Kariuki v Green Valley Business Park Ltd t/a Green Valley Motors & 3 others [2022] KEHC 3398 (KLR)

Kariuki v Green Valley Business Park Ltd t/a Green Valley Motors & 3 others (Civil Appeal 97 of 2021) [2022] KEHC 3398 (KLR) (5 May 2022) (Ruling)

Neutral citation: [2022] KEHC 3398 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Appeal 97 of 2021

JM Ngugi, J

May 5, 2022

Between

Naomi Waruguru Kariuki

Applicant

and

Green Valley Business Park Ltd t/a Green Valley Motors

1st Respondent

Salome Wanjiku Kago

2nd Respondent

Kipotich Soi

3rd Respondent

Platinum Credit Limited

4th Respondent

Ruling

1. The substantive appeal in this matter arose from Nakuru CMMC No. 23 of 2017. The dispute relates to the ownership of Motor Vehicle registration Number KCF 455X. At the Trial Court, the Applicant sought a declaration that she was the lawful owner of the motor vehicle and that its transfer in favour of the 3rd and 4th Respondents was unlawful. She wanted the transfer to be reversed and the vehicle to be registered in her name. She also sought a permanent injunction against the Respondents, to restrain them by themselves their agents and/or servants from attaching, repossessing and or interfering with the Applicant’s possession of the motor vehicle as well as costs of the suit.

2. After hearing the case, the Trial Magistrate reached the conclusion that the Applicant had not proved her claim and dismissed the suit vide the Judgment dated 31/08/2021.

3. The Applicant was aggrieved by the said judgment of the Trial Court and preferred the instant appeal vide her Memorandum of Appeal dated 09/09/2021. Immediately thereafter, she also filed the application dated 17/09/2021 under Certificate of Urgency. It is that application that is before me for determination. It seeks the following orders: 1. Spent.

2. Spent

3. THAT pending the hearing and determination of this appeal, the Court be pleased to restrain the 4th Respondent by itself, its servants and or agents from attaching, repossessing, selling, disposing motor vehicles registration No. KCF 455X and or interfering with the Appellant/ Applicant’s possession of the said vehicle.

4. THAT the costs of this application be provided for.

4. The Application is supported by the grounds on the face of it and the affidavits of Naomi Waruguru Kariuki dated 17/09/2021. The Applicant’s narrative is essentially, as before the Trial Court. She deposes that she is the legal and rightful owner of the subject motor vehicle which she purchased from the 2nd Respondent and has been in its possession since purchase to date. According to her, the 4th Respondent attempted to repossess the motor vehicle sometime in 2017 on the allegation that the 3rd Respondent had defaulted on a loan she obtained with the 4th Respondent.

5. She depones that she then learnt that the 1st and 2nd Respondents had fraudulently transferred the motor vehicle to the 3rd and 4th Respondents despite having sold it to her. She subsequently filed the suit at the Lower Court and after its dismissal she filed the instant appeal which she believes raises substantial issues for determination and her advocates have already requested for proceedings to be typed.

6. The Applicant says that she is apprehensive that with the dismissal of her case and in the absence of orders barring it, the 4th Respondent may repossess the vehicle and dispose it to third parties. She contends that she stands to suffer prejudice and loss as she uses the motor vehicle for personal and business use and there is a high possibility, she may never recover it. This she says will render the appeal nugatory.

7. The 4th Respondent replied with the affidavit dated 29/11/2021 sworn by Richard Simbala, the 4th Respondent’s Legal Officer. It is his disposition that the Court having made an express finding that the motor vehicle was registered to the 3rd and 4th Respondents, it is necessary that the Respondents be allowed to enjoy the benefits of the judgment. He depones that the Applicant had previously obtained orders issued on 20/06/2017 pending the hearing of the suit at the Lower Court and now seeks similar orders. This he says poses the danger that the vehicle which was offered as a security may no longer be available for attachment due to wear and tear. He contends that it would be in the interest of justice for the Applicant, as a condition for the continued possession of the motor vehicle to avail security in the sum of the outstanding secured amount.

8. It is also the Respondent’s position that the terms of the Agreement were that the motor vehicle which was security for a loan advanced to the 3rd Respondent would be registered to the 3rd Respondent and the 4th Respondent and that the 3rd Respondent having defaulted in payment of the loan, the 4th Respondent was entitled to repossess the motor vehicle.

9. In response, the Applicant filed a further affidavit dated 21/12/2021. She maintains that she owns the motor vehicle and contends that she did not take a loan from the 4th Respondent to warrant her requirement to deposit a sum of money in Court. She also says that the 4th Respondent failed to carry out due diligence on the 3rd Respondent while granting the loan facility and the 1st, 2nd and 3rd Respondents refused to participate in the proceeding. She contends that if the 4th Respondent had carried out due diligence, it would have established that that as at 13/09/2016, the motor vehicle was registered to the 2nd Respondent, insured by the Applicant and that the 3rd Respondent neither qualified nor met all the conditions for borrowing set out in the 4th Respondent’s loan application form. In her view, the 4th Respondent did not comply with the requirements of the Chattels Transfer Act, making any dealings on the motor vehicle illegal.

10. The Application was canvassed by way of written submissions. The Applicant’s submissions are dated 03/12/2021. The Applicant submits that the orders she seeks are discretionary and cites the case of Trustees Chrisco Church Nakuru v Samwel Kibowen Towett and 4 Others[2017] eKLR in which she submits, the Court observed that a Court can entertain an application for injunction after an appeal.

11. The Applicant urges that the Court relies on the principles articulated in Julius Musili Kyunga v Kenya Commercial Bank Limited & Another [2012] eKLR, where it was stated that the object of an injunction pending appeal was to preserve the subject matter and ensure that the appeal, if successful, is not rendered nugatory.

12. On whether the appeal in arguable, the Applicant relies on the case of Stanley Kang’ethe Kinyanjuiv Tony Ketter & 5 Others [2013] eKLR and submits that her Memorandum of Appeal raises several triable issues, including the validity of the loan issued to the 3rd Respondent and the applicability of the Chattels Transfer Act. She also contends that the appeal will be rendered nugatory if the orders are not granted because the 4th Respondent will repossess the motor vehicle and sell it to her detriment, making it unavailable in the event her appeal succeeds.

13. The 4th Respondent’s submissions are dated 18/01/2021. It argues that the Applicant has not met the conditions for grant of an injunction set out in Giella v Cassman Brown & Co, Limited [1973] EA 358 and application of those conditions as set out in Kenya Commercial Finance Co. Ltd v Afraha Education Society [2001] 1 EA 86, to wit, that the second condition can only be addressed if the first one is satisfied and the third condition if the Court is in doubt.

14. On the first condition, the 4th Respondent submits that the Applicant has not established a prima facie case as defined in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR. It is also the Respondent’s submission that the threshold in proving a strong prima facie case that is more than arguable is a restrictive one that must be satisfied by the Applicant beyond peradventure. The 4th Respondent citesPaul Gitonga Wanjau v Gathuthi Tea Factory Company Ltd & 2 Others [2016] eKLR. It contends that the Applicant having failed to establish ownership of the motor vehicle and the Trial Court having declined to grant the declarations sought, the Applicant has not established a prima facie case.

15. The 4th Respondent argues that the right that the Applicant now seeks to halt is a statutory right that crystalized after default of payment of the loan. A right the Respondent submits was reiterated in John Karanja Njenga & another v Bank of Africa (K) Ltd [2016] eKLR. It also contends that courts are hesitant to interfere with a financiers’ exercise of its powers to recover debts from delinquent borrowers.

16. The 4th Respondent argues further that the Applicant will not suffer any irreparable loss should this Court decline to grant the orders sought. This is because, the 4th Respondent says first, the 3rd and 4th Respondent are the registered owners of the motor vehicle and secondly, as held by the Trial Magistrate, the Applicant is not without remedy as she may seek damages against the 1st, 2nd, and 3rd Respondents. It relies on Kiru Line Services Ltd v County Government of Nyeri & 2 Others [2016] eKLR and the description of irreparable loss given therein and contends that it is the 4th Respondent who will suffer irreparable loss being that the motor vehicle continues to wear off.

17. On the third ingredient - the balance of convenience, the 4th Respondent contends that the Applicant has failed to show what inconvenience she will suffer if the orders sought are declined. It again, relies on the case of Kiru Line Services Ltd case (supra) and urges the Court to find that the balance of convenience tilts in its favour. It contends that it will suffer greater prejudice if the orders are granted since it may not recover the sums owed to it and cites the case of Amir Suleiman v Amboseli Resort Limited [2004] eKLR 589. It contends that the application has been brought in bad faith and prays that it be dismissed.

18. The sole issue for determination is whether the Applicant has satisfied this Court that it is deserving of a grant of injunction pending hearing and determination of the appeal.

19. The Application was purported to be brought under Order 40 Rule 1 of the Civil Procedure Code and Section 3A of the Civil Procedure Act. At the time of filing submissions, the Applicant changed her mind and sought to rely on the provisions of Order 42 Rule 6 of the Civil Procedure Rules. This realization seemed to have been informed by decision of the Environment and Land Court in the Trustees Chrisco Church Nakuru case cited by the Applicant, in which the Court reasoned that the phrase “….to consider such application and to make such order thereon as it may to it seem just…” allowed the Court to entertain an application for injunction after an appeal. In my view, that case is distinguishable from the present case because the Applicant in that case sought an injunction within an application for stay of execution, hence the applicability of Order 42 Rule 6.

20. Ideally, this would be an application for stay of execution save that the order of the Trial Court was a negative order -one dismissing the suit and thus incapable of being stayed. While it is true that the provisions of Order 40 Rule 1 are not applicable in this instant, the provisions of Order 42 Rule 6 are equally not applicable in the absence of an application for stay. Differently put, a free-standing application for injunction pending appeal is a distinctive application that may be brought under general provisions such as Section 3A of the Civil Procedure Act.

21. This is unlike an appeal to the Court of Appeal where such an application for injunction is expressly provided under Rule 5 (2) (b) of the Court of Appeal Rules. Nevertheless, both at the High Court and even at the Court of Appeal - where there exists an express provision of the law, whether to grant an injunction pending appeal is a matter of discretion. I will be guided by the factors usually considered by the Court of Appeal in granting an injunction pending appeal which are, whether the Appeal is arguable and whether failure to grant the injunction would render the appeal nugatory.

22. On the first consideration, one of the contested issues both at the Trial Court and in this Court is whether the 4th Respondent acquired proper title to the subject motor vehicle. While the Applicant contends that the motor vehicle was fraudulently transferred to the 3rd and 4th Respondents, the 4th Respondent argues that it was diligent in establishing the ownership of the motor vehicle before accepting it as security and accordingly, registering it to itself. In my view, this is an arguable issue that will need to be ventilated at the hearing of the substantive appeal. As has been stated elsewhere, the Applicant need only have one arguable issue and that an arguable appeal is not necessarily one that will succeed.

23. On the second consideration, the Applicant has argued that the 4th Respondent is likely to dispose the motor vehicle to third parties thereby rendering her appeal nugatory in case she is successful. On this aspect, I am guided by the case of Anfakari Limited & 3 others v Fidelity Commercial Bank Ltd (Civil Application E061 of 2021) [2022] KECA 448 (KLR) (18 March 2022) (Ruling) where the Court of Appeal held that an appeal is not rendered nugatory where the successful Appellant can be compensated by an award of damages. Similarly in this case, if the Applicant’s apprehension is confirmed and her appeal is successful, the loss she may suffer is quantifiable in monetary compensation. Indeed, the main issue in this dispute is who between the Applicant and the 4th Respondent should take physical custody of the motor vehicle, and who should carry the burden of going against the 1st and 2nd (and possibly) Respondents for compensation for their loss. The Lower Court thought the 4th Respondent has a better title to the motor vehicle meaning that the Applicant must recover her damages from the 1st and 2nd Respondents. The Applicant thinks she has a better title and that the 4th Respondent should proceed against the 1st, 2nd and 3rd Respondents for compensation. The objective position of both, then, is that the loss suffered by the other is eminently quantifiable. The real question is who between the Applicant and the 4th Respondent is the primary and secondary victim of the apparent fraud perpetrated by the 1st, 2nd, and 3rd Respondents: the primary victim must ultimately recover from the fraudsters while the secondary victim gets some relief from the asset which was the subject of the fraud. Consequently, I am not persuaded that the failure to grant the orders sought in this application will render the appeal nugatory. The motor vehicles in this case is eminently fungible: it can be readily interchanged for another of like kind or compensated by money to purchase another of like kind.

24. In the circumstances, it is without relish that I decline to grant an injunction pending the hearing and determination of the appeal as sought. The upshot is that the Notice of Motion dated 17/09/2021 is hereby dismissed.

25. Costs shall be in the appeal.

26. Orders accordingly.

DATED AND DELIVERED AT NAKURU THIS 5THDAY OF MAY, 2022. ...............................JOEL NGUGIJUDGE