John Edward Ouko v National Industrial Credit Bank Ltd [2013] KEHC 1704 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL SUIT NO. 99 OF 2013

JOHN EDWARD OUKO ……………………………...………… PLAINTIFF

V E R S U S

NATIONAL INDUSTRIAL CREDIT BANK LTD ……….……. DEFENDANT

RULING

The Plaintiff has a Chattels Mortgage agreement with the Defendant over the lorry registered as number KBR 926G Mercedez Benz.

He has filed a Notice of Motion dated 29th August 2013 seeking an order of prohibitory injunction to restrain the Defendant from attaching or selling that lorry and a mandatory injunction requiring the Defendant to release or hand over that lorry to the Plaintiff pending the hearing and determination of this suit.

In support of his Motion the Plaintiff deponed in his affidavit sworn on 28th August 2013 as follows-

“3.  THAT I bought a motor vehicle Registration No. KBR 926G with the purpose of doing business.

THAT as a customer to the Bank, the Defendant financed part of price with understanding that I would pay back by monthly instalments of Kshs. 80,000/-,  I annex herewith a copy of the Log-book marked as “JEO-1”.

THAT I admit to have defaulted in the month June, 2013.

THAT the Defendant’s interest is therefore only up to 50% of the purchase price as we each contracted Kshs. 2. 4 million.

THAT I was surprised when my said motor vehicle was impounded by the Defendant.

THAT I followed up with the Defendants and I was told Kshs. 2,000,000/- was required.”

The Plaintiffs application is opposed by the Defendant.  The Defendant through its Senior Regional Manager's Affidavit sworn on 2nd September 2013 stated-

“2.  THAT this suit arises from a hire-purchase agreement HPR. 4560007420 for Kshs. 2,400,000. 00, signed between the Plaintiff herein and the Defendant Bank under which agreement the Defendant Bank let out a Motor Vehicle Registration No. KBR 926G, Mercedez Benz to the Plaintiff herein.  Annexed is a true copies of the hire-purchase Agreement, Chattel Mortgage Agreement and the Chattel Transfer instrument marked “E-1(a), (b) and (c).

THAT the facility agreement contained express terms and conditions as follows:-

It is an express term of the Hire-Purchase Agreement that the Defendant Bank is an express owner of the said motor vehicle and the Plaintiff is a mere hirer.

It was an express term of the Agreement that the Plaintiff/Respondent would become the owner of the vehicle hired out to him only if he repaid the Bank monthly instalment of Kshs. 80,930/- with effect from 25/2/12 and on every 25th day of the each succeeding month with the last instalment of Kshs. 85,450/- payable on 25/1/16 and at that point exercise the option to purchase the Motor Vehicle from the Defendant Bank.

That the payment of the contractual monthly instalments was of essence and that the Agreement would be deemed repudiated if any instalment or part thereof remained unpaid for more than 14 days after becoming due.

Further it was an express term of the Agreement that in the event the Plaintiff/Hirer failed to pay the reserved rental set out in the Agreement or any part thereof, the Defendant Bank would be entitled to repossess the Motor Vehicle, terminate the hiring, and dispose the vehicle.

The Agreement clearly indicated the contractual interest rate as 26% per annum and late payment interest rate of 30 per annum.”

As stated before the Defendant has a Chattels Mortgage over the lorry. That instrument is annexed to the Defendant's replying affidavit.  Under that Mortgage instrument it is stated that when there is a default in repayment of the instalments by the Plaintiff the Defendant is entitled to take possession of the lorry.  It is so provided in paragraph 9(f) of the Chattels Mortgage which is in the following terms-

“9. The mortgage of the goods and the consent of the Company to the Mortgagor continuing in possession of the Goods shall automatically and without notice terminate on the happening of any of the following events in consequence of which the Company shall have the right to immediately retake possession of the Goods:

(f)  any instalment or other sum payable hereunder by the Mortgagor remaining unpaid after the expiry of fourteen (14) days of becoming due.”

The Plaintiff admitted being in default as shown above in this Ruling. The Defendant was within its rights in repossessing the lorry. Additionally under the third schedule of the Chattels Transfer Act Cap 28 there is provided therein implied terms for the Mortgage instrument. One of those implied terms is that when there is default the grantee without the consent or notice of the grantor may take possession of the property in question and may dispose off such property by private or public auction.

Consideration of the matters stated in this Ruling lead me to find that the Plaintiff has failed to meet the threshold of granting an interlocutory injunction.  The Plaintiff has failed to show a prima facie case with probability of success as defined in the case MRAO LTD -VS FIRST AMERICAN BANK OF KENYA LTD (2003) KLR where the Court stated-

“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.”  It is a case 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 as to call for an explanation or rebuttal from the latter.”

The Plaintiff in bringing the Motion before the Court seems to seek this Court to rewrite the contract between him and the Defendant.  My response is to say that that is forbidden ground.  The case law is clear on that.  In the case KENYA BREWERIES LTD -VS- OKEYO [2002]I EA the Court of Appeal stated-

“It is trite that a contracting party who fails to perform his part of the contract cannot obtain an injunction to restrain a breach of covenant by the other party.”

Also in the case NATIONAL BANK OF KENYA LTD -VS- PIPEPLASTIC SMAKOLIT (K) LTD & ANOTHER (2001)KLR the Court stated-

“A Court of law cannot re-write a contract between the parties.  The parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.”

The Plaintiff is not entitled to the injunction he seeks in view of the Court's finding above.  The Court having found that the Plaintiff has failed to show a prima facie case with probability of success if then an injunction was granted it would encourage the Plaintiff and others like him to avoid paying their just debts.  This was a statement made in the case MRAO (supra) where the Court stated-

“If Courts are going to allow debtors to avoid paying their just debts by taking some of the defences I have seen in recent times for instance challenging contractual interest rate, banks will be crippled if not driven out of business altogether and no serious investors will bring their capital into a country whose courts are a haven for defaulters.”

In the end the Plaintiff's Notice of Motion dated 29th August 2013 is dismissed with costs to the Defendant.

Dated and delivered at Mombasa this  1st day  of  November, 2013

MARY KASANGO

JUDGE