JOSEPH KAMAU MWANGI v KENYA COMMERCIAL BANK LIMITED [2004] KEHC 24 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 661 of 2003

JOSEPH KAMAU MWANGI..………………………….PLAINTIFF

VERSUS

KENYA COMMERCIAL BANK LIMITED…………DEFENDANT

RULING

This Ruling relates to an application brought by way of a Noticeof Motion made under XXXIX, Rules 1 and 5, Order XIX, Rules 1 and2 of the Civil Procedure Rules, Section 3a of the Civil Procedure Act,Section 72 of the Registered Land Act, (Cap. 300), Laws of Kenya,Section 14 of the Auctioneers Act (No. 5 of 1996) and all otherenabling provisions of the law. The Plaintiff seeks three orders fromthis court:-

(a) A temporary injunction restraining theDefendant/Respondent by itself, its servants or agentsfrom taking, selling, or purporting to sell and exercising thepower of sale over the Plaintiff's parcel of land being title-No.   LOC.   16/KIGORO/1697   -   Thika   District   and/or2

interfering with the Plaintiff's possession of the same inany way pending the hearing and determination of this suit,(b) accounts  be  taken  to  determine  the  existence/non-existence of any purported dues from the Plaintiff/Applicanton his loan account, and its actual status,(c)Costs of this application be paid by the Defendant, the

Respondent.The Plaintiff bases his application for the orders sought on six grounds, and these are that:-

(1) on or about 21st July 1997 the Defendant offered a loan

facility to the Plaintiff of Kshs. 500,000/=(2) the Plaintiff has in fact overpaid the Defendant by a sum

of KSh. 22,000/=(3) The Defendant has totally refused to account to the

Plaintiff for the payments made by the Plaintiff and the

alleged loan balance.

(4)  The Defendant is not entitled to any monies from thePlaintiff and that purported sale of the Plaintiff's saidland is unlawful and un procedural.

(5)  the notification of sale dated 18th August, 2003 isinvalid/unlawful and does not comply with theAuctioneers Act (No. 5 of 1996) and the RulesProcedure, and S. 77 of the Registered Land Act Cap.300, Laws of Kenya.

(6) the Defendant did not serve the Plaintiff with thenotification of sale lawfully/procedurally or at alldenying the Plaintiff his right of redemption.

The application is supported by an Affidavit of the PlaintiffJoseph Kamau Mwangi, sworn on 23rd October 2003. The Plaintiffadmits taking a loan of Kshs. 500,000/= from the Defendant but says,he paid it in full within the 36 months agreed to with the Defendant.The Plaintiff complains that in fact he overpaid the Defendant by shs.22,000/= and that this was an error on his part. The Plaintiffremembers receiving a notice issued about 14th January 2002threatening to sell his property, Title No. LOC 16/KIGORO/1697Thika District unless he paid the sum demanded within 45 days. Hesays that upon his raising objection his property was not sold. Thereis a bundle of correspondence attached to Exhibit "2" relating to thisposition and requesting for the composition of the sum of KSh.397,243. 50 demanded in the notice issued by WATTS Enterprises.

The Plaintiff was disappointed when a further notice dated 18thAugust 2003 was issued, and giving him 45 days to pay, now anincreased sum of shs. 404,239. 50 as at 12th August 2003 and againthreatening to sell his shamba if the sum demanded was not paid toredeem his property. The Plaintiff swears that this notice was neverserved upon him, but upon his shamba boy who kept it away from hisemployer who was very sick at the time. The Plaintiff swears that hewas so sick that his gardener feared giving the notice to him lest hewould get worse. The Plaintiff has annexed correspondence from Dr.Ashok S. Matharu showing that the Plaintiff had sustained acerebrovascular accident in May 2003, and he was showing slow butsatisfactory neurological recovery. Receipts of payment for treatmentin various health facilities are generously exhibited. For all this, thePlaintiff says that the notices were served upon him unprocedurally,or that there was no proper notice on him for the sale of his property.

The Plaintiff says that even if the notice of sale was properlyserved upon him the reserve price of Kshs. 900,000/= shown in theValuation Report of Njia Njoroge & Co. was not worth the value of thegum trees growing on the land; or the balance of the debt if any,owed to the Defendant. The Defendant has refused to render to himan account or statements of account or serve notice in the propermanner. So that his right of redemption is not negated, he says thathe was now selling the gum trees to tea factories and hopes to raiseshs. 400,000/= to deposit into court pending final determination of thismatter. He seeks restraining orders to forestall the sale of hisproperty because he was not given a proper notice, and thenotification of sale does not disclose the identity of the auctioneerpurporting to sell the property contrary to the Auctioneers Act, and therules thereunder.

In his submissions, Mr. Mugambi, counsel for the Plaintiffreiterated the Plaintiff's averments in the Supporting Affidavit. TheDefendant had refused to clarify what constituted the outstandingsum as the Plaintiff had repaid the entire loan of Kshs. 500,000/= andhad even overpaid by KSh. 22,000/=. The Defendant was not entitledto any cent from the Plaintiff, and the Notification of Sale dated 18thAugust 2003 issued by Watts Enterprises was unlawful. It does notcomply with the provisions of the Auctioneers Act 1996 (No. 5 of1996) and the Rules there under. The Defendant did not serve thePlaintiff with the notification of sale in a lawful manner, at all, and thusdenied the Plaintiff his legal right of redemption. At the rate of Kshs.22,000/= p.m. for 36 months, the Plaintiff had repaid Kshs. 792,000/=inclusive of principal and interest. The computer printout does notshow the composition of the outstanding sum of Kshs. 404,239/=.

The Plaintiff is entitled to an account in terms of Order XIX Ruled 1and 2.

In addition, the Plaintiff was not served in terms of S. 153 of theRegistered Land Act (Cap. 300) (R.L.A) which sets out therequirements of serving a proper notice. These are that the notice isdeemed to be served upon any person:

(a)   if served on him personally,

(b)  if left for him at his last known place of residence orbusiness in Kenya.

(c)               if sent by registered post to him at his last known postaladdress or at his last known postal address in Kenya,

(d)  if served in any of the above-captioned ways on anattorney where under the attorney is authorized to acceptsuch service

(e)  if service cannot be effected in any of the above-mentioned ways, by displaying it in a prominent place onthe land.

The Plaintiff also alleges that the Defendant did not comply withthe requirements of section 77(6) of the R. L. A. which requires thatwhere the charged land is agricultural land, the chargee shall at leastone month before exercising its right of sale, give a notice on theDistrict Commissioner of the area in which the charged land issituated of its intention to sell the land, and requiring the DistrictCommissioner to take prescribed steps under the section. TheDefendant did however comply with this provision, vide Adera & Co.Advocates' letter dated 2nd July 2001 addressed to the DistrictCommissioner Thika District. Compliance with this provision alone,does not, as I shall show later below legitimize the Defendant's case.

Further, the nature of the notices issued does not complywith the requirements of the Auctioneers Act 1996 (5 of 1996) and theAuctioneers Rules (Legal Notice at 120 of 1997) Rule 15(b) of thewhich requires that upon receipt of a court warrant or letter ofinstruction, the auctioneer shall prepare a notification of sale in theform prescribed in Sale Form 2, set out in the Second Scheduleindicating the value of the property to be sold. The Form providesinter alia, for the auctioneers name, telephone and postal addressand trading name. Rule 15 requires the auctioneer to locate theproperty and serve the notification of sale of the property on theregistered owner or an adult member of his family residing or workingwith him, or where a person refuses to sign such notification, theauctioneer shall sign a certificate to that effect, give in writing to theowner of the property a notice of not less than 45 days within which toredeem the property.

Counsel says that there is a scribble in the nature of a signatureover the trade name Watts Enterprises. This is contrary to therequirements of Sections 9, 14, and 15 of the Auctioneers Act, 1996,(No. 5 of 1996). Section 9 of the Auctioneers Act prohibits any personfrom carrying on the business of an auctioneer unless he holds avalid licence issued by the Auctioneers Licensing Board under theAct. Section 14(2) requires a licensed auctioneer to carry onbusiness in his own name or in the name of a firm whose partners arelicensed auctioneers. The emphasis here is that the auctioneer eithercarries on business as a sole proprietor or in partnership. In eithercase it is necessary to know which auctioneer served the notice uponthe Plaintiff.

The Plaintiff says that the chargee had breached the law andhad not met the requirements of the Auctioneer's Rules preceding asale. The chargor's right of at redemption under Section 72 of theR.L.A requires that there should be no doubt as to the proper notice,service of notice must be within the chargor's residence, and notSome path or street, and the convenience of the parties require thatthe sale should not be allowed to proceed. The Plaintiff prays for atemporary injunction and an order for taking of accounts.

Maweru, counsel for the Defendant opposed the application.He relied upon the Affidavit of one Samuel Kimutai Ngetich who isdescribed as the Manager, Advances, with the Defendant's CityCentre Branch Nairobi as the person who has become and continuesto be seized of the pleadings and facts in this case.

The Defendant's counsel says that the application is incurablydefective and is an abuse of the process of court. The applicationshould have been brought by way of Chamber Summons underOrder XIX, Rule 2 and not by way of Notice of Motion under OrderXXXIX Rule 9.

The Defendant contends that all the provisions cited are notrelevant for the prayers sought. For example, Rule 5 of Order XXXIXwhich states that an injunction directed at a corporation is binding onits officers. Section 72 of the R.L.A merely deals with the chargor'sright of redemption. Section 14 of the Auctioneer's Act 1996 laysdown the conditions of an auctioneer's licence.  These provisions,that is to say, S.72 of the R.L.A., and Section 14 of the AuctioneersAct are not enabling, and the application cannot be founded on them.Section 3A of the Civil Procedure Act could only be invoked wherethere is a vacuum in the procedure which was not the case in thepresent matter. The Defendant's Counsel, continued that thejurisdiction of the court to grant the prayers sought has not beenproperly invoked, and the applicant, the Plaintiff, cannot have hiscake and eat it at the same time. This application is incurablydefective and it should be struck out.

Apart from attacking the applicable provisions of the law uponwhich the Plaintiff relies, counsel for the Defendant also relied uponthe Affidavit of Samuel Kimutai Ngetich. In it Ngetich admits that thePlaintiff paid Kshs. 814,000/= upon the original loan of Kshs.500,000/=. However as at 29. 11. 2003, the Plaintiff still owed theDefendant the sum of Shs. 404,239/50, and that, this is clearly shownfrom statements which were regularly being furnished to the Plaintiff.Ngetich accuses the Plaintiff of being guilty of material non-disclosure, and hence not deserving the orders sought. Ngetichswears further on the advice of his Advocates Adera & Co. Advocatesand which advice he believes to be true that:-

the Plaintiff has no prima facie case with the remotestpossibility of success.

-     In the unlikely event of any loss accruing to the Plaintiff, theBank is able, ready and willing to restitute him fully,

-     the application is mischievous, willfully misleading, malafides and solely intended to frustrate the Bank's exercise ofits statutory power of sale.

-     the Plaintiff's hands are soiled as he has adamantly failed,refused and/or neglected to duly or at all service the loanamount and continues in such default,  the purported dispute herein relating to the amount owingdoes not warrant the orders sought and, in any event, thebalance of convenience favors the Bank;

Ngetich also says that the Plaintiff had not serviced his loanaccount for 15 months and a sum of KSh. 338,000/=, hadaccumulated over the said period, and the Defendant hadexceptionally indulged the Plaintiff at the Plaintiff's plea of inability topay over the period under the loan due to economic hardshipscaused by the weather phenomenon called El-nino in 1998

The loan was to mature on 31st July 2000, and at this point intime, the total sum due was Kshs. 369,620/24 and continued toaccrue interest in accordance with the charge instrument. TheDefendant had not cancelled the previous sale. No sale had beenheld because the Defendant had exceptionally indulged the Plaintiffas stated above.

Counsel for the Defendant also relied upon the Affidavit ofDavid G. Kariuki sworn on the 1st December, 2003 and filed on thesame date. The original was not available in the court file, but thecourt received a photocopy from the Defendant's counsel. David G.Kariuki contends that the Plaintiff's Affidavit sworn on 23. 10. 2003 is adistortion of truth. According to him, the Plaintiff was served with thestatutory notice in the manner authorized by law - pinning the noticeon the suit property, registered post and upon the Plaintiff in personand not any "shamba boy", called Ibrahim, and counsel concludesthat if the Plaintiff would suffer any damages, the Defendant wouldcompensate him. The balance of convenience should go to theDefendant, and the application be dismissed.

In response to the Defendant's counsel's submissions,Mugambi counsel for the Plaintiff reiterated his earlier submission that the court should ignore the Affidavit of Daniel G. Kariuki, thepurported auctioneer as the notices to the Plaintiff were sent andserved by a firm whose licensed auctioneers were not disclosed. Thesignatories on the Notices are mere scribbles against a firm's name.On the issue of interest, if the Plaintiff had paid the outstanding sumthere was no question of additional interest. The application itselfwas in accord with the relevant provisions of the Civil Procedures andother laws under which it had been brought. The court should look atthe substance of the application and not at technicalities. ThePlaintiff's application was not defective and should be granted.

The genesis of these proceedings lies with the letter dated 10thJune 1997. It is addressed to the Plaintiff by the Defendant'sAdvances Officer and Branch Manager based at the Defendant's CityCentre Branch. It is peculiarly entitled "Application for BankingFacility", and refers in its opening paragraph to a discussion betweenthe Plaintiff and representatives of the Defendant. The Plaintiff wasoffered a loan of Kshs. 500,000/= payable at the rate of Kshs.22,000/= p.m. for 36 months. We have from submissions of Counselfor the Defendant that the 36 months would end on 31st July 2000(the maturity date).  The Defendant would take as security for theloan a legal charge over Title No. LOC 16/Kigoro/1697 - ThikaDistrict, registered in the Plaintiff's name. Interest would accrue at32. 5% but a default rate would be charged @ 15% above the rateindicated (i.e. 32. 5%), for amounts in excess of the authorized limitand outstanding from time to time. The Defendant reserved the rightto charge any other rate of interest, and it was not bound to informthe Plaintiff, and any failure of the Defendant to do so would notprejudice the Defendant's right to recover such interest. In additionthe Plaintiff was to pay up-front a deposit mobilization fee of 1. 75%on the loan, and on all funds based facilities. This fee is howeverpayable only when facilities came up for review, but in the case of theloan the fee is chargeable on the anniversary date of funds, and thefee is based on the balance outstanding on the anniversary date.Other material conditions in the offer letter include that the loan wouldnot be drawn until the securities are registered. If the loan weredrawn before the securities were perfected, a penal rate of interest @47. 5% would be charged. The offer was valid for one month from thedate of issue (10. 6.1997). The Plaintiff however accepted the offertwo days later on 12th June, 1997.

It is strange that neither the Plaintiff nor the Defendant hasdeemed it fit, either in their principal pleadings (the Plaint andDefence) or in the Affidavit in support and in opposition, (ReplyingAffidavit) to make any specific reference to the instrument of chargeover the suit property. This I thought is the principal instrument uponwhich the Defendant's case in particular depends. The onlyreference to the security is found in Adera & Co. Advocates (theDefendant's then Advocate's) letter dated 2nd April 2001 in which theDefendant's Advocate conveyed a notice of three months to thePlaintiff under Section 74 of the R.L.A. Under the said Advocate'sletter, the charge instrument is dated 26th June, 1997, and it appearsto have been drawn and executed about 16 days after the offer ofloan. For reasons I will go into later, it would have been useful tohave sight of the said Instrument of Charge. I will first, deal with thetechnical objections raised by the Defendant's Counsel.

The first point raised by the Defendant's Counsel in hissubmissions is that the application is bad in law and is thereforeincompetent. It was brought by way of a Notice of motion whereasunder the applicable orders and rules it ought to have been broughtby way of Chamber Summons. In answer to this point counsel for the

Plaintiff urged the court to look into the substance of the applicationand not the technicalities of the law. Looking at the face of theapplication dated 23rd October 2003, it is indeed titled "Notice ofMotion". The citations however refer to Order XXXIX Rules 1 and 5and Order XIX Rules 1 and 2 and Section 3A of the Civil ProcedureAct. Cap. 21, Laws of Kenya. The citations also referred to Section72 of the Registered Land Act Cap. 300, and Section 14 of theAuctioneers Act 1996 (No. 5 of 1996) and all enabling provisions ofthe law.

The substance of the application is the correct citation of theapplicable rules of procedure. Rule 1 of Order XXXIX applies to theorders sought by the Plaintiff. Order XIX Rules 1 and 2 refer to thePlaintiff's prayers for an account, and that the application shall bebrought by Chamber Summons. If the application were brought say,under Order L. Rule 1, which provides that all applications to thecourt save where otherwise expressly provided for under the Rules,shall be by motion then this court could hold that the application wasincurably defective and incompetent.

Section 3A of the Civil Procedure Act provides that nothing inthis Act shall limit or otherwise affect the inherent power of the courtto make such orders as maybe necessary for the ends of justice or toprevent the abuse of the process of court. The substance of theapplication here is governed by the rules of procedure cited and notthe heading to the application, which like, a side note, is only an aidto a quick understanding of the subject matter, but not the substanceof the application. Reference to Section 72 of the Registered LandAct and Section 14 of the Auctioneers Act, although inadvertent wasnot fatal to the application, although it would have been so, ifreference was merely to those provisions alone. For the ends ofjustice therefore, I do disregard the technicality and find the plaintiffsapplication substantially in order.

I will now turn to the other issues raised by the Defendant,namely that the Applicant's hands are soiled as he has adamantlyrefused and/or neglected to duly or at all service the loan amount andcontinues in such default. This is a contention of equity that he orshe who comes to equity must come with clean hands. TheDefendant also contends that the Plaintiff's application is mischievousand willfully misleading mala fides and solely intended to frustratethe Defendant's exercise of its statutory power of sale, and that theapplication is frivolous, vexatious and a gross abuse of the dueprocess of court.

The Defendant cannot be heard to say this. The Plaintiff has asis admitted by the Defendant, paid Kshs. 814,000/= from the originalloan of Kshs. 500,000/=. The Plaintiff must be as frustrated as theDefendant, to understand why the Defendant is unable to give thePlaintiff a coherent explanation regarding the Plaintiff's extendedliability. I find that the Plaintiff is entitled in law to raise the issues inthe application.

The more substantial issues raised by the Defendant againstthe Plaintiffs application are that the Plaintiff has no prima facie casewith the remotest possibility of success, and that in the unlikely eventof any loss accruing to the Plaintiff, the Defendant, a bank, is ableready and willing to restitute him fully. Has the Plaintiff made aprima facie case with the likelihood of success?

I must consider the above submission in accordance with thewell known principles for the grant of an interlocutory injunction asspelt out by the Court of Appeal in GIELLA vs CASSMAN BROWNLTD [1973] E.A. 358. In asking whether the Plaintiff has shown aprima facie case with the likelihood of success at the trial, the courtmust keep in mind that it should not make any definite finding of factor law. The case the Plaintiff has to prove at the trial is that he wasnot served with a valid statutory notice under Section 74, of theR.L.A. and an Auctioneer's notification of sale under Rule 15 (d) ofthe Auctioneers Rules, and, that such non-service and issue of noticeby an unlicensed person under the Auctioneers Rules was fatal to theto the exercise of the statutory power by the Defendant, the chargee,and it was not a default where remedy was merely in damages underthe provisions of Section 77(3) of the R.L.A.

I have observed above that that neither the Plaintiff nor theDefendant exhibited the Charge Instrument which would haveindicated a repayment date of the loan. Section 65(2) of the R.L.Aprovides that where the charge instrument has not specified a date ofrepayment, it is obligatory on the chargee to give the chargor awritten demand for payment. A chargor cannot be said to be indefault until and unless he or she fails to comply with the terms ofsuch notice. It is only if a chargor is in default for a period of onemonth that a valid and effectual notice under Section 74(1) of theR.L.A may be issued. A notice under Section 65(2) is a conditionprecedent to the issue of the statutory notice under Section 74(1) of 20

the R.L.A It is only after the chargor fails to comply with the noticeunder Section 65(2) that default would be referred and such defaulthad to subsist for at least one month before the statutory notice ofsale could issue. THUS in the absence of a demand made underSection 65(2) of the R.L.A the Plaintiff could not be said to be indefault and accordingly no notice could issue under Section 74(1)and furthermore, the Defendant could not be entitled to the exerciseof its statutory power of sale. Hence the notice issued on 2nd April2001 was not a demand notice under Section 65(2) but a demandnotice under Section 74(1).

In the premises the Defendant's statutory power could not besaid to have arisen in respect of the suit property and the subsequentnotification thereof were null and void. This was the tenure of theseveral cases cited to the court by Counsel for the Plaintiff includingKANORERO RIVER FRAM LTD VS NATIONAL BANK OF KENYALTD (H.C.C.C 699 of 2001) where the court considered theprovisions of Section 65(2) and Section 74(1) of the RLA and whetherfailure to comply with the Auctioneers' Rules is fatal. This court heldthat notification of sale under the Auctioneers Rules and subsequentadvertisement for sale cannot be valid and effectual if no validstatutory notice has been issued. It was similarly held in MARTHAKHAYANGA SIMIYU vs. HOUSING FINANCE CO. OF KENYA LTDAND DAVID WANDERI t/a TAIFA AUCTIONEERS and DAVID K.RUTO (H.C.C.C. 937 of 2001) that failure to serve any or anyadequate statutory notice on a chargor under the R.LA. and anotification of sale under the Auctioneers Rules were fatal to thechargor's exercise of its statutory power of sale. IN YUNIS RUBIABDUL vs. HOUSING FINANCE CO. OF KENYA LIMITED, 2. STEPHEN NGANGA MUNGAI and 3. LAWRENCE MUKERAMUNGAI t/a ALPHA AUCTIONEERS the sale of the chargor'sproperty was voided because it was conducted by a person who wasnot a licensed auctioneer.

The Plaintiff's contention in court was that the firm (WATTSENTERPRISES) who issued the notification of sale dated 18th August2003 was not a person licensed to carry a business of an auctioneerin terms of Section 9 of the Auctioneers Act which provides that "noperson shall in Kenya, carry on the business of an auctioneer unlesshe holds a valid licence issued by the Board, and Section 14(2) of theAct which provides that a licence issued under the Act shall not betransferable and a licensed auctioneer shall carry on business in hisown name or in the name of a firm all of whose partners are licensedauctioneers. Although a firm of auctioneers may employ a licensedauctioneer he shall nevertheless continue to be personallyaccountable to the Board. The notification of sale must be issued inthe manner prescribed under the Auctioneers Rules by an individualtrading as............... (firm name).

I would thus respectfully adopt and follow Ringera J'sphraseology in SAMUEL KIARIE MUNGAI vs. HOUSING FINANCECO. OF KENYA LTD and HAROLD TANGAI ( H.C.C.C 1678 of2001) that "omission to serve a valid statutory notice is not anirregularity or impropriety to be remedied in damages. It is afundamental breach of the statute which derogates from the chargor'sequity of redemption. Without service of a valid statutory notice thepower of sale does not crystallize and any subsequent service of thenotification of sale and actual auction are merely acts pursuant to apretended power of sale. As such they are a nullity in law."

Having thus taken the above view of the matter, the Plaintiff hasshown a prima facie case with a probability of success.

On the second legal of the Defendant's contention for the grantof an interlocutory injunction that the Defendant, a bank is ready, ableand willing in the unlikely event of any loss accruing to the Plaintiff to

restitute the Plaintiff fully, Ringera J. in the case of LUCY NJOKIWAITHAKA vs. I.C.D.C. (H.C.C.C. No. 321 of 2001) had this to say on the adequacy of damages as a remedy:-

"As regards damages I must say that in myunderstanding of the law it is not an inexorable rulethat where damages may be an appropriate remedy,an interlocutory injunction should never issue. If thatwere the rule, the law would unduly lean in favour ofthose rich enough to pay damages for all manner oftrespasses. That would not only be unjust but itwould be seen as unjust. I think that is why the EastAfrican Court of Appeal couched (in the GIELLA vsCASSMAN BROWN case) the second condition invery careful terms by stating that normally aninjunction would not issue if damages would be anadequate remedy. By using the word "normally" thecourt was recognizing that there are instances wherean injunction would not issue if damages would be anadequate remedy for the injury an applicant maysuffer if the adversary were not injuncted. I thinksome of the considerations to be borne in mindinclude the strength or otherwise of the applicant'scase for a violation or threatened violation of its legalrights and conduct of the parties.   If the adversaryhas been shown to be high handed or oppressive inits dealings with the applicant this may move a courtof equity to say "money is not everything at all timesand in all circumstances and don't you think you canviolate another citizen's rights only at the pain ofdamages."

In the instant case, the Plaintiff does not complain merely of theabsence of notice, he complains of improper notice, notification ofsale by a person who is not licensed to conduct the business of anauctioneer, which is WATTS ENTERPRISES. This court will not acceptthe trampling drawn of that right by the Defendant, the chargee, onthe basis that it can compensate the chargor for his losses indamages. Such toleration would be an improper exercise ofdiscretion which would render both the R.L.A. and the AuctioneersAct and Rules thereunder dead letters.

As regards the conduct of the Plaintiff, one cannot say it has inany way been dishonorable. His business suffered because of theEl Nino phenomenon. The Defendant understood. He repaid shs.338,000/= which he thought was the entire outstanding balance. Hehas merely wanted to appreciate the extent and exact nature of thisto him, elastic liability, to the Defendant.  He is holding tenaciously towhat he believes should only be sold upon his being satisfied fully ofhis liability. The lender has failed to comply with the law and in thepremises the court will not hang the borrower.

For the above reasons, I am of the view that this is one of thosecases where the court in the exercise of its equitable discretion willgrant an interlocutory injunction as prayed. There shall accordinglybe an order in terms of prayer (a) of the Plaintiff's application dated23rd October 2003. With  regard to prayer (b) of the said application, while

considering a prayer for an account under Order XIX Rules 1 and 2this is what I said in the case of ALLOYS KAYIHURA KAVEN t/aALLOYS  KAVEN  & CO.  BAKERY vs  KENYA  COMMERCIALBANK LTD (H.C.C.C. 224 of 2003) and I reiterate the same here:-

"Order 43, rule 1(2) [of the Supreme Court Practice] issubstantially the same as, (or as they used say in lawschool in Pari Materia to) Order XIX rule 1 of our CivilProcedure Rules. Where a plaint prays for anaccount or where the relief sought or the plaintinvolves the taking of an account, if the defendanteither fails to appear or does not after appearance orotherwise satisfy the court that there is a preliminaryquestion to be tried an order for proper accounts withall necessary inquiries and directions usual in similarcases shall forthwith be made. The Supreme CourtPractice provides" "that the court may unlesssatisfied that there is some preliminary question to betried, order that an account be taken and may alsoorder that an amount to be due to either party be paidto him within a time specified in the order.

The English Rule is discretionary, "may order ifthere is no preliminary question to be determined."The similar Kenya rule is mandatory that an order foraccount shall be made unless there is somepreliminary question to be determined by the court.The Defendant raised no preliminary question to betried. In the absence of such question, this court isbound by the said Order XIX rule 1 to grant an orderfor proper accounts to be taken. The said order alsoprovides that the court shall not only make the orderfor an account but also all necessary inquiries anddiscretions usual in similar cases.

The order unfortunately does not give anyguidelines as to the form or content of those inquiriesand directions usual in similar cases. The court hasto somehow invent, without going on a long voyageof discovery, those directions.

Fortunately for me, the Supreme Court Practice,Order 43, rule 3 gives some guidelines where thecourt orders an account to be taken or inquiry to bemade and since our own rules give the court fulldiscretion to make an order for the proper accountswith all necessary inquiries and directions this courtshall be guided by the practice in similar cases inEngland."

First, there shall be an order to the Defendant to prepare anaccount of the Plaintiff's mortgage or charge facilities granted to thePlaintiff by the Defendant, and shall verify the same by an Affidavit towhich the Statement of Accounts shall be attached. The Statementof Account shall clearly state in its title the name of the Plaintiff, andthat it is submitted in accordance with this order of court, and the dateof the order. In its body, it shall contain reference to the charge ormortgage deed or instrument which shall be attached to theStatement of Account. The items on each of the Statement ofAccount, shall be numbered consecutively showing:-

(1) the date of the transaction

(2) description of the transaction including original loan account,and current account separately, and balances in arrears,

(3) Interest charges, including interest on principal or capitalinterest on arrears.

(4)Other charges (if any) but include -

Life Protection Insurance Premium (if applicable)

(5)  Fire Insurance (if any)

(6)  Ledger fees

(7)  Legal fees

(8)  Mobilization fee charged on each anniversary

(9)  Valuation fees

(10)         Court fees

(11)         Eviction fees (if any)

(12)         Auctioneers fees in the case of the Charge or Mortgage -(a)   the date of the charge or mortgage,

(b) The Advocates who drew it or whether it was a

standard form instrument of the Defendant(c)the amount of stamp duty and registration fees paid.

(13)          Perhaps the most important of all, repayments madeindicating the date of each repayment, year by year, andmonth by month and

(14)          The current balance as at the date of the Statement ofAccount.

Secondly I order that the said Statement of Account be filed, verifiedby Affidavit as aforesaid, and be served upon the Plaintiff within thrirty(30) days of the date of this Order.

Thirdly. I direct that any objection or clarification sought by thePlaintiff of the Statement of Account in respect of any item thereonshall be filed with the Defendant within twenty one (21) days ofservice of the Statement of Account and the Plaintiff shall give noticethereof to the Defendant showing which item is erroneous, in respectof what amount, or in what respect, and the reasons for suchobjection. The Defendant shall respond to such clarification orobjection within twenty one (21) days of the service of such objectionor notice of clarification.

Fourthly, I further order and direct that unless objection is taken in themanner provided for herein, the amount stated as due under theStatement of Account lodged by the Defendant shall be the amountpayable by the Plaintiff to the Defendant, without further order orrecourse to this court.

Dated and delivered at Nairobi this 12th day of February 2004. In the presence of

....................... For Plaintiff

....................... For Defendant

M. J. ANYARA EMUKULE

JUDGE