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JudgmentR WORLD ENTEPRISES LIMITED VS DIAMOND TRUST BANK KENYA LIMITED AND WESTWOOD VILLAS LIMITED AND 3 Others11 min read

R WORLD ENTEPRISES LIMITED VS DIAMOND TRUST BANK KENYA LIMITED AND WESTWOOD VILLAS LIMITED AND 3 Others

High Court at Milimani High Court · · Peter Mulwa

'1. This ruling relates to the Applicant’s Notice of Motion dated 28th February 2025 brought under the provisions of Order 40 Rule 2, Order 51 Rule 1 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act. The Applicant seeks, inter alia, orders that:
i. A temporary injunction do issue restraining the Respondents, whether by themselves, their servants, agents, employees, or any other persons acting under their instructions, from evicting, trespassing upon, interfering with, or in any manner dealing with L.R. No. 330/383, Lavington, Nairobi, being the development known as The Terraces;
ii. An order restraining the Respondents from interfering in any way with the builder’s lien allegedly held by the Applicant over the said property; and
iii. An order compelling the 1st and 2nd Respondents, Diamond Trust Bank Kenya Limited, to provide a full account of all payments made in relation to the construction of The Terraces.
Applicant’s Case
2. The application is premised on grounds set out on its face and supported by an affidavit sworn by the Applicant’s director. The Applicant avers that it was engaged by the 5th Defendant as a sub-contractor for the structural and finishing works on the development known as The Terraces situated on L.R. No. 330/383, Lavington.
3. The Applicant states that it fully performed its contractual obligations under the Structural Sub-Contract dated 15th August 2018 and the Finishes Sub-Contract dated 9th April 2019, but that substantial amounts remain unpaid. As such, the Applicant claims to have acquired a builder’s lien over the development until full payment is made.
4. The Applicant contends that the Respondents have unlawfully interfered with its possession and now threaten to evict it from the site, thereby undermining its lien and right to retain possession of the premises pending settlement of its dues. It asserts that the 1st and 2nd Respondents, being financiers, are aware of the ongoing dispute and cannot purport to enforce their charge without first settling amounts due to contractors whose work created the property’s value.
5. The Applicant further maintains that unless restrained, the Respondents’ actions will render it destitute of its legal and equitable interest and that damages would not adequately compensate it. Counsel for the Applicant submitted that the Court has inherent power under Section 3A of the Civil Procedure Act to preserve the status quo and protect a lien lawfully acquired under contract.
6. Reliance was placed on decisions recognizing the equitable nature of a builder’s lien, including Rupra Construction Company Limited v ADM Consulting Limited & Another [2022] KEHC 165 (KLR) and Team Construction Limited v Village @ Daystar Limited [2021] KEHC 4085 (KLR), for the proposition that a lien subsists as long as possession is maintained and may be enforced to secure payment. The Applicant urged that the balance of convenience favors preservation of the property pending resolution of the dispute.
1st and 2nd Respondents’ Response
7. The 1st and 2nd Respondents opposed the application through a Replying Affidavit sworn by Faith Ndonga, Legal Manager at Diamond Trust Bank. She avers that the suit property is registered in the name of Ambato Properties Limited, and that the 2nd Respondent holds a registered charge over it to secure a loan facility advanced to Ambato Residency Limited.
8. It is deponed that the property was previously owned by Westwood Villas Limited, which defaulted on a loan facility, leading the 2nd Respondent to exercise its statutory power of sale. The property was sold to Eastman Properties Limited, which nominated Ambato Residency Limited as the transferee, culminating in a transfer dated 4th November 2024.
9. The Respondents assert that the Applicant was engaged by the 5th Defendant under a sub-contract and that any payments due arise solely between those two parties under Clause 23 of the sub-contract agreement. The Bank and its agent, the 1st Defendant, were not privy to those agreements and bear no contractual obligation towards the Applicant.
10. Counsel for the Bank submitted that an agent cannot be sued where the principal is disclosed, and thus the 1st Defendant’s involvement, if any, was purely on behalf of the 2nd Defendant. It was further argued that the suit is misconceived, bad in law, and without cause of action, as it is premised on sub-contractual rights to which the Bank was not a party.
11. The Respondents contend that the Applicant has no legal or proprietary interest in the property and that the alleged builder’s lien cannot supersede a registered charge. The Bank’s interest, being secured under the Land Act, enjoys priority over all unregistered equitable claims. Counsel emphasized that the facility amounting to Kshs. 1.6 billion remains outstanding, and any interference with the Bank’s security would occasion grave prejudice.
12. They further argued that the Applicant’s claim is a monetary dispute, for which damages would suffice, and that the injunction sought is adverse to the registered proprietor, Ambato Properties Limited, who is not even a party to the proceedings.
3rd Respondent’s Submissions
13. The 3rd Respondent also opposed the application, arguing that the Applicant has not satisfied the test for grant of a temporary injunction as established in Giella v Cassman Brown & Co. Ltd [1973] EA 358 and reaffirmed in Nguruman Limited v Jan Bonde Nielsen & Others [2014] eKLR.
14. It was submitted that no prima facie case has been established against the 3rd Respondent, as the Applicant neither demonstrated any contractual relationship nor produced evidence showing that the 3rd Respondent is indebted to it.
15. The 3rd Respondent further contended that the Applicant’s claim for unpaid sums is quantifiable and compensable by damages, hence injunctive relief would be inappropriate. It was urged that the alleged builder’s lien cannot displace a registered charge, as held in Thomas & Piron Grands Lacs Limited v Lighthouse Property Company Limited & Others [2019] KEHC 1535 (KLR), where the Court affirmed that a contractor’s lien is not an indefeasible proprietary right.
16. Counsel urged that the balance of convenience favors denial of the injunction since the property is subject to a valid charge, and the Applicant’s continued possession prejudices the financier’s right to realize its security.
Analysis and determination
17. The Court has previously pronounced itself on the issues of jurisdiction and joinder in its ruling delivered on 25th September 2025. The issues now falling for determination are twofold: first, whether the Applicant has satisfied the legal threshold for the grant of a temporary injunction; and second, whether the Applicant has made out a sufficient basis for an order compelling the 1st and 2nd Respondents, Diamond Trust Bank Kenya Limited, to render a full account of all payments made in relation to the construction of The Terraces on L.R. No. 330/383, Lavington.
On the issue of temporary injunction
18. The principles governing grant of temporary injunctions are well settled in Giella v Cassman Brown & Co. Ltd (supra) namely:
i. Whether a prima facie case has been established;
ii. Whether the Applicant would suffer irreparable harm not compensable by damages; and
iii. Where in doubt, whether the balance of convenience favors granting the injunction.
19. The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & Others (supra) clarified that the three conditions are sequential and not conjunctive; Thus, if the applicant fails to establish a prima facie case, the court need not proceed to consider the remaining two limbs.
20. In Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, the Court of Appeal defined a prima facie case as one that demonstrates an apparent infringement of a right calling for rebuttal by the opposing party.
21. On the first limb, it is undisputed that the Applicant was a subcontractor engaged by the 5th Defendant and that it is currently in possession of the suit property, having undertaken and completed substantial construction works. It is this possession and interest that the Applicant seeks to protect through the present application.
22. The law recognizes a builder’s lien as an equitable possessory right entitling a contractor to retain possession of premises until paid for work done. In Rupra Construction Company Limited v ADM Consulting Limited & Another (supra), the Court held that:
“A builder’s lien subsists so long as possession is maintained, and the court will intervene to preserve such possession against unlawful interference pending payment.”
23. It is, however, not lost to this Court that the 1st and 2nd Respondents, being financiers, were not parties to the construction contracts between the Applicant and the 5th Defendant. There is no evidence that they undertook any direct obligation towards the Applicant. In Kenya Commercial Bank Ltd v Osebe [1982] KLR 296, the Court of Appeal held that a chargee’s rights, once lawfully created, take precedence over unregistered or equitable interests. Accordingly, while the Applicant’s lien may be recognized in equity, it remains subordinate to the Bank’s registered charge.
24. This principle was underscored in Team Construction Limited v Village @ Daystar Limited (supra), where the Court held that a lien cannot override a financier’s registered interest under the Land Act.
25. Nonetheless, the Applicant’s possession constitutes a recognizable equitable interest warranting protection pending trial. Although the Respondents assert priority under the charge, the Court is not, at this interlocutory stage, called upon to make definitive findings on ownership or priority. Its duty is confined to preserving the subject matter and preventing the Applicant’s right from being rendered illusory before the suit is heard and determined.
26. The Court of Appeal in Olympic Escort International Co. Ltd & 2 Others v Parminder Singh Sandhu & Another [2009] eKLR affirmed that at the interlocutory stage, the court is not required to make conclusive findings of fact or law but merely to ascertain whether a serious question exists for trial.
27. Having carefully considered the pleadings and evidence before the Court, I am satisfied that the Applicant has established a prima facie case with a probability of success. The Applicant’s continued possession of the suit premises, coupled with the equitable lien arising from work duly performed, reveals an apparent right deserving of interim protection. The Respondents’ contest raises substantial triable issues concerning the interplay between the lien and the registered charge, which are subject to the full trial.
28. The second limb concerns the likelihood of irreparable harm. As clarified in Nguruman Limited (supra), irreparable injury refers to harm that is substantial and cannot be adequately compensated by damages.
29. In the present case, the Applicant’s claim transcends mere monetary recovery. It is anchored on a possessory equitable lien which, once extinguished through eviction, cannot be revived by an award of damages. The destruction of that right would amount to irreparable harm, as the Applicant’s equitable interest would be rendered nugatory.
30. It was observed in Waithaka v Industrial and Commercial Development Corporation [2001] eKLR, that where the substratum of a suit is threatened with extinction, the court must intervene to preserve it pending trial. I am persuaded that unless restrained, the Respondents’ threatened eviction would defeat the very subject matter of this suit before it is heard on merit.
31. The evidence before the Court indicates that the Applicant remains in possession of the premises, and no material has been presented to show that such possession jeopardizes the Respondents’ charge or financial interest. On the contrary, preserving the current status protects both the lien and the charged property pending the determination of competing rights.
32. Preservation of the status quo is a cardinal consideration in the grant of interim relief. In Agip (Kenya) Ltd v Maheshchandra Himatlal Vora & Others civil appeal no 213 of 1999 the court held that:
“In an application for injunction, the Court should not delve in substantive issues and make finally concluded views of the dispute before hearing oral evidence”.
33. Denying the injunction would expose the Applicant to eviction, thereby extinguishing its equitable right and rendering the proceedings nugatory. Conversely, granting the injunction merely maintains the existing position without diminishing the Respondents’ legal rights under the registered charge, which remain enforceable subject to the outcome of the suit.
34. In Narendra Chaganlal Solanki v Neepu Auto Spares Ltd, Kisumu High Court, Civil Case No.90 of 2003 the Court held that:
“In an interlocutory application for injunction, the Court must warn itself of the gravity of danger of making conclusive findings that may prejudice the interest of the parties at the hearing of the suit and should as far as possible exercise some cautionary steps”.
35. Similarly, in Jane Kemunto Mayaka v Municipal Council of Nakuru & Others, HCCC No.124 of 2005, the Court held that:
“Injunctions are issued to prevent the occurrence of an event that has not occurred or that is threatened to occur that would likely injure the Applicant and are not issued where such an event has taken place…”
36. In the circumstances, the balance of convenience clearly tilts in favour of preserving the status quo by maintaining the Applicant’s possession of the suit property and restraining the Respondents from interference pending the final determination of the dispute.
37. Accordingly, I find that the justice of the case demands that the property, which forms the subject matter of this dispute, be preserved pending the hearing and determination of the main suit.
On the prayer for accounts
38. The third substantive prayer seeks an order compelling the 1st and 2nd Respondents, Diamond Trust Bank Kenya Limited, to provide a full account of all payments made in relation to the construction of The Terraces.
39. The power of the Court to compel accounts is equitable and discretionary. It may be invoked where a fiduciary or contractual duty exists, or where justice demands disclosure to facilitate fair determination of a dispute. In National Bank of Kenya Limited v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, the Court held that a duty to account does not arise merely because one party seeks information, but must be grounded in an established obligation.
40. In this case, the Applicant has not demonstrated any contractual or fiduciary relationship with the 1st and 2nd Respondents. The Bank’s role as financier is governed by its charge instrument with the developer, not by the sub-contracts under which the Applicant claims payment.
41. Accordingly, at this stage the Court declines to compel the immediate rendering of accounts as prayed.
42. In the result, the Court finds that the Notice of Motion dated 28th February 2025 partially succeeds to the extent that the Applicant has established a prima facie case warranting preservation of its possessory interest over L.R. No. 330/383, Lavington, Nairobi. Accordingly, I make the following orders:
i. A temporary injunction is hereby issued restraining the Respondents, whether by themselves, their agents, employees, servants, or any other persons acting on their instructions, from evicting, dispossessing, alienating, selling, charging, leasing, or in any other manner interfering with the Applicant’s possession and interest in L.R. No. 330/383, Lavington, Nairobi, pending the hearing and determination of this suit.
ii. The costs of this application shall abide the outcome of the main suit.
RULING delivered virtually, dated and signed at NAIROBI
This 8th day of October 2025.

PETER M. MULWA
JUDGE

In the presence of:
Mr. Otwal for Plaintiff
Ms. Kadima h/b for Mr. Chacha Odera for 1st & 2nd Defendants
Mr. Mbugua for 3rd Defendant
Court Assistant: Carlos
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