THE REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
HCCOMMA NO. E021 OF 2021
HOUSING FINANCE COMPANY…………….…………….1ST APPELLANT
GARAM INVESTMENTS AUCTIONEERS…..……………2ND APPELLANT
-VERSUS-
NELLIE MWAWAKA WAUGANGA…………………………RESPONDENT
(Being an Appeal from the ruling and order of Hon. D. W. Mburu, Senior Principal Magistrate delivered on 17th February, 2021 at Nairobi Milimani Chief Magistrate’s Court Civil Cause No. E383 of 2020).
JUDGMENT
1. The respondent filed a suit in the lower Court vide a plaint dated 11th August, 2020 against the appellants. She stated that she is the owner House No. 16 on L.R No. 209/8275/32 Parkview Estate “A” South situated in South C Nairobi area and that she has been living in the suit property for over twenty years and has made various investments on it, including putting up additional structures over the said period. The respondent averred that she secured a loan from the 1st appellant but she fell into arrears and was unable to offset the said loan since her business went under. She further averred that she tried to pull her resources into paying what was owed to the 1st appellant but all her efforts were unsuccessful since the 1st appellant refused to extend her a humanitarian arm. She stated that thereafter, she was issued an Auction notice by the 1st appellant.
2. It was stated by the respondent that no valuation was done before putting up the suit property for sale by public auction and in any event, the intended sale of the suit property falls short of the value of the property. She also stated that she has offered the 1st appellant an amount equivalent to the asking price of the suit property at the auction but the 1st appellant has ignored all of her efforts. The respondent stated that she was not served with a fresh statutory notice of sale once the one that was issued prior to the filing of the civil suit elapsed and/or expired. She claimed that in the event the intended sale falls through, she will be rendered homeless.
3. The respondent’s plaint was accompanied by a Notice of Motion application under certificate of urgency dated 11th August, 2020 in which the plaintiff sought an order of temporary injunction restraining the appellants from evicting, attaching, transferring, selling, conveying, charging, leasing or in any other way dealing with House No. 16 on L.R No. 209/8275/32 Parkview Estate “A” situated in South C Nairobi area, pending the hearing and determination of the suit before the lower Court. In opposition thereto, the 1st appellant filed grounds of opposition dated 9th September, 2020 and a replying affidavit sworn on the said date, by Joseph Lule, the Legal Officer litigation, at the 1st appellant.
4. The 1st appellant deposed that the respondent defaulted in her loan repayment sometime in August 2012 and she was served with all the requisite notices to remedy the situation but she failed to regularize her account rendering it necessary to realize the security in exercise of its statutory power of sale. The 1st appellant averred that the respondent first moved to Court by an application dated 16th April, 2020 seeking orders of injunction against the 1st appellant, but the said application was dismissed for lack of merit vide a ruling dated 4th June, 2020 by Hon. Obura who stated that there was no prima facie proof that the respondent had been frustrated by the Covid-19 Pandemic in fulfilling her obligations to the 1st appellant or redeeming the suit property. The 1st appellant deposed that since the respondent never appealed against the said ruling, she was estopped from raising issues that were addressed by the Court in the ruling dated 4th June, 2020.
5. It was stated by the 1st appellant that the sale of the suit property was carried out in accordance with the Auctioneers’ Act and Rules and that the suit property was sold by way of public auction held on 28th July, 2020 to the highest bidder one Abdul Razaa Warfa for Fatuma Farah Warfa upon the fall of the harmer and payment of 25% of the purchase price was made and execution of the sale agreement was done. The 1st appellant contended that the suit property having been lawfully transferred to Fatuma Farah Warfa as a bonafide purchaser for value, the respondent has no legal remedies over it. The 1st appellant deposed that the respondent has neither pleaded nor proved any fraud committed by the 2nd appellant during the auction and if she was able to prove any irregularities in the manner the auction was conducted, she would be entitled to an award of damages against the 2nd appellant as provided for under Section 26 of the Auctioneers’ Act.
6. The lower Court delivered a ruling on 19th February, 2021 allowing the application dated 11th August, 2020 in terms of prayer No. 3. The appellants being aggrieved the said decision filed a Memorandum of Appeal dated 16th March, 2021 raising the following grounds of appeal -
i) That the learned Magistrate erred in law and fact by finding that the respondent had established a prima facie case with high chances of success by granting an injunction in favour of the respondent regarding House No. 16 on L.R No. 209/8275/32 Parkview Estate in South C Nairobi pending the hearing and determination of the main suit;
ii) That the learned Magistrate erred in law and fact in failing to consider that the respondent had been advanced a mortgage facility which she was under an obligation to pay but had failed or neglected hence the 1st appellant’s right to exercise its statutory power of sale;
iii) That the learned Magistrate erred in law and fact by failing to consider the 1st appellant’s evidence, submissions and in so doing misdirected himself on the law and evidence;
iv) That the learned Magistrate failed to make a finding that the 1st appellant has a right to exercise its statutory power of sale under the provisions of Sections 90, 96 and Rule 15 of the Auctioneers Act and in so doing misdirected himself on the law;
v) That the learned Magistrate erred in law and fact by failing to make a finding that the 1st appellant had met all the requirements for exercise of its statutory power of sale under the Land Act and the public auction conducted on 23rd April, 2020 was within the law; and
vi) That the learned Magistrate erred in law in failing to consider the facts of the matter, the 1st appellant’s position and in failing to do so misdirected herself.
7. The appellants’ prayer is for the appeal to be allowed with costs for the ruling and for the order issued by Hon. D.W. Mburu, Senior Principal Magistrate, on the 19th February, 2020 in CMCC No. E383 of 2020 to be set aside and be replaced with an order dismissing the respondent’s Notice of Motion application dated 11th August, 2020, with costs.
8. The instant appeal was canvassed by way of written submissions. The appellants’ submissions were filed by the law firm of Mogeni & Co. Advocates on 26th August, 2022, whereas the respondent’s submissions were filed on 30th November, 2022 by the law firm of Swaka Advocates.
9. Mr. Kanjama (SC), for the appellants submitted that the respondent voluntarily offered House No. 16 on L.R No. 209/8275/32 as security for release of Kshs. 5,000,000/= on 24th October, 2011 but the loan has run into arrears and the same has not been serviced to date. He cited the provisions of Section 90(2), (3) & (4) of the Land Act, 2012 and contended that the bank in exercise of its statutory power of sale started the process of realization of the security. He relied on the case of Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR and stated that the Trial Court ought not to have restrained the 1st appellant from exercising its power of sale
10. Mr. Swaka, learned Counsel for the respondent referred to the provisions Order 40 Rule 1(a) and (b) of the Civil Procedure, 2010 and the cases of Mugo Wa Karanja v Ecobank (Kenya) Limited & another [2019) eKLR and American Cyanamid Co. v Ethicom Limited [1975] AER 504, where the Court considered the test for grant of an interlocutory injunction. The respondent’s Counsel also relied on the Court of Appeal case of Kenya Commercial Bank Ltd. v Pamela Akinyi Ochien’g Civil Appeal No. 114 of 1991 and submitted that the Trial Court in the matter in the lower Court did not deny the existence of the 1st appellant’s statutory power of sale but instead held that in exercising its statutory power of sale, the appellants ought to do so in a proper, regular manner and in conformity with the legal procedure taking into account the rights of all the parties to the transaction.
11. He cited the provisions of Section 97(1) & (2) of the Land Act, 2012 and submitted that despite the fact that the respondent was in arrears in regard to her loan repayment instalments to the 1st appellant, the said appellant in discharging its statutory power of sale still owed the respondent a duty of care under both equity and statute. It was stated by Counsel that Courts have a duty to intervene and right a wrong and to protect against violation or threatened violation of rights to property. Mr. Swaka further stated the 1st appellant had a statutory duty to obtain the best price reasonably attainable at the time the sale was done.
12. Counsel contended that the 1st appellant’s right to exercise the statutory remedy of sale only accrues after the mandatory statutory valuation provided for under Section 97 of the Land Act, 2012 is conducted, thus failure to comply with the said provisions rendered the entire process leading to the sale of the suit property by way of public auction invalid ab initio. Further, that the 1st appellant’s breach of the duties owed to the respondent would invalidate the entire process of the 1st appellant exercising its statutory power of sale over the suit property rendering it null and void.
13. He submitted that the 1st appellant has not attached a valuation report of the suit property to demonstrate that the value attached to the said property reflected the forced sale value of the property in issue, and in the absence of the said report, the only logical inference that can be drawn from that omission is that there was never a report in the first place.
14. Mr. Swaka referred to the provisions of Sections 89 and 102 of the Land Act, 2012 and stated that the respondent had a right in law to redeem the suit property at any time before the sale of the same. He contended that any conduct by a chargor which either expressly or impliedly operates as a clog and fetter of the right to redemption is prima facie illegal and no right can arise from such conduct.
ANALYSIS AND DETERMINATION.
15. I have re-examined the entire record and given due consideration to the written submissions by the parties’ respective Counsel. This Court being the 1st appellate Court has a duty to analyze and re-evaluate the evidence adduced before the lower Court and reach its own independent conclusion.
16. Temporary injunctions are provided for under Order 40 Rule 1 of the Civil Procedure Rules, 2010. The test for granting a temporary injunction was laid down by the Court in the case of Giella v Cassman Brown and Co. Ltd [1971] E.A. 358 as hereunder –
“The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”
17. On whether the plaintiff has established a prima facie case with a probability of success, I am bound by the Court of Appeal finding in the case of Mrao Ltd v. First American Bank of Kenya Ltd & 2 Others [2003] eKLR, where the said Court considered what constitutes a prima facie case and stated the following –
“So, what is a prima facie case" I would say that in civil cases it is 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 as to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the Applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.”
18. The respondent’s application was grounded on the fact that the 1st appellant failed to issue her with a fresh statutory notice of sale once the one that was issued prior to the filing of the civil suit elapsed and/or expired. The 2nd ground was that it failed to carry out a valuation of the suit property before selling it by public auction which led to the suit property being sold at a value that was way below its current market value and forced sale value. The respondent submitted that the 1st appellant’s breach of the duties owed to her would invalidate the entire process of the 1st appellant exercising its statutory power of sale over the suit property thereby rendering the sale null and void.
19. It is evident that the respondent does not dispute being indebted to the 1st appellant. Annexed to the 1st defendant’s affidavit in response to the application dated 11th August, 2020 are copies of a statutory notice pursuant to the provisions of Section 90(1), (2) and (3) of the Land Act, 2012 dated 18th January, 2019 and a 40 days’ notification of sale pursuant to the provisions of Section 96(2) of the Land Act, 2012 dated 9th October, 2019, that the respondent does not dispute receiving. Instead, she contends that the 1st appellant should have issued a fresh notice once that one elapsed and/or expired. The Court of Appeal decision in the case of Euro Bank Limited (In Liquidation) v Twictor Investments Limited & 2 others [2020] eKLR applies to the circumstances of this case. The said Court held as follows–
“From the record it is clear that after receiving the notice giving (whether it was for the 14 days or 90 days), the advocates on record for the mortgagor engaged counsel for the Bank with proposals on how to liquidate the loan. They did not complain at all that the notice they had been given was invalid. They actually acted on it. Following the discussions, the auctioneers were advised to hold any advertisement for the sale of the suit property. That was in November 1998. The property was not re-advertised until April 2001. The question we should be asking, in our view is whether in these circumstances, it was necessary to re-issue another statutory notice. The answer to this is in the negative as the default in payment had continued for more than 3 months following the notice in view of Section 69A(1) (a).”
20. Bound by the aforementioned decision, this Court finds that the 1st appellant had no duty to issue the respondent with fresh statutory notices once the ones dated 18th January, 2019 and 9th October, 2019 elapsed.
21. The respondent submitted that the suit property was sold way below its current market value and forced sale value because the 1st appellant failed to carry out a current valuation on it before subjecting it to a sale by public auction. On perusal of the 1st defendant’s supplementary affidavit, it is evident that the 1st appellant annexed a copy of a valuation report dated 20th January, 2020, for the suit property.
22. The Trial Magistrate at paragraph 11 of the ruling dated 19th February, 2021, held that the 1st appellant herein filed a valuation report very late in the day after the respondent had filed her submissions. The Court noted that the issue of the 1st appellant failing to do a valuation of the suit property was one of the main grounds pleaded by the respondent and it was expected that the 1st appellant would have tendered in evidence of the alleged valuation in its initial response to the application dated 11th August, 2020. The Court further stated that there was no explanation by the 1st appellant as to why it delayed in filing the said valuation report, and the Court could not determine whether the said report was genuine and whether or not it existed at the time the auction was carried out.
23. On perusal of the Record of Appeal, it is impossible to tell whether or not the 1st appellant’s supplementary affidavit to which the valuation report was annexed was properly on record. However, since the Trial Magistrate considered the contents of the said affidavit in her ruling, it would mean that it was properly on record. Having said so, I find that the 1st appellant’s supplementary affidavit and valuation report dated 20th January, 2020 having been properly filed, the issue of its authenticity is to be determined at trial and not at an interlocutory application. All that the 1st appellant was required to do was to tender evidence in support of the allegation that it carried out valuation on the suit property before subjecting it to a sale by public auction, which it did.
24. It is however noteworthy that the 1st appellant did not attach copies of the 45 days’ notice and notification of sale of immovable property in respect of the suit property for the Court to ascertain that indeed the said notices were served on the respondent. For this reason, this Court finds that the 1st appellant did not satisfactorily demonstrate to this Court that in exercising its statutory power of sale over the suit property, it did so in a proper, regular manner and in conformity with the provisions of the Land Act, 2012 and the Auctioneers’ Rules, 1997. I therefore agree with the Trial Magistrate that on a balance of probability, the respondent discharged her burden of demonstrating that she has a prima facie case with a probability of success against the appellants.
25. On whether the respondent stands to suffer irreparable injury that cannot be adequately compensated by an award of damages in the event the order for injunction that was granted in the lower Court is not upheld, I am persuaded that this is the case. The respondent averred that the suit property has been her home for over twenty (20) years, and she has made various investments in said property, including putting up additional structures. It is trite that where there is breach of the law, an applicant cannot be compelled to accept damages as recompense. In Kanorero River Farm Ltd and 3 others v National Bank of Kenya Ltd [2002] 2 KLR 207 quoted by the Court in Beatrice Wathanu Waithaka v Kenya Women Micro-Finance Limited & another [2019] eKLR, it was held thus–
“I would for those reasons alone accede to the Plaintiff’s prayer for interlocutory injunction in respect of the two properties on the grounds that the 1st and 2nd Plaintiffs have a very strong prima facie case with a probability of success. I would not be deterred by any argument that the National Bank could compensate them in damages if it failed at the trial. In my opinion, no party should be allowed to ride roughshod on the statutory rights of another simply because it could pay damages.”
26. In this case, the 1st appellant did not demonstrate that the respondent was served with a 45 days’ notice and notification of sale of immovable property in respect of the suit property as provided for under Rule 15 of the Auctioneers’ Rules, 1997, before the suit property was put up for sale by public auction. In the absence of proof of compliance with the provisions of Rule 15 of the Auctioneers’ Rules, 1997, this Court finds that there was breach of the law on the part of the 1st appellant, therefore, the respondent stands to suffer loss and injury that cannot be compensated by an award of damages in the event the order for injunction that was granted by the Trial Court is not upheld.
27. On the balance of convenience, this Court finds that it tilts in favour of the respondent since compliance with Rule 15 of the Auctioneers’ Rules, 1997 is mandatory as it is couched in mandatory terms.
28. In the end, this Court finds that the instant appeal is devoid of merit. It is dismissed with costs to the respondent.
It is so ordered.
DELIVERED, DATED and SIGNED at NAIROBI on this 13th day of October, 2023. Judgment delivered through Microsoft Teams online plat form
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Musyoka for the appellant
No appearance for the respondent
Ms. B. Wokabi – Court Assistant.
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
HCCOMMA NO. E021 OF 2021
HOUSING FINANCE COMPANY…………….…………….1ST APPELLANT
GARAM INVESTMENTS AUCTIONEERS…..……………2ND APPELLANT
-VERSUS-
NELLIE MWAWAKA WAUGANGA…………………………RESPONDENT
(Being an Appeal from the ruling and order of Hon. D. W. Mburu, Senior Principal Magistrate delivered on 17th February, 2021 at Nairobi Milimani Chief Magistrate’s Court Civil Cause No. E383 of 2020).
JUDGMENT
1. The respondent filed a suit in the lower Court vide a plaint dated 11th August, 2020 against the appellants. She stated that she is the owner House No. 16 on L.R No. 209/8275/32 Parkview Estate “A” South situated in South C Nairobi area and that she has been living in the suit property for over twenty years and has made various investments on it, including putting up additional structures over the said period. The respondent averred that she secured a loan from the 1st appellant but she fell into arrears and was unable to offset the said loan since her business went under. She further averred that she tried to pull her resources into paying what was owed to the 1st appellant but all her efforts were unsuccessful since the 1st appellant refused to extend her a humanitarian arm. She stated that thereafter, she was issued an Auction notice by the 1st appellant.
2. It was stated by the respondent that no valuation was done before putting up the suit property for sale by public auction and in any event, the intended sale of the suit property falls short of the value of the property. She also stated that she has offered the 1st appellant an amount equivalent to the asking price of the suit property at the auction but the 1st appellant has ignored all of her efforts. The respondent stated that she was not served with a fresh statutory notice of sale once the one that was issued prior to the filing of the civil suit elapsed and/or expired. She claimed that in the event the intended sale falls through, she will be rendered homeless.
3. The respondent’s plaint was accompanied by a Notice of Motion application under certificate of urgency dated 11th August, 2020 in which the plaintiff sought an order of temporary injunction restraining the appellants from evicting, attaching, transferring, selling, conveying, charging, leasing or in any other way dealing with House No. 16 on L.R No. 209/8275/32 Parkview Estate “A” situated in South C Nairobi area, pending the hearing and determination of the suit before the lower Court. In opposition thereto, the 1st appellant filed grounds of opposition dated 9th September, 2020 and a replying affidavit sworn on the said date, by Joseph Lule, the Legal Officer litigation, at the 1st appellant.
4. The 1st appellant deposed that the respondent defaulted in her loan repayment sometime in August 2012 and she was served with all the requisite notices to remedy the situation but she failed to regularize her account rendering it necessary to realize the security in exercise of its statutory power of sale. The 1st appellant averred that the respondent first moved to Court by an application dated 16th April, 2020 seeking orders of injunction against the 1st appellant, but the said application was dismissed for lack of merit vide a ruling dated 4th June, 2020 by Hon. Obura who stated that there was no prima facie proof that the respondent had been frustrated by the Covid-19 Pandemic in fulfilling her obligations to the 1st appellant or redeeming the suit property. The 1st appellant deposed that since the respondent never appealed against the said ruling, she was estopped from raising issues that were addressed by the Court in the ruling dated 4th June, 2020.
5. It was stated by the 1st appellant that the sale of the suit property was carried out in accordance with the Auctioneers’ Act and Rules and that the suit property was sold by way of public auction held on 28th July, 2020 to the highest bidder one Abdul Razaa Warfa for Fatuma Farah Warfa upon the fall of the harmer and payment of 25% of the purchase price was made and execution of the sale agreement was done. The 1st appellant contended that the suit property having been lawfully transferred to Fatuma Farah Warfa as a bonafide purchaser for value, the respondent has no legal remedies over it. The 1st appellant deposed that the respondent has neither pleaded nor proved any fraud committed by the 2nd appellant during the auction and if she was able to prove any irregularities in the manner the auction was conducted, she would be entitled to an award of damages against the 2nd appellant as provided for under Section 26 of the Auctioneers’ Act.
6. The lower Court delivered a ruling on 19th February, 2021 allowing the application dated 11th August, 2020 in terms of prayer No. 3. The appellants being aggrieved the said decision filed a Memorandum of Appeal dated 16th March, 2021 raising the following grounds of appeal -
i) That the learned Magistrate erred in law and fact by finding that the respondent had established a prima facie case with high chances of success by granting an injunction in favour of the respondent regarding House No. 16 on L.R No. 209/8275/32 Parkview Estate in South C Nairobi pending the hearing and determination of the main suit;
ii) That the learned Magistrate erred in law and fact in failing to consider that the respondent had been advanced a mortgage facility which she was under an obligation to pay but had failed or neglected hence the 1st appellant’s right to exercise its statutory power of sale;
iii) That the learned Magistrate erred in law and fact by failing to consider the 1st appellant’s evidence, submissions and in so doing misdirected himself on the law and evidence;
iv) That the learned Magistrate failed to make a finding that the 1st appellant has a right to exercise its statutory power of sale under the provisions of Sections 90, 96 and Rule 15 of the Auctioneers Act and in so doing misdirected himself on the law;
v) That the learned Magistrate erred in law and fact by failing to make a finding that the 1st appellant had met all the requirements for exercise of its statutory power of sale under the Land Act and the public auction conducted on 23rd April, 2020 was within the law; and
vi) That the learned Magistrate erred in law in failing to consider the facts of the matter, the 1st appellant’s position and in failing to do so misdirected herself.
7. The appellants’ prayer is for the appeal to be allowed with costs for the ruling and for the order issued by Hon. D.W. Mburu, Senior Principal Magistrate, on the 19th February, 2020 in CMCC No. E383 of 2020 to be set aside and be replaced with an order dismissing the respondent’s Notice of Motion application dated 11th August, 2020, with costs.
8. The instant appeal was canvassed by way of written submissions. The appellants’ submissions were filed by the law firm of Mogeni & Co. Advocates on 26th August, 2022, whereas the respondent’s submissions were filed on 30th November, 2022 by the law firm of Swaka Advocates.
9. Mr. Kanjama (SC), for the appellants submitted that the respondent voluntarily offered House No. 16 on L.R No. 209/8275/32 as security for release of Kshs. 5,000,000/= on 24th October, 2011 but the loan has run into arrears and the same has not been serviced to date. He cited the provisions of Section 90(2), (3) & (4) of the Land Act, 2012 and contended that the bank in exercise of its statutory power of sale started the process of realization of the security. He relied on the case of Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR and stated that the Trial Court ought not to have restrained the 1st appellant from exercising its power of sale
10. Mr. Swaka, learned Counsel for the respondent referred to the provisions Order 40 Rule 1(a) and (b) of the Civil Procedure, 2010 and the cases of Mugo Wa Karanja v Ecobank (Kenya) Limited & another [2019) eKLR and American Cyanamid Co. v Ethicom Limited [1975] AER 504, where the Court considered the test for grant of an interlocutory injunction. The respondent’s Counsel also relied on the Court of Appeal case of Kenya Commercial Bank Ltd. v Pamela Akinyi Ochien’g Civil Appeal No. 114 of 1991 and submitted that the Trial Court in the matter in the lower Court did not deny the existence of the 1st appellant’s statutory power of sale but instead held that in exercising its statutory power of sale, the appellants ought to do so in a proper, regular manner and in conformity with the legal procedure taking into account the rights of all the parties to the transaction.
11. He cited the provisions of Section 97(1) & (2) of the Land Act, 2012 and submitted that despite the fact that the respondent was in arrears in regard to her loan repayment instalments to the 1st appellant, the said appellant in discharging its statutory power of sale still owed the respondent a duty of care under both equity and statute. It was stated by Counsel that Courts have a duty to intervene and right a wrong and to protect against violation or threatened violation of rights to property. Mr. Swaka further stated the 1st appellant had a statutory duty to obtain the best price reasonably attainable at the time the sale was done.
12. Counsel contended that the 1st appellant’s right to exercise the statutory remedy of sale only accrues after the mandatory statutory valuation provided for under Section 97 of the Land Act, 2012 is conducted, thus failure to comply with the said provisions rendered the entire process leading to the sale of the suit property by way of public auction invalid ab initio. Further, that the 1st appellant’s breach of the duties owed to the respondent would invalidate the entire process of the 1st appellant exercising its statutory power of sale over the suit property rendering it null and void.
13. He submitted that the 1st appellant has not attached a valuation report of the suit property to demonstrate that the value attached to the said property reflected the forced sale value of the property in issue, and in the absence of the said report, the only logical inference that can be drawn from that omission is that there was never a report in the first place.
14. Mr. Swaka referred to the provisions of Sections 89 and 102 of the Land Act, 2012 and stated that the respondent had a right in law to redeem the suit property at any time before the sale of the same. He contended that any conduct by a chargor which either expressly or impliedly operates as a clog and fetter of the right to redemption is prima facie illegal and no right can arise from such conduct.
ANALYSIS AND DETERMINATION.
15. I have re-examined the entire record and given due consideration to the written submissions by the parties’ respective Counsel. This Court being the 1st appellate Court has a duty to analyze and re-evaluate the evidence adduced before the lower Court and reach its own independent conclusion.
16. Temporary injunctions are provided for under Order 40 Rule 1 of the Civil Procedure Rules, 2010. The test for granting a temporary injunction was laid down by the Court in the case of Giella v Cassman Brown and Co. Ltd [1971] E.A. 358 as hereunder –
“The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”
17. On whether the plaintiff has established a prima facie case with a probability of success, I am bound by the Court of Appeal finding in the case of Mrao Ltd v. First American Bank of Kenya Ltd & 2 Others [2003] eKLR, where the said Court considered what constitutes a prima facie case and stated the following –
“So, what is a prima facie case" I would say that in civil cases it is 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 as to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the Applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.”
18. The respondent’s application was grounded on the fact that the 1st appellant failed to issue her with a fresh statutory notice of sale once the one that was issued prior to the filing of the civil suit elapsed and/or expired. The 2nd ground was that it failed to carry out a valuation of the suit property before selling it by public auction which led to the suit property being sold at a value that was way below its current market value and forced sale value. The respondent submitted that the 1st appellant’s breach of the duties owed to her would invalidate the entire process of the 1st appellant exercising its statutory power of sale over the suit property thereby rendering the sale null and void.
19. It is evident that the respondent does not dispute being indebted to the 1st appellant. Annexed to the 1st defendant’s affidavit in response to the application dated 11th August, 2020 are copies of a statutory notice pursuant to the provisions of Section 90(1), (2) and (3) of the Land Act, 2012 dated 18th January, 2019 and a 40 days’ notification of sale pursuant to the provisions of Section 96(2) of the Land Act, 2012 dated 9th October, 2019, that the respondent does not dispute receiving. Instead, she contends that the 1st appellant should have issued a fresh notice once that one elapsed and/or expired. The Court of Appeal decision in the case of Euro Bank Limited (In Liquidation) v Twictor Investments Limited & 2 others [2020] eKLR applies to the circumstances of this case. The said Court held as follows–
“From the record it is clear that after receiving the notice giving (whether it was for the 14 days or 90 days), the advocates on record for the mortgagor engaged counsel for the Bank with proposals on how to liquidate the loan. They did not complain at all that the notice they had been given was invalid. They actually acted on it. Following the discussions, the auctioneers were advised to hold any advertisement for the sale of the suit property. That was in November 1998. The property was not re-advertised until April 2001. The question we should be asking, in our view is whether in these circumstances, it was necessary to re-issue another statutory notice. The answer to this is in the negative as the default in payment had continued for more than 3 months following the notice in view of Section 69A(1) (a).”
20. Bound by the aforementioned decision, this Court finds that the 1st appellant had no duty to issue the respondent with fresh statutory notices once the ones dated 18th January, 2019 and 9th October, 2019 elapsed.
21. The respondent submitted that the suit property was sold way below its current market value and forced sale value because the 1st appellant failed to carry out a current valuation on it before subjecting it to a sale by public auction. On perusal of the 1st defendant’s supplementary affidavit, it is evident that the 1st appellant annexed a copy of a valuation report dated 20th January, 2020, for the suit property.
22. The Trial Magistrate at paragraph 11 of the ruling dated 19th February, 2021, held that the 1st appellant herein filed a valuation report very late in the day after the respondent had filed her submissions. The Court noted that the issue of the 1st appellant failing to do a valuation of the suit property was one of the main grounds pleaded by the respondent and it was expected that the 1st appellant would have tendered in evidence of the alleged valuation in its initial response to the application dated 11th August, 2020. The Court further stated that there was no explanation by the 1st appellant as to why it delayed in filing the said valuation report, and the Court could not determine whether the said report was genuine and whether or not it existed at the time the auction was carried out.
23. On perusal of the Record of Appeal, it is impossible to tell whether or not the 1st appellant’s supplementary affidavit to which the valuation report was annexed was properly on record. However, since the Trial Magistrate considered the contents of the said affidavit in her ruling, it would mean that it was properly on record. Having said so, I find that the 1st appellant’s supplementary affidavit and valuation report dated 20th January, 2020 having been properly filed, the issue of its authenticity is to be determined at trial and not at an interlocutory application. All that the 1st appellant was required to do was to tender evidence in support of the allegation that it carried out valuation on the suit property before subjecting it to a sale by public auction, which it did.
24. It is however noteworthy that the 1st appellant did not attach copies of the 45 days’ notice and notification of sale of immovable property in respect of the suit property for the Court to ascertain that indeed the said notices were served on the respondent. For this reason, this Court finds that the 1st appellant did not satisfactorily demonstrate to this Court that in exercising its statutory power of sale over the suit property, it did so in a proper, regular manner and in conformity with the provisions of the Land Act, 2012 and the Auctioneers’ Rules, 1997. I therefore agree with the Trial Magistrate that on a balance of probability, the respondent discharged her burden of demonstrating that she has a prima facie case with a probability of success against the appellants.
25. On whether the respondent stands to suffer irreparable injury that cannot be adequately compensated by an award of damages in the event the order for injunction that was granted in the lower Court is not upheld, I am persuaded that this is the case. The respondent averred that the suit property has been her home for over twenty (20) years, and she has made various investments in said property, including putting up additional structures. It is trite that where there is breach of the law, an applicant cannot be compelled to accept damages as recompense. In Kanorero River Farm Ltd and 3 others v National Bank of Kenya Ltd [2002] 2 KLR 207 quoted by the Court in Beatrice Wathanu Waithaka v Kenya Women Micro-Finance Limited & another [2019] eKLR, it was held thus–
“I would for those reasons alone accede to the Plaintiff’s prayer for interlocutory injunction in respect of the two properties on the grounds that the 1st and 2nd Plaintiffs have a very strong prima facie case with a probability of success. I would not be deterred by any argument that the National Bank could compensate them in damages if it failed at the trial. In my opinion, no party should be allowed to ride roughshod on the statutory rights of another simply because it could pay damages.”
26. In this case, the 1st appellant did not demonstrate that the respondent was served with a 45 days’ notice and notification of sale of immovable property in respect of the suit property as provided for under Rule 15 of the Auctioneers’ Rules, 1997, before the suit property was put up for sale by public auction. In the absence of proof of compliance with the provisions of Rule 15 of the Auctioneers’ Rules, 1997, this Court finds that there was breach of the law on the part of the 1st appellant, therefore, the respondent stands to suffer loss and injury that cannot be compensated by an award of damages in the event the order for injunction that was granted by the Trial Court is not upheld.
27. On the balance of convenience, this Court finds that it tilts in favour of the respondent since compliance with Rule 15 of the Auctioneers’ Rules, 1997 is mandatory as it is couched in mandatory terms.
28. In the end, this Court finds that the instant appeal is devoid of merit. It is dismissed with costs to the respondent.
It is so ordered.
DELIVERED, DATED and SIGNED at NAIROBI on this 13th day of October, 2023. Judgment delivered through Microsoft Teams online plat form
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Musyoka for the appellant
No appearance for the respondent
Ms. B. Wokabi – Court Assistant.