Hannah Njeri Thube v Equity Bank Limited [2021] KEHC 13034 (KLR)

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL AND TAX DIVISION

CORAM: D. S. MAJANJA J.

CIVIL CASE NO. E052 OF 2021

BETWEEN

HANNAH NJERI THUBE...............................................................PLAINTIFF

AND

EQUITY BANK LIMITED.......................................................... DEFENDANT

RULING

Introduction

1. The Plaintiff has moved the court by the Notice of Motion dated 22nd January 2021 made, inter alia, under Order 40 rules 1, 2, 4, 5, 6, 7and8 of the Civil Procedure Rules seeking an injunction restraining the Defendant (“the Bank”) from selling her property; DAGORETTI/RIRUTA/5312 (“the suit property”) in exercise of its statutory power of sale pending the hearing and determination of the suit. The application is supported by her affidavits sworn on 22nd January 2021 and 1st March 2021 respectively and a further affidavit sworn on 7th June 2021. The Bank opposes the application through the affidavit of its Credit Manager at Community branch, Joseph Mahiri, sworn on 14th April 2021.  Both parties filed written submissions which they adopted in support of their respective positions.

2. The facts giving rise to the application and the suit are common ground. The Bank advanced the Plaintiff from time to time facilities secured by, inter alia, the suit property as follows: a Charge dated 22nd November 2011 securing a maximum loan amount of KES 5,000,000. 00, a further Charge dated 5th June 2013 securing a maximum of KES. 6,000,000. 00 and a second further Charge dated 19th May 2016 securing a maximum of KES. 19,000,000. 00.

3. In her deposition, the Plaintiff states that she has been servicing the last loan facility granted to her to support her business which involved importing goods from China to sell in Kenya. She states that the business was affected in 2018 when the Government allowed Chinese traders to enter Kenya after which she faced severe competition forcing her to close down. She then went into water purification business where she invested heavily in machinery and equipment but before the business could take off, the Government imposed Excise duty and Value Added Tax on bottled water making it very hard for her business. Although she attempted to sell one of her properties to salvage her business and pay off the loan, she was not successful. She further states that the Bank did not grant her reprieve following the COVID 19 pandemic in line with Central Bank Circular No. 3 of 2020 advising banks to reschedule loans.

4. Although the Plaintiff admits that she was served with a redemption notice on 20th November 2020, she denies that the Bank ever served her with any other notice to recover the loan. She claims that the Bank advanced her a total of KES. 53,070,000. 00 out of which she has paid KES. 51,264,936. 50 leaving a balance of KES. 1,805. 063. 50 which she has not finished paying due to the harsh economic times. In her deposition she states that she has restructured her business and as a result she is, “able to raise at least KES. 5,000. 00 daily to pay the defendant bank until the economy …. improves.” The Plaintiff’s case is that it is entitled to an injunction as she was not served with the statutory notices and that she is ready and willing to continue servicing the loan hence the court should grant an injunction.

5. The Bank’s position is that the Plaintiff is indebted to it. It contends that it complied with all the perquisites necessary for it to exercise its statutory power of sale hence the Plaintiff is not entitled to an injunction.

6. The Bank states that the Plaintiff was required to repay the facility by monthly instalments of KES. 399,864. 00 but she defaulted causing the Bank to issue a demand notice under section 90 of the Land Act, 2012 dated 16th January 2012 for arrears of KES 1,466,248. 70 within 3 months from the date of service of the notice whereupon it would proceed to exercise its statutory power of sale. The Bank exhibited a certificate of posting to show that the notice was sent to her last known and declared address. The Plaintiff did not comply with the said notice causing the Bank to issue a notice under section 96 of the Land Act dated 4th June 2019 informing the Plaintiff that it would proceed with the sale of the suit property after three months from the date of service of the notice. The Bank exhibited the certificate of the posting showing that the notice was dispatched to the Plaintiff. The Bank further states that it issued a redemption notice and proceeded to advertise the suit property for sale.

7. The Bank further states that the Plaintiff’s loan fell into arrears on 16th January 2019 hence the Central Bank’s Circular No. 3 of 2020 could not apply to her as it only applied to those whose loans were upto date as at 2nd March 2020.

Analysis and Determination

8. The main issue for determination is whether the court should grant an injunction restraining the Bank from exercising its statutory power of sale. The parameters for the grant of such an order are grounded on the principles established in Giella v Cassman Brown [1973] EA 358. In order to succeed an applicant must demonstrate that it has a prima facie case with a probability of success, demonstrate irreparable injury which cannot be compensated by an award of damages if a temporary injunction is not granted, and if the court is in doubt, show that the balance of convenience is in its favour.

9. In Nguruman Limited v Jane Bonde Nielsen and 2 Others NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR the Court of Appeal reiterated the three conditions to be fulfilled before an interim injunction is granted as set out in Giella v Cassman Brown (Supra) and further clarified that they are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. This means that if an applicant does not establish a prima faciecase then irreparable injury and balance of convenience do not require consideration. On the other hand, if a prima facie case is established, then the court will consider the other conditions.

10. In Mrao Ltd v First American Bank of Kenya Limited and 2 Others MSA CA Civil Appeal No. 39 of 2002 [2003] eKLR, the Court of Appeal explained that a prima facie case is, “a case in 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 to call for an explanation or rebuttal from the latter.”Since the Company seeks to restrain the Bank from exercising its statutory power of sale, it must show that the Bank is violating its right in the suit property.

11. The Plaintiff has admitted indebtedness and default to the Bank. It blames its indebtedness on several factors including the harsh business environment engendered by the COVID -19 pandemic. Indebtedness is the foundation for the Bank to initiate the process of exercising its statutory power of sale by first issuing and serving on the Plaintiff a 90-day statutory notice under section 90 of the Land Act. The Bank has exhibited the notice and evidence that it was served on the Plaintiff by registered post at her last known address. It has also issued the notice to sell under section 96 of the Land Act supported by evidence that it was forwarded by registered post. This evidence is not controverted. Lastly, the Plaintiff admits that she received the redemption notice.

12. Based on the facts outlined in the Plaintiff’s deposition, there is no basis upon which I can conclude the Bank has violated her rights as the statutory notices were issued in accordance with the law and were received by the Plaintiff. At the hearing of the application, counsel for the Plaintiff readily admitted that what the Plaintiff required was time to pay the debt on the terms she has proposed. This court cannot compel the Bank to accept the Plaintiff’s proposals which would amount to restructuring the facilities granted to her by the Bank by restraining it from exercising its legal remedies as this would amount to re-writing the parties’ bargain.

13. I find that the Plaintiff has failed to establish a prima facie case with a probability of success. In view of the dicta in Nguruman Limited v Jane Bonde Nielsen and 2 Others(Supra), once an applicant fails to establish a prima facie case with a probability of success, the inquiry comes to an end.

14. The Plaintiff’s Notice of Motion dated 22nd January 2021 is dismissed with costs to the Defendant. The interim orders in place are discharged forthwith.

DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF JUNE 2021.

D. S. MAJANJA

JUDGE

Court of Assistant: Mr M. Onyango

Mr Kiboi instructed by Kiboi and Company Advocates for the Plaintiff.

Mr Kilonzo instructed by S. M. Kilonzo and Associates Advocates for the Defendant.