ELIZABETH ADERA v FINA BANK LIMITED [2011] KEHC 788 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

COMMERCIAL AND ADMIRALITY DIVISION

CIVIL SUIT NO. 445 OF 2011

ELIZABETH ADERA………….……………...................……………..…..…..PLAINTIFF

-VERSUS –

FINA BANK LIMITED ……………………….....................…………………DEFENDANT

RULING

1. This is a notice of motion by the plaintiff dated 5th October 2011 praying for orders;

a)THAT pending the hearing and determination of this suit, or until further Orders of the court, this Honourable Court be pleased to issue an Order of temporary injunction restraining the Defendant either by itself, its servants and/or agents, employees, advocates or auctioneers or any of them or otherwise from doing the following acts or any of them, that is to say selling by public auction or private treaty, advertising for sale, disposing of or otherwise howsoever or completing any transfer of any sale, parting with possession except to the Plaintiff or otherwise howsoever interfering with the Plaintiffs ownership of Motor Vehicle Registration No.KAX 165 S or acting in any detrimental way to the Plaintiff.

b)THAT this Honourable Court be pleased to issue an order of mandatory injunction to compel the Defendant to immediately and unconditionally release Motor Vehicle registration No.KAX 165 S to the Plaintiff.

The application is expressed to be brought under sections 1A, 1B and 3A of the Civil Procedure Act, order 40 rules 1,2 and 4 of the Civil Procedure Rules as well as section 15 (1) of the Hire Purchase Act. There are two affidavits in support sworn by the plaintiff on 5th October 2011 and 8th November 2011.

2. The plaintiff bought motor vehicle KAX 165 S on hire purchase finance from the defendant as more particularized in the agreement marked “EA1”. The consideration, as per the plaintiff, was Kshs 3,600,000. The plaintiff and the defendant were registered as joint owners. The plaintiff says she has to date paid Kshs 3,400,000 which is more than two thirds of the hire purchase debt and that according to section 15 (1) of the Hire Purchase Act, the defendant cannot attach the suit vehicle without court sanction. The plaintiff says she has not been served with any termination notice and was thus surprised on 15the September 2011 to learn that the defendant had issued repossession orders for the suit vehicle. She also learnt that the same was advertised for sale by public auction on 30th September 2011 as per annexture “EA3”. In the meantime she instructed a Mr. Mathias Aketch to negotiate with the bank. An offer of Kshs 500,000 was made on 27th September 2011 but was rejected on 29th September 2011 by the bank. Finally, the plaintiff avers that on 30th September 2011, she went to the offices of the bank’s auctioneers and that no auction took place on that day. She thus prays for the injunctive reliefs aforementioned and costs.

3. The application is opposed. A replying affidavit by Zakary Muturi Muchai of the bank’s recovery department sworn on 19th October 2011 confirms that a hire purchase agreement was executed by the parties on security of the suit vehicle. A sum of Kshs 3,600,000 was advanced to the plaintiff to be repaid in 59 monthly installments of Kshs 96,064. 12 and a last installment of Kshs 97,564. 12. Default occurred and on 7th February 2011, a notice as per condition number 17 of the agreement was issued and mailed to the plaintiff’s address specified in the letter of offer.

A copy (annexture 2MM2) is attached. A statement of account is annexed showing a debit balance of Kshs 3,921,122. 12 as at 30th September 2011, the date of the auction. The defendant in sum, says the plaintiff did not heed the notices to regularize the account and that her last offer of 27th September 2011 was unacceptable.

The bank thus instructed its auctioneers to proceed with the sale. The defendant avers that the sale took place on 30th September 2011 and the vehicle was sold to the highest bidder named as Shadrack O. Mirera for Kshs 1,205,000.

The defendant’s position is that the sale having taken place, the application is overtaken by events and is for dismissal.

4. I have heard the rival arguments. I am satisfied that the plaintiff bought under hire purchase the suit vehicle on finance from the defendant of Kshs 3,600,000 upon the terms in the agreement and as set out earlier. In addition the plaintiff was to pay hire purchase charges of Kshs 2,078,867. 43 together with Kshs 1,500 being her option to purchase bringing the hire purchase price to Kshs 5,680,167. 43. From the statement of account marked “2MM3” I am satisfied that the plaintiff had neither completed the payments of the hire purchase debt nor exercised the option to purchase.As at 30th September 2011 the statement shows a debit balance of Kshs 3,921,122. 12. It is also true that by that date, the plaintiff, on the credit entries in that statement had paid over Kshs 2,881,857. When one grants the plaintiff further credits after that date (presumably from the auction sale) it brings the total credits to Kshs 4,077,780. 59 against a claim by the bank of Kshs 6,894,934. 36 bringing the debt to just about Kshs 2,817,153. 80.

5. I am satisfied that the plaintiff is thus not too far off the mark when she claims she had paid about Kshs 3,000,000 by September 2011. And the bank itself, if the statement is not contested, was demanding well over Kshs 3,000,000 on the same date.But it is also clear that the plaintiff was in default and no payments are reflected for the period between 24th March 2010 and 24th September 2011. Under clauses 5, 7. 2 and 8. 1 of the hire purchase agreement, the bank became entitled to terminate the agreement, repossess and sell the chattels.

My view is that most of those matters can only be fully ventilated at the trial and on tested evidence upon cross-examination; what is critical now is whether the plaintiff by the pleadings and depositions before the court has reached the threshold for grant of interlocutory injunction. The principles for grant of injunctive relief in East Africa were well settled in the decision of Giella vs CassmanBrown & Company[1973] E.A. 358. Those principles are, first, that the applicant must show a prima facie case with a probability of success; secondly that he stands to suffer irreparable harm not compensable in damages; and thirdly, if in doubt, the court must assess the balance of convenience.

In addition, there is ample authority that an injunction, which is a discretionary remedy, may be denied despite fulfilling some of the conditions above, if the applicant has committed acts or misconducted himself in a manner that would not meet approval of equity. See Anne Njeri Mungai Kihiu vs The Standard Group Limited HCCC No 435 of 2011 (unreported).

6. The Hire Purchase Act at section 3 provides that the Act applies to agreements in which the hire purchase price does not exceed Kshs 4,000,000. The hire purchase price in turn is defined as the total amount the hirer would be required to pay to own the goods but excluding penalties or damages for breach of agreement. On the face of it then, the hirer here would have owned goods by paying the total hire purchase price in the schedule to the agreement of Kshs 5,680,167. 43 made up as principal finance of Kshs 3,600,000, hire purchase charges of Kshs 2,078,867. 43 and an option to purchase of Kshs 1,500. I would thus hold that the total hire purchase price of Kshs 5,680,167. 43 took it out of the purview and jurisdiction of the Hire Purchase Act. Accordingly, section 15 of the Act which bars the owner from repossessing the goods when 2/3 of the hire purchase price has been paid except by way of suit does then not come to the plaintiff’s aid.

7. The hire purchase agreement here may be unfavourable to the plaintiff. But having executed it, she became bound by its terms and this court cannot rewrite the terms. See Morris & Company Limited Vs Kenya Commercial Bank Limited [2003] 2 EA 605. With regard to the prayer for a mandatory injunction to return the vehicle, some doubt has been created by virtue of the alleged auction sale and the possibility that the application has been overtaken by events. Furthermore, the court will only grant a mandatory injunction in the clearest of case. See Locabail Internatinal Finance Ltd Vs Agro Export et al [1986] 1 ALLER 901.

8. I also note the conflicting evidence on the auction sale. The bank insists the suit vehicle was sold to Shadrack O. Mirera as per annextures “2MM 6 (a)” and “2MM 6 (b)”. The plaintiff claims no such auction took place on 30th September 2011. While these facts will emerge at the trial, it militates against the plaintiff’s prayer for mandatory injunction to release the suit vehicle back to the plaintiff.

9. As the plaintiff’s claim can be compensated in damages and there is no evidence that the defendant bank cannot pay for the loss upon decree, I would find in all the circumstances that the plaintiff has not made out a prima facie case or satisfied the second limb of the Giella case (Supra). See also Ooko Vs Barclay Bank of Kenya Limited [2002] 2 KLR 394 at 398.

10. For all the above reasons, I order that the plaintiff’s notice of motion dated 5th October 2011 be and is hereby dismissed with costs.

DATED and DELIVERED at NAIROBI this 24th day of November 2011.

G.K. KIMONDO

JUDGE

Ruling read in open court in the presence of

Mrs. Macharia for Mr. Odera for the Plaintiff.

No appearance for the Defendant.