EQUITY BANK LIMITED V STEPHEN K. KANGETHE T/A DALALI TRADERS & 2 OTHERS [2012] KEHC 820 (KLR)

REPUBLIC OF KENYA

High Court at Nairobi (Nairobi Law Courts)

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EQUITY BANK LIMITED……...........................…………………………PLAINTIFF

VERSUS

STEPHEN K. KANGETHET/A DALALI TRADERS …......…….1ST DEFENDANT

FRANCIS KOMU GITAUT/A BOMAS MOTORS MART…….2ND DEFENDANT

ZIPPORAH WAMBUI NJENGA…………........................…..…3RD DEFENDANT

RULING

By an application made by a Notice of Motion dated 26th February, 2010 and taken out under Order XXXIX Rules 1 and2 of the Old Civil Procedure Rules, Order L Rule 1; Sections 3A and 36(e) of the Civil Procedure Act and all other enabling provisions of the law, the Applicant seeks  the following orders-

1. That the public auction scheduled for 27th February, 2010 and/or on any public action scheduled for any other date for the sale of motor vehicle Registration No. KAZ 400T be stayed pending hearing and determination of this application.

2. That a temporary injunction be issued restraining the Defendants whether by themselves, their servants, employees agents, assigns or any other person claiming through them restraining then from selling, alienating disposing or in any other way dealing with motor vehicle Registration No. KAZ 400T pending hearing and determination of this application.

3. That The public auction schedule for 27th February, 2010 and or on any public auction scheduled for any other date for the sale of motor vehicle registration number KAS 400T be stayed pending hearing and determination of this application.

4. That a temporary injunction be issued restraining the Defendants whether by themselves, their servants, employees agents, assigns or any other person claiming through them restraining them from selling, alienating, disposing or in any other way dealing with motor vehicle registration No. KAZ 400T pending hearing and determination of this applicaiotn.

5. That a mandatory permanent injunction compelling the Defendants to put the Plaintiff in possession of motor vehicle Registration No. KAZ 400T pending hearing and determination of this suit.

6. That costs of his application be provided for.

The application is supported by the annexed affidavit of Gerald Gakiri, a Relationship Manager-Credit Manager of the Plaintiff herein, sworn on 26th February 2010. It is based essentially on the grounds that the Plaintiff at the request of the 2nd Defendant, advanced a loan to the 2nd Defendant on the security of, inter alia, motor vehicle registration No. KAZ 400T. Pursuant to the contract, the Plaintiff was registered as a joint owner of the said motor vehicle together with the 3rd Defendant. However, on the 25th February, 2010 the Plaintiff saw an advertisement in the Daily Nation in which he 3rd Defendant advertised the sale of motor vehicle registration No. KAZ 400T by public auction to be held on 27th February 2010. It is further the Applicant’s case that the 2nd Defendant has since defaulted in payment and as at the date of the said advertisement, the 2nd Defendant was still indebted to the Plaintiff. The Plaintiff is apprehensive that the 3rd Defendant, in collusion with the 2nd Defendant, parted with possession of the subject motor vehicle to defeat the security for the loan.

Opposing the application, the 1st Respondent filed a Replying Affidavit sworn on 3rd May 2010. In the affidavit, he states that Diamond Trust Bank who were his  instructing principals financed the 2nd Defendant t/a Bomas Motor Mart to purchase motor vehicle No. KAZ 400T under a hire purchase agreement.One of the terms of the agreement was in the event that the 2nd Defendant defaulted in the payment of the hire purchase instalments or any part thereof, the lender would be at liberty to, inter alia, retake possession of the vehicle. The 2nd Defendant defaulted in payment of the same and this led to the bank exercising its right under the hire purchase agreement by repossessing the motor vehicle.

It is the 1st Respondent’s case that the motor vehicle to which the Applicant herein lays claim is a distinct motor vehicle from the one in their custody. The 1st Respondent has produced a report prepared by the Automobile Association of Kenya who inspected motor vehicle No. KAZ 400T in their possession and the description of the vehicle in the report differs from the one in the logbook. The report is annexed to the Applicant’s supporting affidavit.Furthermore, the 1st Respondent argues that the contract entered into between the Applicant and the 2nd Respondent was procured by fraud, deceit and misrepresentation.

The 2nd Defendant also filed a replying affidavit sworn on 5th May, 2010 with the authority of the 3rd Defendant. Both the 2nd and 3rd Defendants agree that the Applicant was indeed registered as owner of motor vehicle Registration No. KAZ 400T, a Toyota, jointly with the 3rd Defendant. They also admit being in possession of the said motor vehicle. However, the 2nd Defendant denies any knowledge of the sale by public auction and goes on  to ask the court to issue a temporary injunction against the 1st Defendant restraining him from advertising and/or selling the suit motor vehicle by public auction pending the hearing and determination of the suit.

At the oral canvassing of this application, Miss. Mwau appeared for the Applicants, Mr. Otieno for the 1st Respondent and Ms. Kinyua for the 2nd and 3rd Respondents.  After considering the pleadings and submissions by counsel, I find that the issues for determination are whether the Applicant is entitled to a temporary injunction restraining the Defendants from selling or disposing of the motor vehicle which is the subject of his suit, and whether the Applicant is entitled to a mandatory permanent injunction.

From the records, it is clear that the Plaintiff/Applicant was indeed registered as joint owner of motor vehicle Registration No. KAZ 400T, together with the 3rd Defendant/Respondent.   On the other hand, the 1st Respondent states that their instructing principal, the Diamond Trust Bank, had paid for Joint registration of motor vehicle KAZ 400T in the name of Bomas Motor Mart, of which the 2nd Defendant was the director, and Diamond Trust Bank.  Annexed to the replying affidavit is a receipt issued by Kenya Revenue Authority (KRA) upon application for joint registration. However, there is no evidence to the effect that the bank was actually registered as a joint owner of the said motor vehicle. The actual registration of joint ownership was important for the bank in perfection of their security.   Whether it did so or not, the court cannot tell at this juncture.

There is also confusion regarding the particulars of motor vehicle Registration No. KAZ 400T which is the subject of this suit. The Newspaper advertisement of the sale of motor vehicle No. KAZ 400T by the 1st Respondent by public auction indicates that the said motor vehicle is white in colour. The same motor vehicle, as assessed by Automobile Association of Kenya (AAK), is said to be silver in colour. This is contradictory information. Both the 1st Respondent and Automobile Association of Kenya were acting under the instructions of Diamond Trust Bank.  This raises a serious question as to the true identity of motor vehicle No. KAZ 400T.

The Applicant has produced a logbook indicating the joint registration of motor vehicle Registration No. KAZ 400T in its name and that of the 3rd Defendant. The particulars of the said motor vehicle, as indicated in the logbook differ from those given by AAK in their motor vehicle Inspection Report. The main differences are with regard to the year of manufacture, engine No, make and Chasis No. If the report by AAK is anything to go by, then the vehicle that was advertised for sale by public auction is different from the one jointly registered in the names of Equity Bank and the 3rd Defendant. However, it is not possible in law to have 2 motor vehicles bearing the same registration number. Ideally, the true and accurate particulars of motor vehicles are to be found in the logbook. Unfortunately, we live in an era where fraud and fraudulent practices are rampant. Ideally, the particulars in the logbook should tally with the physical details of the motor vehicle. As they do not do so, I have no doubt in my mind that there is an element of fraud involved in this matter. Consequently, there is  need for an investigation to be mounted before the matter goes to trial.

In GIELLA v. CASSMAN BROWN & CO. [1973] E.A. 358, it was held that to be entitled to an interlocutory injunction, an Applicant must show a prima facie case with a probability of success; that an injunction will not normally be granted unless the Applicant might otherwise suffer irreparable injury; and when the court is in doubt, it will decide the application on the balance of convenience.

Applying these principles to this case, it is significant that both the 2nd and 3rd Defendants admit to being in possession of the motor vehicle KAZ 400T. They also admit that they were granted a credit facility by the Applicant and that the Applicant was registered as joint owner of the motor vehicle together with the 3rd Defendant. In sum, the Defendants do not dispute that they are indebted to the Applicant and that the said motor vehicle was pledged as security for the loan. For these reasons, I find that the Applicant has established a prima facie case with a probability of success. Failure to grant an injunction; would be prejudicial to the Applicants in the event that their suit is successful and the Respondents are unable to pay the value of the vehicle.

As to whether the Plaintiff is entitled to a mandatory injunction at this stage or not, the test to be applied is clearly spelt out in volume 24 of Halsburys Laws of England, 4th Edition, at Paragraph 848 wherein it is authoritatively stated that-

“A mandatory injunction can be granted on an interlocutory application as well as the hearing, but in the absence of special circumstances, it will not normally be granted. However, if a case is clear and one which the court thinks ought to be decided at once, or if the act done is a simple and summary one which can be easily remedied, or if the Defendant attempted to steal a march on the Plaintiff…a mandatory injunction will be granted on an interlocutory application…”

The principles propounded in the above quotation were repeated and applied in KENYA BREWERIES LTD & ANOTHER v. WASHINGTON OKEYO, Court of Appeal, Civil Appeal No. 332 of 2000 (Nairobi)

The Plaintiff asks the court to grant a mandatory permanent injunction compelling the Defendants to put the Plaintiff in possession of the motor vehicle, the subject of this suit. However, there is a dispute between the Plaintiff and the 1st Defendant as to who has a rightful and proper security over the motor vehicle Registration No. KAZ 400T. Whereas the Plaintiff states that it was registered as a joint owner of the said motor vehicle together with the 3rd Defendant, the 1st Defendant’s case is that the same could have been procured fraudulently as payment for joint registration of the motor vehicle had been duly received by Kenya Revenue Authority.

Further, the 1st Defendant states in his replying affidavit that they are in custody of motor vehicle KAZ 400T. At the same time, the 2nd and 3rd Defendants state in their replying affidavit that they are also in possession of the said motor vehicle. This information is contradictory and it would be difficult to resolve it without hearing some viva voce evidence.

In a normal case, the court should feel a high degree of assurance that at the trial, it will appear that the mandatory injunction was rightly granted and this calls for a higher standard than that for a prohibitory injunction. Such a high standard cannot be achieved where the evidence is contradictory as in this case especially as regards the identity of the motor vehicle. In view of that contradictory evidence, this court does not feel a high degree of assurance that at the trial it will appear that any mandatory injunction was rightly granted. For that reason, this court has considerable doubts as to the probative value of granting a mandatory injunction at this stage.

In the light of the foregoing, I am satisfied that the Applicant has established that they are entitled to an interlocutory injunction.  Prayers 5 and 6 of the application by Notice of Motion dated 26th February, 2010 are hereby granted.  Prayer 7 is not allowed/granted, save that the court orders that the motor vehicle Registration No. KAZ 400T be produced in court by whoever is in possession pending the hearing and determination of the suit.

Costs in the cause.

It is so ordered.

L. NJAGI

JUDGE

DATEDand DELIVERED at NAIROBIthis 11th day of September, 2012.

G. V. ODUNGA

JUDGE