Asumba v Thuku (Widow to John Wainaina, Deceased) & 4 others [2022] KEHC 10336 (KLR) | Statutory Power Of Sale | Esheria

Asumba v Thuku (Widow to John Wainaina, Deceased) & 4 others [2022] KEHC 10336 (KLR)

Full Case Text

Asumba v Thuku (Widow to John Wainaina, Deceased) & 4 others (Civil Suit 93 of 2001) [2022] KEHC 10336 (KLR) (Commercial and Tax) (13 May 2022) (Ruling)

Neutral citation: [2022] KEHC 10336 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit 93 of 2001

A Mabeya, J

May 13, 2022

Between

Mabel Wakasa Asumba

Plaintiff

and

Margaret Wambura Thuku (Widow to John Wainaina, Deceased)

1st Defendant

Wakamo Service Company Ltd

2nd Defendant

Hebson Ahiro Asumba

3rd Defendant

Margaret Kaptuiya Cheboiwo

4th Defendant

Trust Bank Ltd (In Liquidation)

5th Defendant

Ruling

1. The plaintiff, Mabel Wakasa Asumba, was married to the 3rd defendant, Hesbon Ahiro Asumba, until 2001 when they were legally separated. Before then, the two executed various deeds of personal guarantee and indemnity in favour of the 5th defendant to secure various overdraft facilities extended to a company known as Trans Rapid Express Cargo Limited (“TECL”).

2. The facilities were also secured by a legal charge, further charge and second further charge registered in favour of the 5th defendant over the plaintiff’s property known as LR No 209/10730 Nairobi (hereinafter “the suit property”).

3. TECL defaulted and in June 2001, the 5th defendant sold the suit property by way of private treaty to the 1st defendant John Mwaura Wainaina in exercise of its statutory power of sale. It is noteworthy, that the 1st defendant died in 2019 and was substituted with his widow Margaret Wambura Thuku vide an made on April 13, 2021.

4. Vide an amended plaint dated May 3, 2006, the plaintiff sought judgment against the defendants for:“(a)Spent.(b)Spent.(bb)A declaration that the statutory notice signed by the 4th defendant on behalf and upon instructions of the 5th defendant was a complete nullity.(c)A declaration that the sale by the 5th defendant of LR No 209/10730 Nairobi the 1st defendant or any other person is void and of no effect.(d)A declaration that the contracts of guarantee made by the plaintiff in favour of the 5th defendant in respect of the indebtedness of transrapid were procured by fraud and/or mistake and consequently void and of no effect.(dd)A declaration that the instruments of charge dated November 7, 1996, August 29, 1997 and June 4, 1998 are void ab initio or voidable at the instance of the plaintiff as they are contracts based on past consideration.(e)A declaration that the instruments of charge dated November 7, 1996, August 29, 1997 and June 4, 1998 and respectively registered as IR 55128/4 and IR 55128/5 are void and of no effect.(f)A declaration that the grantIR 55128/1 be rectified by removing those entries known as IR55128/3, 55128/4 and 55128/5. (g)Costs of the suit.”

5. The plaintiff’s case was that on diverse occasions prior to August 1996, the 5th defendant extended to TECL, a company solely owned by her husband the 3rd defendant, unsecured overdraft facilities and other financial accommodation. That with the intention to induce and persuade her to offer the suit property as a security for existing debts owed by TECL, the 3rd defendant and officials of the 5th defendant made false, misleading and fraudulent representations to her regarding the financial status of TECL. She faulted the 3rd defendant and the officials of the 5th defendant for failing to give her an opportunity to seek independent legal advice and failing to advise her on the implications of giving her property as security for the overdraft facilities extended to TECL by the 5th defendant.

6. It was her case that at the time the instruments of charge and supplemental charge were executed, the indebtedness of TECLto the 5th defendant was already in existence and thus the said contracts were void ab initio or voidable at her instance as they were founded on nil or past consideration. She contended that the sale of the suit property by private treaty was void for want of compliance with sections 69 and 69A of the Transfer of Property Act, 1882.

7. Lastly, she contended that the sale was a nullity as it was effected on the basis of an invalid statutory notice, drawn and signed by the 4th defendant, whom the Law Society of Kenya confirmed did not take out a practising certificate in the year 1999.

8. The 1st and 2nd defendant filed a joint amended statement of defence and cross-claim dated June 15, 2012. It was their case that sometimes in June, 2000, the 1st defendant saw an advertisement by Agmoniz auctioneers offering the suit property for sale. He approached the auctioneers and offered to buy the suit property. He conducted due diligence before purchasing the same by private treaty at Kshs 2,000,000/=.

9. Thereafter, he appointed the 2nd defendant to manage and undertake all the necessary improvements thereon so that he could recover his investment and pay off the loan he had taken to purchase the same. The 2nd defendant went to the suit property and requested the occupants to vacate so as to enable him carry out his mandate but this did not happen.

10. The 1st defendant contended that he was an innocent purchaser for value and mounted a cross-claim against the plaintiff for; the dismissal of the suit, vacant possession and mesne profits. Ho also sought costs.

11. He also raised a cross claim against the 5th defendant for having been denied vacant possession of the suit property yet no refund of the purchase price had been made. He contended that if the sale of the suit property turned out to be voidable, the 5th defendant will be liable to him for all the financial loss and damages suffered by him by reason of breach of its covenants and sought judgment against it for; indemnity and/or contribution if the title to the suit property reverted to the plaintiff, Kshs2,000,000/= and interest thereon at commercial rates from June 21, 2000 till the date of judgment, value of the suit property at the current market rates, mesne profits, accumulated rent of Kshs 40,000/- per month since 2000, general damages and costs.

12. The 5th defendant filed an amended statement of defence and counterclaim dated May 25, 2006. Its defence was that the plaintiff willingly charged her property in its favour to secure an overdraft facility of Kshs 450,000/= extended to TECL in 1996, enhanced to Kshs 800,000/= in 1997 and further enhanced to Kshs 1,500,000/= in 1998.

13. That they executed a legal charge dated November 7, 1996, a further charge dated August 29, 1997 and a second further charge dated June 4, 2006 respectively over the suit property. That the plaintiff and the 3rd defendant, as directors of TECL, also executed personal guarantees for the overdraft facilities.

14. TECL defaulted and the 5th defendant proceeded to exercise its statutory power of sale. A statutory notice dated March 9, 1999 was served on the plaintiff by registered post. This was followed by a notification of sale dated November 3, 1999. Efforts by the plaintiff to redeem the suit property failed despite accommodation by the 5th defendant. This culminated with the sale of the suit property by private treaty to the 1st defendant for Kshs 2,000,000/=. A transfer in his favour was effected on December 1, 2000.

15. The 5th defendant further contended that the plaintiff willingly participated in the subject transactions as a co-director ofTECL and was well versed with the financial position and dealings of the said company. It denied making any false representation or breach of duty alleged by the plaintiff. It denied that the statutory notice was signed by the 4th defendant as alleged.

16. The 5th defendant counterclaimed against the plaintiff, for costs of auctioneers for postponed auction and the unrecovered balance of Kshs 849,001. 65 as at January 31, 2001 on account of her personal guarantee dated March 10, 1998.

17. The trial was conducted before Nzioka J who was transferred from the commercial division before writing the judgment. At the trial, the plaintiff testified that TECL belonged solely to the 3rd defendant and she was neither a shareholder nor director. That she had bought the suit property on her own. That she later learnt that the same was used by TECL to secure overdraft facilities.

18. She further testified that the notification of sale dated November 2, 1999 and the advertisement did not bear her name but TECL. When she learnt that the suit property was going to be sold, she confronted the 5th defendant as she had not received a notification of sale. That although the notification of sale indicated that the suit property would be sold by public auction, it was sold by private treaty on June 21, 2002 without notice. That theLSK had confirmed that the 4th defendant did not take out a practicing certificate in the year 1999.

19. In cross examination, she stated that she did not get the statutory notice dated March 9, 1999 that was purportedly sent to her by Cheboiwo and Kasamani Advocates. She admitted having written a letter dated December 6, 1999 to the 5th defendant stating that she had offered the suit property as security for the overdraft facilities extended to TECL where she was a co-director. She also confirmed that in the said letter, she had stated that she was aware of default as well as the imminent sale of the suit property.

20. However, the plaintiff stated that she was in fact not a director of TECL and that the letter was written by the bank then she typed it under coercion since the bank told her that they would help her if she indicated so. She admitted having requested the 5th defendant to postpone the sale of December 31, 1999 to enable her secure funding from the Housing Finance Company of Kenya (HFCK) to enable her redeem the suit property. She admitted that the statutory notice dated March 9, 1999 was signed by Lutta Kasamani Advocate and not the 4th defendant.

21. She further admitted having executed the guarantees and indemnity, credit agreements and charge instruments relating to the facilities advanced. However, she stated that she did not have the benefit of reading those documents first to understand their implication.

22. In re-examination, she renounced any responsibility for the contents of her letter of December 6, 1999 and reiterated that it was the bank that told her to state that she was a director of TECL as a “show” to enable her secure Kshs 1,500,000/=. She also noted that her name did not appear on the company’s resolution for a meeting purportedly held on March 10, 1998 in the board approved the borrowing.

23. On the other hand, the 1st defendant testified on his own behalf and that of the 2nd defendant. He adopted his statement dated May 28, 2012 and the list of documents filed therewith as his evidence. He reiterated that despite having purchased the suit property and a transfer effected, he had never taken possession since the plaintiff resisted.

24. In cross examination, he told the court that he purchased the property by a public auction held at Windsor house but the auctioneer did not give him a certificate of sale or any other document. He stated that he wrote a bid of Kshs 2,000,000/= during the auction of December 30, 1999 and was told that he would be notified later by the bank. He was later called by the bank and informed that he was the highest bidder. He paid the 5th defendant vide banker’s cheque nos 933257 and 376510 forKshs 1,500,000/- and Kshs 500,000/- issued by Barclays bank and Standard Chartered bank, respectively. Both were dated June 21, 2001.

25. The 5th defendant’s case was supported by the evidence of its assistant manager resolution, John Ombasa, who adopted his statement dated April 8, 2019 in entirety as his evidence and relied on the 5th defendant’s bundle of documents dated May 23, 2012.

26. In cross-examination, he confirmed that from the records, the suit property was not sold by public auction and that the plaintiff was not notified that the sale would be effected by way of a private treaty. In addition, the Bank did its best to get the best price because the property was valued at Kshs 2. 8 million and sold at Kshs 2 million.

27. That the property was sold and transferred to the 1st defendant since he paid the amount of the bid. However, the money was not enough to satisfy the loan debt since there was a residual balance ofKshs 849,001. 65. There was an injunction in place which had prohibited the buyer from taking possession.

28. Upon considering the pleadings and evidence on record, the issues for determination are; whether the plaintiff was a director of TECL, whether the exercise of the statutory power of sale by the 5th defendant was regular, whether the 1st and 2nd defendant proved their cross-claim against the plaintiff and the 5th defendant and if so, whether they are entitled to the reliefs sought, whether the 5th defendant has proved its counterclaim against the plaintiff and/or is entitled to the reliefs sought, and what order as to costs.

29. The first issue was whether the plaintiff was a director of TECL. The plaintiff submitted that there was no evidence to show that she was a director of TECL. On their part, the 1st, 2nd and 5th defendant submitted that from the contents of the plaintiff’s letter of December 61999, it was clear that her relationship and involvement with TECL as its director was undeniable.

30. From the record, no CR12 was produced to prove the directorship of TECL. However, there were various documents produced by the 5th defendant which were written and executed by the plaintiff in her capacity as a director of TECL. These include a letter dated August 1, 1996 from TECL to the bank signed by both the plaintiff as director thereof the 3rd defendant as the managing executive; her letter of December 6, 1999 to the 5th defendant wherein she referred herself as a co-director of TECL; and credit agreements executed by her on August 15, 1996, July 23, 1997 and October 10, 1998 in her capacity as director of TECL.

31. She denied writing and signing the letter of August 1, 1996. That however, is as far as she went. The court’s view is that she should have effectively challenged the same by engaging and calling rebuttal evidence such as that of a handwriting expert considering that the same came to the possession of the 5th defendant allegedly from her.

32. The plaintiff also claimed that her letter of December 6, 1999 was authored by the bank then she was coerced to type. She did not allege that immediately she had the opportunity, she ever complained against the 5th defendant to the authorities for that alleged action. Having waited all those years only to come and raise the same at the trial was but an afterthought.

33. Accordingly, there was overwhelming evidence on record to show that the plaintiff was either a director of TECL or she held herself as such. Having held up herself as such to the 5th defendant who acted on the same to its detriment, the plaintiff cannot be allowed to rescale from that position. I therefore find and hold that the plaintiff was a director of TECL together with her husband, the 3rd defendant

34. The second issue was whether the exercise of the statutory power of sale by the 5th defendant was regular. It was not disputed that that the 5th defendant extended various overdraft facilities toTECL. It was also not disputed that the facilities were secured by inter alia, a charge, a further charge and a second further charge over the suit property. It was not disputed that TECL defaulted which led to the sale of the suit property by the 5th defendant.

35. However, the plaintiff faulted the said sale on various grounds. Firstly, she contended that the contracts of guarantee and indemnity executed by her in favour of the 5th defendant were procured by fraud and/or mistake. It was her contention that she was duped into doing so by the 3rd and 5th defendants’ false and fraudulent misrepresentations.

36. At paragraph 10 of the amended plaint, she enumerated particulars on the part of the 3rd defendant as falsely and fraudulently representing to her that: TECL enjoyed a favourable credit rating with the 5th defendant; TECLcould not exploit the full potential of its business unless it enhanced its credit rating with the 5th defendant; and, the 5th defendant was willing to enhance the credit available to TECL but required, as a matter of formality, only proof that the company had the ability to provide real property as a security.

37. At paragraph 11 of the amended plaint, she pleaded that the 5th defendant falsely and fraudulently represented to her: that TECL’s financial position including its cash flow was excellent and competently managed; that it had in its possession TECL's business proposal which showed positive projections and that TECL had the ability to settle its overdraft with the 5th defendant if the facility was called in; that TECL’s accounts revealed a healthy and profitable and creditworthy company; that the requirement of a security by way of real property was simply to formalise normal banking procedures to avoid unnecessary queries by the internal bank inspection and also the banking inspection department of the Central Bank of Kenya.

38. On its part, the 5th defendant denied all these allegations and contended that the plaintiff was merely trying to evade liability. That there was no evidence of coercion or inducement.

39. The 5th defendant relied on Kenya Commercial Bank Limited &another v Samuel Kamau Macharia & 2 others (2008) eKLR where the court cited with approval the decision of the Privy Council in Pao & others v Lau Yiu & Another [1979]3 ALL E.R. 65 stating:“that in a contractual situation commercial pressure is not enough. There must be present some fact on which could in law be regarded as a coercion of his will, so as to vitiate his consent ... in determining whether there was a coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did not protest whether at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy, whether he was independently advised; and whether after entering the contract he took steps to avoid it."

40. It is trite law that whoever alleges fraud must strictly prove the same on a standard that is more than a mere balance of probabilities since fraud cannot be inferred from facts. (See Kinyanjui Kamau v George Kamau [2015] eKLR). This is further buttressed by section 107 of the Evidence Act, cap 80.

41. In her oral testimony, the plaintiff admitted to having signed the subject documents. However, she claimed that she was coerced by her husband to do so without being given an opportunity to read first. However, she never told the court whether she took any action against either the bank or her husband upon learning that she had unknowingly offered her property to the 5th defendant to secure past advances made to TECL. There was no evidence of any protest at all. The irresistible conclusion is that the plaintiff did not prove any of the allegations of fraud.

42. Secondly, the plaintiff contended that the charges dated November 7, 1996, August 29, 1997 and June 4, 1998 were voidab initio or voidable at her instance as they were contracts based on past consideration.

43. In Chitty On Contract at paragraph 3-026, on page 232, the learned authors posit: -“The consideration for a promise must be given in return for the promise. If the act or forbearance alleged to constitute the consideration has already been done before, and independently of, the giving of the promise, it is said to amount to ‘past consideration’; and such past acts or forbearances do not in law amount to consideration for the promise.”

44. From the forgoing, it can be said that past consideration constitutes a promise made or an act performed prior to a contract. That is unenforceable. The exception however is that, if an act is performed at the request of a promisor, the said act constitutes good consideration even if the promisor’s promise is given after the act has been performed.

45. In the Malaysian case of Lau Ngiik Ping & Anor v Bank Pertanian Malaysia [992] 3 CLJ 1437, the borrowers applied for a loan from the defendant bank, to be secured by a charge over the plaintiffs’ property. The loan amount was released by the bank just a day after the signing of the loan agreement on October 27, 1978 but the memorandum of charge was executed later on November 27, 1978.

46. In that case, the plaintiffs contended that that was past consideration since the monies were released without any security. The Court of Appeal held that the issue could not be looked at in isolation since the execution of the loan agreement, the release of the loan and the execution of the charge instrument were all inter-related despite having taken place on different dates. The court observed that the defendant bank agreed to grant the loan to the borrowers on the basis of a letter of September 30, 1978 through which the plaintiffs authorised the borrower to charge their property as security to the bank. This therefore constituted good consideration under section 2(d) of the Malaysian Contracts Act.

47. In the present case, the plaintiff executed three different credit agreements on 15/8/1996, 23/7/1997 and 10/3/1998 in which she authorised the 5th defendant to extend various overdraft facilities to TECLwith the suit property acting as security. From the bank statement produced by the 5th defendant, it is evident that the facilities were extended to the company after the requests but before the plaintiff executed the charges dated 7/11/1996, 29/8/1997 and 4/6/2006 respectively.

48. It is not disputed that the 5th defendant agreed to grant the facilities to TECL on the basis of contracts of guarantee by which the plaintiff authorised the charging of the suit property as security. The events must be looked at holistically and not in isolation.

49. Further and in any event, the recitals at pages 1 and 2 of the charges were to the effect that the plaintiff offered the security in order to allow the TECL to overdraw its account with the 5th defendant from time to time up to an aggregate amount not exceeding the maximum principal amount agreed from time to time and/or to give TECL time to pay back past advances. This cannot be regarded as past consideration.

50. In Lalchand Fulchand Shah & Another v Investments & Mortgages Bank Limited [2000] eKLR, Shah JA (as he then was) held: -“I see no merit in the argument that the charge was created for past consideration. The charge itself clearly states that it was being given for either further advances to be made or to give time to the borrower for repayment of past advances. The latter is good consideration.”

51. Accordingly, the plaintiffs challenge to the charges is without merit and is rejected.

52. Thirdly, the plaintiff argued that the sale was conducted on the basis of a statutory notice which was signed by the 4th defendant who did not hold a practicing certificate for that year. I have perused the statutory notice dated 9/3/1999. The same was drawn by the firm of Messrs Cheboiwo and Kasamani Advocates. It was signed by C Lutta Kasamani and not the 4th defendant as alleged by the plaintiff. Her allegations are unfounded and notice was valid for all purposes and intents.

53. Fourthly, the plaintiff complained that the sale was void as it was effected on the basis of a statutory notice which offends section 69A of the Transfer of Property Act, 1882 to the extent that it was not served on her. She faulted the 5th defendant for failing to produce in evidence a certificate of postage showing that the statutory notice was sent to her.

54. It is trite law that where a chargor alleges that she did not receive a statutory notice served by way of registered post, the burden shifts to the chargee to demonstrate that the notice was indeed dispatched to the right address and actually received by the chargor. (See Obel Omuom v Kenya Commercial Bank Ltd [1996] eKLR).

55. The statutory notice in this case was addressed to the plaintiff’s last known address. In her letter of 6/12/1999 to the bank, the plaintiff acknowledged that the bank’s advocates, Messrs Cheboiwo & Company Advocates, had already issued her with the statutory notice and instructed Agmoniz auctioneers to sell the suit property by public auction on December 31, 1999. This is a clear demonstration that the plaintiff had received notice notwithstanding that a certificate of postage was not produced.

56. Fifthly, the plaintiff challenged the notification of sale dated 26/4/2000 on the basis that it was addressed to TECLand not her. She submitted that this was fatal to any sale subsequently conducted since the same should have been addressed to and served upon her. In her view therefore, the notification of sale offends rule 15(c) and (d) of the Auctioneers Rules, 1997. In my considered view however, nothing turns on this argument because the sale was not conducted on the basis of that notification of sale. in any event, that cannot be a basis for nullification of the sale.

57. Sixthly, the plaintiff took issue with the sale of the security by private treaty instead of public auction as initially scheduled. In her submissions, she faulted the bank for failing to call the auctioneer to explain the circumstances under which the intended public auction mutated into a sale by private treaty to the 1st defendant. In her view, the auctioneers and the 5th defendant acted in bad faith and the only reasonable conclusion that cab be drawn is that the sale was meant to prejudice her. The 5th defendant defended itself and submitted that the sale was conducted in accordance with section 69(1) of the Indian Transfer of Property Act (ITPA).

58. Section 69(1) of the ITPA (repealed) empowered a mortgagee to realize its security either by public auction or by private treaty. It provided thus: -“A mortgagee, or any person acting on his behalf where the mortgage is an english mortgage, to which this section applies, shall, by virtue of this Act and without the intervention of the court, have power when the mortgage-money has become due, subject to the provisions of this section, to sell, or to concur with any other person in selling, the mortgaged property or any part thereof, either subject to prior encumbrances or not, and either together or in lots, /by public auction or by private contract, subject to such conditions respecting title, or evidence of title, or other matter, as the mortgagee thinks fit, with power to vary any contract for sale, and to buy in at an auction, or to rescind any contract for sale, and to resell, without being answerable for any loss occasioned thereby;”

59. In Jose Estates Limited v Muthumu Farm Limited &2 others [2019] eKLR, the Court of Appeal when dealing with a similar issue held: -“The 3rd respondent was not obliged to sell by public auction. Sale by private treaty was an option also as long as the 3rd respondent acted in good faith. From the record before us, the 3rd respondent acted in good faith as it involved the 1st and 2nd respondents in the process of finding a suitable purchaser. The 3rd respondent gave due allowance to the 1st and 2nd respondent to exercise their equity of redemption by calling off several public auctions at their behest and also allowing them to bring on board suitable purchasers ….”

60. From the evidence on record, it is clear that the bank gave the plaintiff ample time to exercise her equity of redemption. The bank called off the first auction that was scheduled for December 30, 1999 at her behest. It was meant to allow her time to engage another financier who was purported to be HFCK but she did not succeed. Her equity of redemption was extinguished the moment the bank sold the suit property to the 1st defendant. The bank cannot therefore be faulted for exercising an option it had all along merely because it had earlier on given notice that the security would be sold by public auction. (See Francis Mogaka Moranya v National Bank of Kenya & Another[1997] eKLR).

61. Accordingly, the second issue is in the affirmative, the exercise of the statutory power of sale by the 5th defendant was regular.

62. The upshot of the foregoing is that the plaintiff failed to prove her case to the required standard of a balance of probabilities. She is thus not entitled to any of the reliefs sought in her amended plaint.

63. The next issue is whether the 1st and 2nd defendant are entitled to the reliefs sought. The court has already determined that the 5th defendant exercised its statutory power of sale lawfully and regularly. To that end, the 1st and 2nd defendant submitted that the 1st defendant’s title in the suit property is not impeachable by virtue of section 69(B) (2) of the Transfer of Property Act.

64. Additionally, the 1st and 2nd defendant submitted that the plaintiff continues to unjustly and unfairly occupy the suit property by virtue of a court injunction which she has enjoyed for over eighteen years now.

65. Section 69(B) (2) of the Transfer of Property Act (repealed) provided as follows: -“(2)Where a transfer is made in exercise of the mortgagee’s statutory power of sale, the title of the purchaser shall not be impeachable on the ground(a)that no case had arisen to authorize the sale; or(b)that due notice was not given; or(c)that the power was otherwise improperly or irregularly exercised, and a purchaser is not, either before or on transfer, concerned to see or inquire whether a case has arisen to authorize the sale, or due notice has been given, or the power is otherwise properly and regularly exercised; but any person damnified by an unauthorized, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power.”

66. The view the court takes is that, the 1st defendant lawfully purchased the suit property from the 5th defendant who passed a clean title to him on 1/12/2000 when a transfer was effected to him and that title cannot be impeached. This means that the plaintiff cannot maintain any suit against the 1st and 2nd defendant and must compensate them. Further, the 1st defendant without a doubt deserves to occupy the suit property as a bonafide purchaser for value.

67. On mesne profits, the 1st defendant submitted that he had intended to lease the property for rental income at Kshs 40,000/= per month effective from June 21, 2000. The Civil Procedure Act defines “mesne profits” as: -“… those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits, but does not include profits due to improvements made by the person in wrongful possession”

68. The only attempt made at proving mesne profits was an inquiry from the plaintiff during cross examination by the 1st and 2nd defendants’ counsel about the monthly rental income that the property generates. No other evidence in the form of a valuation report or otherwise was tendered in evidence to prove this claim. The 1st defendant should have tendered evidence of the rent payable for similar premises over the years. To fix any amount would be speculative, in my view. That claim was therefore not proved.

69. In view of the foregoing, it is evident that the 1st and 2nd defendant’s cross-claim against the 5th defendant cannot stand. The 5th defendant passed a good title to the 1st defendant the latter’s inability to get vacant possession of the suit property was occasioned by the injunction obtained in these proceedings by the plaintiff. The 5th defendant cannot be faulted for the same.

70. The next issue is whether the 5th defendant proved it’s case against the plaintiff. The 5th defendant produced a temporary statement of account in the name of Transrapid E C Ltd held at Trust Bank Limited for the period June 21, 1995 to April 30, 2006. A careful perusal of the statement reveals that it relates to three accounts in the name of TECL.

71. The first one was current account No 12718-0001 at Industrial area branch for the period November 1, 1994 to October 16, 2000 (pages 201 – 238 of the defendants bundle of documents). The second was non-performing account No 12718-0026 at Industrial area branch for the period October 16, 2000 to December 31, 2000 (page 239 of the defendants bundle of documents). The third was account No 182109-0026 at Moi Avenue for the period 16/1/2001 to 30/6/2001 ((page 240 - 242 of the defendants bundle of documents).

72. The statement shows that on 23/6/2000, current account No 12718-0001 was credited with Kshs 2,000,000/= leaving a debit balance of Kshs 528,844. 20. The balance accrued interest and other charges and as at 31/1/2001, it stood at a debit balance of Kshs 849,001. 65. This was neither challenged or disproved. This limb of the 5th defendant’s counterclaim was therefore proved.

73. However, the 5th defendant did not produce any invoice or any other evidence to prove the special damages allegedly incurred on account of auctioneers fees and other costs incidental thereto following the postponement of the first scheduled auction. This claim was not proved and is therefore dismissed.What orders commend themselves in this case?

74. In view of the foregoing, the suit is determined in the following terms: -a.The plaintiffs’ claim is dismissed in its entirety.b.Judgment is entered for the 1st defendant as against the plaintiff for vacant possession of the suit property LRNo 209/10730, Nairobi.c.Such vacant possession to be given within 30 days from the date of this judgment, failing which the 1st defendant may forthwith proceed to evict the plaintiff from the suit property.d.The 1st and 2nd defendants’ claim formesne profits is dismissed.e.The 1st and 2nd defendants’ cross-claim against the 5th defendant is dismissed.f.Judgment is entered for the 5th defendant as against the plaintiff for the sum of Kshs 849,001. 65 plus interest at court rate from the date of the suit until payment in full.g.The 1st, 2nd and 5th defendants shall have the costs of this suit and counter-claim.It is so decreed.

DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF MAY, 2022. A. MABEYA, FCIArbJUDGE