Background and Introduction
1. This ruling determines the plaintiffs’ application dated 15/11/2023. The application is brought under Sections 1A, 1B, 3A and 63 of the Civil Procedure Act, Order 40 rules 1&4, Order 51 rule 1 of the Civil Procedure rules 2010 and section 97(3)(b) of the Land Act.
2. The application seeks injunctive orders restraining the 1st and 2nd defendants from advertising for sale by public auction the property known as L.R. No 11805/8 situate in Lower Kabete within Nairobi county (hereinafter the suit property). Additionally, the plaintiffs pray that the court issues an order directing that a valuation of the property be conducted by an independent valuer, mutually agreed upon by both parties.
3. The application is supported by an affidavit sworn by Pauline Wangari Nguyai on the same date. The plaintiffs assert that they are the registered proprietors of the suit property. They confirm that the 3rd respondent (hereinafter the Company), was advanced three credit facilities by the 1st respondent (hereinafter the Bank), totaling Kshs 130,000,000/=. It is their case that the 2nd plaintiff signed the documents relating to the facilities without fully understanding their implications.
4. The plaintiffs contest the legal charge on several grounds. They argue that it is defective because it fails to specify the date of execution, that the commissioner for oaths omitted to state the mode of identification and the affidavit of consent was signed by both applicants rather than solely by the 2nd plaintiff. Furthermore, they assert that the affidavits were not properly dated and that there are errors in the names of the parties in the charge documents. Additionally, they assert that any person executing a land instrument must appear in person before a registrar or public officer, a requirement the 2nd plaintiff did not meet.
5. They also challenge the valuation report commissioned by the Bank, which valued the suit property at Kshs 164,500,000/=. The 2nd plaintiff maintains that the correct purchase price is Kshs. 390,200,000/= and argues that there was no reasonable justification for such a significant decrease in value. Additionally, it was claimed that neither the Company nor the 2nd plaintiff was served with the required statutory notices.
6. The Bank opposes the application through a replying affidavit sworn by its Legal Manager, Kariuki King’ori, on 29/11/2023. He confirms that the Company together with the plaintiffs executed a letter of offer dated 5/3/2021 whereupon it was agreed that the Bank would advance three credit facilities to the Company. That as joint tenants of the suit property the plaintiffs executed a first legal charge over the suit property and personal guarantees and indemnities for Kshs 130,000,000/=.
7. The Bank confirms that the facility was also secured by an all assets fixed and floating debenture over the existing and future assets of the Company in favour of the Bank. The depondent confirms that as a result of default on repaying the facility, the Bank issued statutory notices to the plaintiffs. The 2nd respondent was equally directed to issue a 45-day Notification of Sale to the plaintiffs and the Company as the principal borrower.
Analysis and Determination
8. The application was canvassed by way of written submissions which I have considered, alongside the application, response and evidence produced by the parties.
9. The key issue for determination is whether the plaintiffs have met the threshold for granting the injunction orders they seek. Both parties acknowledge that the plaintiffs must satisfy the conditions established in Giella v. Cassman Brown & Co., Ltd. [1973] E.A. 358. These conditions require the plaintiffs 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.
10. The Court of Appeal in Mrao Ltd v First American Bank of Kenya Limited and 2 Others [2003] eKLR explained what amounts to a prima facie case as;
“A case in 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 to call for an explanation or rebuttal from the latter.”
11. It is undisputed that the Bank advanced three credit facilities to the Company. In this application, the plaintiffs challenge three key issues: the attestation of the charge instrument, the validity of the spousal consent, and the service of statutory notices.
12. I have reviewed the impugned charge dated 8th July 2021 between the Bank and the plaintiffs. On page 36 of the Bank’s documents, there is a Certificate of Acknowledgement of the Effect of Section 90 of the Land Act, 2012 executed by both plaintiffs. By executing the certificate, the plaintiffs confirmed their understanding of the Bank’s remedies under the charge. It was not the Bank’s obligation to ensure that the chargors fully understood the document before signing, as long as they had the opportunity to seek independent legal advice. The plaintiffs have not demonstrated that the Bank denied them this right.
13. The plaintiffs have also executed the charge at pages 37-39 of the Bank’s documents and have sworn an affidavit at page 40 confirming their status as a married couple. Additionally, they affirmed their intention to jointly charge the suit property as security for the facility extended to the Company, doing so of their own free will.
14. The joint execution of the charge along with the jointly executed affidavit of consent of spouse on page 41 complies with Section 79(3) of the Land Act which requires that;
“A charge of a matrimonial home, shall be valid only if any document or form used in applying for such a charge, or used to grant the charge, is executed by the chargor and any spouse of the chargor living in that matrimonial home, or there is evidence from the document that it has been assented to by all such persons.
15. As such, I find that the alleged infractions, raised by the plaintiffs were within their knowledge throughout the period they benefited from the facility, yet they did not bring them to the Bank’s attention. Even if proven, these infractions would not be sufficient to override the parties’ clear intentions as expressed in the contractual documents.
16. On this point, I am guided by the decision in Steadman v Steadman (1976) AC 536, 540 cited with approval by the Court of Appeal in its Judgement delivered in the case of Ali Abdi Mohamed v Kenya Shell & Company Ltd (2017) eKLR. The court stated that:
“If one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid, he will not then be allowed to turn around and assert that the agreement is unenforceable.”
17. There is no doubt that the Bank disbursed funds to the Company based on these documents, and the Company utilized the funds for its benefit. It would be an act of bad faith for the plaintiffs to now renege on their agreement with the Bank in an attempt to evade liability. The Bank has presented account statements covering the period from 1/11/2022 to 20/11/2023 as evidence of the outstanding loan amount. These statements are found on pages 66 and 67 of the Bank’s documents. Additionally, there are correspondences between the parties reflecting proposals to repay the loan, which ultimately led to the issuance of statutory notices by the Bank to the plaintiffs.
18. The plaintiffs' claim that they were not served with the relevant legal notices is therefore untrue. I have reviewed the notices found on pages 53 to 58 of the Bank’s documents, which include the statutory notice dated 1/11/2022, the notice to sell dated 20/3/2023, and the 45-day redemption notice dated 8/6/2023. These notices, addressed to both the Company and the plaintiffs, were all sent via registered
19. In Nyagilo Ochieng & Another v Fanuel Ochieng & 2 Others [1995-1998] 2 EA 260, the Court of Appeal held that the burden to show that the statutory notice has been served does not in any way rest on the chargor. Once the chargor alleges non-receipt of the statutory notice, it is for the chargee to prove that such notice was in fact served. Based on the evidence before me, the Bank has discharged this burden, and I am satisfied that the relevant notices were duly sent to both the Company and the plaintiffs.
20. I believe it is now obvious that the plaintiffs have not made out a prima facie case with a probability of success. The inquiry on whether they are entitled to an injunction ends at this point in line with the dicta in Nguruman Limited v Jane Bonde Nielsen and 2 Others [2013] KECA 347 (KLR).
21. In any event, I find that any loss that is to be suffered by the plaintiffs can ameliorated by an award of damages as per section 99(4) of the Land Act. I have not been shown or told that the Bank is not capable of paying these damages. The balance of convenience also tilts in favour of the Bank realizing their security as early as possible so that the value of the suit property is not outstripped by the ballooning debt.
Disposition
22. The upshot of this is that the application dated 15/11/2023 is not merited and it is dismissed with costs to the Bank.
DATED, SIGNED AND DELIVERED IN MOMBASA
THIS 16TH DAY OF APRIL 2025.
F. MUGAMBI
JUDGE