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ELRCPartially AllowedNot stated in judgment· [2022] KEELRC 818 (KLR)

Nahashon Maina & 5 others v Central Park Hotel [2022] KEELRC 818 (KLR)

Employment and Labour Relations Court
14 February 2022
JGJacob Gakeri
2,775 words in judgment
View original judgmentRead on Kenya Law Watch case
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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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Following judgment entered on 13th September 2021 in favour of the Claimants against the Respondent for Kshs.933,939/- plus costs and interest, with a 30-day stay that lapsed on 13th October 2021, the Respondent applied by notice of motion dated 28th October 2021 for stay of execution, leave to liquidate the decretal sum in monthly instalments of Kshs.50,000/-, and restraint on execution. The Respondent, in the hospitality sector, attributed its financial difficulties to the COVID-19 pandemic, producing bank statements showing September 2021 income of Kshs.3,491,197/- against expenses of Kshs.7,373,946/-. It also relied on part payments totalling Kshs.250,000/- and issuance of certificates of service as evidence of good faith. The Claimants opposed, contending the application was an abuse of process, that the proposed instalments were inordinately low compared to the Respondent's own earlier offer of Kshs.200,000/- monthly, and that the 30-day stay had lapsed. Applying Order 21 Rule 12 of the Civil Procedure Rules and the principles in Keshavji Jethabhai & Brothers Limited v Saleh Abdulla, the Court held that inability to pay in a lumpsum was not of itself sufficient cause, and that instalments must not prejudice the creditor. While satisfied the application was made in good faith, the Court found the proposed Kshs.50,000/- monthly instalments unreasonable. The application was allowed on modified terms: a lumpsum of Kshs.300,000/- by 31st March 2022, the balance in monthly instalments of Kshs.100,000/- from 30th April 2022, restraint on execution upon compliance, liberty to execute in default, with each party bearing its own costs. The ruling was delivered virtually at Nairobi on 14th February 2022 by Dr. Jacob Gakeri, Judge.

Key legal issues

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01

Whether inability to pay a decretal sum in a lumpsum, caused by COVID-19 business hardship, constitutes sufficient cause under Order 21 Rule 12

Holding

No - financial incapacity alone is not sufficient cause, though it is a relevant circumstance in fashioning instalment terms

Reasoning

The Court accepted that the Applicant's hospitality business was adversely affected by COVID-19, as shown by bank statements where expenses (Kshs.7,373,946/-) substantially exceeded income (Kshs.3,491,197/-). It found the Applicant lacked the wherewithal to pay in a lumpsum, but held this was not by itself sufficient cause; discretion had to weigh the creditor's right to the fruits of judgment.

p. 4
02

Whether the Applicant's proposed instalments of Kshs.50,000/- per month were reasonable and made in good faith

Holding

The application was made in good faith, but the proposed instalments were unreasonably low; the Court substituted higher instalment terms

Reasoning

Relying on Keshavji Jethabhai, African Banking Corporation and Hildegard Ndalut, the Court held good faith was shown by part payments of Kshs.250,000/- and disclosure of financials. However, Kshs.50,000/- monthly would take over six months and prejudice the creditor, so the Court crafted terms of Kshs.300,000/- lumpsum plus Kshs.100,000/- monthly instalments.

p. 5

Legal principles established

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  • Under Order 21 Rule 12, an applicant for payment of a decretal sum by instalments must demonstrate sufficient cause; mere inability to pay in a lumpsum is not of itself sufficient cause
  • Payment by instalments must not prejudice the creditor; the Court weighs the interests of both debtor and creditor
  • Good faith or bona fides is a critical consideration in applications to pay decretal sums by instalments

Court orders

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  1. 1.The Respondent/Applicant to pay the Claimants/Decree Holders a lumpsum of Kshs.300,000/- in the next 45 days on or before 31st March 2022
  2. 2.The balance to be paid in equal monthly instalments of Kshs.100,000/- effective 30th April 2022 and on the 30th of each succeeding month until payment in full
  3. 3.In default, the Claimants/Decree Holders at liberty to execute the decree and/or apply
  4. 4.The Claimants/Decree Holders restrained from levying execution as long as the Respondent/Applicant pays the monthly instalments by the due date
  5. 5.Parties shall bear their own costs

Authorities

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Legislation

  • Civil Procedure RulesOrder 21 Rule 12
  • Civil Procedure RulesOrder 21(1), Order 22
  • Civil Procedure ActSections A1, 1B, 31
  • Constitution of Kenya 2010Article 159(1) and (2), Article 159(2)(d), Article 48

Cases cited (5)

  • Keshavji Jethabhai & Brothers Limited v Saleh Abdulla
    [1959] E.A. 260
  • African Banking Corporation Limited v Florence Wangari Wangai
    [2012] eKLR
  • Benard Kipkemoi Soy v Laban Cherongony
    [2019] eKLR
  • Tabu Tuva Khonde v Ngomeni Swimmers Limited
    [2021] eKLR
  • Hildegard Ndalut v Lelkina Dairies Ltd & Another
    [2005] eKLR
Jurisdiction invoked
Order 21 Rule 12 of the Civil Procedure Rules; Sections 1A, 1B, 3A of the Civil Procedure Act; Article 159(1) and (2) of the Constitution of Kenya 2010

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Nahashon Maina & 5 others v Central Park Hotel [2022] KEELRC 818 (KLR)", Case Analysis (2022). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/818/eng@2022-02-14

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