Background
1. The Applicant, Nancy Wanjiku Munyota, filed the present suit as Miscellaneous Application No. E459 of 2024, seeking injunctive reliefs to restrain the Respondent, Family Bank Kenya Limited, from exercising its statutory power of sale over Land Reference No. Naivasha/Maraigushu Block 4/174.
2. The dispute arose from a loan agreement entered between the Applicant and the Respondent, where the Applicant borrowed Kshs. 2,500,000, secured by a legal charge over the subject property. The loan was to be repaid over 36 months, starting in January 2023 and ending in December 2025. The Applicant made nine payments totaling Kshs. 697,159.99 between February and September 2023 but defaulted after being incarcerated at Lang’ata Women’s Prison in October 2023.
3. On 26th April 2024, the Respondent issued a Notice of Intention to Sell the property pursuant to Section 96(2) of the Land Act, 2012, claiming that the Applicant had failed to settle her outstanding loan balance. The Applicant disputed the legality of the intended sale, arguing that the Respondent had not properly served her with the requisite statutory notices, as required by the Land Act, 2012, and that the Respondent acted in bad faith by failing to consider a loan restructuring proposal made through her daughter while she was incarcerated.
4. In response to the imminent sale, the Applicant filed the present Notice of Motion Application dated 31st May 2024 under a Certificate of Urgency, seeking an injunction to restrain the Respondent from selling the charged property, an extension of time to redeem the property by 19 months or as deemed fit by the Court, and the suspension of the Respondent’s statutory power of sale until December 2025, when the loan repayment was originally scheduled to end.
5. The Respondent opposed the application, arguing that the Applicant’s suit was defective, as it was filed as a Miscellaneous Application rather than as a substantive suit. The Respondent also maintained that it had fully complied with all statutory requirements and was lawfully exercising its right to sell the property due to the Applicant’s continued default.
6. The Respondent subsequently filed a Notice of Preliminary Objection on 18th June 2024, arguing that the suit was improperly filed as a Miscellaneous Application contrary to the Civil Procedure Act and Rules, that the orders sought by the Applicant should be made within a substantive suit rather than a Miscellaneous Application, and that the Applicant’s reliance on outdated legal provisions rendered her application defective.
7. In response, the Court directed that the parties file submissions on both the Notice of Motion Application and the Preliminary Objection. The Applicant filed submissions dated 11th October 2024, while the Respondent filed two sets of submissions, one dated 7th October 2024 in support of the Preliminary Objection and the other dated 18th October 2024 in response to the Applicant’s Notice of Motion Application.
Applicant’s Submissions
8. The Applicant submitted that the Respondent’s attempt to exercise its statutory power of sale over the charged property, Naivasha/Maraigushu Block 4/174, is unlawful and in violation of her constitutional right to property under Article 40 of the Constitution of Kenya. The Applicant argued that the Respondent failed to serve the requisite statutory notices as mandated under the Land Act, 2012, making the intended sale illegal and irregular.
9. The Applicant contended that she took a loan facility of Kshs. 2,500,000 from the Respondent and diligently made nine payments between February 2023 and September 2023, amounting to Kshs. 697,159.99. However, she defaulted on repayments after being incarcerated at Lang’ata Women’s Prison in October 2023, a fact well known to the Respondent. The Applicant submitted that despite informing the Respondent of her circumstances and making efforts to restructure her loan payments, the Bank unreasonably refused to accommodate her and instead initiated the illegal sale of her property.
10. On the issue of statutory notices, the Applicant submitted that the Respondent failed to comply with Section 90(1), 90(2)(b), and 96(2) of the Land Act, 2012, which mandate that a Chargee must issue:
i. A 90-day statutory notice of default, specifying the amount due and the steps required to remedy the default.
ii. A 40-day notice of intention to sell, explicitly informing the Chargor of the intended sale and allowing them time to redeem the property.
iii. A 45-day notification of sale by an auctioneer, as required under Rule 15 of the Auctioneers Rules.
11. The Applicant argued that the Respondent did not serve these notices in the prescribed manner, and any notices allegedly sent were defective, inadequate, or improperly served since the Applicant was at the time incarcerated at the Langata Women’s Prison.
12. On the issue of balance of convenience, the Applicant submitted that she stands to suffer irreparable harm if the sale is allowed to proceed. She argued that the charged property serves as her primary residence and source of livelihood, and its sale would render her homeless and financially ruined. The Applicant relied on the principles set out in Giella v. Cassman Brown [1973] E.A. 358, emphasizing that courts should prioritize protecting a Chargor’s rights where the process of realization is contested on valid legal grounds.
13. The Applicant further submitted that the Respondent’s statutory power of sale has not accrued because the purported notices were defective, and as such, no lawful sale can proceed. She relied on the case of David Gitome Kuhiguka v. Equity Bank Ltd [2013] eKLR, where the court held that a Chargee must comply with all statutory requirements before exercising the power of sale, failure to which any attempted sale is null and void.
14. On the issue of restructuring the loan, the Applicant argued that the Respondent acted in bad faith by disregarding her proposal to service the loan through rental income from her property. She submitted that the Bank’s refusal to accommodate a reasonable repayment plan was a deliberate attempt to frustrate her and accelerate the sale of the property, despite her willingness to meet her obligations once released from incarceration.
15. The Applicant concluded by urging the Court to issue an injunction restraining the Respondent from proceeding with the sale of Naivasha/Maraigushu Block 4/174, declare that the statutory notices issued were defective and thus rendered the intended sale unlawful, order an extension of time under Section 104(2) of the Land Act, 2012, allowing her to redeem the property within 19 months or such period as the Court may deem fit, and award the costs of the application to the Applicant.
Respondent’s Submissions
16. The Respondent, Family Bank Kenya Limited, submitted that the Applicant’s suit is fatally defective and amounts to an abuse of the court process since it was filed as a Miscellaneous Application contrary to Order 40 Rule 1 of the Civil Procedure Rules. The Respondent argued that injunctive relief and extension of time for loan repayment cannot be granted through a Miscellaneous Application, as the law requires such orders to be sought within a substantive suit.
17. The Respondent contended that it lawfully advanced a loan of Kshs. 2,500,000 to the Applicant which was secured by a legal charge over Naivasha/Maraigushu Block 4/174. The loan was to be repaid in 36 monthly installments, but the Applicant defaulted after making only nine payments, totaling Kshs. 697,159.99, between February and September 2023. The Respondent submitted that due to the continued default, it exercised its statutory power of sale, in full compliance with the Land Act, 2012.
18. The Respondent asserted that it had fully complied with the statutory requirements under the Land Act, 2012, by issuing all the necessary notices including a Statutory Notice of Default issued on 24th January 2024 and served via registered mail, providing the Applicant with a 90-day period to remedy the default, as stipulated in Section 90 of the Land Act. Additionally, a Notice of Intention to Sell issued on 26th April 2024, in accordance with Section 96(2) of the Land Act, giving the Applicant a further 40 days before initiating the sale process. The Respondent emphasized that the Applicant neither challenged the validity of these notices nor provided any evidence to dispute their service. As such, the Respondent argued that the statutory power of sale had lawfully accrued.
19. The Respondent argued that the Applicant has failed to meet the legal threshold required for the grant of an injunction, as outlined in Giella v. Cassman Brown [1973] E.A. 358 and reaffirmed in Nguruman Limited v. Jan Bonde Nielsen & 2 Others [2014] eKLR. Specifically, the Respondent contended that the Applicant has not established a prima facie case, as she acknowledges her default and has not demonstrated any illegality in the loan recovery process. Furthermore, the Respondent asserted that the Applicant will not suffer irreparable harm, as she voluntarily provided the property as security, fully aware that default would lead to its sale. The Respondent cited Charles Alex Njoroge v. National Bank of Kenya Ltd [2015] eKLR, where the court ruled that land given as security becomes a commodity for sale and that any loss can be compensated by damages. Regarding the balance of convenience, the Respondent argued that delaying the sale would unfairly prejudice it, as the loan balance continues to accrue interest, thereby increasing the Applicant’s debt. The Respondent referred to Pius Kipchirchir Kogo v. Frank Kimeli Tenai [2018] eKLR, where the court held that when both parties may suffer inconvenience, the Applicant must demonstrate that their inconvenience outweighs that of the Respondent.
20. On the issue of the Applicant’s plea for extension of time, the Respondent submitted that Section 104(2) of the Land Act, 2012 only allows a court to extend the time for compliance before the Notice of Intention to Sell is issued. The Respondent argued that since the 40-day period under Section 96(2) had already lapsed, the court no longer has jurisdiction to extend time.
21. The Respondent further argued that the Applicant approached the court with unclean hands, having defaulted on loan repayments and failing to inform the bank of her incarceration, only seeking relief when the sale process commenced. The Respondent submitted that granting the orders sought would encourage loan defaulters to frustrate recovery efforts through procedural technicalities.
22. In conclusion, the Respondent urged the court to dismiss the application with costs, highlighting that the Applicant has not established a prima facie case. Furthermore, the Respondent argued that any loss the Applicant may incur could be compensated by damages. It was also emphasized that the Respondent would suffer greater prejudice if an injunction were to be granted.
Analysis and Determination
23. Having considered the pleadings, affidavits, and submissions of both parties, the following issues arise for determination:
i. Whether the Application is procedurally defective for having been filed as a Miscellaneous Application.
ii. Whether the Applicant has met the threshold for the grant of injunctive relief.
Whether the Application is procedurally defective for having been filed as a Miscellaneous Application
24. The Respondent has raised a Preliminary Objection, arguing that the Applicant’s Notice of Motion is fatally defective as it was filed as a Miscellaneous Application, which is not a recognized procedure for instituting a suit seeking injunctive relief. The Respondent contends that the Application contravenes Section 19 of the Civil Procedure Act, Order 3 Rule 1 of the Civil Procedure Rules, 2010, and Order 40 Rule 1 of the Civil Procedure Rules, 2010, which require that a suit be commenced by way of a Plaint, Petition, or Originating Summons, and not a Notice of Motion.
25. The Court of Appeal in DT Dobie & Company (Kenya) Ltd v Muchina [1982] KLR 1 emphasized that:
‘’ No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward for a court of justice ought not to act in darkness without the full facts of a case before it.’’
26. However, the High Court in Wanja & Another v Roothaert (Misc. Application E193 of 2021) [2022] KEHC 10255 (KLR) (3 June 2022) held that:
"Not every procedural blunder can be excused as a ‘mere technicality.’ The filing of a suit is a mandatory statutory provision which the court cannot simply wish away... Article 159 (2)(d) cannot be used to excuse glaring omissions in adhering to statutory provisions."
27. Additionally, in Scope Telmatics International Sales Limited v Stoic Company & Another [2017] eKLR, it was held that –
‘’Article 159 of the Constitution should not be seen as a panacea to cure all manner of indiscretions relating to procedure ….”
28. While Article 159(2)(d) of the Constitution mandates that justice be administered without undue regard to procedural technicalities, this provision does not grant litigants a license to disregard established procedural rules. The law is clear that an application for injunctive relief must be anchored on a substantive suit, as this provides the necessary legal and factual foundation for the court’s determination.
29. Consequently, the applicant’s decision to commence this suit by way of a Miscellaneous Cause renders it fatally defective.
30. The administration of justice is not solely concerned with substantive rights but also with adherence to due process, which ensures fairness, certainty, and order in judicial proceedings. Entertaining a stand-alone application of this nature would contravene well-established legal principles and set a dangerous precedent that compromises the integrity of judicial processes. The failure to adhere to this fundamental requirement is not a mere procedural lapse but a substantive defect that cannot be cured by invoking Article 159 of the Constitution.
Whether the Applicant has met the threshold for the grant of injunctive relief
31. The principles governing the grant of an interlocutory injunction are well established in Giella v Cassman Brown & Co Ltd [1973] E.A 358, where the court held that:
"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 the application on the balance of convenience."
32. The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR reinforced these principles, stating:
“These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established that all the above three conditions and stages are to be applied as separate, distinct, and logical hurdles which the applicant is expected to surmount sequentially.”
33. The burden of proof lies with the Applicant, who must satisfy all three conditions before an injunction can be granted. If the Applicant fails to establish a prima facie case, the court need not consider irreparable harm or balance of convenience.
(a) Whether the Applicant has established a prima facie case
34. The grant of an interlocutory injunction is a discretionary remedy, guided by well-established legal principles. It is trite law that a party seeking this equitable relief must satisfy the court that they have a genuine and arguable case that warrants the court’s intervention. The Applicant, in this instance, must demonstrate that she has a right that has been infringed upon by the Respondent, and that this right is deserving of judicial protection.
35. A prima facie case was defined in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR as:
“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.”
36. It bears repeating that a property offered as security becomes a commodity for sale in the event of default. A borrower who willingly pledges property as collateral cannot later seek the court's protection to prevent the realization of that security, absent any proof of illegality, fraud, or unconscionability in the chargee’s actions. The Applicant has admitted defaulting on loan repayments. The loan was secured by a legal charge over Naivasha/Maraigushu Block 4/174, and the Respondent has complied with all statutory requirements under Sections 90 and 96 of the Land Act, 2012, before exercising its statutory power of sale.
37. The law is unequivocal that once a chargor defaults on loan repayments, the chargee has the legal right to exercise its statutory power of sale. Section 90(3)(e) of the Land Act, 2012 provides that if the default is not rectified within the time given in the statutory notice, the chargee may sell the charged land.
38. The Court of Appeal in John Nduati Kariuki t/a Johester Merchants v National Bank of Kenya Ltd [2006] eKLR addressed this issue succinctly:
“A bank has no money of its own, and it is axiomatic that it uses public funds to trade with. The applicant obtained a large amount of those funds and had full benefit of it. He offered securities knowing fully well that they would be sold if he defaulted on the terms stated in the security documents. He cannot be heard to say, as he does, that the securities are unique and special to him.”
39. The Applicant, having voluntarily offered the property as security, cannot now seek to restrain the Respondent from realizing its security merely because she now faces the consequences of default. The courts have consistently held that when a borrower offers property as security, it automatically becomes a commodity for sale in the event of default.
40. In Andrew Muriuki Wanjohi v Equity Building Society Ltd & 2 Others [2006] eKLR, the court held:
“Whenever the applicant offered the suit property as security, he was fully conscious of the fact that if the borrower did not meet his obligations, the suit property could be sold off.”
41. Furthermore, in Mrao Ltd (supra), Kwach, JA reiterated:
“The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged.”
42. This Court finds that the Applicant has not demonstrated a prima facie case with a probability of success. The argument that she should be granted more time to rectify the default under Section 104 of the Land Act, 2012, is misplaced, as this section applies before a chargee has issued a Notice of Intention to Sell. The Respondent has already complied with all legal requirements, and the time for rectification has lapsed. The Respondent has lawfully exercised its statutory power of sale, and the Applicant has not produced any evidence of irregularity or illegality in the sale process.
(b) Whether the Applicant Will Suffer Irreparable Harm That Cannot Be Compensated by Damages
43. The second limb requires the Applicant to demonstrate that she will suffer irreparable harm if the injunction is not granted. The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others (supra) stated:
“An injury is irreparable where there is no adequate remedy in damages.”
44. The Applicant argues that she will suffer irreparable loss if her property is sold. However, courts have consistently held that loss of property can be adequately compensated by damages. Mere loss of property, without more, does not constitute irreparable harm in the legal sense.
45. In Joseph Siro Mosiomo v Housing Finance Company of Kenya Nairobi HCCC No. 265 of 2007 [2008] eKLR, Warsame, J (as he then was) held:
“Damages are not and cannot be a substitute for the loss, which is occasioned by a clear breach of the law. In any case, the financial strength of a party is not always a factor to refuse an injunction. More so, a party cannot be condemned to take damages in lieu of his crystallized right which can be protected by an order of injunction.”
46. However, in the present case, there is no evidence of any illegality or breach of the law by the Respondent. The Respondent has acted strictly in accordance with the Land Act, 2012, and the Applicant voluntarily offered the property as security.
47. In Andrew Muriuki Wanjohi v Equity Building Society Ltd & 2 Others (supra), the court observed:
“By offering the suit property as security, the chargor was equating it to a commodity which the chargee may dispose of, so as to recover his loan together with interest thereon. Therefore, if the chargee were to sell off the suit property, the chargor’s loss could be calculable, on the basis of the real market value of the said property.”
48. In the result and for the reasons stated, this Court finds that the Applicant has failed to demonstrate irreparable harm that cannot be adequately remedied by an award of damages. The law is clear that once a property is pledged as security, it becomes a commodity for sale in the event of default. The Applicant voluntarily offered the suit property as collateral, fully aware of the consequences of default. To restrain the Respondent from exercising its statutory power of sale in such circumstances would not only undermine contractual sanctity but also disrupt commercial certainty in the lending industry.
49. In the absence of any evidence of fraud, illegality, or procedural irregularity, the Court cannot intervene to shield the Applicant from the consequences of her own default.
50. Accordingly, any loss suffered by the Applicant, if any, is quantifiable and compensable in damages, and there is no basis to warrant the issuance of an injunction.
(c) Where the Balance of Convenience Lies
51. The balance of convenience tilts in favor of the Respondent. A borrower who willingly defaults on their loan obligations cannot turn to the court for refuge when the chargee lawfully exercises its rights. In Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR, the court stated:
“The meaning of balance of convenience in favour of the plaintiff is that if an injunction is not granted and the suit is ultimately decided in favour of the plaintiffs, the inconvenience caused to the plaintiff would be greater than that which would be caused to the defendants if an injunction is granted but the suit is ultimately dismissed.”
52. The grant of interlocutory injunction is discretionary. It is trite law that a party seeking this equitable relief must in all matters relating to the suit meet the approval of a Court of equity. The Applicant has failed to make any significant payments towards settling the loan arrears, despite the Respondent giving her sufficient time to rectify the default. The Respondent is a financial institution that relies on loan repayments to sustain its business operations.
53. In Kyangavo v Kenya Commercial Bank Ltd & Another [2004] eKLR, the court cautioned against courts becoming a haven for defaulters, stating:
“While chargees are enjoined by law to follow the laid-down procedures for the realization of their security, the courts must not at the same time be converted into a haven of refuge by defaulters.”
54. This Court finds that the balance of convenience overwhelmingly tilts in favor of the Respondent. Equity does not aid the indolent, and the Applicant has neither demonstrated willingness nor the financial ability to rectify her default. The Respondent, as a financial institution, operates on the prudent management of credit facilities, and judicial interference in the lawful exercise of its statutory power of sale would not only prejudice its rights but also set a dangerous precedent that rewards defaulting borrowers at the expense of financial discipline. The Applicant cannot seek the court’s protection while failing to honor her contractual obligations, particularly when the Respondent has complied with all legal and procedural requirements.
55. In the circumstances, it would be inequitable to restrain the Respondent from realizing its security, and accordingly, the application for an injunction is without merit and stands dismissed with costs to the Respondent.
Final Disposition
56. Having carefully considered the pleadings, the submissions of the parties, the applicable law, and the guiding judicial precedents, the Court finds as follows:
i. On Issue 1: The Court finds that the Applicant’s Notice of Motion Application is procedurally defective for having been filed as a Miscellaneous Application, contrary to the provisions of Section 19 of the Civil Procedure Act, Order 3 Rule 1, and Order 40 Rule 1 of the Civil Procedure Rules, 2010. The law requires that an application for injunctive relief be anchored on a substantive suit, and the Applicant’s failure to do so renders the Application fatally defective. The Court, therefore upholds the Respondent’s Preliminary Objection.
ii. On Issue 2: The Applicant has failed to meet the threshold for the grant of an injunction as set out in Giella v Cassman Brown [1973] EA 358 and affirmed in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR. Specifically:
a. The Applicant has not established a prima facie case with a probability of success, having admitted default on the loan and failing to challenge the Respondent’s statutory power of sale.
b. The Applicant has not demonstrated irreparable harm, as any loss suffered can be adequately compensated by damages.
c. The balance of convenience tilts in favor of the Respondent, as granting an injunction would unfairly prejudice the Respondent’s right to recover its funds.
57. In light of the foregoing findings, the Applicant’s Notice of Motion Application dated 31st May 2024 is hereby dismissed in its entirety with costs to the Respondent.
SIGNED DATED and DELIVERED IN VIRTUAL COURT
THIS 27TH DAY OF FEBRUARY 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant