Joseph Mandu Soita v Family Bank Ltd Bungoma [2014] KEHC 3450 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT AT BUNGOMA

HCCC NO.5 OF 2014

JOSEPH MANDU SOITA               …................................................                    PLAINTIFF

VRS

FAMILY BANK LTD,

BUNGOMA                                      ….................................................                   DEFENDANT

RULING

1.       Before me is a Motion on Notice dated 13th March, 2014.  It is brought under Order 40, Rule 1 of the Civil Procedure Rules.  It seeks an injunctive order torestrain the Defendant from selling or disposing off the land parcel No. S.  Malakisi/Mwaliye/479 (hereinafter “the suit property”) until the hearing and    determination of the suit.

2.       The grounds upon which the application is grounded are set out in the body of the Motion and the Affidavit of the Plaintiff sworn on 13th March, 2014.  These are; that, the Plaintiff had taken a loan from the Defendant of Kshs.800,000/= in 2014 and has been dutifully paying the same but fell into arrears after he was conned Kshs.690,000/=; that on 31/01/14 the Defendant had issued a  Notification of Sale through Pawaba Auctioneers for the sale of the suit    property; that the Defendant had not issued any statutory notice before issuing   the notification of sale and that the Plaintiff was apprehensive that the suit  property may be sold at an under value.

3.       Mr. Were, Learned Counsel for the Plaintiff submitted that since no statutory    Notice of Sale had been issued, the security can not be realized; that the suit property had not been revalued.  Counsel urged that the application be allowed.

4.       The application was opposed through a Replying Affidavit by Kennedy Wafula sworn on 30th April, 2014.  He deponed that; the Plaintiff took a loan of Kshs.800,000/= from the Defendant which was disbursed in March, 2013; that the Plaintiff had failed to properly service the said loan; that the amount outstanding was Kshs.1,544,107/75; that in terms of the said loan agreement the Defendant  was entitled to realize the security upon default.  The Defendant exhibited both the loan agreement and the statement of account for the period  28th February, 2013 and 31st March, 2013, the account had a debit balance of Kshs.839,098/25.

5.       Mr. Kituyi, Learned Counsel for the Defendant submitted that a Statement of    Account had been supplied; that a letter of default had been supplied; that the Plaintiff had come to court prematurely.  Counsel admitted that no statutory power of sale had been issued.  He urged that the application should be dismissed to allow the Defendant issue a statutory notice.

6.       Having considered the Affidavits on record and counsels submission, my view is that the only issue for determination is whether the statutory power of sale   has arisen in favour of the Defendant.  It is not in dispute that the Defendant advanced certain facilities to the Plaintiff and that the Plaintiff has been in default.  Although the charge document creating the security was neverproduced by either the Plaintiff or Defendant to show whether the defendant  retained a power to sell the secured property, the parties seemed to suggest that  such a power existed.   As regards default, although Kennedy Wafula deposed that the amount outstanding as Kshs.1,544,107/25, the bank statement that he produced for the period 28/02/2013 and 31/03/14, showed the amount as outstanding as Kshs.839,098/25. However, there is ample authority to the effect that a dispute on accounts cannot warrant the issuance of any injunction  against a mortgagee.

7.       What concerns this court is  the allegation by the Plaintiff and admission by the Defendant that no statutory notice of sale had been issued before the Notification of Sale dated 31st January, 2014 by Pawaba Auctioneers. To my mind, that Notification was illegal. The Statutory Power of Sale had not arisen. Sections 90 and 96  of the Land Act 2012 require that before a chargee exercises its statutory power of sale, a statutory notice of  sale must be given.   In the Case ofDakagi Holdings Ltd -vrs- Equitorial Commercial Bank Ltd   & Anor (NBI HCCC No.413 of 2013) (UR) after  analyzing the effect of Sections 90 and 96 of the Land Act, this Court held:-

“From the foregoing, my view is and I so hold that a Chargee's statutory power of sale under Section 96 (1) arises after the expiry of the notice given under Section 90 (1) of the Land Act.  That Section is clear that the notice is not less than three months.  What Section 90 (3) does, it allows a chargee to exercise the rights  set out thereunder after expiry of two (2) months after service of the three months' notice.........”

8.       That being the Case, I hold that the Plaintiff has established a prima facie Case with a probability of success.  These  Court cannot allow the Defendant to realize its rights or remedies in a manner contrary to the law.  In the circumstances, I need not consider the other two limbs of Giella -vs- Cassman    Brown as to the grant of           injunctions.  I will not however grant a blanket   injunction.  I will as I did in Dagaki Holdings Ltd's Case (supra)limit the injunctive order accordingly.

9.       Accordingly, I will grant an injunction in terms of prayer No.3 of the motion restraining the Defendant from exercising any statutory power of sale on the  basis of the Notification of Sale dated 31/01/14. Since default is not in dispute,  the Defendant may exercise its  right under the Charge (if there was any) as  that seems to have been the contractual right and obligation between the   parties upon giving proper notices under the law.

10.     I will award the costs of the application to the Plaintiff.

DATED and DELIVERED at Bungoma this 7th day of July, 2014.

A. MABEYA

JUDGE