Background and Introduction
1. By a Motion dated 3rd September 2025, the Plaintiff seeks orders to enjoin the Official Receiver as the 2nd Defendant in these proceedings, to amend the Plaint filed on 18th April 2024, and to obtain injunctive relief restraining the 1st Defendant (the Bank) from selling or transferring Land Reference Number Kiambaa/Ruaka/6667 (the suit property). The Plaintiff also seeks to restrain the 2nd Defendant (the Official Receiver) from entering or remaining on the property, collecting rent or purchase price from occupants of the premises erected thereon, or otherwise interfering with its management.
2. The Plaintiff contends that the Bank, acting under the inducement of the Official Receiver as liquidator of Cytonn High Yield Solutions (CHYS) breached its financing agreement entered into with the Plaintiff for the development of the property. It is the Plaintiff’s case that, pursuant to a consent dated 1st August 2023 (the consent), the Bank and the Official Receiver agreed that the Bank would cease financing and facilitating completion of the development. The Plaintiff contends that this agreement unlawfully and maliciously frustrated the performance of contractual obligations owed between the Bank and the Plaintiff.
3. Consequently, the Official Receiver entered and remained on the property, collecting all income intended for repayment of the Bank’s advance and completion of the development. Despite this, the Bank has issued a notice of sale, set to lapse on 7th September 2025, and has failed to respond to a settlement proposal submitted by the Plaintiff on 25th July 2025 following a meeting held on 17th July 2025.
4. The Plaintiff argues that the losses occasioned by the actions of the Bank and the Official Receiver far outweigh the Bank’s claim for outstanding amounts. It is therefore the Plaintiff’s position that permitting the Bank to proceed with the sale of the property before determination of liability arising from the conduct of the Bank and the Official Receiver would be unconscionable and unjust.
5. The application is opposed through a Replying Affidavit sworn on 7th November 2025 by Peter Ndirangu, a senior manager of the Bank. It argues that the Plaintiff, having admitted indebtedness of Kshs. 750,738,625.05, has no basis to seek injunctive relief. The Bank emphasizes that the consent was adopted as an order of the Court, remains valid, and has never been set aside. It further contends that the Plaintiff’s removal of the Official Receiver from the property was in blatant disregard of orders of both this Court and the Court of Appeal, thereby disentitling the Plaintiff to equitable relief. The Bank maintains that inducement is not a recognized cause of action and cannot ground an injunction.
6. The Bank denies the Plaintiff’s claim that the sums advanced were not disbursed. It asserts that the Plaintiff diverted sales proceeds without making repayments towards the principal loan. The Bank adds that further disbursements were conditional upon compliance with Clause 10 of the Offer Letter, which required submission of an engineer’s interim certificate or valuation of works. It confirms its position as a secured creditor over the property under a Charge dated 23rd August 2019 and a Further Charge dated 19th August 2023.
7. The Bank explains that the consent was necessary following the appointment of the Official Receiver as liquidator of the Plaintiff, and that it authorized the Bank to exercise its statutory power of sale while remitting any surplus to the Official Receiver. The Bank also notes that the consent contained provisions beneficial to the Plaintiff.
8. Finally, the Bank maintains that the Official Receiver acted strictly within the powers conferred by the Court, thereby negating any allegation of inducement. It stresses that the liquidation orders arose from proceedings initiated by the Plaintiff, who cannot now resist their consequences. The Bank disputes the Plaintiff’s claim of losses, arguing that they are unsubstantiated and not attributable to the Bank.
9. In response to the Bank’s replying affidavit, the Plaintiff filed a Supplementary Affidavit disaffirming the Bank’s averments, which I have equally considered alongside the written submissions filed.
10. At the time of writing this Ruling, no Replying Affidavit had been filed by the Official Receiver, notwithstanding the representation by Ms. Mugo, counsel for the Official Receiver, on 27th November 2025 that such an affidavit had indeed been lodged. I am, however, satisfied that the application was duly served upon the Official Receiver, as evidenced by the affidavit of service sworn by Mr. Nelson Havi on 15th September 2025. Equally, the Bank had not filled its written submissions by the time of preparing the Ruling.
Analysis and Determination
11. From my reading of the application and response thereto, three issues arise for determination:
i. Whether the Official Receiver should be joined to the proceedings;
ii. Whether the Plaintiff should be granted leave to amend its Plaint;
iii. Whether an injunction should issue against the Defendants.
12. The Bank has raised a preliminary issue, contending that the application as presented is defective on account of its omnibus nature, in that it seeks multiple prayers within a single motion. While I acknowledge the concern, I am guided by the pronouncement of the Court of Appeal in Riccardo Fanelli & 2 others v Frigrieri Graziano [2015] KECA 186 (KLR). In that case, the Court was confronted with a similar objection and observed as follows:
“In the application before me, Ms. Otieno, learned counsel for the respondent, has rightly taken objection to the omnibus nature of the application. While I agree with Ms. Otieno that the applicants ought to have separated the two applications, the default is technical in nature and curable under Article 159 of the Constitution and the overriding objective in section 3A and 3B of the Appellate Jurisdiction Act.”
13. Drawing from this authority, I am persuaded that the defect alleged by the Bank is purely procedural and does not go to the substance of the matter. No prejudice has been demonstrated as having been suffered by the Bank due to the form in which the application is drafted. Accordingly, I find no basis to strike out the application on this ground and will therefore proceed to consider and determine it on its merits.
14. The first issue is whether the Official Receiver should be enjoined in these proceedings. The principles governing the joinder of parties are set out in Order 1 Rule 10(2) of the Civil Procedure Rules, which stipulates:
“The court may at any stage of the proceedings, either upon or without the application of either party... order that the name of any party improperly joined... be struck out, and the name of any person who ought to have been joined... be added...”
15. It is well settled in judicial pronouncements that for a party to succeed in an application for joinder, it must be demonstrated that such a party is necessary to the proceedings. A necessary party is one who possesses a direct and substantial interest in the reliefs sought, or whose participation is indispensable to enable the court to issue an effective and enforceable decree. Without the presence of such a party, the court would be unable to fully and conclusively adjudicate upon all the issues arising in the suit. (See for instance Peter Nganga Muiruri v Housing Finance Co of Kenya Ltd & 2 others [2016] KECA 373 (KLR).
16. It is beyond dispute that the Official Receiver has been consistently referred to by both parties in connection with the liquidation of CHYS as well as the suit property presently before the Court. The pleadings, particularly the amended Plaint, expressly seek substantive reliefs directed against the Official Receiver. Notably, the Bank itself has raised no objection to the joinder. In the circumstances, the principles of fairness and natural justice dictate that the Official Receiver be formally enjoined as a party. Such joinder will ensure that the office is afforded a proper opportunity to respond to the allegations made and to defend its position in relation to the matters at hand.
17. The next issue for consideration is whether the Plaintiff has made out a case for leave to amend its Plaint after close of pleadings. Order 8 Rule 3 of the Civil Procedure Rules, is generously drafted and provides as follows: -
Amendment of pleading with leave.
(1) Subject to Order 1, rules 9 and 10, Order 24, rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings.
(2) Where an application to the court for leave to make an amendment such as is mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of filing of the suit has expired, the court may nevertheless grant such leave in the circumstances mentioned in any such subrule if it thinks just so to do.
(3) …
(4) …
(5) An amendment may be allowed under subrule (2) notwithstanding that its effect will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the suit by the party applying for leave to make the amendment.”
18. The provisions underscore the broad latitude conferred upon the court in matters of amendment of pleadings. This discretion is not confined to minor adjustments but extends even to amendments that introduce a new cause of action, so long as the proposed claim emanates from the same facts, or facts substantially connected to those already pleaded. In this way, the court ensures that the real questions in controversy are fully ventilated and determined.
19. The Court of Appeal has consistently emphasized that the amendment of pleadings and the joinder of parties should be approached with liberality, provided that such amendments do not occasion prejudice or injustice to the opposing party. In Central Kenya Ltd v Trust Bank & 4 Others, CA No. 222 of 1998 [2000] eKLR, the Court underscored this guiding principle in the following terms:
“All amendments should be freely allowed and at any stage of the proceedings, provided that the amendment or joinery, as the case may be, will not result in prejudice or injustice to the other party, which cannot be properly, compensated for costs”.
20. Similarly, in Ochieng and Others v First National Bank of Chicago [Civil Appeal No. 147 of 1991], the Court of Appeal comprehensively articulated the principles governing the exercise of judicial discretion in granting leave to amend pleadings. The Court set out the following guiding considerations:
a) the amendments should be timeously applied for;
b) power to amend can be exercised by the court at any stage of the proceedings;
c) that as a general rule however late the amendment is sought to be made it should be allowed if made in good faith provided costs can compensate the other side;
d) the plaintiff will not be allowed to reframe his case or his claim if by an amendment of the plaint the defendant would be deprived of his right to rely on limitations Act subject however to powers of the court to still allow and amendment notwithstanding the expiry of current period of limitation.”
21. Upon careful examination of the draft amended plaint, it is evident that the most significant proposed amendment is twofold: first, the joinder of the Official Receiver as a party to these proceedings; and second, the introduction of a claim against the Official Receiver for inducing breach of contract.
22. I am persuaded by the Plaintiff’s submission that the intended cause of action is not extraneous but rather arises squarely from the same factual matrix already pleaded in the Plaint. The foundation of the dispute remains the loan agreement, the consent order entered into between the Official Receiver and the Defendant, and the consequential damages allegedly suffered by the Plaintiff as a result of those actions. While the cause of action against the Official Receiver is new in form, it is nonetheless intrinsically connected to the facts already before the Court.
23. It is also material to observe that the matter has not yet been certified ready for hearing. This means that no prejudice will be occasioned to the Defendants, who will have the full opportunity to respond to the amended Plaint and to mount their respective defenses. The amendment will also avoid the risk of multiplicity of suits or piecemeal litigation. Accordingly, I find merit and allow the prayer for amendment.
24. The final issue is whether the Plaintiff has made a case for grant of the injunctive reliefs sought. To succeed in this prayer, the Plaintiff must satisfy the conditions established in Giella v. Cassman Brown & Co., Ltd. [1973] E.A. 358. These conditions require them to demonstrate a prima facie case with a probability of success, show that they would suffer irreparable harm that could not be adequately compensated by damages, and, if the court is in doubt, have the application determined on the balance of convenience.
25. These conditions are applied as distinct, sequential hurdles which the Plaintiff is expected to surmount sequentially. This means that if they fail to establish a prima facie case, there is no need to consider irreparable harm or the balance of convenience (see Nguruman Limited v Jan Bonde Nielsen& 2 others [2013] KECA 347 (KLR)).
26. As to what constitutes a prima facie case, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR) explained as follows:
“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter”.
27. Turning to the matter at hand and the evidence presented by the parties, it is undisputed that the Plaintiff is one of the SPVs under CHYS. It was incorporated exclusively to undertake a real estate development project known as The Alma on the suit property currently in contention. Following the liquidation of CHYS, preservation orders were duly issued over the assets of its SPVs, including the suit property. As a result, the liquidator assumed control of the property for the purpose of administering the liquidation process.
28. While I have taken note of the Plaintiff’s submission that it was neither liquidated nor involved in the liquidation proceedings, this contention cannot be sustained. The question of the Plaintiff’s status vis-à-vis the liquidation of CHYS has been the subject of extensive litigation, traversing this Court and the Court of Appeal. The matter has been exhaustively considered and conclusively determined at both levels. In my view, the issue is now settled and cannot be reopened in these proceedings.
29. It is also beyond contention that a Bank–Customer relationship subsisted between the Bank and the Plaintiff prior to the liquidation. Equally undisputed is the fact that the Plaintiff was advanced financial facilities by the Bank for the purpose of undertaking the construction of the project. These facilities were duly secured through a Charge and Further Charge registered over the suit property.
30. The default on the facility has likewise been acknowledged in a letter dated 25th July 2025, duly signed by Mr. Edwin H. Dande. Contrary to the Plaintiff’s assertion, the said letter is not expressed to be “without prejudice” and therefore constitutes admissible evidence upon which this Court may properly rely. The letter states, in part:
“We acknowledge the existing liability comprising the principle sum and accrued interest as at 6th January 2023 being the date of the preservation order issued in Nairobi HCOMMIP No 63 of 2021…totalling …Kshs. 750,738,625.05/=. We remain committed to resolving the outstanding obligations in a commercially pragmatic and sustainable manner that safeguards the interests of both parties”.
31. What emerges with particular significance from the contents of the letter is the unequivocal confirmation that, even prior to the consent between the Official Receiver and the Bank being entered into, the Plaintiff had already defaulted on its obligations to the Bank and to a colossal amount. This is also before the time the liquidation and preservation orders were issued. It cannot, therefore, be, as alleged by the Plaintiff, that the Official Receiver is the one who occasioned or contributed to the default, as the indebtedness had happened well before the liquidator’s intervention.
32. It is therefore my finding that the Bank’s statutory power of sale had duly crystallized. Upon issuance of the requisite statutory notices in accordance with the law, the Bank, as a secured creditor, was fully entitled to invoke its statutory remedies, including the power of sale over the charged property.
33. The Plaintiff argues that its obligation to repay the loan was conditional upon the sale of completed units under the facility agreement. It further contends that the Bank’s alleged failure to disburse funds compelled the contractor to abandon the site, thereby preventing the Plaintiff from selling apartments and leaving it unable to service the loan. This contention, however, is not supported by the evidence before the Court. The Plaintiff has failed to produce any credible proof that it ever raised the issue of non-disbursement with the Bank.
34. In contrast, the Bank’s position is clearly set out in its letter dated 25th October 2025 and corroborated by the Bank Statements on record. These documents confirm that funds were disbursed to the Plaintiff in accordance with the facility agreement and further establish the Plaintiff’s default in the sum of Kshs 750,738,625.05.
35. It is evident from the contractual framework between the parties that the proceeds of sale of the units were to be remitted directly to the Bank and not retained by the Plaintiff. This arrangement was expressly acknowledged in Recital B of the Lease Agreements executed between the Plaintiff and the purchasers of the units, which provided as follows:
SBM Bank Limited (hereinafter called the "Bank") has financed the Project. The financing has been secured by way of a First Legal Charge over the Property. The Bank shall issue a partial discharge of charge for each apartment upon payment of the full Purchase Price (for cash buyers) or upon receipt of an irrevocable letter of guarantee from the buyer's financier (for financed buyers)
36. Further, Clause 3.3 of the Agreements stipulated that all purchase monies were to be deposited into a specific account held by the Plaintiff in the Bank. However, the audit carried out by the Plaintiff does not provide tangible evidence that all proceeds from the sale were deposited into the said account so as to counter the Bank’s assertion.
37. Coupled with the Plaintiff’s express admission of liability as at 6th January 2023, the inference is that certain monies were indeed not remitted to the Bank. In any event, the Bank has drawn the Court’s attention to Clause 10 of the Letter of Offer dated 27th February 2019, which made loan disbursements conditional upon the progress of the project. It was expressly provided that payment of any certificate by the Bank would only be made against an interim certificate or valuation of works raised by the project engineer in accordance with the Bill of Quantities and work schedule. The Plaintiff has not produced evidence of compliance with Clause 10 so as to justify its attempt to shift blame to the Bank.
38. It is a well‑established principle of law that a chargee cannot be restrained from exercising its statutory power of sale unless the full amount demanded is tendered and settled. Halsbury’s Laws of England, Vol. 32 (4th Edition), paragraph 725, makes this position clear:
“When mortgagee may be restrained from exercising power of sale: The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has began a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however, if the mortgagor pays the amount which the mortgagee claims to be due to him unless, on the terms of the mortgagee, the claim is excessive.”
39. Applying this principle to the present case, there is no dispute as to the amount outstanding. By parity of reasoning, therefore, there exists no legal basis upon which the Plaintiff can seek to restrain the Bank from exercising its power of sale.
40. The commencement of liquidation proceedings and the appointment of the Official Receiver as liquidator introduced a distinct statutory framework. The primary purpose of this regime is to safeguard the interests of creditors and to ensure the orderly collection, preservation, and distribution of assets. Importantly, this statutory framework operates independently of the contractual obligations between the Bank and the Plaintiff, and its scope must be understood within the confines of insolvency law.
41. In this regard, the consent adopted as an order of this Court on 30th November 2023 has been placed before me. That consent expressly gave the Bank the option of exercising its statutory power of sale or, in the alternative, funding the completion of the project. It is therefore inaccurate, as alleged by the Plaintiff, to suggest that the Bank and the Official Receiver agreed to cease financing or facilitating completion of the development. The Plaintiff was not entitled to disbursement of funds as of right.
42. The Bank, like any other financial institution, was within its rights to decline the Plaintiff’s debt settlement proposal, a decision communicated in its letter of 23rd October 2025. The preservation orders having triggered an event of default, the requisite statutory notices followed and the Bank cannot be faulted for its actions. The Court of Appeal in Civil Appeal No. E091 of 2024 (consolidated with Civil Appeal Nos. E092, E093 & E094 of 2024) recognized that the effect of the consent was to settle the liability admittedly owed to SBM Bank Ltd, after which the balance would be available for distribution to unsecured creditors.
43. The Court of Appeal further emphasized the import of section 67(2) of the Civil Procedure Act, which provides that no appeal shall lie from a decree passed by the court with the consent of parties. While the provision does not bar a challenge to a consent order, it prohibits a direct appeal therefrom. The proper procedure, the Court noted, was an application to set aside the consent, from which an appeal may then be preferred. In the present case, the consent order remains binding upon the parties.
44. The Plaintiff has failed to establish that there was any ulterior motive between the Bank and the Official Receiver in entering into the consent. On the evidence before me, it is apparent that the actions of the Bank are in strict compliance with the law. Moreover, the Plaintiff’s rights are now subject to the liquidation process and no material has been placed before this Court to justify interference with the liquidator’s mandate. In these circumstances, it is clear that the Plaintiff has failed to satisfy the first requirement of establishing a prima facie case.
45. The Plaintiff has also not demonstrated that, should they ultimately succeed, the Bank would be unable or unwilling to compensate them in damages. In the worst case, compensation could also be achieved within the liquidation framework if proved.
46. I am further persuaded that the balance of convenience lies in permitting the sale of the suit property to proceed. This course of action will prevent the debt from escalating to a level that outstrips the security or diminishes the resources available to creditors. The Plaintiffs’ reliance on Keziah Njambi Maingi & another v Barclays Bank of Kenya Limited [2014] KECA 262 (KLR) is misplaced, as that case is distinguishable from the present matter. Unlike in Keziah Njambi Maingi, here the debt is expressly and unambiguously admitted.
Disposition
47. Accordingly, the application dated 3rd September 2025 is allowed in part and the following final orders do hereby issue:
i. The Official Receiver be and is hereby added as the 2nd Defendant to this suit;
ii. The Plaintiff be and is hereby granted leave to amend the Plaint dated 18th April, 2024 in terms of the draft attached to the Supporting Affidavit of Adamskey Dudi
iii. Prayers 6 and 7 of the said application, seeking injunctive orders against the Defendants are hereby dismissed
iv. The interim orders issued are hereby vacated
v. Each party shall bear its own costs of the application.
1. By a Motion dated 3rd September 2025, the Plaintiff seeks orders to enjoin the Official Receiver as the 2nd Defendant in these proceedings, to amend the Plaint filed on 18th April 2024, and to obtain injunctive relief restraining the 1st Defendant (the Bank) from selling or transferring Land Reference Number Kiambaa/Ruaka/6667 (the suit property). The Plaintiff also seeks to restrain the 2nd Defendant (the Official Receiver) from entering or remaining on the property, collecting rent or purchase price from occupants of the premises erected thereon, or otherwise interfering with its management.
2. The Plaintiff contends that the Bank, acting under the inducement of the Official Receiver as liquidator of Cytonn High Yield Solutions (CHYS) breached its financing agreement entered into with the Plaintiff for the development of the property. It is the Plaintiff’s case that, pursuant to a consent dated 1st August 2023 (the consent), the Bank and the Official Receiver agreed that the Bank would cease financing and facilitating completion of the development. The Plaintiff contends that this agreement unlawfully and maliciously frustrated the performance of contractual obligations owed between the Bank and the Plaintiff.
3. Consequently, the Official Receiver entered and remained on the property, collecting all income intended for repayment of the Bank’s advance and completion of the development. Despite this, the Bank has issued a notice of sale, set to lapse on 7th September 2025, and has failed to respond to a settlement proposal submitted by the Plaintiff on 25th July 2025 following a meeting held on 17th July 2025.
4. The Plaintiff argues that the losses occasioned by the actions of the Bank and the Official Receiver far outweigh the Bank’s claim for outstanding amounts. It is therefore the Plaintiff’s position that permitting the Bank to proceed with the sale of the property before determination of liability arising from the conduct of the Bank and the Official Receiver would be unconscionable and unjust.
5. The application is opposed through a Replying Affidavit sworn on 7th November 2025 by Peter Ndirangu, a senior manager of the Bank. It argues that the Plaintiff, having admitted indebtedness of Kshs. 750,738,625.05, has no basis to seek injunctive relief. The Bank emphasizes that the consent was adopted as an order of the Court, remains valid, and has never been set aside. It further contends that the Plaintiff’s removal of the Official Receiver from the property was in blatant disregard of orders of both this Court and the Court of Appeal, thereby disentitling the Plaintiff to equitable relief. The Bank maintains that inducement is not a recognized cause of action and cannot ground an injunction.
6. The Bank denies the Plaintiff’s claim that the sums advanced were not disbursed. It asserts that the Plaintiff diverted sales proceeds without making repayments towards the principal loan. The Bank adds that further disbursements were conditional upon compliance with Clause 10 of the Offer Letter, which required submission of an engineer’s interim certificate or valuation of works. It confirms its position as a secured creditor over the property under a Charge dated 23rd August 2019 and a Further Charge dated 19th August 2023.
7. The Bank explains that the consent was necessary following the appointment of the Official Receiver as liquidator of the Plaintiff, and that it authorized the Bank to exercise its statutory power of sale while remitting any surplus to the Official Receiver. The Bank also notes that the consent contained provisions beneficial to the Plaintiff.
8. Finally, the Bank maintains that the Official Receiver acted strictly within the powers conferred by the Court, thereby negating any allegation of inducement. It stresses that the liquidation orders arose from proceedings initiated by the Plaintiff, who cannot now resist their consequences. The Bank disputes the Plaintiff’s claim of losses, arguing that they are unsubstantiated and not attributable to the Bank.
9. In response to the Bank’s replying affidavit, the Plaintiff filed a Supplementary Affidavit disaffirming the Bank’s averments, which I have equally considered alongside the written submissions filed.
10. At the time of writing this Ruling, no Replying Affidavit had been filed by the Official Receiver, notwithstanding the representation by Ms. Mugo, counsel for the Official Receiver, on 27th November 2025 that such an affidavit had indeed been lodged. I am, however, satisfied that the application was duly served upon the Official Receiver, as evidenced by the affidavit of service sworn by Mr. Nelson Havi on 15th September 2025. Equally, the Bank had not filled its written submissions by the time of preparing the Ruling.
Analysis and Determination
11. From my reading of the application and response thereto, three issues arise for determination:
i. Whether the Official Receiver should be joined to the proceedings;
ii. Whether the Plaintiff should be granted leave to amend its Plaint;
iii. Whether an injunction should issue against the Defendants.
12. The Bank has raised a preliminary issue, contending that the application as presented is defective on account of its omnibus nature, in that it seeks multiple prayers within a single motion. While I acknowledge the concern, I am guided by the pronouncement of the Court of Appeal in Riccardo Fanelli & 2 others v Frigrieri Graziano [2015] KECA 186 (KLR). In that case, the Court was confronted with a similar objection and observed as follows:
“In the application before me, Ms. Otieno, learned counsel for the respondent, has rightly taken objection to the omnibus nature of the application. While I agree with Ms. Otieno that the applicants ought to have separated the two applications, the default is technical in nature and curable under Article 159 of the Constitution and the overriding objective in section 3A and 3B of the Appellate Jurisdiction Act.”
13. Drawing from this authority, I am persuaded that the defect alleged by the Bank is purely procedural and does not go to the substance of the matter. No prejudice has been demonstrated as having been suffered by the Bank due to the form in which the application is drafted. Accordingly, I find no basis to strike out the application on this ground and will therefore proceed to consider and determine it on its merits.
14. The first issue is whether the Official Receiver should be enjoined in these proceedings. The principles governing the joinder of parties are set out in Order 1 Rule 10(2) of the Civil Procedure Rules, which stipulates:
“The court may at any stage of the proceedings, either upon or without the application of either party... order that the name of any party improperly joined... be struck out, and the name of any person who ought to have been joined... be added...”
15. It is well settled in judicial pronouncements that for a party to succeed in an application for joinder, it must be demonstrated that such a party is necessary to the proceedings. A necessary party is one who possesses a direct and substantial interest in the reliefs sought, or whose participation is indispensable to enable the court to issue an effective and enforceable decree. Without the presence of such a party, the court would be unable to fully and conclusively adjudicate upon all the issues arising in the suit. (See for instance Peter Nganga Muiruri v Housing Finance Co of Kenya Ltd & 2 others [2016] KECA 373 (KLR).
16. It is beyond dispute that the Official Receiver has been consistently referred to by both parties in connection with the liquidation of CHYS as well as the suit property presently before the Court. The pleadings, particularly the amended Plaint, expressly seek substantive reliefs directed against the Official Receiver. Notably, the Bank itself has raised no objection to the joinder. In the circumstances, the principles of fairness and natural justice dictate that the Official Receiver be formally enjoined as a party. Such joinder will ensure that the office is afforded a proper opportunity to respond to the allegations made and to defend its position in relation to the matters at hand.
17. The next issue for consideration is whether the Plaintiff has made out a case for leave to amend its Plaint after close of pleadings. Order 8 Rule 3 of the Civil Procedure Rules, is generously drafted and provides as follows: -
Amendment of pleading with leave.
(1) Subject to Order 1, rules 9 and 10, Order 24, rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings.
(2) Where an application to the court for leave to make an amendment such as is mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of filing of the suit has expired, the court may nevertheless grant such leave in the circumstances mentioned in any such subrule if it thinks just so to do.
(3) …
(4) …
(5) An amendment may be allowed under subrule (2) notwithstanding that its effect will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the suit by the party applying for leave to make the amendment.”
18. The provisions underscore the broad latitude conferred upon the court in matters of amendment of pleadings. This discretion is not confined to minor adjustments but extends even to amendments that introduce a new cause of action, so long as the proposed claim emanates from the same facts, or facts substantially connected to those already pleaded. In this way, the court ensures that the real questions in controversy are fully ventilated and determined.
19. The Court of Appeal has consistently emphasized that the amendment of pleadings and the joinder of parties should be approached with liberality, provided that such amendments do not occasion prejudice or injustice to the opposing party. In Central Kenya Ltd v Trust Bank & 4 Others, CA No. 222 of 1998 [2000] eKLR, the Court underscored this guiding principle in the following terms:
“All amendments should be freely allowed and at any stage of the proceedings, provided that the amendment or joinery, as the case may be, will not result in prejudice or injustice to the other party, which cannot be properly, compensated for costs”.
20. Similarly, in Ochieng and Others v First National Bank of Chicago [Civil Appeal No. 147 of 1991], the Court of Appeal comprehensively articulated the principles governing the exercise of judicial discretion in granting leave to amend pleadings. The Court set out the following guiding considerations:
a) the amendments should be timeously applied for;
b) power to amend can be exercised by the court at any stage of the proceedings;
c) that as a general rule however late the amendment is sought to be made it should be allowed if made in good faith provided costs can compensate the other side;
d) the plaintiff will not be allowed to reframe his case or his claim if by an amendment of the plaint the defendant would be deprived of his right to rely on limitations Act subject however to powers of the court to still allow and amendment notwithstanding the expiry of current period of limitation.”
21. Upon careful examination of the draft amended plaint, it is evident that the most significant proposed amendment is twofold: first, the joinder of the Official Receiver as a party to these proceedings; and second, the introduction of a claim against the Official Receiver for inducing breach of contract.
22. I am persuaded by the Plaintiff’s submission that the intended cause of action is not extraneous but rather arises squarely from the same factual matrix already pleaded in the Plaint. The foundation of the dispute remains the loan agreement, the consent order entered into between the Official Receiver and the Defendant, and the consequential damages allegedly suffered by the Plaintiff as a result of those actions. While the cause of action against the Official Receiver is new in form, it is nonetheless intrinsically connected to the facts already before the Court.
23. It is also material to observe that the matter has not yet been certified ready for hearing. This means that no prejudice will be occasioned to the Defendants, who will have the full opportunity to respond to the amended Plaint and to mount their respective defenses. The amendment will also avoid the risk of multiplicity of suits or piecemeal litigation. Accordingly, I find merit and allow the prayer for amendment.
24. The final issue is whether the Plaintiff has made a case for grant of the injunctive reliefs sought. To succeed in this prayer, the Plaintiff must satisfy the conditions established in Giella v. Cassman Brown & Co., Ltd. [1973] E.A. 358. These conditions require them to demonstrate a prima facie case with a probability of success, show that they would suffer irreparable harm that could not be adequately compensated by damages, and, if the court is in doubt, have the application determined on the balance of convenience.
25. These conditions are applied as distinct, sequential hurdles which the Plaintiff is expected to surmount sequentially. This means that if they fail to establish a prima facie case, there is no need to consider irreparable harm or the balance of convenience (see Nguruman Limited v Jan Bonde Nielsen& 2 others [2013] KECA 347 (KLR)).
26. As to what constitutes a prima facie case, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR) explained as follows:
“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter”.
27. Turning to the matter at hand and the evidence presented by the parties, it is undisputed that the Plaintiff is one of the SPVs under CHYS. It was incorporated exclusively to undertake a real estate development project known as The Alma on the suit property currently in contention. Following the liquidation of CHYS, preservation orders were duly issued over the assets of its SPVs, including the suit property. As a result, the liquidator assumed control of the property for the purpose of administering the liquidation process.
28. While I have taken note of the Plaintiff’s submission that it was neither liquidated nor involved in the liquidation proceedings, this contention cannot be sustained. The question of the Plaintiff’s status vis-à-vis the liquidation of CHYS has been the subject of extensive litigation, traversing this Court and the Court of Appeal. The matter has been exhaustively considered and conclusively determined at both levels. In my view, the issue is now settled and cannot be reopened in these proceedings.
29. It is also beyond contention that a Bank–Customer relationship subsisted between the Bank and the Plaintiff prior to the liquidation. Equally undisputed is the fact that the Plaintiff was advanced financial facilities by the Bank for the purpose of undertaking the construction of the project. These facilities were duly secured through a Charge and Further Charge registered over the suit property.
30. The default on the facility has likewise been acknowledged in a letter dated 25th July 2025, duly signed by Mr. Edwin H. Dande. Contrary to the Plaintiff’s assertion, the said letter is not expressed to be “without prejudice” and therefore constitutes admissible evidence upon which this Court may properly rely. The letter states, in part:
“We acknowledge the existing liability comprising the principle sum and accrued interest as at 6th January 2023 being the date of the preservation order issued in Nairobi HCOMMIP No 63 of 2021…totalling …Kshs. 750,738,625.05/=. We remain committed to resolving the outstanding obligations in a commercially pragmatic and sustainable manner that safeguards the interests of both parties”.
31. What emerges with particular significance from the contents of the letter is the unequivocal confirmation that, even prior to the consent between the Official Receiver and the Bank being entered into, the Plaintiff had already defaulted on its obligations to the Bank and to a colossal amount. This is also before the time the liquidation and preservation orders were issued. It cannot, therefore, be, as alleged by the Plaintiff, that the Official Receiver is the one who occasioned or contributed to the default, as the indebtedness had happened well before the liquidator’s intervention.
32. It is therefore my finding that the Bank’s statutory power of sale had duly crystallized. Upon issuance of the requisite statutory notices in accordance with the law, the Bank, as a secured creditor, was fully entitled to invoke its statutory remedies, including the power of sale over the charged property.
33. The Plaintiff argues that its obligation to repay the loan was conditional upon the sale of completed units under the facility agreement. It further contends that the Bank’s alleged failure to disburse funds compelled the contractor to abandon the site, thereby preventing the Plaintiff from selling apartments and leaving it unable to service the loan. This contention, however, is not supported by the evidence before the Court. The Plaintiff has failed to produce any credible proof that it ever raised the issue of non-disbursement with the Bank.
34. In contrast, the Bank’s position is clearly set out in its letter dated 25th October 2025 and corroborated by the Bank Statements on record. These documents confirm that funds were disbursed to the Plaintiff in accordance with the facility agreement and further establish the Plaintiff’s default in the sum of Kshs 750,738,625.05.
35. It is evident from the contractual framework between the parties that the proceeds of sale of the units were to be remitted directly to the Bank and not retained by the Plaintiff. This arrangement was expressly acknowledged in Recital B of the Lease Agreements executed between the Plaintiff and the purchasers of the units, which provided as follows:
SBM Bank Limited (hereinafter called the "Bank") has financed the Project. The financing has been secured by way of a First Legal Charge over the Property. The Bank shall issue a partial discharge of charge for each apartment upon payment of the full Purchase Price (for cash buyers) or upon receipt of an irrevocable letter of guarantee from the buyer's financier (for financed buyers)
36. Further, Clause 3.3 of the Agreements stipulated that all purchase monies were to be deposited into a specific account held by the Plaintiff in the Bank. However, the audit carried out by the Plaintiff does not provide tangible evidence that all proceeds from the sale were deposited into the said account so as to counter the Bank’s assertion.
37. Coupled with the Plaintiff’s express admission of liability as at 6th January 2023, the inference is that certain monies were indeed not remitted to the Bank. In any event, the Bank has drawn the Court’s attention to Clause 10 of the Letter of Offer dated 27th February 2019, which made loan disbursements conditional upon the progress of the project. It was expressly provided that payment of any certificate by the Bank would only be made against an interim certificate or valuation of works raised by the project engineer in accordance with the Bill of Quantities and work schedule. The Plaintiff has not produced evidence of compliance with Clause 10 so as to justify its attempt to shift blame to the Bank.
38. It is a well‑established principle of law that a chargee cannot be restrained from exercising its statutory power of sale unless the full amount demanded is tendered and settled. Halsbury’s Laws of England, Vol. 32 (4th Edition), paragraph 725, makes this position clear:
“When mortgagee may be restrained from exercising power of sale: The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has began a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however, if the mortgagor pays the amount which the mortgagee claims to be due to him unless, on the terms of the mortgagee, the claim is excessive.”
39. Applying this principle to the present case, there is no dispute as to the amount outstanding. By parity of reasoning, therefore, there exists no legal basis upon which the Plaintiff can seek to restrain the Bank from exercising its power of sale.
40. The commencement of liquidation proceedings and the appointment of the Official Receiver as liquidator introduced a distinct statutory framework. The primary purpose of this regime is to safeguard the interests of creditors and to ensure the orderly collection, preservation, and distribution of assets. Importantly, this statutory framework operates independently of the contractual obligations between the Bank and the Plaintiff, and its scope must be understood within the confines of insolvency law.
41. In this regard, the consent adopted as an order of this Court on 30th November 2023 has been placed before me. That consent expressly gave the Bank the option of exercising its statutory power of sale or, in the alternative, funding the completion of the project. It is therefore inaccurate, as alleged by the Plaintiff, to suggest that the Bank and the Official Receiver agreed to cease financing or facilitating completion of the development. The Plaintiff was not entitled to disbursement of funds as of right.
42. The Bank, like any other financial institution, was within its rights to decline the Plaintiff’s debt settlement proposal, a decision communicated in its letter of 23rd October 2025. The preservation orders having triggered an event of default, the requisite statutory notices followed and the Bank cannot be faulted for its actions. The Court of Appeal in Civil Appeal No. E091 of 2024 (consolidated with Civil Appeal Nos. E092, E093 & E094 of 2024) recognized that the effect of the consent was to settle the liability admittedly owed to SBM Bank Ltd, after which the balance would be available for distribution to unsecured creditors.
43. The Court of Appeal further emphasized the import of section 67(2) of the Civil Procedure Act, which provides that no appeal shall lie from a decree passed by the court with the consent of parties. While the provision does not bar a challenge to a consent order, it prohibits a direct appeal therefrom. The proper procedure, the Court noted, was an application to set aside the consent, from which an appeal may then be preferred. In the present case, the consent order remains binding upon the parties.
44. The Plaintiff has failed to establish that there was any ulterior motive between the Bank and the Official Receiver in entering into the consent. On the evidence before me, it is apparent that the actions of the Bank are in strict compliance with the law. Moreover, the Plaintiff’s rights are now subject to the liquidation process and no material has been placed before this Court to justify interference with the liquidator’s mandate. In these circumstances, it is clear that the Plaintiff has failed to satisfy the first requirement of establishing a prima facie case.
45. The Plaintiff has also not demonstrated that, should they ultimately succeed, the Bank would be unable or unwilling to compensate them in damages. In the worst case, compensation could also be achieved within the liquidation framework if proved.
46. I am further persuaded that the balance of convenience lies in permitting the sale of the suit property to proceed. This course of action will prevent the debt from escalating to a level that outstrips the security or diminishes the resources available to creditors. The Plaintiffs’ reliance on Keziah Njambi Maingi & another v Barclays Bank of Kenya Limited [2014] KECA 262 (KLR) is misplaced, as that case is distinguishable from the present matter. Unlike in Keziah Njambi Maingi, here the debt is expressly and unambiguously admitted.
Disposition
47. Accordingly, the application dated 3rd September 2025 is allowed in part and the following final orders do hereby issue:
i. The Official Receiver be and is hereby added as the 2nd Defendant to this suit;
ii. The Plaintiff be and is hereby granted leave to amend the Plaint dated 18th April, 2024 in terms of the draft attached to the Supporting Affidavit of Adamskey Dudi
iii. Prayers 6 and 7 of the said application, seeking injunctive orders against the Defendants are hereby dismissed
iv. The interim orders issued are hereby vacated
v. Each party shall bear its own costs of the application.