Madey v Mwananchi Credit Limited [2025] KEHC 2980 (KLR)

Madey v Mwananchi Credit Limited (Commercial Case E338 of 2024) [2025] KEHC 2980 (KLR) (Commercial and Tax) (17 March 2025) (Ruling)

Neutral citation: [2025] KEHC 2980 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case E338 of 2024

A Mabeya, J

March 17, 2025

Between

Bashir Maalim Madey

Plaintiff

and

Mwananchi Credit Limited

Defendant

Ruling

1. The applicant moved the Court vide an application dated 24/6/2024 seeking the following orders: -a.Spentb.Spentc.That this court be pleased to issue an order compelling the respondent to issue the applicant with a copy of his account statement pending hearing and determination of this application.d.That this honourable court be pleased to issue a temporary order against the respondents jointly and severally restraining them from selling, transferring, disposing and/or dealing with applicant’s property known as Title Number KJD/Olchoro Onyore/4463 pending the hearing and determination of this suit.e.That costs of the application be provided for.

2. The application was based on the grounds set out on the face of the Motion as well as the supporting affidavit Bashir Maalim Madey. The applicant averred that he was the owner of the property known as Title Number KJD/Olchoro Onyore/4463 (“the suit property”) together with the developments thereon.

3. That the respondent had illegally advertised the suit property for sale. That he has never been issued with the 90-day statutory notice or the 45-day redemption notice. That despite making efforts to have the suit property discharged from the respondent, he stands to suffer great loss and damage if the respondent is not restrained from disposing of his parcel.

4. In response, the respondents filed a replying affidavit sworn on the 5/7/2024 by Saleh Jackline, the respondent’s legal officer. It was averred that sometime in the year 2020, the applicant offered the suit property as security for a loan facility of Kshs. 10,000,000/=. That he fell into arrears whereby the respondent had no option but to seek to exercise its statutory power of sale over the same.

5. That it issued the applicant a 90-day statutory notice dated 11/11/2022 and subsequently a 40-days’ notice dated 02/03/2023 through the applicant’s registered postal address which the applicant had offered at the time of obtaining the loan facility. That the respondent has been in constant communication with the applicant through his official email address also offered up at the time of obtaining the loan facility.

6. That it instructed an auctioneer who duly prepared a 45-days redemption notice to sell the suit property dated 9/5/2023 and served the same through both the applicant’s postal and email address. That in preparation to sell the suit property, it instructed North Court Real Estate Limited Valuers who prepared the valuation report dated 25/7/2023. It subsequently instructed auctioneers who issued the applicant with a courtesy notice of intention to sell within 14 days and thereafter advertised the suit property for sale.

7. That as a result of the forgoing, the applicant was at all material times aware of every step that it took and by instituting the instant suit and application, the applicant had approached the Court with unclean hands as he had failed to make material disclosure. It urged the Court to dismiss the application.

8. I have considered the entire record. This is an application for a temporary injunction. The principles are well known as set out in the case of Giella vs. Cassman Brown [1973] EA. That an applicant must establish a prima facie case with a probability of success, that if the injunction is not issued the applicant will otherwise suffer loss that cannot be compensated by an award of damages and that, if the court is in doubt, it will determine the matter on a balance of convenience.

9. I note that the applicant’s prayer for a statement of accounts has been overtaken by events as the respondent attached the same to its replying affidavit sworn on the 5/7/2024. What remains is the prayer for a temporary injunction.

10. In Nguruman Limited vs Jane Bonde Nielsen and 2 others NRB CA Civil Appeal No. 77 of 2012 [2014] eKLR, the Court of Appeal clarified that the three conditions are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially.

11. On the first limb, as to what constitutes a prima facie case, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Limited and 2 others [2003] eKLR explained as follows: -“A prima facie case in a civil application includes but is 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 that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”

12. There is no doubt that the applicant and respondent had a financial relationship. The applicant impugns the respondent’s pending exercise of its statutory right of sale on the account that he had not been served with the requisite statutory notices.

13. However, in its response, the respondent detailed all it had done in complying with the law. That it had issued the requisite statutory notices to the applicant through his availed postal and email addresses. The applicant did not challenge the said averment or the documents evidencing service of the notices. Only if he had controverted that evidence or challenged the same could the evidentiary burden of proof had shifted to the respondent.

14. In the circumstances, the respondent’s evidence to that effect remain uncontroverted and the Court holds that the applicant had been properly served with the requisite statutory notices.

15. From the foregoing it is clear that the grounds relied on by the applicant in his application remained unproven. In the premises, the applicant has failed to establish a prima facie case to warrant the grant of a temporary injunction.

16. On the second limb, the applicant averred that he stood to suffer substantial loss if the intended sale was allowed to proceed. I must note that it cannot be a point of debate that a person who receives a loan from a lender and who voluntarily and lawfully gives out his property as collateral or security for the loan, is presumed to be fully aware that in the event of default in repayment of the loan within the terms and timelines agreed, the lender is at liberty to sell off the property to recover the money lent out.

17. In Maltex Commercial Supplies Limited & Another v Euro Bank Limited (In Liquidation), HCCC No. 82 of 2006), Warsame J (as he then was) observed as follows: -“….. Any property whether it is a matrimonial or spiritual house, which is offered as security for loan/overdraft is made on the understanding that the same stands the risk of being sold by the lender if default is made on the payment of the debt secured”.

18. In this case, the respondent exhibited a Valuation Report dated 25/7/2023. However, in the event that the valuation was erroneous, giving rise to a sale at a gross undervalue, it would be possible for the applicant to be compensated by an appropriate award in damages. Therefore, if the applicant was able to prove that the property had been sold at an undervalue, it would be possible for the court to easily quantify such compensation as would be sufficient to make good such loss as the applicant would have suffered.

19. On the third limb, it is this courts view that the balance of convenience tilt in favour of the respondent. The applicant has failed to demonstrate a prima facie case in his favour and that he would suffer irreparable loss if the intended sale were to proceed. The applicant has taken the respondents money and it is just and fair that the respondent recoups the depositor’s money that was lent to the applicant.

20. In the premises, the Court holds that the applicant has failed to make out a case for the grant of a temporary injunction pending the hearing and determination of the suit. The application dated 24/6/2024 is without merit and is hereby dismissed with costs to the respondent.It is so ordered.

SIGNED AT KISUMU THIS 5TH DAY OF MARCH, 2025. A. MABEYA, FCI ArbJUDGEDATED AND DELIVERED AT NAIROBI THIS 17TH DAY OF MARCH, 2025. F. GIKONYOJUDGE