Mauri Onyalo Yambo & Joan Akinyi Yambo v Housing Finance Company (K) Limited & Otindi Investments Limited [2017] KEHC 10039 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL & TAX DIVISION

CIVIL CASE NO. 194 OF 2008

PROF. MAURI ONYALO YAMBO..............................1ST PLAINTIFF

MRS. JOAN AKINYI YAMBO...................................2ND PLAINTIFF

-VERSUS-

HOUSING FINANCE COMPANY (K) LIMITED....1ST DEFENDANT

OTINDI INVESTMENTS LIMITED.......................2ND DEFENDANT

RULING

[1]The Application before the Court is the Plaintiffs’ Notice of Motion dated 2 June, 2016 and filed on 3 June 2016. The same was brought pursuant to the provisions of Section 3A of the Civil Procedure Act and Order 40 Rule 3 (1)of the Civil Procedure Rules. The application seeks for the following orders:

[a]    THAT this Honourable Court be pleased to order the   committal to prison of the 1st Defendant’s directors for such period    of time as this Court may deem fit and just in that the      1st      Defendant has disobeyed the Court Order made on 24 March       2009inter alia, restraining the Defendants herein either by itself,         its servants or agents by means of temporary injunction from   interfering with the Plaintiff’s possession of the suit property L.R      No. 3734/904/M4, LAVINGTON NAIROBI, issued herein

[b]THAT this Court be pleased to order the withdrawal of          the           Plaintiffs’ names from the Metropol Credit          Reference Bureau.

[c]THAT the costs hereof be assessed by the Court and paid by        the 1st Defendant.

[2]    The Plaintiffs’ application is supported by the affidavit of Prof. Mauri Onyalo Yambo, the 1st Plaintiff herein and sworn on 2 June, 2016. The background to the application is that on 24 March 2009, the Court granted the Plaintiffs interim orders herein restraining the 2nd Defendant either by themselves or through their agents from interfering with the Plaintiffs’ possession of L.R No. 3734/904, Lavington Nairobi (herein “the suit property”). The Plaintiff avers that the said order was duly extracted and served upon the 1st Defendant through its Advocates on record.

[3]    It is the Plaintiffs’ case that despite being served with the said order, the 1st Defendant has failed and/or refused to comply and persists in such refusal. The Plaintiffs aver that, in blatant refusal to obey the valid court order, the 1st Defendant has advertently published the names of the Plaintiffs with Metropol Credit Reference Bureau and Transunion Credit Reference Bureau as delinquent debtors, while well knowing of the existence of the injunctive order.

[4]    In response to the application, the 1st Defendant filed a Replying affidavit sworn by the 1st Defendant's Legal Manager, Martin Machira, sworn on 17 June 2016.  The 1st Defendant avers that the order made on 24 March 2009 was only against the 2nd Defendant restraining them from transferring the suit property to third parties or in any way interfering with the Plaintiffs’ possession of the said property. According to the 1st Defendant, the Plaintiffs never sought any order against them in the Notice of Motion Application filed on 25 June 2008. The 1st Defendant further avers that the said order had no penal notice endorsed on it and had never been served on them or its Directors.

[5]    It was further the contention of the 1st Defendant’s that Regulation 50 of the Credit Reference Bureau Regulations, 2013 mandates banking institutions to notify their customers, within one month before a loan becomes non-performing, that it shall submit to the bureau the information pertaining to the loan immediately it becomes non-performing; and that in the absence of an order restraining them from referring the Plaintiffs for listing at the Credit Reference Bureau, the 1st Defendant was under obligation to comply; whereupon it was notified by Metropol Credit Reference Bureau Ltd on the 24 February 2016, that the Plaintiffs had disputed the listing. In response thereto, the 1st Defendant wrote the letter dated 7 March 2016 (marked 'MM-9') affirming that the Plaintiff's mortgage account was still in arrears. Accordingly, the 1st Defendant averred that the present application seeking to commit its Directors to civil jail is not only defective but is also an abuse of the Court process and should therefore be dismissed with costs.

[6]    The application was disposed by way of written submissions. Thus, the Plaintiff filed its written submissions dated 18 July, 2016 on 19 July 2016 while the 1st Defendant filed its submissions dated 29 May, 2017 on 30 May 2017. Having considered the application, the affidavits aforementioned and the written submissions filed herein, the key question to resolve is whether the 1st Defendant is in contempt of the orders granted by this Court on 24 March 2009.

[7]    The parties are in agreement that upon the filing of this suit, the Plaintiffs put in an application for an interlocutory injunction seeking to have the 2nd Defendant restrained from interfering with their possession of the suit property, pending the hearing and determination of the suit. A copy of the application was exhibited as an annexure to the Replying Affidavit of Martin Machira and marked MM-2. That application was heard and allowed by Kimaru, J. on 24 March 2009. An order was extracted in terms thereof which was duly served on the 2nd Defendant. A copy thereof is annexed to the Replying Affidavit of Mr. Machira and marked MM-1. The Plaintiff has, vide the instant application dated 2 June 2016, moved the Court to have the 1st Defendant cited for contempt for having caused their names to be listed with the Metropol Credit Reference Bureau Ltd,contending that the publishing of their names as delinquent debtors by the 1st Defendant plainly goes against the order.

[8]    First and foremost, there is a manifest disconnect between the Plaintiffs' prayer in their Chamber Summons, the Ruling of the Court dated 24 March 2009 and the Order that was extracted therefrom on the one hand and the contempt application on  the other. The initial application was in respect of the 2nd Defendant; the Ruling dated 24 March 2009 was in respect of the 2nd Defendant and the order that was extracted was directed at the 2nd Defendant. That Order reads:

"IT IS HEREBY ORDERED:-

1.      That the 2nd Defendants either by itself, its servants or agents        is constrained by means of a temporary injunction from    transferring to 3rd parties, alienating or otherwise howsoever     interfering with the plaintiffs possession of the suit property         LR No. 3734/904 Lavington, Nairobi pending the hearing and determination of the suit.

2.      That the Plaintiffs shall have the costs of the application."

[9]    It is plain from the Order aforestated that it was not directed at the 1st Defendant and therefore the 1st Defendant is in order in questioning why it has been cited for contempt. Secondly, the Order was specific to the Plaintiffs' possession of the suit property, and had absolutely nothing to do with the listing of the Plaintiffs as delinquent borrowers; which is what the instant application is all about. It would accordingly be futile to inquire into whether or not the 1st Defendant was served with the Order or a penal notice when clearly it was not the target or object of the Order. In the same vein, the question of whether or not the 1st Defendant complied with the  Order or not would not arise, there being no suggestion that the Plaintiffs' possession of the suit property, which was protected by the injunctive order, has been interfered with or threatened with interference. In any event, Order 40 Rule 6 of the Civil Procedure Act is explicit that:

"Where a suit in respect of which an interlocutory injunction          has been granted is not determined within a period of twelve        months from the date of the grant, the injunction shall lapse     unless for any sufficient reason the court orders otherwise."

And there is no such order on the court file.

[10]  More importantly, the 1st Defendant was under obligation to make the report complained about by dint of Regulation 18 of the Credit Reference Regulations 2013, which state that:

"(1)  Customer information which shall be exchanged    pursuant to these Regulations is any customer information         concerning a customer's non-performing loan and any other         negative information and may include details specified in sub-  regulation (4)."

Sub-regulation (4) provides a list of information to do, not only with the customer's identity, but also a customer's credit status including the nature and amount of loans or advances and other credit facilities granted, amounts outstanding thereof, credit applications and related matters. Besides the regulations have an elaborate redress mechanism under Regulation 35 for aggrieved ones to pursue for purposes of redress.

[11]  In the result, I have no hesitation in holding that the Plaintiffs' application dated 2 June 2016 is not only misconceived but is also totally lacking in merit. The same is hereby dismissed with costs.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 13TH DAY OF OCTOBER, 2017

OLGA SEWE

JUDGE