Jane Achieng Muga v Engen Kenya Limited, Samuel Gachugi Mwangi, Shadrack Koskei Cherogoe, Garam Investments, Amit Shah & Kromatt Limited [2018] KEHC 6973 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KERICHO

ELC CASE NO. 14 OF 2013 CONSOLIDATED WITH CIVIL SUIT NO. 92 OF 2009

JANE ACHIENG MUGA....................................................PLAINTIFF

VERSUS

ENGEN KENYA LIMITED.....................................1ST DEFENDANT

SAMUEL GACHUGI MWANGI............................2ND DEFENDANT

SHADRACK KOSKEI CHEROGOE....................3RD DEFENDANT

GARAM INVESTMENTS.......................................4TH DEFENDANT

AMIT SHAH.............................................................5TH DEFENDANT

KROMATT LIMITED............................................6TH DEFENDANT

JUDGMENT

Introduction

1. This judgment relates to ELC Case No. 92 of 2009 and ELC Case No. 14 of 2013 which were consolidated for purposes of hearing and determination. The plaintiff in ELC case no 14 of 2014 is the husband of the plaintiff is the instant suit and the subject matter of the suit is the same. At the centre of this suit is land parcel no. KERICHO/KIPCHIMCHIM/2722 (the suit property) which was registered in the name of the Shadrack Koskei Cherogoe. Both suits challenge the manner in which the said parcel of land was sold by Engen Kenya Limited (the 1st defendant).

Background of the case

2. In order to put this matter into perspective, it is important to give brief background of the facts. Sometime in early 2001, Shadrack Koskei (the 3rd defendant- hereinafter referred to as Shadrack) was approached by Samuel Gachugi Mwangi- hereinafter referred to as Samuel with a view to doing business with him. After negotiations they agreed to form a partnership and entered into a partnership agreement. In his Amended Plaint filed on 2nd December 2009, Shadrack pleads that he charged the suit property to the 1st defendant to secure a credit facility of Kshs. 2,150,000 for the purchase of fuel and fuel products from the 1st defendant. He further pleads that it was an express term of the said charge that he would repay the amount secured by the charge three months after the service of a demand in writing by the chargee, the 1st defendant.

3. Shadrack contends that sometime in November 2009 he received a demand letter and a notification of sale of the suit property by public auction on 19th November 2009 from the 1st defendant. He then filed suit and obtained an order of injunction restraining the 1st defendant from selling or transferring the ownership of the suit property. By the time Shadrack’s advocate went to serve the order upon Garam Investment (the auctioneers), he found when the sale had just taken place and the auctioneers had left.

4. Shadrack faults the 1st defendant’s sale of the suit property for the following reasons:

i. That the charge was registered using a false title document.

ii. That no valuation was conducted prior to the sale as required by section 97(2) of the Land Act.

iii. The charge did not specify the amount outstanding.

iv. That no redemption notice was served.

v. That the sale was conducted contrary to the order dated 9th December 2009 prohibiting any dealings on the suit property.

vi. That the 1st defendant had not exhausted its remedies under the law before proceeding to advertise the suit property for sale.

vii. That the amount sought to be recovered offends the in duplum rule.

5. The sale took place but for some unexplained reason it was set aside by the successful bidder.

6. Sometime in 2013, the 1st defendant once again instructed the auctioneers to sell the suit property by public auction. The auctioneers issued a notification of sale on 22nd March 2013, advertised the suit property for sale and proceeded to sell the same on 31st May 2013. The successful bidders were Chai Holdings Limited who paid the purchase price in full but were unable to transfer the suit property to their name as there was a restriction barring any transfer of the property until the suit is heard and determined. Chai Holdings Limited therefore sought and were granted leave to be enjoined in the suit as interested parties.

7. On 11th July 2013, Jane Achieng’ Muga the plaintiff in Kericho ELC No. 14 of 2014 filed a suit in Nairobi against Engen Limited, Shadrack, Samuel, the auctioneers, Amit Shah and Keromatt Ltd.

8. In her suit Jane pleads that she is the wife of Shadrack and that at all material times she had custody of the title to the suit property. According to her the property could not have been charged as she never released the original title deed. She learnt that the property was charged when she made follow-ups with regards to case no. 92 of 2009. She seeks the following reliefs:

a) A declaration that the charge entered in favour of Engen is illegal

b) A declaration that the tittle deed used to register the charge was a forgery

c) A declaration that the auction held on 31st May 2013 was void and in contempt of court

d) A permanent injunction to restrain the defendants from interfering with the suit property.

9. The suit was defended vide a statement of Defence filed by 1st defendant (Engen) in which it denies that the title used to charge the suit property was fake and that the auction was marred with fraud, misrepresentation or forgery. Engen further states that all the laid down procedures were followed before the property was advertised for sale.

Plaintiff’s case

10. When the case came up for hearing Jane testified as PW1. She testified that she got married to Shadrack in 1992 and they were blessed with three sons. She testified that they bought the suit property in 1994 and she contributed to the purchase price thereof. They then established their matrimonial home on the suit property where she has been living with her sons. She said she learnt about the advertisement for the sale of the suit property from a neighbour after which she informed her husband. Shadrack then instituted HC Civil Case No 92 of 2009 and obtained an order restraining the transfer of the suit property pending the hearing and determination of the suit. She stated that when they bought the suit property they were issued with a title deed in the name of Shadrack which she had always had in her custody. She denied any knowledge of the agreement between Shadrack and Samuel with regards to charging the suit property to Engen so as to obtain a credit facility for their business. Her attempt to produce the title deed as an exhibit was successfully resisted by counsels for the defendants who insisted that in view of the fact that there were two title deeds in respect of the suit property, the same ought to be produced by the Land Registrar, Kericho. She testified that according to her, the sale of the suit property was illegal.

11. In cross-examination she stated that she had not reported that their land had been charged using a fake title deed. She stated that her husband had obtained a court order stopping the transfer of the suit property. She stated that what she was holding was a land certificate while what was in the 1st defendant’s list of documents was a title deed. She admitted that a title deed was different from a land certificate. She testified that the green card indicated that a title deed had been issued.

12. Shadrack testified as PW2. He stated that he had been approached by Samuel for a business partnership. They agreed that Shadrack would give out his title deed to secure a credit facility from Engen which would in turn sell them fuel and petroleum products. He testified that he gave out a photocopy of his land certificate for the suit property together with a copy of his identity card. He stated that after giving out his title, he realized that Samuel had not included his name as a director in the business and he therefore withdrew from the business and they parted ways.

13. He was later informed by his wife Jane that the suit property had been advertised for sale. He then moved to court and obtained an order to stop the sale. He later learnt that the suit property had once again been advertised for sale in May 2013. When he brought the matter to his advocate’s attention, his advocate assured him that the property could not be sold as the court order stopping the sale was still in force. It was at this juncture that Jane decided to move the court to stop her matrimonial home from being sold.

14. In cross examination Shadrack admitted that he did not amend his Plaint to state that he did not charge the suit land. He maintained that he did not give out his title to be charged as the business never took off. He stated that the suit land was subsequently sold in 2013. In response to a question by Samuel’s counsel, he admitted that he did not sue Samuel for fraudulently charging his land but only challenged Engen about the manner in which the suit property was charged. He conceded that he had been served with a statutory notice before the sale. Upon being shown a copy of the green card, he conceded that it mentions that a title deed and not land certificate was issued on 3rd June 1994. He stated that he was aware that the suit land was sold in 2013 as a notification of sale was served on his wife.

15. Grace Korir, the Land Registrar, Kericho who testified as PW3 admitted that it was unusual to issue a land certificate and title deed in respect of the same parcel of land at the same time. She declined to produce the title deeds as she was not the one who had issued them. She stated that she is the one who signed the charge after confirming that the entries in the certificate of official search were similar to those in the green card. She stated that land certificates used to be issued previously as documents of title but they have since been phased out. Upon cross-examination she confirmed that according to the search conducted on 23rd April 2001, the document that was issued on 3rd June 1994 was a title deed.

16. Dickson Indu Ayiga who testified as PW4 stated that he was an Assistant Land Registrar in Kericho in 1994. He admitted that he was the one who signed and affixed a seal on the land certificate issued to Shadrack in respect of the suit property. He stated that a green card was issued on the same day.

17. When he was shown the title deed in respect of the suit property issued to Shadrack on the 3rd June 1994, he denied having signed it and stated that his signature had been forged. He categorically stated that a land certificate and title deed cannot be issued on the same day in respect of the same parcel of land. He insisted that the title deed was not valid. He produced the land certificate which he confirmed was genuine. He also confirmed that he was the one who issued the green card in which he indicated that a title deed had been issued. According to him the land certificate was commonly referred to as a title deed. He stated that he was surprised that the document he did not sign was the one used to register the charge.

Defence case

18. The 1st and 2nd defendants called two witnesses. Kemunto Michieka, the Human Resource Manager, Engen Kenya Limited (DW1) and Charles Ayienda, the Assistant Land Registrar, Kericho (DW 2). DW1 testified that Shadrack and Samuel approached Engen with a partnership agreement they had between the two of them for the supply of petroleum products from Engen. Engen then requested them for security to secure the products that were to be supplied to them and they availed a title deed in the name of Shadrack in respect of the suit property. Engen then proceeded to register a charge in respect of the said title on 23rd April 2001 for petroleum products equivalent to the sum of Kshs. 2,150,000. She produced both the charge and partnership agreement as exhibits.

19. DW1 testified that after the registration of the charge they released the petroleum products to Shadrack and Samuel but they failed to pay for them as per the agreement prompting them to issue a 3 months’ statutory notice to Shadrack and Samuel on 4th July 2007. She explained that when they received no payment from the two partners, they instructed an advocate to proceed with the sale of the charged property. The advocate then instructed Garam Investments who issued a notification of sale to Shadrack then advertised the property for sale by public auction. She stated that even though the sale took place on 19th November 2009, the same was nullified as the money that was paid was refunded to the purchaser. In the meantime, Shadrack moved to court and obtained a court order stopping the sale. In the chamber summons seeking injunctive relief, Shadrack swore an affidavit stating that he had charged the suit property to Engen.

20. DW1 explained that when no payment was forthcoming from Shadrack and Samuel, Engen conducted a valuation of the property and once again advertised the suit property for sale in May 2013. The auctioneers issued a notification of sale and the sale took place on 31st May 2013. The highest bidders were Amit Shah and Jaysukulal of Chai Holdings Limited and Keromatt Ltd (5th and 6th defendants respectively) who bought the property for Kshs. 6,150,000.

21. DW1 Confirmed that the correct procedure was followed before the suit property was sold and since the 4th and 5th defendants paid the purchase price of Kshs. 6,150,000 in full, they were issued with a Discharge of charge.

22. Charles Ayienda, the Assistant Land Registrar, Kericho testified as DW2. He stated that according to the green card, the title document that was issued in respect of the suit property was a title deed. He stated that land certificates used to be issued a long time ago but under the Registered Land Act, they issued title deeds. He produced a certified copy of the green card as Defence exhibit 6. He also produced the original title deed as Defence exhibit 9. Upon cross-examination, he stated that it was absurd if PW4 stated that he issued a land certificate yet the green card indicates that what was issued was a title deed.

23. Amit Premchand Shah testified on behalf of the 5th and 6th defendants as DW3. He testified that he participated in a public auction for the sale of the suit property on 31st May 2013. He stated that they were the highest bidders and they paid a sum of kshs. 6,150,000 for the suit property after which they were issued with a Discharge of charge. He explained that they have not been able to transfer the property to their name owing to the instant suit.

Plaintiff’s submissions

24. In their submissions, learned counsel for the plaintiff (Shadrack) argues that Engen used a forged title to create a charge in respect of the suit property. He argues further that Engen’s exercise of its statutory power of sale was unlawful and a nullity as statutory notices were not issued, the chargee did not specify the extent of default, the chargee had not exhausted his remedies under the law and there was a court order prohibiting any dealings in the suit property pending the hearing and determination of the suit. He also argues that the amount sought to be recovered by Engen offends thein duplumrule.

Defendants Submissions

25. On the other hand, learned counsel for Engen and the auctioneers bases his submissions on four main grounds;

26. First, he argues that Shadrack is bound by his pleadings and he cannot deviate from his Plaint where he pleads that he charged his title to Engen.

27. Secondly, he argues that Jane had no locus standi to institute a case against Engen and the other defendants hence her suit ought to be struck out.

28. Thirdly, he argues that Shadrack has failed to prove a case against Engen or the auctioneers. He submits, that even though Shadrack and Jane allege fraud against Engen and the auctioneers, they have not proved the said allegations to the required standard.

29. Fourthly, he argues that interlocutory injunctions lapse after 12 months by operation of the law and therefore there was nothing wrong with Engen exercising its statutory power of sale once the period of one year elapsed after the order of prohibition was issued, notwithstanding the fact the case was still pending in court.

30. In his submissions, learned counsel for the 5th and 6th defendants argues that Jane did not prove any fraud or misrepresentation on the part of Amit Shah or Keromatt Limited. He submits that Chai Holdings Limited which bought the suit property at the public auction by the auctioneers on behalf of Engen were bona fide purchasers for value without notice and are therefore entitled to protection of the law under section 99 (1) to (4) as well as section 99 (2) of the Land Act.

31. With regard to the court order prohibiting any dealings with the suit property before the case was finalized, he submits that the said order had lapsed by the time the auction was conducted in 2013 and therefore the defendant had a right to exercise its statutory power of sale.

Issues for Determination

32. From the pleadings, evidence and rival submissions the following issues emerge for determination:

i. Whether Jane has locus standi to institute ELC case No 14 of 2013

ii. Whether the charge dated 26th March 2001 is valid

iii. Whether the sale of the suit property by public auction was valid

iv. Whether the court order dated 2nd December 2009 lapsed after a period of one year

v. Whether Chai Holdings Ltd were bona fide purchasers for value without notice

vi. Whether the plaintiffs are entitled to the reliefs sought

Analysis and Determination of issues

Whether Jane has locus standi

33. The first issue I must determine is whether Jane has locus standi to institute a suit against Engen and the other defendants. According to Black’s Law Dictionary, 9th Edition P. 1026, locus standi is defined as the right to be heard or appear in court or other proceedings.

34. It is Jane’s case that she is the wife of Shadrack and she therefore has a beneficial interest in the suit property. She contends that the suit property is her matrimonial home where she lives with her sons and that she has never parted with possession of the land certificate. She therefore asserts that the suit property could not have been validly charged to Engen without the original land certificate. The issue of the land certificate will be determined a little later.

35. Back to the issue of locus standi. Engen has disputed the claim and asserted that the plaintiff has no locus standi because she is not the registered proprietor of the suit property. Engen’s counsel has also asserted that there is no privity of contract between Engen and Jane.

36. Section 2 of the Matrimonial Property Act provides that a matrimonial home means any property that is owned by one or both spouses and occupied or utilized by the spouses as their family home and includes any attached property.

37. From the evidence on record, it is common ground that the suit property is registered in the name of Shadrack and that Jane lives on the suit property with her sons. I have no reason to doubt that Jane is married to Shadrack. As a spouse she has a beneficial interest in the suit property which clothes her with locus standi. In any event the Constitution of Kenya 2010 has enlarged the concept of locus standi as a way of actualizing every person’s right to access justice. In Sophy Njiri V National Bank of Kenya & Another (2015) eKLR the court held as follows:

“a spouse has a right to the matrimonial home, and if that right is threatened or is being affected by some action by another person, the spouse may apply to court for relief”.

38. I therefore find and hold that Jane has locus standi to institute this suit.

Whether the charge dated 26th March 2001 is valid

39. The validity of the charge is dependent inter alia on whether the title used to charge the suit property is genuine. The evidence on record shows that two titles were issued in respect of the suit property on the same day, that is on the 3rd, June 1994. One is a Land Certificate while the other one is a Title Deed.

40. According to the evidence of PW4, the retired Assistant Land Registrar, Kericho who issued the Land Certificate, the title deed is fake as he testified that the signature on the title deed was not his. DW3 who is the current Assistant Land Registrar however testified that he was surprised that PW4 had stated that the signature on the title deed was not his. He stated that according to the green card, the document that was issued on 3rd June 1994 was a Title Deed, not a Land Certificate and if PW4 is to be believed, nothing would have stopped him from indicating on the green card which he admits having created, that he had issued a Land Certificate.

41. DW3 further testified that Land Certificates had been phased out a long time ago and there was no way a Land Certificate could have been issued under the Registered Land Act. PW3, PW4 and DW3 who have been responsible for the issuance of land title documents in the course of their work, were in agreement that it is unusual to issue two title documents in respect of the same parcel of land at the same time.

42. The evidence of these three witnesses leads me to the inference that the Title Deed that was issued on 3rd June 1994 is genuine while the Land Certificate is fake and may have been back-dated and issued to Shadrack to assist him in his nefarious mission. This explains why there are no records in support of the Land Certificate which sticks out like a sore thumb. The charge that was registered on 26th March 2001 in respect of the title deed is therefore valid.

Whether the sale of the suit property by public auction was valid

43. The third issue that I am called upon to determine is whether the sale of the suit property by Engen was valid. As correctly submitted by learned counsel for the 1st and 2nd defendants, a party is bound by their pleadings. Counsel has cited the case of Malawi Railways Ltd V Nyasulu (1998) MWS 3where the Supreme Court stated as follows:

“As the parties are adversaries, it is left to each one of them to formulate his case in his own way, subject to the basic rules of pleadings… for the sake of certainty and finality, each party is bound by his own pleadings and cannot be allowed to raise a different and fresh case without due amendment properly made.

Each party thus knows the case he has to meet and cannot be taken by surprise at the trial. The court itself is bound by the pleadings of the parties as they are themselves. It is not part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings.

Indeed, the court would be acting contrary to its own character and nature if it were to pronounce any claim or defence not made by the parties. To do so would be to enter upon the realm of speculation. Moreover, in such event, the parties themselves or at any rate one of them might well feel aggrieved: for decision given on a claim or defence not made or raised by or against a party is equivalent to not hearing him at all and thus be a denial of justice. In the adversarial system of litigation therefore, it is the parties themselves who set the agenda for the trial by their pleadings and neither party can complain if the agenda is strictly adhered to. In such an agenda, there is no room for an item called “any other business” in the sense that points other than those specific may be raised without notice”

44. Closer home, in the case ofIndependent Electoral and Boundaries Commission V Stephen Mutinda Mule and 3 Others (2014) eKLR the Court of Appeal relied on the Malawi Railways case (supra) and cited with approval the case of Adetoun Oladeji NIG Ltd V Nigeria Breweries SC 91/2001 where the court observed as follows:

“It is now trite law that parties are buond by their pleadings and that any evidence which is led by any of the parties which does not support the averments in the pleadings, or put in another way, which is at variance with the pleadings goes to no issue and must be disregarded”

45. Additionally, the Court of Appeal in Dakianga Distributors (K) Ltd V Kenya Seed Company Ltd (2015) eKLRstated the following on the importance of pleadings:

“A useful discussion on the importance of pleadings is to be found in Bullen Leake and Jacob’s Precedents of Pleadings, 12th Edition, London Sweet & Maxwell (The Common Law Library No. 5) where the learned authors declare that:

The system of pleadings operates to define and delimit with clarity and precision the real matters in controversy between the parties upon which they can prepare and present their respective cases and upon which the court will be called upon to adjudicate between them. It thus serves the two-fold purposes of informing each party what is the case of the opposite party which he will have to meet before and at the trial and at the same time informing the court what are the issues between the parties which will govern the interlocutory proceedings before the trial and which the court will have to determine at the trial.”

46. In his Amended Plaint, Shadrack clearly pleads that he charged the suit property to Engen. This is also stated in his affidavit in support of the application for a restraining order. His evidence at the trial which is at variance with these averments must therefore be disregarded.

47. Shadrack contends that he was never served with any statutory notice before the sale. However, in his evidence he admits that the two addresses to which the statutory notices were sent belong to him and in his pleadings he admits that he received the said notices.

48. DW1 testified that a three months’ statutory notice was sent to Shadrack and Samuel on 4th July 2007. They produced the certificates of posting in their list of documents. I am therefore satisfied that Engen discharged its burden of proving that service of the statutory notices was duly effected upon Shadrack and Samuel.

49. Regarding the second sale that was conducted in May 2013, there was no requirement to issue a fresh statutory notice. In Stephen Kipkatam Kenduiywa T/A Kapchebet Farm V Sidian bank Ltd and Another (2017) eKLR the court observed as follows:

“The only argument raised was whether there needed to be fresh notices before the advertisement of the properties for the sale that was intended to take place on 22nd August 2016. I have not been pointed at any law which requires new notices to be issued before a charged property may be advertised for sale. So long as the chargee has served the statutory notices and the auctioneers’ redemption notice has been served. I am not aware of any law which requires an additional notice before an advertisement of the property of for fresh notices to be issued before subsequent advertisements of the property”

50. If the validity of the charge was to be decided solely from the case presented by Shadrack, I would hold that the sale was valid. However, Jane’s case throws a spanner in the works as she challenges the sale on various grounds which must be considered from her perspective as a person with a beneficial interest in the suit property.

51. Her first ground is that the title which was used to charge the suit property is as forgery she never parted with possession of the original land certificate which she tendered as an exhibit. This issue has however been settled by my earlier finding. The other complaint raised by Jane is that she was never served with a statutory notice before the suit property was sold. Her counsel has referred me to the recent Court of Appeal decision in Mugo Muiru Investments V EWB & 2 Others (2017) eKLRwhere the court observed as follows:

“In the circumstances of this case, it is plain to see that Elizabeth had an equitable interest in the matrimonial home and that her husband, Shem Bageine held the title to it in trust for both. Such equitable interest combined with actual possession and control of the matrimonial home gave rise in common law to an overriding interest superior to that of an adverse possessor…

The peculiar circumstances and evidence in this appeal show that HFCK knew or ought to have known that Shem Bageine was not entitled to deal with HFCK as he wished without the involvement and concurrence of Elizabeth who was in possession and control of the matrimonial home and who had an interest in it as an unregistered co-owner and a beneficiary.

Prior to coming into force of the Land Registration Act, a married spouse’s unregistered proprietary interest in the matrimonial home by dint of his or her contribution to its acquisition and therefore, as part owner and as such unregistered proprietary interest was in common law, an overriding interest which superseded a registered instrument conveying title in the matrimonial property including a transfer and a charge”…

Whereas a buyer of property who fails to physically check the state in which the property is before the sale runs the risk of having a sitting tenant or an adverse possessor, in the event that an overriding interest exists as in this case, the buyer takes it subject to such overriding interest and cannot claim to be entitled to possession because, once an overriding interest is established or it is shown that the sale was in breach of trust, the sale must be vitiated and transfer cancelled”

52. In the Court’s view therefore, the fact that a spouse is in possession and control of a charged property creates an overriding interest which ranks in priority over any charge or transfer of the said property to a third party. The Registered Land Act (repealed) under which the charge herein was created did not require the chargee to seek the consent of the chargor’s spouse before charging the property, however, the chargee was under an obligation to serve the spouse with the relevant notices under the law.

53. The said authority is binding on this court.

54. In the instant case, Engen (K) Ltd did not serve Jane with any statutory notice before the sale. Since the sale was subject to Jane's overriding interest as an unregistered co-owner, Shadrack could not pass a good title to Engen and the transfer by Engen K Ltd to the 5th and 6th Defendants was subject to Jane's overriding albeit unregistered interest in the matrimonial home.

55. The other issue raised by Jane is the fact that the injunction issued on 8th December 2009 in Kericho HCCC No. 92 0f 2009 was still in force at the time the suit property was sold on 31st May 2013 and therefore the said sale was illegal.

The said order which was issued by Justice Ang’awa was couched in the following terms:

“IT IS HEREBY ORDERED:

1. THAT there be no dealings with the said land known as KERICHO/KIPCHIMCHIM/2722 as to transfer ownership, until final determination of the main suit.

2. THAT costs be in the cause”

56. Engen’s contention is that in terms of Order 40 Rule 6 of the Civil Procedure Rules, the interlocutory injunction lapsed after 12 months.

S 40 (6) of the Civil Procedure Rules provides as follows:

“When a suit in respect of which an interlocutory injunction has been granted is not determined within a period of twelve months from the date of the grant, the injunction shall lapse, unless for any sufficient reason the court orders otherwise”

57. While Jane refers to the above provision as a technicality which Engen sought to rely on to justify the sale, counsel for Engen has cited the case ofSimon Njagi Njoka V James Gatimu Muriithi & 5 Others (2017) eKLR,which provides useful guidance to me, where the Court faced with an interpretation of the said section stated as follows:

“My understanding of this provision is that once an interlocutory injunction is granted, the suit upon which that injunction is premised must be heard and determined within a period of twelve months. If for some reasons the suit cannot be heard and determined within that period, the onus is on the party in whose favour it was issued to go back to the Court with sufficient reason seeking an extension of the said order, otherwise it shall lapse automatically by effluxion of time.

The mischief that this rule was intended to cure was the practice whereby a party moves the Court, obtains an interlocutory injunction and while enjoying the relief, takes no steps towards prosecuting the suit. Indeed, in some cases, such a party will employ all tactics to ensure that the main suit drags on ad infinitum. Such a situation is not in-keeping with the overriding objective of the Court under section 1A and 1B of the Civil Procedure Act which include the expeditious disposal of cases. Article 159(2) (b) of the Constitution also provides that justice shall not be delayed. That is the statutory underpinning of Order 40 Rule (6) of the Civil Procedure Rules and notwithstanding the manner in which an order of interlocutory injunction is worded, it shall lapse if the suit upon which it was made is not determined within twelve months, unless for sufficient reason, the Court decides otherwise”

58. I therefore find and hold that the interlocutory injunction issued on 8th December 2009 had lapsed. Perhaps the only thing I can fault Engen’s counsel for, is the lack of courtesy in failing to inform Shadrack’s counsel that they intended to proceed with the sale as the matter was still pending in Court.

59. The other issue raised against Engen is that they offended the in duplum rule in demanding from Shadrack and Samuel an amount in excess of the principal sum. Thein duplumrule provided for in section 44A (1) of the Banking Act Cap 488 of the Laws of Kenya which provides as follows:

“An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection 2.

Subsection 2 of the same section provides as follows:

The maximum amount referred to in (1) is the sum of the following-

a) The principal owing when the loan becomes non-performing;

b) Interest in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and

c) Expenses incurred in the recovery of any amounts owed by the debtor”

60. The In Duplum rule which was given statutory clothing by section 44A of the Banking Act (Amendment No. 6 of 2006) is applicable to institutions as defined under the Act. A schedule to the Central Bank of Kenya Act has a list of Banks and Financial Institutions which are bound by the In Duplum rule. Engen is not one of them.

Whether Shadrack is entitled to the reliefs sought

61. Shadrack has sought a declaration that the purported sale of the suit property on 19th November 2009 is illegal and that the same be set aside. This prayer has been overtaken by events as the said sale was set aside by Engen and the successful bidder then.

62. Shadrack also sought a perpetual injunction to restrain Engen from selling or transferring the suit property until Engen complies with the relevant provisions of the law. The Court of Appeal in the case of Chrispus Chengo Masha & 7 Others V Daniel Ricci (2017) eKLR held that the burden of proof is on the party seeking a permanent injunction to prove that he deserves it. According to the pleadings and evidence on record, he failed to discharge this burden and the prayers sought are not available to him.

Whether Jane is entitled to the reliefs sought

63. In her Plaint Jane prayed for the following against the 1st, 2nd, 3rd, 4th 5th and 6th defendants:

a) An order declaring the charge if any, entered into by the 1st, 2nd and 3rd defendants over L.R No. KERICHO/KIPCHIMCHIM/2722 fraudulent, null and void. This prayer fails for the reasons stated above.

b) An order declaring the title deed presented over L.R NO. KERICHO/KIPCHIMCHIM/2722 as security and forming any charge thereof by the 1st, 2nd and 3rd Defendants as fraudulent, a forgery and fake and therefore null and void. This prayer also fails.

c) An order declaring the purported public auction held on 31st May 2013 by the 4th Defendant, an agent of the 1st Defendant over L.R No. KERICHO/KIPCHICHIM/2722 sold to the 5th and 6th Defendants as fraudulent, null and void and that the same be set aside and in the alternative, declare it an act in contempt of the court order in Kericho HCCC No. 92 of 2009. This prayer succeeds to the extent that the sale was illegal and therefore null and void.

d) A permanent Order of injunction restraining the 1st, 2nd, 3rd, 4th, 5th and 6th Defendants and their agents, servants and employees from advertising, offering for sale by private treaty or public auction, leasing, mortgaging, charging, transferring or assigning and/or otherwise dealing with land reference no. KERICHO/KIPCHIMCHIM/2722.

This prayer succeeds in part only to the extent that the 1st Defendant is restrained from transferring the suit property to the 5th and 6th Defendants but the 1st Defendant is not permanently restrained from exercising its statutory power of sale.

e) A permanent order of injunction restraining the 1st, 2nd, 3rd,4th 5th and 6th Defendants by themselves, their agents, servants and/or employees from entering into, remaining on, evicting, transferring, dealing or in any manner interfering with land parcel number KERICHO/KIPCHIMCHIM/2722. This prayer is subsumed by the finding in (d) above.

64. The upshot is that Kericho HCCC No. 92 of 2009 is dismissed with costs to the 1st Defendant (Engen Kenya Limited).

65. With respect to Kericho ELC No. 14 of 2013 I make the following final orders:

a) A declaration is hereby issued that the purported public auction held on 31st May 2013 by the 4th Defendant, an agent of the 1st Defendant over L.R No. KERICHO/KIPCHICHIM/2722 sold to the 5th and 6th Defendants is unlawful, null and void and that the same is hereby set aside.

b) A permanent order of injunction is hereby issued only to the extent that the 1st Defendant is restrained from transferring the suit property to the 5th and 6th Defendants.

c) The sale of L.R No KERICHO/KIPCHIMCHIM/2722 is hereby cancelled and the 1st defendant is ordered to refund the purchase price paid by the 5th and 6th defendants without interest.

d) It is hereby ordered that unless the amount outstanding to the 1st defendant is fully paid by 2nd and 3rd Defendants, the 1st Defendant is at liberty to exercise its statutory power of sale in respect of the suit property in strict conformity with the law.

e) Considering the circumstances of this case, each party shall bear its own costs.

66. I must commend counsels in both suits for their industry in defending their clients and bringing to the court’s attention recent authorities on the case at hand.

Dated, signed and delivered, at Kericho this 9th day of May, 2018.

…................................

J. M ONYANGO

JUDGE

In the presence of:

1. Mr. Bii for Mr. Mbeche for the 5th & 6th Defendants.

2. Mr. Omuganda for Mr. Andama for the Plaintiffs.

3. The 2nd, 3rd & 4th Defendants absent.