motion Application dated January 13, 2022. In Umoja Service Station Ltd & 5 others v Hezy John Ltd Civil Application No Nai 39 of 2006 the court of Appeal dealt with the issue whether a Court would competently grant an order of stay as opposed to an injunction pending an appeal, where an application for injunction has been dismissed. In the case, the court stated that a prayer seeking for the stay of an order dismissing an injunction application is futile as the grant of the same would not in any way advance the Applicants’ cause. In this case to grant stay of the decision being challenged would mean that this Court would have stayed the order dismissing the application in which event the application would still be live.
46.However, even if this Court was of the view that the Court could in the circumstances of this case grant the order of stay sought, the Court would be obliged to consider the grounds upon which such an order ought to be granted. In an application for stay pending appeal to the Court of Appeal there is no requirement that the Court considers the chances of success of the intended appeal. That is a requirement where the Court of Appeal is considering an application under Rule 5(2)(b) of the Court of Appeal Rules since the intended appeal would be heard by the Court of Appeal. One of the considerations to be taken into account is whether substantial loss is likely to result to the applicant if the stay is not granted.
47.In the present case, what the applicant seeks to stay is the order of the court dismissing his application to liquidate the decretal amount in instalments. This Court simply dismissed the Applicant’s Application for liquidating the decretal amount in instalments. The payment of the decretal amount is only a consequential step and is not even the subject of the intended appeal.
48.In The Hon. Peter Anyang’ Nyong’o & 2 others v The Minister for Finance & Another Civil Application No Nai 273 of 2007, the Court of Appeal expressed itself as follows:
49.Similarly, in Raymond M Omboga v Austine Pyan Maranga Kisii HCCA No 15 of 2010, Makhandia, J (as he then was) held:
50.In Muhamed Yakub & Another v Mrs Badur Nasa Civil Application No Nai 285 of 1999 the court stated that where the Application for stay is directed to a decision against which the intended appeal is not directed, a stay of execution pending that appeal is not available and the Application is rendered incompetent on that score. The appeal in the instant case is against the dismissal order by this court and not against the decree yet the stay sought targets the decree herein.
51.Even assuming for a moment that the application herein fits in the purview of Order 42 Rule 6 (2) of the Civil Procedure Rules 2010, there are no concrete grounds upon which the Applicant believes that the Interested Party will not be able to refund the sum in question, if the appeal succeeds. A successful litigant can only be deprived of the fruits of success in exceptional circumstances. Therefore, the legal burden is on the Applicant to adduce evidence on the basis of which he forms his belief that he stands to suffer loss; thereafter, the evidential burden shifts to the successful party to show that that is not the case. In the instant case, there is no evidence upon which the Applicant has discharged the legal burden in order to call upon the Interested Party to discharge the evidential burden.
52.Notably in Republic v Retirement Benefits Appeals Tribunal Ex-parte Heritage A.I.I. Insurance Company Limited Retirement Benefits Scheme (Supra) the court observed that whereas the Applicant’s fears may well have been real, the Applicant had not in the supporting affidavit expounded on how it would suffer substantial loss. And while the court agreed with the decision in Oraro and Rachier Advocates v Co-Operative Bank of Kenya Limited (1999) LLR 118 (CAK), the court stated that it did not understand the Court of Appeal to be saying that in applications for stay of execution pending appeal the burden is on the successful party to show that the applicant will not suffer irreparable loss. That kind of interpretation with due respect would be clearly against the legal provisions dealing with stay pending appeal.
53.The issue of substantial loss is such a crucial issue in such applications that it ought to come out clearly in the supporting affidavit rather than to be dealt with in the submissions.
54.The importance of complying with the conditions precedent to the grant of stay pending appeal was emphasised in Machira T/A Machira & Co Advocates v East African Standard (No 2) [2002] KLR 63 where it was held that:
55.In Kenya Shell Limited v Kibiru & another [1986] KLR 410 the court observed that it is 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 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.
Orders
56.From the foregoing and for reasons above stated, I reach the considered finding that Notice of Motion dated July 18, 2022 lacks merit. The same is dismissed with an order that each party bears its own costs.
DATED SIGNED AND DELIVERED AT NAIROBI THIS 17TH DAY OF NOVEMBER 2022.………………………………………..A.K. NDUNGUJUDGE