LN PROPERTY DEVELOPMENT CO. LIMITED & ANOTHER V FIDELITY BANK LIMITED [2012] KEHC 1248 (KLR)

REPUBLIC OF KENYA

High Court at Nairobi (Nairobi Law Courts)

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LN PROPERTY DEVELOPMENT CO. LIMITED ............................1ST PLAINTIFF

LUORE NYOIRE COMPANY LIMITED  .........................................2ND PLAINTIFF

- VERSUS -

FIDELITY BANK LIMITED...................................................................DEFENDANT

R U L I N G

1. The NoticeofMotion dated 18th July 2012 is filed under Section 1A, 1B, 3A of the Civil Procedure Act, Order 40, Rule 1 (a), Order 51 Rule 1 of the Civil Procedure Rules. The motion seeks orders as follows:-

1. That this application be certified urgent, be heard ex-parte and service thereof be dispensed with in the first instance.

2. That pending the hearing and determination of this application, this honourable court be pleased to grant an interim injunction restraining the Defendant its agents, assigns, representatives, employees or otherwise howsoever from interfering with or alienating, disposing of, selling, transferring or advertising for sale that portion of land known as land Reference Kajiado/Kisaju 1189 – Kisaju.

3. That pending the hearing and determination of this suit, this Honoruable Court be pleased to grant an interim injunction restraining the Defendant it agents, assigns, representatives, employees or otherwise howsoever from interfering with or alienating, disposing of, selling, transferring or adverting for sale that portion of land known as land Reference Kajiado/Kisaju 1189 – Kisaju.

4. Any other or further relief.

2. The motion is premised on several grounds set out in the application, and is supported by affidavit of IAN OKUNDI dated 18th July 2012 with its annextures.

3. The application is opposed vide a replying affidavit by Georgina Muthama dated 24th July 2012 with its annextures.

4. The brief history of the application is that the Plaintiffs are both limited liability companies while the Defendant is a bank. On or about April 22, 2010, the 1st Plaintiff and the Defendant entered into an agreement for the provision of a loan facility for the amount of   US $ 125,000. 00 secured by a legal charge over the property Land Reference Kajiado/Kisaju 1189 – Kisaju (hereinafter referred to as ‘the property’) which was at all times registered in the name of the 2nd Plaintiff.

The 1st Plaintiff serviced the facility as pledged until December 2011 when owing to an unavoidable and unforeseen dip in the value of shares in the securities market, a default occurred. On or about December 1, 2011, the 1st Plaintiff received a notification of sale of the property sent care of Keysian Auctioneers, indicating that the amount owing as at that date was the sum of Kshs.10,454,420. 80, and that sale would be by public auction and would take place on March 9, 2012.

On or about January 25, 2012, the 1st Plaintiff presented the Defendant with a proposal for settlement the details of which were as follows:-

a)A payment of Kshs.1,080,000. 00 at end of February 2012.

b)A further payment of Kshs.7,000,000. 00 on March 29, 2012 and

c)Assignment on mutual agreement of a treasury bill issue number 1936/031 of CDS account number 09-30-20661-8 of L.N. Property Development Company Limited of value Kshs.5,000,000. 00 to the Defendant.

5. For reasons given in the supporting affidavit by MR. IAN OKUNDI, a director of the 1st Plaintiff Company, the above proposals in settlement were never honoured to the letter, leading to the auction of the suit property on 10th July 2012. The Plaintiffs have now come to court to stop the sale process and to stop the transfer of the property to the purchaser in the event that the property has indeed been sold.

6. When the application first came to court ex-parte, I did not issue any interim orders and I directed that the application be served upon the Respondent for hearing inter-partes on 26th January 2012. On that day, upon hearing the parties, I granted an interim injunction in terms of prayer 2 pending the delivery of this Ruling. Mr. Mogere for the Applicant based his submissions on four grounds, namely:-

a)That the Notice to the Plaintiff about the intended auction on 10th July was never served, as the Applicant had used a non-existent address of P.O. Box November 25707 and not 25207. In response to this Mr. Kosgei for the Respondent submitted that the issue of Notice was overtaken by events as the Applicants had admitted in paragraph 5 of the supporting affidavit the receipt of the Notice sent in December 2011 using the same address. In any event, Mr. Kosgei submitted, the fresh notices issued after the December 2011 notice were not mandatory and were purely based on good will.

7. I have considered the application, the opposing affidavits and submissions of the parties. For me the issues are:-

(i)Whether or not the auction which was carried out on 10th July 2012 can be reversed and/or if this court can stop the transfer of the property to the Purchaser.

(ii)Whether or not damages would be adequate remedy to the Applicant.

8. I am convinced that the auction which took place on 10th July 2012 was valid and that proper notices were given to the Applicant. I am also satisfied that the Plaintiff owes the said debt to the Respondent. I am unable to reverse the said auction which was properly conducted, and after which a deposit of 25% was paid to the Respondent.

9. I believe that it would be unjust to stop the transfer of the suit property to the Purchaser. This is so because under the principles established under the Giella – Vs – Cassman Brown, damages are adequate remedy for the Applicant should it transpire that the said auction was illegal. However, I am not satisfied that the Plaintiff has established a case with a probability of success in this particular instance. But should the Plaintiff succeed in its case, the Plaintiff will be properly compensated by way of damages.

10. In the upshot I herewith dismiss with costs the NoticeofMotion dated 18th July 2012.

It is so ordered.

DATED, READ AND DELIVERED AT NAIROBI

THIS 6TH DAY OF NOVEMBER 2012

E. K. O. OGOLA

JUDGE

PRESENT:

Mogere for the Plaintiffs

Kosgei for the Defendant

Teresia – Court Clerk