Maangi v Housing Finance Company of Kenya Ltd [2022] KEHC 13732 (KLR)

Maangi v Housing Finance Company of Kenya Ltd (Civil Suit E781 of 2021) [2022] KEHC 13732 (KLR) (Commercial and Tax) (14 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13732 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit E781 of 2021

A Mabeya, J

October 14, 2022

Between

Zacharia Moenga Maangi

Plaintiff

and

Housing Finance Company of Kenya Ltd

Defendant

Ruling

1. Vide application dated August 30, 2021, the applicant moved this court under order 40 rules 1 and 2 of theCivil Procedure Rulesand section 1A, 1B and 3A of the Civil Procedure Act seeking a temporary order to restrain the from selling or in any way interfering with property Land Ref Molo/Sachangwani block 1/79 (“the suit property”).

2. The grounds for the application were set out in the supporting affidavit of the plaintiff sworn on August 30, 2021. These were that the respondent had issued a statutory notice dated April 16, 2007 to sell the suit property by public auction subject to a charge dated September 24, 1993. That the respondent’s claim was null and void under the provisions of sections 4 and 19 of the Limitation of Actions. That the amount claimed by the respondent was in breach of section 44 of the Banking Act cap 488.

3. He further contended that he had paid the loan amount of Kshs 300,000/= in full plus a further Kshs 329,910/= on December 30, 2006. That the penalty charged was non-contractual and illegal. He had filed HCC 598 of 2007 and obtained injunctive orders on condition that Kshs 204,974/23 be paid into court within 10 days. However, that suit was dismissed for want of prosecution on April 12, 2012.

4. The respondent opposed the application vide the replying affidavit sworn on October 4, 2021. It was its case that the applicant was in default of the loan, leading to a rescheduling agreement dated April 12, 2006 on which he also defaulted. He had also failed to comply with the terms of the ruling of February 22, 2008 in the above mentioned case. That it had issued a notice of sale on March 24, 2009 but the scheduled auction was unsuccessful as the bids were below the reserve price.

5. That the respondent re-issued a statutory notice dated October 27, 2020 demanding Kshs 1,333,496. 90, thus the applicant’s reliance on the notice dated April 16, 2007 to claim latches was misleading.

6. Further, that section 19(2) of the Limitation of Actions Act exempted mortgagees from the 12 years limitation. It was also contended that the applicant’s mortgage was not non-performing thus section 44A of the Banking Act was not applicable.

7. It was finally contended that HCCC No 598 of 2007 was dismissed thus this suit and application for injunction were both res judicata.

8. This court has considered the pleadings, evidence and submissions on record. This is an injunction application. The principles were well set out in the case ofGiella v Cassman Brown & Company Limited(1973) E A 358. These are that; an applicant must establish a prima facie case with a probability of success, an injunction would normally not issue unless the applicant will suffer loss that cannot be compensated by an award of damages and if the court is in doubt, it will determine the matter on a balance of convenience.

9. In Paul Gitonga Wanjau v Gathuthi Tea Factory Company Ltd & 2 others[2016] eKLR, the court captured these principles as follows: -“i)Is there a serious issue to be tried?;ii)Will the applicant suffer irreparable harm if the injunction is not granted?iii)Which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits? (often called" balance of convenience")

10. As to whether the applicant has shown a prima facie case with a probability of success, the applicant contends inter alia that the respondent’s claim was barred by the statute of limitations. That the loan claimed had already been fully paid and that the amount claimed by the respondent was in breach of the in duplum rule under the Banking Act. These are serious and triable issues.

11. It is not in dispute that the principal sum advanced in 1993 was Kshs 300,000/-. The amount claimed by the respondent is far higher than double of the principal amount which is a serious breach of the in duplum rule. This gives the applicant a better probability of success.

12. As to whether the applicant will suffer irreparable harm, the answer is in the affirmative. The applicant will suffer harm should the suit property be sold before the issues raised herein are determined. Moreso, there is a claim that the amount lent has been paid in full. No amount of damages can compensate a Kenyan who has wrongfully lost his land.

13. As to the balance of convenience, this lies with maintaining the status quo pending the trial.

14. Moreover, it would be in the best interest of justice to preserve the substratum of the suit until the merits of the case are heard and determined. Should the respondent be allowed to dispose of the charged property before the dispute is determined, the ends of justice shall be defeated. As regards the claim that the matter is res judicata, this a preliminary issue, the respondent can raise the same formally when putting its defence to the claim for the court’s determination.

15. In light of the above, the court finds the application to be meritorious and allows the same as prayed.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF OCTOBER, 2022. A. MABEYA, FCIArbJUDGE