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JudgmentJACINTA MBITHE SAKU (suing as personal representative of the estate of ONESMUS MISOA MUKIMA (DECEASED) VS FAMILY BANK LIMITED AND WATTS AUCTIONS15 min read

JACINTA MBITHE SAKU (suing as personal representative of the estate of ONESMUS MISOA MUKIMA (DECEASED) VS FAMILY BANK LIMITED AND WATTS AUCTIONS

High Court at Kajiado High Court · · Stella Mutuku

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KAJIADO

CIVIL CASE NO. E019 OF 2023

JACINTA MBITHE SAKU……………………………………………………...APPLICANT

VERSUS

FAMILY BANK LIMITED…………………………………………….…1ST RESPONDENT

WATTS AUCTIONS……………………………………………………..2ND RESPONDENT

RULING

Notice of Motion

  1. By a Notice of Motion application dated 27th September 2023, Jacinta Mbither Saku, the Applicant, moved this Court citing Order 40 Rules 1, 2 and 4 of the Civil Procedure Rules and Section 1A, 1B, 3A and 63 of the Civil Procedure Act seeking the following orders:
  2. Spent.
  3. Spent.
  4. That an interim injunction do issue against the Defendants  by themselves, their servants and/or agents from selling, offering for sale, advertising, alienating, transferring by public auction or private treaty, disposing off or otherwise completing by conveyance, transfer of any sale conducted by public auction or private treaty, taking possession, or exercising any power conferred by section 90 (3) of the Land Act, 2012, leasing, letting, charging or otherwise interfering with all that parcel of land known as Ngong/Ngong/45779 pending the hearing and determination of this suit.
  5. That the Defendants, their servants and/or agents be restrained by an order of injunction from lodging with the Registrar of Titles, Kajiado or any other Registry, a transfer or any other document that would transfer the ownership of the suit property pending the determination of the suit.
  6. That the costs of this application be borne by the Defendants.
  7. The Applicant has backed this application with the grounds found on the face of the application and her Supporting Affidavit sworn on the 23rd September 2023.
  8. The Applicant is the widow of Onesmus Misoa Mukima, deceased, who was the registered owner of Ngong/Ngong/45779 (suit property). The deceased charged the suit property to secure several loan facilities. The deceased defaulted in meeting his financial obligations in repaying the loan facilities. The deceased passed on in December 2018 on the 15th.
  9. It is the Applicant’s claim that the 1st Defendant sought to recover the loan without following the laid down recovery procedures. She has claimed that the Defendants have failed to serve the deceased or his legal representatives with the requisite statutory notices and that the 1st Applicant’s statutory power of sale has not crystalized.
  10. The Application is opposed through a Replying Affidavit sworn by Sylvia Wambani who has described herself as the Legal Officer of the 1st Defendant. Sylvia has confirmed that the deceased and the Applicant were advanced several loan facilities, as specified under paragraphs 5 and 6 of the Replying Affidavit, on the strength of registered legal charges over the suit property and that they defaulted in serving the said facilities leading to the 1st Defendant serving him with the statutory notices.
  11. It is deposed that all the statutory notices have been served on the deceased and the Applicant; that the 1st Defendant issued a 90 days statutory notice dated 24th August 2018 pursuant to section 90(1) of the Land Act and Secti8on 56(2) of the Land Registration Act, by Registered Post but the Applicant and the deceased failed to rectify the default on the loan facility; that the 1st Defendant issued a 40 days statutory notice of intention to sell dated 5th August 2018 pursuant to section 96(2) of the Land Act and that subsequent to the issuance of the latter notice, the Applicant notified the 1st Defendant of the demise of the deceased.
  12. It was deposed that after the expiry of 40 days, the 1st Defendant instructed the 2nd Defendant to proceed with repossession and sale of the charged property. It was deposed that the Applicant engaged the 1st Defendant through correspondence, acknowledging the outstanding loan owed to the 1st Defendant and promising to settle the same. It was deposed that despite making proposals on how to settle the loan, the Applicant failed to settle the loan leading to issuance of 45 days’ notice and notification of sale both dated 27th July 2023 by the 2nd Defendant on instructions by the 1st Defendant; that the sale was slotted for 28th September 2023 but the Applicant sought interim orders stopping the sale.
  13. The Applicant filed a Further Affidavit sworn on the 19th April 2024 reiterating that the 1st Defendant did not follow the law in serving the statutory notices and that she believes that she has a prima facie case. She has stated that it is necessary to establish, through a full trial whether or not the deceased’s administrator’s equity of redemption had been extinguished by the time the suit property was advertised for sale. It is her case that the main suit will be rendered nugatory if the orders sought are not granted.

Submissions

  1. The application was canvassed through written submissions. The Applicant filed her submissions dated 19th April 2024. She has raised the following issues:
  2. Failure to perfect the securities before allowing drawdown of the facilities.
  3. Service of the statutory notices.
  4. Dealing with the estate of the deceased without the requisite administrator of the estate.
  5. Uninsured loans.
  6. The Applicant submitted that the original borrowing between the years 2010 and 2015 had been fully paid but the subsequent borrowing lending was unsecured and therefore no statutory power of sale could arise.
  7. It was submitted that the auctioneers notice was never served on the Applicant; that the Applicant is not the administrator of the estate of the deceased but holds a limited grant which only allows her to file and defend suit. It was submitted that the service of the notice by the auctioneers was done at a time when the defendants knew that the borrower was deceased and therefore the defendants proceeded on an illegality. The Applicant relied on Josephine Njoki Mwangi v Housing Finance Corporation of Kenya Limited [2008] eKLR to support her submissions that service of a statutory notice of sale of suit property upon a deceased person is invalid.
  8. It was submitted that the Applicant has established a prima facie case with a probability of success and that she has demonstrated that she deserves an injunction having satisfied the principles of granting injunctions. She cited Silvester Momanyi Marube v Guizar Ahmed Motari & Another [2012] eKLR, among other cases to support her submissions.
  9. Th 1st Defendant’s submissions are dated3rd June 2024. Two issues has been raised for determination:
  10. Whether the Applicant is entitled to the orders of interim injunction.
  11. Who should bear the costs of this application.
  12. The 1st Defendant has cited Order 40 Rule 1 (a) and (b) of the Civil Procedure Rules on the law applicable in granting injunctions and Giella v Cassman Brown (1973) EA 358 on the conditions for granting interlocutory injunctions. They also relied on Robert Mugo wa Karanja v Ecobank (Kenya) Limited & Another [2019] eKLR where the court expounded on the principles applicable for granting interlocutory injunctions as follows:

“The test for granting of an interlocutory injunction was considered in the American Cyanamid v Ethicom Limited (1975) AAET 504 where three elements were noted to be of great importance, namely:

  1. There must be a serious/fair issue to be tried;
  2. Damages are not an adequate remedy; and
  3. The balance of convenience lies in favour of granting or refusing the Application.”
  4. It was submitted that the Applicant has failed to satisfy the above principles and is therefore not entitled to the grant of the orders she is seeking. It was submitted that the Applicant has not demonstrated that she has a legal or equitable right which requires protection by an injunction. The 1st Defendant relied on Kenleb Cons Ltd v New Gatitu Service Station Ltd & another [1990] eKLR. The 1st Defendant submitted that the Applicant must demonstrate a prima facie case as defined in Mrao Limited v. First American Bank of Kenya & 2 others (2003) KLR 125.
  5. On the issued raised by the Applicant that the letters of offer, the disbursements of the facilities were conditional on the perfection of the securities offered by the deceased on the loan facilities and that the securities were not perfected, the 1st Defendant submitted that the First Legal Charge, Further Legal Charge, Second Further Legal Charge, Third Further Charge and Fourth Charge were all registered on 16th December 2010, 3rd April 2012, 13th October 2014, 17th March 2015 and 22nd September 2015 respectively as demonstrated in their Replying Affidavit.
  6. It was submitted that through the two Facility Letters dated 31st January 2018 and 28th June 2018, the 1st Defendant advanced to the Applicant and the deceased an extension of Local Purchase Order (LPO) financing of Kshs 7,555,200. Kshs 6,262,800 and Kshs 7,320,000 and not two facilities of Kshs 7,555,200 and Kshs 6,262,800 as argued by the Applicant that the Applicant.
  7. The 1st Defendant has submitted that, contrary to the argument by the Applicant that the additional borrowing was never secured, a Memorandum varying the Charges was created through the letters of 31st January 2018 and 28th June 2018 and that the said Memorandum complied with section 84(3) of the Land Act in that it was signed by the Chargee and the Chargor, the deceased and the Applicant; that they highlight that the term of the charge had been extended for a period of three months for the Memorandum dated 31st January 2018 and for a period of sixty days for the Memorandum dated 28th June 2018 and that they specify the manner in which the charges would be extended and amended.
  8. On the claim by the Applicant that the certificate of search does not show any further charges after 2015, the 1st Defendant submitted that the LPOs dated 31st January 2018 and 28th June 2018 were meant to vary the already existing charge facilities which were already registered and executed.
  9. It was submitted that the Applicant wrote to the 1st Defendant acknowledging the outstanding loans owed to the 1st Defendant and undertaking to settle the same and therefore the Applicant is estopped, vide section 24 of the Evidence Act from denying the legality of the said facilities.
  10. It was submitted that the 1st Defendant served the statutory notices in compliance with section 90 and 96 of the Land Act. That the 90 days’ notice dated 24th August 2018 was served on the Chargor by Registered Post; that the 40 days’ notice was issued on 5th December 2018 through Registered Post and the auctioneer served the Applicant with 45 days’ Redemption Notice and Notification for Sale both dated 27th July 2023.
  11. The 1st Defendant has submitted that the Applicant has failed to demonstrate she has a prima facie case with a probability of success in view of the fact that she is indebted to the 1st Defendant and has failed to demonstrate willingness to settle the debt.
  12. It was submitted that the Applicant has failed to demonstrate that she will suffer irreparable loss which cannot be compensated by an award of damages. The 1st Defendant relied on Pius Kipchirchir Kogo v Frank Kimeli Tenai (2018) eKLR where the Court defined irreparable injury as follows:

“Irreparable injury means that the injury must be one that cannot be adequately compensated for in damages and that the existence of a prima facie case is not itself sufficient. The applicant should further show that irreparable injury will occur to him if the injunction is not granted and there is no other remedy open to him by which he will protect himself from the consequences of the apprehended injury.”

  1. It was submitted that the Chargor offered the suit property as security for a loan advanced to the borrower fully aware that the 1st Defendant would be entitled to exercise the statutory power of sale should default occur; that the Chargor has failed to service the loan facility amounting to Kshs 19,763,634 at the time of filing the submissions and therefore it is logical that sale of the suit property by the 1st Defendant is inevitable. The 1st Defendant relied on John Nduati Kariuki T/A Johester Merchants v National Bank of Kenya Ltd, Civil Application No. Nai. 306 of 2005 [2006] 1 EA 96 and Premier Flour Mills Ltd & 2 others v Standard Chartered Bank Kenya Ltd [2019] eKLR to the effect that the properties had been offered as security for various loans given by the defendant. It was very clear in the loan agreement that in the event of default the said properties would be sold. The defendant has already commenced the process of realizing the securities. The plaintiff’s claim that they are likely to be thrown under the bus by the actions of the defendant can be taken care of by way of damages.
  2. It was submitted that the 1st Defendant has demonstrated that the Chargor is in default of loan repayments; that the 1st Defendant is within its right to exercise its Statutory Power of Sale and that the Applicant has failed to demonstrate that she will not suffer injury that cannot be compensated by an award of damages.
  3. On the issue of the balance of convenience, the 1st Defendant relied on First Choice Mega Store Limited v Ecobank Kenya Limited [2017] eKLR and Ochola Kamili Holdings Limited v Guardian Bank Limited (2018) eKLR and submitted that the 1st Defendant stands to suffer more harm should this Court grant the orders sought by the Applicant and therefore the balance of convenience tilts in favour of the 1st Defendant. The 1st Defendant further submitted that costs should not be awarded to the Applicant.

Determination

  1. I have considered the application and all the supporting documents. I have considered the Replying Affidavit and all the supporting documents as well as the submissions by the parties. The main issue for determination is whether the Applicant is entitled to the orders she is seeking.
  2. What is clear from the pleadings of the parties and the documents attached is that it is not in dispute that the deceased was advanced loan facilities by the 1st Defendant secured by Ngong/Ngong/45779 registered in the name of the deceased. According to the Applicant, she does not dispute the original borrowing between 2010 and 2015, which she claims was paid in full. She disputes the subsequent lending which she claims was not secured. She has cited sections 82, 84 and 85 of the Land Act to support her claim.
  3. In response to the above claims by the Applicant, the 1st Defendant has stated that through the two Facility Letters dated 31st January 2018 and 28th June 2018, the 1st Defendant advanced to the Applicant and the deceased an extension of Local Purchase Order (LPO) financing of Kshs 7,555,200. Kshs 6,262,800 and Kshs 7,320,000 and not two facilities of Kshs 7,555,200 and Kshs 6,262,800 as argued by the Applicant that the Applicant.
  4. The 1st Defendant further submitted that, contrary to the argument by the Applicant that the additional borrowing was never secured, a Memorandum varying the Charges was created through the letters of 31st January 2018 and 28th June 2018 and that the said Memorandum complied with section 84(3) of the Land Act in that it was signed by the Chargee and the Chargor, the deceased and the Applicant; that they highlight that the term of the charge had been extended for a period of three months for the Memorandum dated 31st January 2018 and for a period of sixty days for the Memorandum dated 28th June 2018 and that they specify the manner in which the charges would be extended and amended.
  5. I have considered this issue and I am satisfied with the evidence adduced by the 1st Defendant in response to the claims by the Applicant. She has not adduced evidence controverting that of the 1st Defendant on the issue. I have read the two facility letters dated 31st January 2018 and the on dated 28th June 2018. All the three letters addressed to the deceased, confirm that there was an extension of the LPO financing of Kshs 7,555,200, Kshs 6,262,800 and Kshs 7,320,000 respectively. The terms of the extended LPO Loan facilities are clear as shown in those three letters in terms of the securities.
  6. I am also satisfied with the explanation by the 1st Defendant that contrary to the argument by the Applicant that the additional borrowing was never secured, a Memorandum varying the Charges was created through the letters of 31st January 2018 and 28th June 2018 and that the said Memorandum complied with section 84(3) of the Land Act in that it was signed by the Chargee and the Chargor, the deceased and the Applicant; that they highlight that the term of the charge had been extended for a period of three months for the Memorandum dated 31st January 2018 and for a period of sixty days for the Memorandum dated 28th June 2018 and that they specify the manner in which the charges would be extended and amended.
  7. I have considered the claim by the Applicant that the certificate of search does not show any further charges after 2015, and the explanation by the 1st Defendant that the LPOs dated 31st January 2018 and 28th June 2018 were meant to vary the already existing charge facilities which were already registered and executed. I find no evidence by the Applicant controverting this evidence by the 1st Defendant the LPOs dated 31st January 2018 and 28th June 2018 were meant to vary the already existing charge facilities which were already registered.
  8. I have read various correspondences between the Applicant and the 1st Defendant in which the Applicant has acknowledged the debt owed to the 1st Defendant. It is clear to me that the Applicant wrote to the 1st Defendant acknowledging the outstanding loans owed to the 1st Defendant and undertaking to settle the same.
  9. For the Applicant to succeed in securing the orders she is seeking, she has to satisfy the court that she has a prima facie case, that the stands to suffer irreparable injury that cannot be adequately compensated by an award of damages and that the balance of convenience tilts in her favour. This is the legal position as stated in various decisions including Giella v Cassman Brown Case cited above.
  10. I have noted that the statutory notices were served on the deceased. The Statutory Notice pursuant to section 90(1) of the Land Act giving 90 days to regularize the default is dated 24th August 2018. It is addressed to the deceased. It was sent through Registered Mail as shown in the Certificate of posting attached. There is the second statutory notice, Notice of Intention to sell pursuant to section 96(2) of the Land Act, issued to the deceased dated 5th December 2018 giving him 40 days notice. There is a Certificate of posting attached.
  11. I have noted a 45 days Redemption Notice and Notification of sale from the Auctioneers addressed to the Applicant. I have also noted the exchange of correspondent between the Applicant and the 1st Defendant in which the Applicant has admitted the debt and negotiated how she would settle the same. It seems that she did not honour her promises to settle the loan.
  12. As stated in Mrao Limited case, a prima facie case includes but not confined to a genuine and arguable case. It is a case which on the material presented to the court, a tribunal property 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.
  13. The Applicant is aware that there is default in repaying the loan facilities. The suit property was offered as security. The Applicant has admitted the default and proposed how she would settle the same but has failed to do so. As stated in John Nduati Kariuki T/A Johester Merchants v National Bank of Kenya Ltd, Civil Application No. Nai. 306 of 2005 [2006] 1 EA 96 and Premier Flour Mills Ltd & 2 others v Standard Chartered Bank Kenya Ltd [2019] eKLR:

The properties had been offered as security for various loans given by the defendant. It was very clear in the loan agreement that in the event of default the said properties would be sold. The defendant has already commenced the process of realizing the securities. The plaintiff’s claim that they are likely to be thrown under the bus by the actions of the defendant can be taken care of by way of damages.

  1. Given the circumstances of this case, it is my considered view that the Applicant has not demonstrated to this court that she has deserves the orders sought. She has failed to demonstrate she has a prima facie case or that she stands to suffer irreparable injury that cannot be compensated by an award in damages and that the balance of convenience tilts in granting the injunction.
  2. It is my finding, and I so hold, that the Applicant does not deserve the orders she is seeking for the reasons given in this ruling. Consequently, the Notice of Motion dated 27th September 2023 lacks merit and is hereby dismissed with costs to the 1st Defendant.
  3. Orders shall issue accordingly.

Dated, signed and delivered this 24th day of January 2025


Details

Delivered
Court rank
High Court
Station
Kajiado High Court (High Court at Kajiado High Court)
Division
High Court Div
Case type
Civil Suit
Judge
Stella Mutuku

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