Loorkipuny v Credit Bank Limited [2022] KEHC 15210 (KLR)

Loorkipuny v Credit Bank Limited (Civil Case E003 of 2022) [2022] KEHC 15210 (KLR) (19 July 2022) (Ruling)

Neutral citation: [2022] KEHC 15210 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Case E003 of 2022

SN Mutuku, J

July 19, 2022

Between

James Loorkipuny

Applicant

and

Credit Bank Limited

Respondent

Ruling

1. James Loorkipuny, the Applicant, has brought this application through a Notice of Motion dated March 17, 2022 anchored under Order 40 rules 1 and 2 of the Civil Procedure Rules Section 3A of the Civil Procedure Act, Sections 90 and 96 of the Land Act No. 6 of 2012 seeking the following orders:(i)Spent.(ii)That court be pleased to grant temporary injunction restraining the Respondent by itself, its agents and/or servants, from selling and otherwise howsoever disposing by public auction parcel of land number Kajiado/Kisaju/4890 pending hearing and determination of this application.(iii)That court be pleased to grant temporary injunction restraining the Respondent by itself, its agents and/or servants, from selling and otherwise howsoever disposing by public auction parcel of land number Kajiado/Kisaju/4890 pending hearing and determination of this suit.(iv)A declaration be issued that the advertising to sell by public auction of land parcel Kajiado/Kisaju/4890 on 22nd March, 2022 is a nullity and thus defective for failure to issue and serve statutory Notice as provided under Section 90 and 96 (iii) of the Land Act No.6 of 2012. (v)That cost of this application be provided for.(vi)That the Honourable Court be pleased to make such further or other orders as it may deem just and expedient in the circumstances of this case.

2. This application is supported by an Affidavit sworn by James Loorkipuny on March 17, 2022. It is his case that he is the registered owner of parcel of land known as Kajiado/Kisaju/4890; that he guaranteed one Conier Limited to obtain a loan facility of Kshs. 25,000,000 from the Respondent and a charge was registered over the suit property; that the property was advertised for sale by public auction on March 22, 2022; that they were not served with the statutory Notice as provided under section 90 and 96 of the Land Act; that the borrower has diligently made payments towards the settlement of the loan and that the suit property is matrimonial property and he stands to suffer irreparable and substantial loss if the injunction is not issued.

3. The Application is opposed. In Replying Affidavit dated April 20, 2022 sworn by Wainaina Francis Ngaruiya, the Head of Legal Department of the Defendant, it is the Defendant’s case that on May 3, 2019 the Bank granted a guarantee cum invoice/certificate discounting facility of Kshs.25,000,000 to Conier Limited (Borrower); that the Applicant is a director of the borrower and the loan was secured by an individual guarantee and a charge secured over the suit property; that the Applicant is the chargor herein; that as at March 29, 2022 the Borrower owed Kshs. 64,098,231. 48.

4. It is further deposed that as a consequence of the default, the Bank exercised its statutory power of sale by giving a 3 months statutory notice dated 6th April, 2021, a 40 days’ notice to sell dated July 12, 2021 dispatched by registered mail and a 45 days’ redemption Notice dated November 9, 2021; that the Bank held a negotiation meeting with the Applicant on January 10, 2022 and that he received all the Notices afresh and he confirmed receipt and that the Applicant and his spouse swore affidavits at the point of registration of the charge with spousal consent being granted.

Submissions 5. Through the directions of this court, this matter proceeded by way of oral submissions on May 10, 2022.

6. The Applicant through his counsel reiterated the contents of her supporting affidavit on the issue of lack of notices under Section 90 and 96 of the Land Act and Rule 15 of the Auctioneers Rules. He argued that the certificate of postal address does not show the address used; that the notice was sent to a wrong postal address; that paragraph 5 of the Replying Affidavit stated that the Notices were served afresh on January 11, 2022; that the property was set for auction on March 22, 2022 and that the statutory period had not lapsed and therefore he had a right of redemption according to section 96 of the Land Act.

7. It is further argued that the property is matrimonial and if sold, he will suffer loss; that the balance of convenience tilts in his favour as he stands to suffer loss.

8. The Applicant attached bank statements to show that the borrower was repaying the loan and therefore he has come to court with clean hands. It is his submissions that the letter of offer states that interest shall be 13% p.a and that they have been charging the interest per month which goes against the contract and therefore the amount claimed is unlawful as per section 44 of the Banking Act.

9. The Respondents argued that the Applicant is not only the guarantor but the chargor herein and that he has misrepresented facts to this court; that matrimonial property can be charged under section 79(3) of the Land Act; that there are attached documents to show that the Applicant’s spouse consented to the charging of the property.

10. On the issue of statutory notices, the Respondent reiterated the contents of paragraph 6 of the Replying Affidavit on the issue of service and that, although the Applicant claims that the Notices were sent to the wrong address, he has confirmed that the same were issued to him afresh.

11. The Respondent argued that the letter of offer at page one (1) allows the Bank to consolidate all accounts if there is default. They relied on the Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003]eKLR to support the argument that a dispute on the amount would not stop the Bank from exercising its statutory power of sale and argued that the Applicant can seek damages.

12. Further, the Respondent argued that the Applicant has not demonstrated a prima facie case as defined in Mrao case; that all consents were obtained and that sentimental attachment to property is not a ground to stop sale. It was their case that the Balance of convenience tilts in their favour as they have demonstrated that they acted lawfully.

Determination 13. A party seeking temporary injunction must meet the threshold in Giella v. Cassman Brown and Company Limited (1973) E.A 385 that:“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience."

14. The case for the Applicant is that he was not served with requisite notices by the Respondent. He claims that he was only served on January 11, 2022 when he went to the offices of the Respondent. The onus is on the Applicant to persuade this court, firstly, that he has a prima facie case with a probability of success; secondly that he stands to suffer irreparable injury that would not adequately be compensated by an award of damages and thirdly that the balance of convenience tilts in his favour.

15. Prima facie case has been defined in Mrao Ltd v First American Bank of Kenya and 2 others, [2003] KLR125, as follows:“A Prima facie case in a civil application includes but 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 there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the later”.

16. I have considered the materials placed before me. It is true, as argued by counsel for the Respondent, that the Applicant is not just a guarantor. He is described in the Charge document as a “Chargor”. This court was also told that he is a director of the Borrower. He has not been forthright in his claim that he is only a guarantor.

17. It is clear to me that there is no dispute that there exists a loan facility in favour of the Applicant in this matter. That there is default of repayments is also admitted. What is contested is service of notices under the Land Act.

18. The Respondent claims to have properly served the notices. I have seen a 3 months’ statutory notice dated April 6, 2021 pursuant to section 90 of the Land Act. I have seen a 40 days’ notice served upon the Applicant and his spouse pursuant to section 90 (2) of the Land Act and a 45 days’ Redemption Notice. The latter was served personally to Michael Kinyua, a Director of the Borrower.

19. These notices were sent by registered post. There is evidence from the Postal Corporation of Kenya showing recipients of the notices. The address used isP. O Box 24-00207 Kajiado. That is the address indicated on the Charge document. It was argued that the certificate from the Postal Corporation does not indicate the postal address. To this, it was explained that this is not normally indicated but the recipient is indicated.

20. I have also seen a letter dated January 6, 2022 addressed to the Defendant by Michael Kinyua to the effect that a redemption notice had been issued to them. The author was proposing how to clear the outstanding loan arrears. It is clear to me that the letter dated 6th of January 2022 was issued before January 11, 2022 when the Applicant claims to have been served with the notices for the very first time. If by January 6, 2022 the Borrower was aware of the Redemption notice, it is clear to me that the Applicant had been served with the requisite notices before January 11, 2022 and was aware of the notices.

21. I have confirmed that both the Applicant and the spouse had sworn affidavits giving their consent in respect of the property charged. It is clear to me therefore that the Applicant has not demonstrated a prima facie case.

22. I have considered this matter against the findings in Nancy Wacici v Kenya Women Microfinance Bank Ltd[2017]eKLR where it was stated that:“Once a power of sale has arisen, a mortgagee has the right to exercise it. The Court has no power to prevent the exercise of that power it is being properly exercised. It is a power parliament has granted a mortgagee and courts cannot and ought not to interfere if it is being exercised.”

23. I have also considered the case of Mrao Limited v First American Bank of Kenya Ltd & others to the effect that:“The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however, if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.”

24. On the strength of the evidence presented by both parties, it is my finding that the Applicant has failed to demonstrate that he stands to suffer irreparable injury that would not be adequately compensated by an amount in damages.

25. On balance of convenience the Respondent argued that same tilts in their favour, as they have acted according to the Law in exercising their statutory power of sale as a result of default. I agree with them, especially for the reasons that requisite notices have been served and that the Respondents statutory power of sale flows automatically once a party defaults in servicing the facility advanced to him.

26. My conclusion of this matter is that the Applicant has failed to persuade this court that he deserves the orders he is seeking. He has met the threshold for grant of injunction. Consequently, the Notice of Motion dated March 17, 2022 is hereby dismissed with costs to the Respondent.

27. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED ON 19TH JULY 2022. S. N. MUTUKUJUDGE