Tugende Limited v Julius Nyamai Ndambuki

3. b. The Respondent sued the Appellant in the lower court in Machakos SCCC No. 876 of 2024 on an alleged accident which was alleged to have been occasioned by the Appellant. c. Judgment was entered in default against the Appellant and the Respondent obtained the decree for the sum of Kes 286,163.00. d. The Appellant filed an application to set aside the judgment and to be allowed to defend the suit on merit on the basis that: i. The failure to defend was not intentional since the matter had been reported to the insurance company but which failed to defend the claim. ii. It had a good defence being that it was a mere financier of the motor cycle KMFZ 704E alleged to have caused the accident. e. The Appellant’s application was dismissed on 22nd April, 2025. The Appellant is aggrieved by the entire of the decision dismissing its application hence the current appeal which has very high chances of success. f. There is no stay of execution of the Decree in favour of the Respondent. The Respondent has carted the goods of the Appellant on 25th April 2025 and will definitely sell the same in execution of the Decree. g. That if stay of execution is not granted Appellant will be highly prejudiced as this appeal against will be rendered nugatory. h. The Respondent’s financial position and economic status is unknown to the Appellant. It will be impossible to recover any amount paid to the Respondent in the event that the Appeal is successful. i. The Appellant is willing to comply with the directions of the court for purposes of issuance of the orders now sought. j. This application has been brought expeditiously and without unreasonable delay. k. This Honourable court has unfettered discretion and jurisdiction to grant the prayers sought herein in the interest of justice and fairness. In opposition to the said application, the Respondent Julius Nyamai Ndambuki filed a Replying Affidavit sworn on 10th June 2025 and sought for Applicant’s notice of motion to be dismissed for reasons that; a. the application is misconceived, lacks merit, is an abuse of the court process and should be dismissed with costs. b. judgment was lawfully entered against the Appellant in default after they failed to enter appearance and/or file a response within the prescribed timelines under the Small Claims Court Rules. c. the Appellant subsequently filed an application to set aside the said judgment,which application was heard and dismissed on 22/04/2025 by the trial court on its merits. d. the current appeal arises from the dismissal of the application to set aside the default judgment, and does not in any way stay or bar execution of the valid decree in my favour. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 2

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4. e. the Appellant has not demonstrated any sufficient cause or exceptional circumstances that would warrant the granting of stay of execution. f. the requirements for a stay of execution are well established under Order 42 Rule 6(2) of the Civil Procedure Rules and are supported by clear jurisprudence. Specifically; (i) demonstrating substantial loss that may be incurred unless the stay is granted, (ii) making the application without unreasonable delay, and (iii) providing security for the due performance of the decree. g. the Appellant has utterly failed to demonstrate any substantial loss that may result unless the stay is granted. They have not provided credible evidence to substantiate their claims, instead relying solely on unproven assertions. It is imperative that the Appellant furnish compelling evidence to establish the existence of substantial loss, which they have notably failed to do. h. additionally, the Appellant has not indicated any intention or capability to provide security for the due performance of the decree, a critical requirement under Order 42 Rule 6(2) of the Civil Procedure Rules. Their failure to address this essential element further undermines their application for a stay of execution. i. while the Appellant claims that their appeal has high chances of success, the memorandum of appeal attached carries no weighty or substantial grounds to justify a stay of execution. The mere filing of an appeal does not automatically entitle them to a stay; they are required to demonstrate sufficient grounds that warrant such a remedy. j. the Appellant's claim that the appeal will be rendered nugatory is unsubstantiated, speculative and without evidentiary support. The Appellant has not furnished any proof of my alleged inability to refund any monies in the unlikely event the appeal succeeds. k. the decree herein is a lawful judgment obtained after due process, and I am entitled to the fruits thereof. The continued delay caused by the Appellant is causing me undue hardship and financial prejudice. l. the Appellant has not approached this Honourable Court with clean hands, having failed to participate in the proceedings at the trial court, and is now seeking to unjustly delay the execution of a lawful decree. m. allowing the Appellant to evade execution will unjustly deprive me of the fruits of the judgement. Their concerns regarding the possibility of recovering any sums paid to me, should their appeal succeed, do not provide adequate grounds for a stay of execution. They must demonstrate, at a minimum, that I am likely to abscond or that the funds awarded will be irretrievably lost. n. it is in the interest of justice, equity, and fairness that the Appellant's application be dismissed to allow me to enjoy the fruits of the judgment. Directions were given for the application to be canvassed through written submissions. The Applicant’s submissions are dated 25th September 2025 whilst the Respondent’s submissions are dated 2nd September 2025. Those submissions replicate the summary above and I wish not to duplicate the same here. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 3

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Analysis and Determination 5. I have carefully perused and considered the application, the supporting affidavit, the replying affidavit and the Parties’ Counsel submissions as well as the judicial decisions relied upon. In my view, the issues for determination are as follows:a. Whether the Applicant/Appellant has met the criteria for grant of orders of stay pending Appeal. b. Who shall bear costs of the application? a. Whether the Applicant/Appellant has met the criteria for grant of orders of stay pending Appeal. 6. The law relating to stay pending Appeal is Order 42 Rule 6 (2). It is also important to state that the power to grant an order of stay is discretionary and is dependent on certain conditions being met. Order 42 rule 6(1) and (2) of the Civil Procedure Rules,2010 provides as follows: 7. 8. (1) No appeal or second appeal shall operate as a stay of execution or proceeding 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.” In Vishram Ravji Halai v Thornton & Turpin Civil Application No. Nai. 15 of 1990 [1990] KLR 365, the Court of Appeal held that whereas the Court of Appeal’s power to grant a stay pending appeal is unfettered, the High Court’s jurisdiction to do so under Order 41 rule 6 of the Civil Procedure Rules is fettered by three conditions namely: i. establishment of a sufficient cause, ii. satisfaction of substantial loss and iii. the furnishing of security. Further the application must be made without unreasonable delay. In Butt v Rent Restriction Tribunal [1979], the Court of Appeal gave pointers on what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court stated thus: i. The power of the court to grant or refuse an application for a stay of execution is a discretionary, and the discretion should be exercised in such a way as not to prevent an Appeal. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 4

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ii. The general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an Appeal may not be rendered nugatory should the Appeal court reverse the judge’s discretion. iii. Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the Applicant at the end of the proceedings. iv. Finally, the court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirements. 9. On the first criterion as set out in Order 42 Rule 6 (2) i.e. Whether Applicant/Appellant has brought this application without unreasonable delay. The ruling was delivered on 22nd April 2025. The Memorandum of Appeal dated 25th April 2025 was filed on the same date. The instant application dated 25th April 2025 was also filed in court on the even date, which was after three days of the ruling and which was within time. In the circumstances, I find that application has been brought without unreasonable delay. 10. On second criterion is whether the Applicant/Appellant has demonstrated that he is bound to suffer substantial loss if orders of stay of execution are not granted. The question that follows is what comprises substantial loss. In Silverstein Vs Chesoni (2002)1 KLR 867 it was held that “ The issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what has to be prevented by preserving the status quo because such loss would render the Appeal nugatory” 11. The Appellant/Applicant has deposed that the if stay of execution is not granted, the Appellant will be highly prejudiced as this appeal against the Respondent will be rendered nugatory and that the Respondent’s financial position and economic status is unknown to the Appellant. It will be impossible to recover any amount paid to the Respondent in the event that the Appeal is successful. 12. The court is under a duty to hold the rings of justice even handed; it should not offer any illegitimate advantage to either party. The Appellant/Applicant appeals to this Honourable Court to grant the order of stay to enable the Applicant an opportunity to be heard on its Appeal. 13. In James Wangalwa & Another v Agnes Naliaka Cheseto [2012] eKLR, it was held that: “ No doubt, in law, the fact that the process of execution has been put in motion, or is likely to be put in motion, by itself, does not amount to substantial loss. Even when execution has been levied and completed the attached properties have been sold, as is the case here, does not in itself amount to substantial loss under Order 42 Rule 6 of the CPR. This is so because execution is a lawful process. The applicant must establish other factors which show that the execution will create a situation that will irreparably affect or negate the very essential core of the applicant as the successful party in the appeal ... the issue of substantial loss is the cornerstone of both jurisdictions. Substantial loss is what must be prevented by preserving the status quo because such loss would render the appeal nugatory." 14. In response to the Applicant’s assertions the Respondent averred that the Appellant has utterly failed to demonstrate any substantial loss that may result unless the stay is granted. They have not provided credible evidence to substantiate their claims, instead relying solely on unproven assertions. It is https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 5

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imperative that the Appellant furnish compelling evidence to establish the existence of substantial loss, which they have notably failed to do 15. The Appellant/Applicant has a duty to demonstrate facts, and not merely to allege that the Respondent’s financial position and economic status is unknown to the Appellant therefore it will be impossible to recover any amount paid to the Respondent in the event that the Appeal is successful. Indeed, on a similar issue in Isaac Muteti Kisua v Felix Mwangi Ndegwa[2016] eKLR the Court rendered itself thus: “ This Court finds that the Applicant from the reading of the above quoted provisions has the burden to demonstrate that he would suffer "substantial loss" and not just loss unless stay of execution is granted. I am not convinced that the burden of demonstrating financial means is the other way round as submitted by the Applicant. Looking at the authorities quoted, especially by the Respondent and the provisions of the quoted rules it is clear that an applicant has a duty to demonstrate that a substantial loss may result to him/her unless an order of stay is made”. 16. Similarly, in Socfinac Company Limited v Nelphat Kimotho Muturi[2013] eKLR Odunga J, held as follows: The appellant's belief that the respondent will be unable to repay the same is solely based on the appellant's lack of knowledge as to the respondent's financial ability or capability. In my view, the mere fact that an appellant does not know the respondent's financial capability does not give rise to the presumption that the respondent will be unable to repay the sum. There must be other factors that lead to that presumption. On the material before the court. I am not satisfied that the appellant has shown that it stands to suffer substantial loss if the stay sought is not granted. Further, Radido J at paragraphs 16 - 18 in Van Den Berg (k) Limited v Charles Osewe Osodo[2015] eKLR rendered himself thus: 17. 16. I have carefully perused the supporting affidavit sworn by Isaac M. Wamaasa and I have not been able to decipher what substantial loss the Appellant would suffer if stay were not grant. 17. The closest contention is that the Respondent is a man of straw who has not demonstrated that he could refund the decretal sum. 18. The position as urged by the Appellant on this point cannot be correct. It is not a burden placed upon decree holders to prove that they can refund the decretal sum. It is the appellant who alleges that the decree holder is a man of straw to demonstrate that fact. In granting an order of stay of execution, the court should not be seen to interfere with a party's enjoyment of the fruit of the judgment. See the case of Stephen Wanjohi v Central Glass Industries Ltd. Nairobi HCCC No.6726 of 1991 where the court stated as follows: “ The financial ability of a decree-holder solely is not a reason for allowing stay, it is enough that the decree-holder is not a dishonourable miscreant without any form of income. Suffice to state that the respondent, at this moment, is the successful party and in order to deny him the fruits of his success, it is upon the applicant to prove that he is unlikely to make good whatever sum he may have received in the meantime." 18. The loss the Appellant has alluded to is that the appeal herein will be rendered nugatory should the stay order be declined. It is my considered view that this being a monetary claim, any loss to be suffered by either party can adequately be compensated by an award in damages. The Applicant has not shown by https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 6

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evidence through an affidavit that the Respondent is incapable of refunding the decretal sums should the appeal succeed. 19. On the third criterion where the Applicant/Appellant must furnish security for the due performance of the decree. I am fully aware that the court has a delicate task of balancing the interests of both the Appellant and the Respondent. The Appellant who seeks to preserve the status quo pending the hearing of the Appeal so that his Appeal is not rendered nugatory and the interest of the Respondent who is seeking to enjoy the fruits of his judgement. It is true that under Order 42 rule 6 aforesaid, the Applicant is required to offer security for the due performance of the decree and the Court is entitled to take into account the fact that no such security has been offered in deciding an application thereunder. I agree with the position in Mwaura Karuga t/a Limit Enterprises.v Kenya Bus Services Ltd & 4 Others [2015] eKLR, where it was held that: “ … the security must be one which shall achieve due performance of the decree which might ultimately be binding on the applicant. The rule does not, therefore, envisage just any security. The words ‘’ultimately be binding’ are deliberately used and are useful here, for they refer to the entire decree as will be payable at the time the appeal is lost. That is the presumption of law here. Therefore, the ultimate decree envisaged under order 42 rule 6 (2) (b) of the Civil Procedure Rules includes costs and interest on the judgment sum unless the latter two were not granted-which is seldom. The security to be given is measured on that yardstick.” 20. I also associate myself with the holding in Gianfranco Manenthi & another v Africa Merchant Assurance Company Ltd [2019] eKLR, where the court observed: “ … the applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition a party who seeks the right of appeal from money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under order 42 rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the degree in order to enjoy the fruits of his judgment in case the appeal fails. Further, order 42 should be seen from the point of view that a debt is already owed and due for payment to the successful litigant in a litigation before a court which has delivered the matter in his favour. This is therefore to provide a situation for the court that if the appellant fails to succeed on appeal there could be no return to status quo on the part of the plaintiff to initiate execution proceedings where the judgement involves a money decree. The court would order for the release of the deposited decretal amount to the respondent in the appeal … This the objective of the legal provisions on security was never intended to fetter the right of appeal. It was also put in place to ensure that courts do not assist litigants to delay execution of decrees through filing vexatious and frivolous appeals. In any event, the issue of deposit of security for due performance of decree is not a matter of willingness by the applicant but for the court to determine.” 21. The law is that where the Applicant intends to exercise its undoubted right of appeal, and in the event, it were eventually to succeed it should not be faced with a situation in which it would find itself unable to get back its money. Likewise, the Respondent who has a decree in his favour should not, if the applicant were eventually to be unsuccessful in its intended appeal, find it difficult or impossible to realize the decree. This is the cornerstone of the requirement for security. The issue of adequacy of https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 7

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security was dealt with by the Court of Appeal in Nduhiu Gitahi v Warugongo [1988] KLR 621; 1 KAR 100; [1988-92] 2 KAR 100 where the Court of Appeal expressed itself as follows: “ The process of giving security is one, which arises constantly. So long as the opposite party can be adequately protected, it is right and proper that security should be given in a way, which is least disadvantageous to the party giving the security. It may take many forms. Bank guarantee and payment into court are but two of them. So long as it is adequate, then the form of it is a matter, which is immaterial. In an application for stay pending appeal the court is faced with a situation where judgement has been given. It is subject to appeal. It may be affirmed or it may be set aside. The court is concerned with preserving the rights of both parties pending that appeal. It is not the function of the court to disadvantage the defendant while giving no legitimate advantage to the plaintiffs. It is the duty of the court to hold the ring even-handedly without prejudicing the issue pending the appeal. For that purpose, it matters not whether the plaintiffs are secured in one way rather than another. It would be easier for the defendants or if for any reason they would prefer to provide security by a bank guarantee rather than cash. There is absolutely no reason in principle why they should not do so. The aim of the court in this case was to make sure, in an even-handed manner, that the appeal would not be prejudiced and that the decretal sum would be available if required. The respondent is not entitled, for instance, to make life difficult for the applicant, so as to tempt him into settling the appeal. Nor will either party lose if the sum is actually paid with interest at court rates. Indeed, in this case there is less need to protect the defendant because nearly half the sum will have been paid and the balance was at one stage open to negotiation to reduce it”. 22. The Appellant contends that it is willing to comply with the directions of the court for purposes of issuance of the orders now sought but has not indicated any intention or capability to provide security for the due performance of the decree which is a critical requirement under Order 42 Rule 6(2) of the Civil Procedure Rules. The Appellant/Applicant has failed to specify what kind of security it intends to offer for costs. 23. This court is of the view that the Applicant’s failure to address this essential element further undermines their application for a stay of execution. 24. Further while the Appellant/Applicant claims that its appeal has high chances of success, I find that the memorandum of appeal filed herein carries no weighty or substantial grounds to justify a stay of execution. It is trite law that the mere filing of an appeal does not automatically entitle a party to a stay; they are required to demonstrate sufficient grounds that warrant such a remedy. b) Who should bear the cost of this application? 25. On the question of costs of the application, the general rule is that costs shall follow the event in accordance with the provisions of Section 27 of the Civil Procedure Act (Cap. 21). A successful party should ordinarily be awarded costs of an action unless the court, for good reason, directs otherwise. See Jasbir Singh Rai & 3 Others Vs Tarlochan Singh Rai & 4 others SC. Petition No. 4 of 2012: [2014] eKLR. The Supreme Court held that costs follow the event and that the Court has the discretion in awarding such costs. 26. The upshot is that the application dated 25th April 2025 lacks merit and the same is dismissed with costs to the Respondent assessed at Kshs.15,000/=. It is so ordered. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 8

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RULING WRITTEN, DATED & SIGNED AT MACHAKOS THIS 16TH APRIL 2026 NOEL I. ADAGI JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7172/eng@2026-04-16 9

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