University of Nairobi v N.K Brothers Limited (Civil Suit 309 of 2013) [2022] KEHC 671 (KLR) (Commercial and Tax) (21 April 2022) (Ruling)
Neutral citation:
[2022] KEHC 671 (KLR)
Republic of Kenya
Civil Suit 309 of 2013
JN Mulwa, J
April 21, 2022
Between
University of Nairobi
Applicant
and
N.K Brothers Limited
Respondent
Ruling
1.Before the court is a Notice of Motion dated 17th August 2020 brought under Section 1A, 1B & 3A of the Civil Procedure Act and Order 42 Rule 6 of the Civil Procedure Rules, 2010. The Applicant seeks orders of stay of execution of the judgment and decree delivered by this court on 30th January 2020 pending the hearing and determination of its intended appeal to the Court of Appeal. It also seeks an order that costs of this application be in the cause.
2.The application is premised on grounds stated at the of the application and supported by an Affidavit sworn on even date by the Applicant’s Vice Chancellor,Professor S.G. Kiama. He avers that the Applicant’s case was dismissed with costs in the judgment delivered herein on 30th January 2020 by Justice F.A. Ochieng. Subsequently, on 3rd February 2020, the Applicant lodged a Notice of Appeal against the whole judgment together with a formal request for typed court proceedings. He contends that there is an imminent risk that the Respondent will commence execution proceedings to defeat the Applicant’s intended Appeal thus it is in the interest of justice that the stay orders sought be granted.
3.In opposition, the Respondent filed a Replying Affidavit sworn on 28th August 2020 by its Chief Executive Officer, Rajesh Dayaram Rathod. He averred that there is no imminent threat of execution as the Respondent is yet to present its Bill of Costs for taxation. He states that the Applicant’s intended appeal has no chances of success but is only meant to frustrate the Respondent. Further, he deposes that in any event, the Respondent Company is financially stable and thus able to reimburse the judgment sum in case the Applicant’s intended appeal succeeds. Additionally, he contends that a Notice of Appeal and intention to Appeal cannot be the basis of staying execution. Lastly, he states that the Applicant has not taken any tangible steps towards filing the Appeal since its letter of 3rd February 2020 requesting for typed proceedings.
4.By the above averments by both parties, I find only one issue for determination; whether the Applicant has satisfied the conditions necessary for the grant of stay of execution pending appeal.
5.Stay of execution pending appeal is governed by Order 42 Rule 6(1) and (2) of the Civil Procedure Rules (CPR) which provide as follows:(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 from may 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 appeal is 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 person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.(2)No order for stay of execution shall be made under subrule (1) unless—(a)the court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; and(b)such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant.”
6.From the above provisions, it is clear that a party seeking a stay of execution pending appeal must satisfy the court that substantial loss will occur if stay is not granted; that the application has been made timeously and/or without undue delay; and must provide security for the due performance of the decree.
7.It is also important to note that the grant of stay of execution pending appeal is a matter of the discretion of the court which discretion must not be exercised capriciously. In Butt v Rent Restriction Tribunal [1979] eKLR, the Court of Appeal stated thus: -
8.To begin with, the Respondent contends that the Applicant cannot seek a stay of execution pending appeal when it has not filed any appeal as of yet. On the part of the Applicant, it is submitted that the fact that it has lodged a Notice of Appeal is enough as there is no requirement that a Memorandum of Appeal or Record of Appeal be filed before an Appeal may be deemed to have been lodged.
9.Under Order 42 Rule 6(4) CPR, an appeal to the Court of Appeal is deemed to have been filed when a Notice of Appeal has been lodged as required under the Court of Appeal Rules. In the instant case, I note that on 3rd February 2020, the Applicant’s advocates filed a Notice of Appeal against the judgment dated 30th January 2020, pursuant to Rule 75 of the Court of Appeal Rules, and served the Respondent’s advocates on the same day.In the premises, I am satisfied that for purposes of seeking the stay orders, an appeal has been duly filed.
Substantial Loss
10.As regards substantial loss, the Applicant submitted that if the colossal decretal sum of Kshs. 105,000,000/=, which consists of public funds, is paid, the Respondent will not be able to refund the same in the event that the appeal succeeds, and the appeal will be rendered nugatory or an academic exercise. The Applicant reiterates that the Respondent’s financial liquidity is unknown and faulted the Respondent for failing to discharge the burden of proving that it has enough resources to refund the decretal amount should the appeal succeed. Reliance was placed on Stanley Karanja Wainaina & another v Ridon Anyangu Mutubwa [2016] eKLR where the court stated that in such a case, the evidential burden shifts to the Respondent since that is a matter which is peculiarly within its knowledge.
11.According to the Respondent however, the Applicant has not demonstrated what loss it will suffer if stay is not granted but is cunningly requesting this court to frustrate the Respondent's right to enjoy the fruits of its judgment.
12.In the case Winfred Nyawira Maina v Peterson Onyiego Gichana [2015] eKLR, Gikonyo J. stated that:
13.Gikonyo J. went on to state that:
14.Similarly, the Applicant in the instant case has not placed before the court any prima facie evidence of the Respondent’s alleged financial limitation such as company returns filed by the Respondent as was done in the case of ABN AmroBank N.V. v Le Monde Foods Limited [2002] eKLR. The Applicant is merely worried that the Respondent’s financial liquidity is unknown and this cannot be a basis for shifting the evidential burden to the Respondent to prove its capability to repay the decretal amount. The upshot therefore is that the Applicant has not demonstrated what substantial loss it would suffer if stay is not granted. In the premises, I associate myself with the sentiments of Platt Ag. J.A. (as he was then) in Kenya Shell Ltd v Kibiru & Another [1986] KLR 410 that:
Whether the application has been filed without undue delay
15.As to whether the Application was filed without undue delay, the Applicant submitted that the delay in filing the present application was inadvertent as it resulted from the scaling down of court registry operations due to the covid-19 pandemic in 2020 and, is therefore excusable. In this case, the judgment appealed against was delivered on 30th January 2020 whilst this application was brought on 17th August 2020, almost six months later.
16.The court takes judicial notice that the first case of Covid-19 in the country was reported in March 2020 which was over a month after delivery of the impugned judgment. This indeed affected court operations but it is public knowledge that soon after, an alternative channel for filing court documents namely, e-filing, was availed to all litigants in order to keep the wheels of justice rolling. The Applicant has not indicated whether it attempted to use this channel in filing the present application and encountered any challenges. Further, I note that the Applicant has urged the court to take note of the fact that it was awaiting typed proceedings which it had requested from the court. That was not necessary for purposes of the instant application. In the premises, I hold the view that although the delay of six months was not sufficiently explained, the same has not prejudiced the respondent in a manner that may not be compensated in costs.
Security
17.On this, the Applicant submitted that it is ready and willing to furnish reasonable security that the court may order and urged the court to take into consideration the fact that the same shall be derived from public funds. By so stating, it is my view that the Applicant has satisfied the said condition.
18.Bearing the foregoing in mind, and in the interest of justice, I find that this is a case where a conditional stay should be granted. Accordingly, the following are the orders that commend themselves:a.There shall be a stay of execution of the judgment delivered on 30th January 2020 pending the hearing and determination of the appeal, on condition that the Applicant provides a bank guarantee for the sum of Kshs. 46,996,101.07/= from a reputable bank within 60 days from the date of this ruling.b.In default, this application shall be deemed to have been dismissed and execution may issue.c.Costs of the application shall abide the outcome of the appeal.
DATED AND DELIVERED AT NAIROBI THIS 21ST DAY OF APRIL 2022.J.N.MULWAJUDGE.