Alando v Gulf African Bank Limited & 2 others [2025] KEHC 2728 (KLR)

Alando v Gulf African Bank Limited & 2 others (Commercial Case E173 of 2024) [2025] KEHC 2728 (KLR) (Commercial and Tax) (6 February 2025) (Ruling)

Neutral citation: [2025] KEHC 2728 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case E173 of 2024

JWW Mong'are, J

February 6, 2025

Between

Eliakim Charles Ooko Alando

Plaintiff

and

Gulf African Bank Limited

1st Defendant

George Njoroge Muiruri t/a Philips International Auctioneers

2nd Defendant

Zenith (Management) Valuers Limited

3rd Defendant

Ruling

1. It is common ground that as per the Letters of Offer dated 11th December 2019 and 13th January 2021, the 1st Defendant (“the Bank”) advanced the Plaintiff various loan facilities aggregating Kshs.147,000,000. 00/= for purposes of constructing 16 housing units on L.R No. 12410/39 situated along Marist Lane, in Karen, Nairobi(“the Karen property”). The facilities were secured by inter alia Charges over the Karen property, L.R No. 27024/30(“the Langa’ta property”) and L.R No. 27024/2 and; Deeds of Assignment for all rental income over the Karen and Lang’ata properties, L.R No. 27024/31, L.R No. 27024/32 and L.R No. 27024/2. These facilities were restructured as per the Supplemental Letter of Offer and Variation Letter dated 14th September 2021 and 24th March 2022 respectively.

2. As the facilities fell into arrears over time, the Bank issued various Statutory Notices to the Plaintiff and instructed the 2nd and 3rd Defendants to value and sell the Karen and Lang’ata properties and an auction for the same was scheduled on 17th April 2024. This prompted the Plaintiff to institute the present suit and application dated 8th April 2024 to forestall the auction. The application is supported by the Plaintiff’s affidavits sworn on 8th April 2024 and 28th July 2024 and it is opposed by the Defendants through the replying affidavit of the Bank’s Head of Debt Recovery Unit, Richard Murage, sworn on 23rd April 2024. The court directed that the application be disposed by way of written submissions which are on record and which, together with the pleadings, I will make relevant references to in my analysis and determination below.

Analysis and Determination 3. From the parties’ pleadings and submissions, the main issue for the court’s determination is whether an injunction should issue to restrain the Defendants from selling or in any way dealing with the Karen and Lan’gata properties. The court is also being called to determine whether the Bank should be ordered to produce all account statements since the time the facilities were offered to the Plaintiff. I do not think it is in dispute that for an order of injunction to issue, the Plaintiff is required to satisfy the conditions set out in the case of Giella v Cassman Brown & Co., Ltd. [1973] E.A. 358 by demonstrating a prima facie case with a probability of success, that it will suffer irreparable injury which would not adequately be compensated by an award of damages and that if the Court is in doubt, it should decide the application on the balance of convenience. These conditions are to be applied as separate, distinct and logical hurdles which the Plaintiff is expected to surmount sequentially which means that if it does not establish a prima facie case then irreparable injury and balance of convenience do not require consideration (see Nguruman Limited v Jan Bonde Nielsen& 2 others [2013] KECA 347 (KLR).

4. The parties also agree that what constitutes “a prima facie case” was set out by the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR) as follows:-A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is 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.

5. A prima facie case flows from what has been pleaded in the plaint. I have gone through the same and I deduce that the Plaintiff’s grievance is that the Bank failed to disburse the balance of the facilities, unreasonable demands by the Bank thus exposing him to very high interest rates and penalties, undervaluation of the Karen and Lan’gata properties and disputes over the Plaintiff’s indebtedness to the Bank.

6. On failure to fully disburse the facilities in full, the Bank responds by stating that the disbursement was contingent upon a number of conditions including presentation of certificates of works completed or services rendered, inspection by the Bank to ensure that the funds have been applied to the project, the Plaintiff maintaining a sole banking status with the Bank and payment of default damages at a rate of 20% in case of default and payment of profit to the Bank. The Bank avers that the Plaintiff failed to fulfil the aforementioned conditions and his obligations under the Facility agreements as his account fell into arrears hence the restructuring. This position is not disputed by the Plaintiff and is evidenced by the Plaintiff’s letters requesting the restructuring of the facilities and the Bank’s letters approving the same which indicate that the Plaintiff had outstanding sums due as at the time of the restructure.

7. Whereas the Plaintiff blames the Bank for not disbursing the facilities as requested, there is no evidence annexed by the Plaintiff, at least on a prima facie basis, to demonstrate the same. If anything, the Plaintiff’s letters requesting the restructuring do not point to any such complaint as a reason for the restructuring. As the Plaintiff was not repaying the facilities as required by the Facility Agreements and as per the conditions for disbursements, he cannot be heard to say that the Bank failed to disburse funds. I therefore find no merit in the Plaintiff’s ground that the Bank failed to disburse the loan facility.

8. On the Bank making unreasonable demands thus exposing the Plaintiff to high interest and penalties, once again, I find no proof of this. I have gone through the statutory demands issued by the Bank and I find that the same are standard both in form and substance and there is nothing unreasonable about them. They refer to the facilities and the securities, they particularize the nature and extent of default, the rate of profit and damages accruing and they seek rectification of the same by the Plaintiff. This ground by the Plaintiff also fails.

9. On the undervaluation of the Karen and Lang’ata properties, I would agree that under section 97 of the Land Act, the Bank has a duty of care to the Plaintiff to obtain the best price reasonably obtainable at the time of sale and in that regard, it is required to ensure a forced sale valuation is obtained. The Plaintiff disputes the valuation carried out on the properties and dismisses the values indicated therein as undervalues. Even if I was to assume or the Plaintiff is to demonstrate that the properties have been undervalued as per the said valuation reports, the same does not outrightly entitle him to an injunction. This is because any loss suffered by the Plaintiff as a result of the undervalue represented by the difference in valuation is a finite value which represents damages that the Plaintiff has not shown that the Bank is incapable of paying. It should also not be lost that a valuation report is based on the professional and expert opinion of a duly qualified valuer who assessed the value of properties based on accepted parameters. In order to displace a professional valuation, the Plaintiff must produce clear evidence that the valuation is wrong or at least doubtful. Mere assertions or statements are not sufficient (see Palmy Company Limited v Consolidated Bank of Kenya Limited [2014] KEHC 4811 (KLR).

10. I therefore reject the Plaintiff’s entreaty that seeks an injunction based on his dispute of the valuation figures. On the ground that the Plaintiff is disputing the amounts indicated in the Bank’s statements of 4th April 2024, this court and the appellate court has always held that a court cannot grant an injunction restraining a chargee from exercising its statutory power of sale solely on the ground that there is a dispute as to the amount due under the charge (see J. L. Lavuna and Others v Civil Servants Housing Co. Ltd. & Savings And Loan Kenya Ltd [1995] KECA 111 (KLR). Such disputes and settling of the same are always reserved for the main hearing where parties will be at liberty to produce evidence and in case of any difference as to the sums due, the court will always be able to order the Bank to pay any sums in excess.

11. I think I have said much to now conclude that the Plaintiff has not made out a prima facie case which signals the end for his quest for an injunction as outlined in the dicta in Nguruman(supra). In any case, I have found that for the complaints raised by the Plaintiff, damages are an adequate remedy and that much of the same will be settled at trial and not at this interlocutory stage. I also find that the balance of convenience tilts towards the Bank realizing the securities so as to recoup its admitted debt. Further, as the Plaintiff has admittedly been issued with the latest statement of account before the filing of this application, I see no reason why the Bank should be ordered to produce another one. In any case, the Plaintiff is always at liberty to request the same from the Bank, who has indicated that it has never dishonoured such a request from the Plaintiff.

Conclusion and Disposition 12. The upshot is that the Plaintiff’s application dated 8th April 2024 has no merit and is dismissed with costs. The Interim Orders in place now stand discharged.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI ON THIS 6TH DAY OF FEBRUARY 2025. ………………………………J.W.W. MONGAREJUDGEIn the Presence of:-1. Mr. Owago for the Plaintiff/Applicant.2. Ms. Weru for the Defendant/Respondent.3. Amos – Court Assistant