Background
1. This ruling determines the application dated 29th December 2023 which primarily seeks injunctive relief against the respondent, for their joinder in this suit and consequently for leave to the plaintiffs to amend their plaint so as to reflect such joinder of the respondent.
2. The plaintiffs instituted the present suit against the defendant with respect to a loan advanced to the 1st plaintiff through the Loan Agreement dated 27th January 2021 and secured by a transfer of the suit property to the defendant. The plaintiff’s case is that under the loan agreement, the defendant was allowed to sell and deal in the suit property only in the event of default of the terms of the agreement and upon a twenty-one (21) days’ notice to the plaintiffs.
3. In breach of the loan agreement the 1st defendant had gone ahead on charged the suit property to the intended 2nd defendant before the end of the loan term and repayment period or any default by the 1st plaintiff and without notice to the 1st plaintiff. The plaintiffs argue that the charge is irregular and void for having been registered contrary to the loan agreement.
4. The application is opposed. The 2nd respondent confirms having extended a loan facility to the 1st respondent, on 29th September 2021, secured by a legal charge over the suit property. The 1st respondent defaulted in repayment of the facility and by 22nd September 2023 the outstanding balance stood at Kshs. 16,668,067.20. The 2nd respondents confirm that they were at the verge of exercising their statutory power of sale as a result of the default by the 1st respondent when the proceedings before the court were filed against them.
5. The 2nd respondents urge this court not to allow the application as they had complied with the law and therefore the intended sale and pursuant transfer would be legal.
6. In response to the prayer for joinder, the 2nd respondent submits that they are a complete stranger to the loan transaction between the plaintiffs and the 1st respondent and that the 2nd respondent owes no contractual duty to the plaintiffs. Furthermore, the plaintiffs have no relief that they are claiming against the 2nd respondent.
7. On their part the 1st respondent avers that the charge with the plaintiffs was executed without duress and as a result that the 1st respondent had acquired a clean and valid title and as proprietor of the suit property was within his rights to charge the suit property to the 2nd respondent.
8. The 1st respondent argues that the transaction between the 2nd respondent and the 1st respondent is irrelevant to the suit herein. Further, it is the 1st respondent’s case that the charge dated 28th May 2021 in favour of the 2nd respondent was validly registered and cannot be invalidated unless proven otherwise.
Analysis and determination
9. I have carefully considered the pleadings, evidence and the submissions filed by the parties. The issue for determination is whether or not the applicants have met the threshold for granting of an interlocutory injunction and whether the joinder of the 2nd respondent to these proceedings is necessary.
10. The conditions for granting interlocutory injunctions are set out in Order 40 rule (1) (a) and (b) of the Civil Procedure Rules 2010. These conditions have been interpreted and given effect through numerous judicial pronouncements. Amongst the most celebrated of these is the case of Giella vs. Cassman Brown & Co. Ltd (1973) E.A 385. The Court at page 360 (Spry J) held that: -
"The conditions for the grant of an interlocutory injunction are 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."
11. It is not in dispute that this court already pronounced itself in an earlier ruling dated 24th November 2023 as follows: -
As to whether the respondent is entitled to the monies claimed, is a question for further interrogation at a substantive hearing. I am satisfied that the applicant has established that he has a prima facie case worthy of rebuttal.
12. With the developments now apparent from the record, the court will further be required to determine whether the charge of the suit property by the 1st respondent in favour of the 2nd respondent is valid and legal and who between the applicants and the respondents has a superior claim over the suit property. That cannot be done at this interlocutory point, but must be interrogated at a substantive hearing.
13. As to the irreparable injury that may be suffered by the applicants, besides the sentimental attachment and the real dispute that surrounds the rights over the property, I am convinced that this court ought to preserve the subject matter with a view to having an expeditious determination of the matter.
14. Having considered the totality of the facts herein, I find that the inconvenience caused to the applicants would be greater than that which would be caused to the 2nd respondent by not granting the orders of injunction. Such inconvenience may extend to and affect other third-party rights should the intended sale be allowed to go on.
15. On the question of joinder of the 2nd respondent, Order 1 Rule 10(2) of the Civil Procedure Rules provides the basis on which a court may exercise its discretion in such instances. At the heart of the exercise of this discretion is the need for expeditious disposal of suits, finality and the need for justice.
16. This rule provides that the court may, at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added.
17. It is common ground that the applicants’ claim revolves around a dispute on the amount due and the alleged default, which led to the disputed transfer of the applicants’ property by the 1st respondent. The suit property has since been used as security by the 1st respondent for a loan from the 2nd respondent. The 2nd respondent intending to exercise its right to sell the suit property due to the 1st respondent’s default is directly linked to the outcome of the applicants’ claim.
18. Given that the 2nd respondent’s interests in the property and the subsequent actions by the 1st and 2nd respondents affect the dispute, the 2nd respondent’s presence is necessary for the court to adjudicate on all matters comprehensively and fairly.
Disposition
19. For these reasons that I have stated, I allow the application in the following terms:
i. A temporary order of injunction is issued as per prayer 2 of the application, directed at Family Bank Limited, against property Title Number I.R 83020 Land Reference Number 15065/64 (original number 15065/47/1) as set out in the application dated 29th December 2023;
ii. Family Bank Limited be joined to the instant suit as a defendant.
iii. Consequently, leave is hereby granted to the plaintiffs to amend the plaint so as to effect the joinder of Family Bank Limited to the suit. Costs of the application shall await the outcome of the suit.