Maryjuster Chepleting Mitei v Daima Bank Limited & Rhoda Chelangat Kandie [2017] KEHC 9967 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 796 OF 1998

MARYJUSTER CHEPLETING MITEI…………….…………….PLAINTIFF

VERSUS

DAIMA BANK LIMITED…......…………..…..…..………..1ST DEFENDANT

RHODA CHELANGAT KANDIE…...........………….…….2ND DEFENDANT

JUDGEMENT

1. The plaintiff, MARYJUSTER CHEPTELING MITEI, filed suit against the 2 defendants, DAIMA BANK LIMITEDand RHODA CHELANGAT KANDIE, in relation to the property Title Number L.R. 330/478.

2. She asserted that she was the lawfully registered proprietor of the said property.

3. However, she acknowledged that the suit property had been charged to Daima Bank Ltd, as security for some financial facilities which the bank had provided to her.

4. The plaintiff further acknowledged that she did run into some financial difficulties, which led into a situation in which she was unable to service the financial facilities which had been accorded to her.

5. In consequence of the defaults on the plaintiff’s part, the bank expressed to her, their intention to realize the security.

6. But the plaintiff’s case was, inter alia, that the Notice given by the bank was in violation of the Government Lands Act and the Auctioneers Act.

7. The plaintiff also asserted that the interest which the bank levied on her account, were contrary to the Banking Act and to the Central Bank of Kenya Regulations.

8. The effect of the alleged unlawful rates of interest was said to have given rise to accounts which were not justifiable.

9. Notwithstanding the said position, the bank is alleged to have purported to sell-off the suit property to the 2nd defendant, RHODA CHELANGAT KANDIE.

10. The plaintiff asserted that the alleged sale was illegal and a nullity.

11. In the event, the plaintiff had intended to ask the court to declare both the Sale and the Transfer of the suit property, to be a nullity.

12. As a follow-up to the said declaration, the plaintiff intended to ask the court to cancel the title issued to the 2nd defendant.

13. The intention of the plaintiff was to have the title of the suit property revert to her name.

14. The plaintiff also intended to ask the court to order for the discharge of the charge which she had registered in favour of the bank.

15. In response to the plaint, each of the defendants filed a Defence and a Counterclaim.

16. Both defendants asserted that the sale of the suit property was lawful in every respect.

17. The 2nd defendant, who had purchased the suit property, sought the dismissal of the suit on the grounds that it did not disclose any cause of action.

18. Secondly, as she was the registered proprietor of the property, the 2nd defendant prayed that the plaintiff be compelled to pay mesne profits to her, from the date of the sale, upto the date when the plaintiff handed over vacant possession of the suit property.

19. Meanwhile, the bank indicated that the amount of money which was realized from the sale of the suit property was insufficient to pay-off the debt which the plaintiff owed.

20. According to the bank, the sale realized a sum of Kshs. 13,000,000/-, whilst the outstanding debt was in the sum of Kshs. 13,893,970. 24.  Therefore, by the time the bank lodged its counterclaim against the plaintiff, the outstanding balance was Kshs. 1,661,382. 50.

21. On 17th September 2013, Havelock J. dismissed the plaintiff’s suit, on the grounds that the plaintiff had failed to attend court to prosecute it.

22. Later, the plaintiff applied for the reinstatement of the suit.  She explained that the failure to prosecute the case was largely attributed to the fact that she had been unwell for a considerable period.

23. Whilst the court was hearing the application for the reinstatement of the suit, it came to light that on 5th June 2008, the court had ordered the plaintiff to deposit Kshs. 50,000/- in court, every month.

24. The said money was to be deposited in court as a pre-condition for the plaintiff’s continued occupation of the suit property, after the said property had been transferred to the 2nd defendant.

25. Mr. Njoroge, the learned advocate for the plaintiff explained to the court that the plaintiff, who was said to be unwell, needed 30 days in order to enable her come up with a proposal on how she was to comply with the order which required her to deposit  Kshs. 50,000/- monthly.

26. On 18th June 2015 the Court ordered that the whole case would be heard de novo. The reason for that order is that the case was already part-heard before Havelock J. However, the learned trial Judge retired from the Judiciary before completing the trial.

27. On 6th April 2016, the trial commenced afresh, before me.  But after the plaintiff had been sworn and was about to start testifying, the 2nd defendant submitted that the plaintiff was undeserving of an opportunity to be heard.  Mr. Nyawara, the learned advocate for the 2nd defendant, said that the failure by the plaintiff to comply with the court order dated 5th June 2008, pursuant to which Warsame J, (as he then was),had directed the plaintiff to deposit Kshs. 50,000/- monthly.

28. The plaintiff confirmed that she had not remitted the deposits.  Her explanation was that her lawyer had told her that the order had been set aside.

29. The court allowed the plaintiff time to peruse the court records, so that she could identify the date when the court had allegedly set aside orders requiring her to deposit Kshs. 50,000/- monthly.

30. After the plaintiff had perused the records, she confirmed that there was no court order which set aside the order requiring her to remit deposits to court, every month.

31. At that stage, the plaintiff blamed her advocate for failing to give her the correct advice. She said that if she had been given the correct advice, she would not have been in contempt, as she had now found herself.

32. The court informed the plaintiff that if she purged the contempt, by making payment in accordance with the order of Warsame J., the court could accord her a hearing.

33. However, the plaintiff was unable to make payment immediately, and the trial court allowed her 30 days to raise the money, which would then be held in a joint interest-earning bank account, in the names of the 3 Law Firms representing the parties to this suit.

34. The court further held that if the plaintiff failed to raise the money within the 30 days, her case would stand dismissed.

35. On 8th September 2016 the 2nd defendant informed the court that the plaintiff had not raised the money.

36. Based on the said information, which was also verified by Miss Njoroge, the learned advocate for the bank, the court reiterated that the plaintiff’s suit stood dismissed.

37. The case was dismissed because the plaintiff did not lead any evidence to support it. The reason why she failed to adduce evidence is that she was denied audience by the court after she did not purge her contempt of the court.

38. The plaintiff had been allowed to continue occupying the suit property even though it had been sold and transferred to the 2nd defendant.  In consideration for being allowed to continue being in occupation, Warsame J. ordered the plaintiff to be depositing Kshs. 50,000/- every month.

39. Whilst the plaintiff did continue to occupy the house, she did not remit any payments at all.

40. In the circumstances, the court held that the plaintiff could not be granted a hearing until she purged the contempt.

41. The plaintiff sought and was allowed time to purge the contempt.  However, she still did not make any remittances.

42. In the result, the plaintiff’s suit stood dismissed.

43. In relation to the claim by the bank, one witness testified.  He is ADAM BORU, a Liquidation Agent for Daima Bank Limited.

44. He testified that the suit property was sold to the 2nd defendant by Private Treaty. The said sale was made pursuant to Section 69 (1) of the Transfer of Property Act 1882 as amended by the ITPA, 1959.

45. By a letter dated 26th May 1998, the bank’s advocates, M/s J.W. Wambua & Company Advocates, drew the attention of the plaintiff to the fact that the suit property had been sold for Kshs. 13,000,000/-.

46. The bank also produced a Statement of Account which showed a Debit Balance of Kshs. 13,126,587. 25 as at May 1998.

47. Immediately below that entry, there are 2 credits of Kshs. 6,000,000/- and Kshs. 7,000,000/-, respectively.  There is a hand-written note on the Statement of Account, against the 2 credits, describing them as, “Sale Proceeds?.

48. Having credited the Sale Proceeds to the account, the balance was Kshs. 126,587. 25.

49. Thereafter, the bank debitted Kshs. 417,704. 85, on account of “Interest Charged?. The bank did not provide the court with any explanation about why the account was being debitted with that sum, when the outstanding balance was Kshs. 126,587. 25.

50. In my considered view, the bank has failed to demonstrate to the court, the justification for the debit of Kshs. 417,704. 85.

51. Another notable debit to the account is of Kshs.222, 597. 50, on account of “Auctioneer’s Fees?.

52. Obviously, if the property was sold by Private Treaty, as Adam Boru said in his evidence, the bank ought to have justified the payment of Auctioneer’s Fees.

53. On the other hand, KIGEN KANDIE, who is one of the legal representatives for the Estate of RHODA CHELANGAT KANDIE (Deceased), testified that the suit property was purchased at a public auction.

54. Based on the advertisements which were exhibited in court, together with the Certificate of Sale issued by D.N. NJOKA, I find that it was more probable than not, that the suit property was sold by public auction.

55. In the event, the payment of Auctioneer’s Fees would be justified.

56. Accordingly, the 1st defendant is entitled to recover from the plaintiff, the sum of Kshs. 349,184. 75, being the outstanding balance after the suit property was sold.  I therefore grant judgement in favour of the 1st defendant for Kshs. 349,184. 75, plus costs of the suit.

57. The principal sum will attract interest at Court Rates from 11th July 2000, when the Counterclaim was lodged in court.

58. Meanwhile, as relates to the 2nd defendant, I find that her Estate is entitled to take possession of the suit property from the plaintiff, as it is duly registered in the name of the 2nd defendant.

59. On the issue of mesne profits, the 2nd defendant did not provide evidence to back the amounts claimed.

60. Pleadings do not constitute evidence. Therefore, even if a claim embodied in a pleading is unchallenged by the opposite party, it does not follow that the court would grant it.

61. In order for the court to grant the relief claimed, there has got to be a basis for the said grant. Ordinarily, it is evidence which forms the best foundation for the award of reliefs.  In the absence of evidence to prove the claim, the court could either dismiss the claim or, in the alternative, grant such relief as is deemed reasonable.

62. . As I have already indicated, the 2nd defendant claimed mesneprofits of Kshs. 100,000/- monthly, but thereafter there was no evidence led to support the sums claimed.

63. In the circumstances, should the claim be dismissed?

64. I hold the view that it would be most unfair to the 2nd defendant, if the claim was dismissed. I so hold because the plaintiff continued living in the suit premises even after it had been sold to the 2nd defendant.

65. The court had, earlier, allowed the plaintiff to live in the property on condition that she deposited Kshs. 50,000/- monthly, as security.

66. The suit property is situated in the Lavington area of Nairobi.  I take Judicial Notice of the fact that that area of Nairobi generally attracts reasonable rents.  Indeed, the property would most probably be attracting rental incomes in excess of Kshs. 50,000/- monthly.

67. But because the 2nd defendant did not adduce evidence to prove the actual monthly rentals payable for either the suit property or similar kinds of property, in the general neighbourhood, I do award mesneprofits of Kshs. 50,000/- monthly.

68. The said sum is based on the figure which the court had previously ordered the plaintiff to deposit in court every month.  As the plaintiff did not seek to challenge that figure either through review or through an appeal, I find that it constitutes a reasonable rental return for the suit property.

69. The plaintiff shall pay to the 2nd defendant,mesne profits of Kshs. 50,000/- every month, with effect from 1st June 1998, when the suit property had been transferred to the 2nd defendant.

70. The plaintiff will also pay the costs of the suit, to both the defendants.

DATED, SIGNED and DELIVERED at NAIROBI this17th dayof July2017.

FRED OCHIENG

JUDGE

Judgement read in open court in the presence of

No appearance for the Plaintiff

Miss Njoroge for the 1st Defendant

Nyawara for the 2nd Defendant

Collins Odhiambo – Court clerk.