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ELCAllowedMachakos Environment and Land Case No. 166 of 2011 (Application dated 29th January, 2018)· [2018] KEELC 4393 (KLR)

Diesel Care Limited v Megvel Cartons Limited & 2 others [2018] KEELC 4393 (KLR)

Environment and Land Court
23 February 2018
OAO.A. Angote
1,665 words in judgment
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The bottom line

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What this practically means

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Executive summary

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This is a ruling by the Environment and Land Court at Machakos (O.A. Angote J) on the 1st Defendant's Notice of Motion dated 29th January, 2018 seeking a stay of execution of the judgment and decree delivered on 26th January, 2018 in Diesel Care Limited vs. Megvel Cartons Limited & 2 others, pending an intended appeal. The judgment had issued a permanent injunction restraining the Defendants from interfering with L.R. No. 1504/11 (I.R 85400) and declared the grant for L.R. No. 25064 (I.R 85088) null and void. The 1st Defendant, which claimed to have purchased the land for Kshs. 110,000,000 in 2008 and built a carton factory and godowns on it, argued that execution would destroy its decade-long investment and render the appeal nugatory, and that the Plaintiff's directors had invaded the land with armed thugs and begun demolishing the factory. The Plaintiff maintained that it was the lawful owner and should enjoy the fruits of judgment, while the 2nd and 3rd Defendants supported a limited stay with security. Applying Order 42 Rule 6(2) of the Civil Procedure Rules and the principles in Kenya Shell Limited and Machira & Co. Advocates, the court found substantial loss would result if the permanent structures were demolished before the appeal was heard. It allowed the application, granting a stay conditional on the 1st Defendant depositing Kshs. 100,000,000 in a joint interest-earning escrow account in the names of both advocates within 21 days, and ordered each party to bear their own costs.

Key legal issues

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01

Conditions for grant of stay of execution pending appeal under Order 42 Rule 6(2)

Holding

The Applicant satisfied the substantial loss threshold because permanent godowns built on the suit land would likely be demolished pursuant to the decree before the appeal is determined, occasioning substantial loss

Reasoning

Order 42 Rule 6(2) requires substantial loss, security for due performance of the decree, and application without unreasonable delay. The 1st Defendant had built permanent godowns on the suit land; if the Plaintiff, entitled to do so under the judgment, demolished them before the appeal was heard, the 1st Defendant would suffer substantial loss. The court balanced this against the decree holder's right to enjoy the fruits of judgment by conditioning the stay on a deposit of Kshs. 100,000,000 as security, reflecting the land's purchase value of Kshs. 110,000,000 in 2008.

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02

Security for due performance of the decree as a precondition to stay

Holding

The Applicant, having offered a bank guarantee, was directed to deposit Kshs. 100,000,000 in a joint interest-earning escrow account in the names of both advocates within 21 days

Reasoning

The rule requires the applicant to furnish security to reassure the successful party that, if the appeal fails, it will be restored to the financial position it would have occupied had the appeal not been filed. Given the 1st Defendant's purchase of the 22.95-acre land along Mombasa Road for Kshs. 110,000,000 nearly ten years earlier, the court valued it at not less than Kshs. 100 million and ordered that sum as security.

p. 3

Legal principles established

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  • Substantial loss is the cornerstone of the jurisdiction to grant a stay of execution
  • Where no pecuniary or tangible loss can be shown, the court will not grant a stay of execution
  • A successful party should enjoy the fruits of judgment and be restrained only where the substratum of the appeal would be lost

Court orders

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  1. 1.Pending the hearing and determination of the intended appeal, stay of execution of the entire Judgment and Decree of 26th January, 2018, on condition that the 1st Defendant deposits Kshs. 100,000,000 in a joint interest earning bank account (Escrow account) to be opened in the names of the Plaintiff's and the 1st Defendant's advocates within twenty one (21) days of the date of the Ruling
  2. 2.Each party to bear their own costs

Authorities

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Legislation

  • Civil Procedure ActSection 3A(1)
  • Civil Procedure RulesOrder 42 Rule 6(2)

Cases cited (2)

  • Kenya Shell Limited vs. Benjamin Karuga Kigibu and Ruth Wairimu Karuga
    (1982-1988) 1 KAR 1018
  • Machira t/a Machira & Co. Advocates vs. East African Standard (No. 2)
    (2002) KLR 63
Jurisdiction invoked
Order 42 Rule 6(2) of the Civil Procedure Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Diesel Care Limited v Megvel Cartons Limited & 2 others [2018] KEELC 4393 (KLR)", Case Analysis (2018). Machakos Environment and Land Case No. 166 of 2011 (Application dated 29th January, 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4393/eng@2018-02-23

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.