Muthengi v Heritage Insurance Co. Kenya Limited [2022] KEHC 10735 (KLR)

Muthengi v Heritage Insurance Co. Kenya Limited (Civil Case E026 of 2021) [2022] KEHC 10735 (KLR) (13 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10735 (KLR)

Republic of Kenya

In the High Court at Machakos

Civil Case E026 of 2021

GV Odunga, J

June 13, 2022

Between

Augustine Nzuma Muthengi

Plaintiff

and

Heritage Insurance Co. Kenya Limited

Defendant

Ruling

1. By a notice of motion dated October 27, 2021 premised on sections 1A,1B,3A and 63(e) of the Civil Procedure Act, the plaintiff/applicant seeks the following orders that:-1. The application be certified urgent and the same be heard Ex parte in the first instance.2. The court be pleased to grant an order of temporary injunction restraining the defendant/respondent whether by itself, it’s agents, servants and/or any other person working under the defendant’s/applicant’s instructions and authority from auctioning, dealing with, alienating or in any other way disposing off the Plaintiff’s/Applicant’s parcel of land LR Machakos/kiandani/5011 located at Manza area along Machakos-Nairobi Road opposite KMTC Manza Campus within Machakos Town pending the hearing and determination of this application.3. The Court be pleased to grant an order of temporary injunction restraining the defendant/respondent whether by itself, its agents, servants and/or any other person working under the defendant’s/applicant’s instructions and authority from auctioning, dealing with, alienating or in any other way disposing off the plaintiff’s/applicant’s parcel of land LR Machakos/kiandani/5011 located at Manza area along Machakos-Nairobi Road opposite KMTC Manza Campus within Machakos Town pending the hearing and determination of the main suit.

The Costs of this application be awarded to the Plaintiff/Applicant. 2. The application is primarily based on the ground that the Applicant has realized that the respondent has been illegally and unlawfully charging interest on the borrowed loan at 13% per month yet the respondent is not a Bank within the meaning of the Banking Act, Cap. 488 and the Central Bank Act Cap.491 of the laws of Kenya authorized to charge such interest or any other interest in law.

3. The application is supported by the Applicant’s supporting sworn on October 27, 2021 in which he averred that he is the registered owner of parcel of land LR Machakos/Kiandani/5011. According to the deponent, he borrowed a loan facility of Kshs. 4,700,000/- from the Respondent in order to enable him successfully complete the construction of the storey building on his parcel of land on the security of the said parcel of land and the storey building thereon. He averred that he paid Kshs. 1,100,000/- towards settling the loan between 2016 and April, 2020.

4. According to the deponent, since there was no agreement between the respondent and him as to the timelines within which the balance of kshs. 3,600,000/- was to be paid, the respondent in May, 2020 requested the applicant to make a proposal in the wake of Covid 19 period as to how he intended to pay the balance. According to the deponent, he proposed to the respondent that he be indulged in the repayment of the balance of Kshs. 3,600,000/- owing to the loss of jobs in the insurance industry due to the restrictions of movement of people, motor vehicles, trains and airplanes by the Government of Kenya in Mid-March, 2020 and the general impact of the Covid 19 pandemic to the Kenya’s economy.

5. The applicant averred that the respondent accepted to indulge him until the economy stabilized and the business of insurance sector properly resumed. However, he has realized that the Respondent has been illegally and unlawfully charging interest on the borrowed loan at 13% per month yet the respondent is not a Bank within the meaning of the Banking Act cap.488 and the Central Bank Act cap. 491 authorized to charge such interest. According to the deponent, the respondent is an insurance company within the meaning of the provisions of the Insurance Act cap. 405 of the laws of Kenya.

6. According to the deponent, in breach of the terms of the indulgence agreement, in early August, 2021 the Respondent demanded that he pay in full the loan balance and interest amongst other charges totaling to Kshs. 6,788,721. 08 within 21 days or else the Respondent would exercise its statutory power of sale and sell his said parcel of land by public auction as per the Notification of Sale and Redemption Notice which according to the Applicant were served upon him on 1st September, 2021. According to the deponent, the whole process has been marred with fraud, irregularity and illegality since the said parcel of land has been wrongfully attached and advertised for sale by Public Auction when he has faithfully paid a sum of Kshs. 1,100,000/- and also before the period of indulgence was over noting that curfew in the country was lifted on October 20, 2021 and the transport business properly resumed on that date.

7. The deponent averred that it had come to his knowledge that the respondent had not captured in the statement of account the total amount the applicant paid in the year 2016 and 2017 in the sum of Kshs. 740,000/- and it was not clear how the Respondent came up with the sum of Kshs. 6,788,721. 08 as the balance of the loan plus interest and other charges.

8. According to the Applicant, the respondent deliberately and fraudulently valued the applicants property at Kshs. 9,500,000/- in September but a reputable company had valued the property at Kshs. 13, 500,000/- as at January 21, 2021 before the respondent decided to exercise its statutory power of sale. In the applicant’s view, the sole intention is for the respondent to unjustly enrich itself by pocketing the difference of Kshs. 4,000,000/- upon paying the loan amount after the intended sale by public auction.

9. In opposition to the applicant’s application, on behalf of the respondent, its Senior Manager Finance, David Kibira Mathenge swore a replying affidavit on December 8, 2021 which was filed on December 10, 2021. Based on the advice of the respondent’s advocate, the deponent averred that this court does not have pecuniary jurisdiction over the matter for the following reasons;a.The amount claimed to have been wrongly valued is Kshs. 13,500,000. 00 viz-a-viz the amount valued by the Respondent of Kshs. 9,500,000/-b.Section 7 of the Magistrate’s Court Act provides that a Magistrate’s Court shall have and exercise such jurisdiction and powers in proceedings of a civil nature in which the value of the subject matter does not exceed Kshs. 20,000,000. 00. c.The Magistrate’s Court is competent to try or dispose of the suit as the value of the property is below Kshs. 20 Million. Indeed, the Magistrates Courts have granted jurisdiction to hear land matters where the value of the property is within the pecuniary jurisdiction of the court.d.This entire suit is incurably defective and an abuse of the court process and should be struck out with costs to the defendant/respondent.

10. According to the deponent, on May 23, 2016, the applicant applied for a staff loan of Kshs. 9,282,348/- and from the amount, the applicant was advanced an initial sum of Kshs.3, 400,000/- towards the purchase of a plot. He averred that the Applicant being an employee of the respondent was required to settle the amount with an interest rate of 8% but upon exit, the interest rate reverted to commercial interest of 13% as per the extract of the HR Manual.

11. According to the deponent, the Letter of Offer had the following particulars;a.The Applicant was to offer security to be charged to the Respondentb.He was to pay Kshs. 27,410. 05 per monthc.Interest applicable was 8% or as may be directed by the Management

12. He averred that in line with the letter of offer, the mortgage facility was secured by a legal Charge dated August 30, 2016 over the property known as L.R No. Machakos/Kiandani/5011 for Kshs.9, 200,000/-. According to the deponent, the Applicant failed to adhere to the terms and conditions of the charge and the applicant’s account fell into arrears that led to the respondent issuing the statutory notices to the applicant under the Land Act before exercising its statutory power of sale. As a result, the 90 days statutory notice dated July 18, 2018 was duly sent by registered post to the chargor when the outstanding debt was Kshs.4, 860,792. 72 but the applicant did not respond to the Notice and rectify the debt hence the respondent issued the 40 day statutory notice dated October 25, 2018 which was duly sent to the Applicant by registered post when the outstanding debt was Kshs. 5,020,486. 07. According to the deponent, by july 31, 2021 the applicant’s loan account had an outstanding balance in the sum of Kshs. 6,788,721. 08 together with interest and by 30th November, 2021 the outstanding balance was in the sum of Kshs. 7,087,714. 01. Consequently, Philips International Auctioneers issued the 45 days redemption notice to the applicant vide the letter dated September 7, 2021. According to the deponent, the applicant was also informed that the property would be sold at a public auction on September 7, 2021 as the same had been advertised in the Daily Nation newspaper earlier on October 18, 2021.

13. It was averred that before the auctioneer was instructed to issue the redemption notice, the respondent had caused a valuation of the property to be done by Tysons Limited who determined the market value of the applicant’s property at Kshs. 9,500,000/- while its forced sale value at Kshs. 7,500,000/-. It was disclosed that the applicant made his late installment of Kshs. 45,000/- in April, 2020.

14. Regarding the indulgence agreement, the deponent’s position was that there was no evidence on the alleged repayment proposal was tendered in court or an agreement was reached on the same. According to the deponent, the interest charged was based on the Letter of Offer and the charge document which the Applicant agreed to by executing the documents. It was the deponent’s case that the statements of accounts exhibited were a true reflection of the amounts paid and outstanding. According to the deponent, there was no evidence placed before the court to show that the report by the Respondent’s valuer did not meet the test applicable when valuing the property. He therefore averred that the Respondent is entitled in law to the sale of the charged property where it has issued notices and the applicant has failed to clear the outstanding balance.

15. Regarding the issue of the valuation report, it was deposed, based on legal advice that the applicant had not placed material facts before the court to show that the respondent violated the provisions of section 97(2) of the Land Act. According to the respondent, the Applicant has not proved that the value arrived at was not the best price reasonably obtainable at the time as no counter valuation report was tendered in court. Further, it was not proved that the valuer is not qualified or competent or that the valuation report was carried out in consideration of irrelevant factors or before the time of the intended sale.

16. In the deponent’s view, the intended sale shall not rob the applicant of his hard work and investment nor will it violate his right to property but will ensure the Respondent’s exercises its statutory right of sale to property against the applicant who has defaulted on the loan repayment notwithstanding the issuance of all the statutory notices under the law.

17. In his rejoinder, the applicant, vide a supplementary affidavit, deposed that there was no evidence of authorization from the respondent through a company resolution in a meeting by the directors of the respondent to represent the company or swear any document on behalf of the company.

18. The applicant maintained that since the loan transaction is commercial in nature this court has jurisdiction over the matter. It was noted by the Applicant that the deponent of the replying affidavit avoided the issue of whether the Respondent is allowed to charge any interest at all, interest at 8%, interest at 13% or at 14% in law as an insurance company on the loan advanced to the Applicant. The Applicant maintained that the Respondent as an insurance company, it is not allowed to charge any interest at commercial rate of any other rate since its main objective is to issue policies to a Policy Holder. The Applicant averred that the Respondent has not attached a copy of its Memorandum of Association to show its main objective is to advance loans and charge interest on it.

19. According to the deponent, there was no oral or written contract or agreement in respect of the interest on the advanced loan hence the interest is illegal, unlawful and wrongful. The applicant averred that the Respondent was charging interest of 8% per month on the reducing balance against the terms of the Charge instrument which indicated that the interest charged would be 8% per annum. It was explained that the Respondent charged interest of 13% per month on reducing balance between the periods September 2017 to September 2021 against the terms of the Charge instrument. To the Applicant, the Respondent increased the interest rate to 14% per annum on the loan and a further 10% on default interest without giving him notice, without his consent and without an agreement against the law.

20. It was averred that as at August, 2017 the principal balance was Kshs. 4,364,269. 20 based on the statement of accounts attached to the respondent’s replying affidavit. According to the applicant, the respondent has not attached a comprehensive statement of accounts showing the total principal money advanced to him, the 1st payment he made in June, 2016 and the last repayment in April, 2020 before he was given an accommodation in loan repayment due to the effects of covid 19 pandemic. The applicant re-asserted that he has made payment as agreed and as per the terms of the Charge instrument dated August 30, 2016 until April 2020.

21. According to the applicant, the accommodation for the loan repayment was granted orally by the Respondent for the period in May, 2020 to August, 2021. The Applicant disclosed that previously the Respondent had granted him an accommodation through an oral agreement between the periods in September, 2017 to February, 2019 after he had left employment before resuming payment at Kshs.45, 000/- per month in March, 2019. In this instance, he deposed that he was to resume the repayment of the balance in September, 2017 or thereabouts but the Respondent seem to have initiated its exercise of statutory power of sale that period. According to the Applicant, the accommodation given to the Applicant on loan repayment was the reason why the Respondent could not exercise the right between September, 2017 and February, 2019 and also as from April, 2020 to August, 2021.

22. The applicant averred that the annexed statement of account does not state what percentage of interest was charged and for which particular months and years. He acknowledged having received the initial amount of Kshs. 3,400,000/- and an additional sum of Kshs. 1,050,000/- as loan from the Respondent hence the total summed up to Kshs. 4,450,000/- which he was willing and ready to pay in installments. He averred that he has paid Kshs. 831, 090/- or thereabouts hence the willingness and readiness to continue paying the monthly installment of Kshs. 45,000 he used to pay.

23. According to the applicant, his only contention was the interest charged by the Respondent at the rate of 8%, 13%,14% per month on a reducing balance plus the default interest of 10% without notification or agreement between them which in his view was contractual and against the law.

24. According to the applicant, he was not served with the statutory notices through registered post as alleged by the respondent as certificate of postage in the respondent’s annextures bear the postal address Machakos Town whose postal code is 90100b when the notices purported to have been served by Philips International Auctioneers and even the Charge instrument bear his postal address as P.O Box 43-90126, Kahawa-Makueni.

Applicant’s submissions 25. On behalf of the applicant, it is submitted that the respondent’s Finance Manager replying affidavit was defective for want of authority from the Respondent.

26. As to whether a temporary injunction should be issued against the Respondent the applicant relied on the principles set out in Geilla vs. Cassman Brown (1973) EA 358 and regarding whether the applicant has established a prima facie case reliance was placed on Mrao Ltd vs. First American Bank of Kenya Ltd & 2 Others [2003] eKLR. According to the applicant, it is not in dispute that he was advanced a total of Kshs. 4,450,000/- by the respondent in June, 2016 but disputes the interest that was being charged on the loan advanced to him as being non-contractual, unlawful and illegal. It is submitted that the respondent as an insurance company is not allowed by its memorandum of association and the law to charge interest as a bank within the meaning of the Central Bank Act and Banking Act cap. 490 hence the respondent is only entitled to recover Kshs. 4,450,000/- advanced to him by the Respondent.

27. According to the applicant, the interest of 13% per month on reducing balance charged was against the terms of the Charge instrument dated 31st August, 2016. It was submitted that the applicant was never notified or consented to the interest and that it is not clear in the letter of offer whether the interest at 8% was per month or per annum but the Charge instrument show that the interest on loan advanced shall be 8% per annum. However, in the statement of accounts, the Respondent was charged interest at 8% per month and on reducing balance contrary to the terms of the Charge instrument from June, 2016 to August, 2017 when the Applicant resigned from employment. Reference was also made to the 45 days Redemption Notice that show the interest had been charged at 14% per annum while the statutory demand notice show the interest was charged at 13. 5% per annum plus a default interest of 10% per annum.

28. According to the applicant, the unilateral charging and varying of interest by the respondent was in contravention of section 84(1) of the Land Act, 2012 which requires that at least 30 days written notice of the reduction or increase of the rate of interest be served on the charger by the chargee.

29. The applicant also disputed service of the statutory notice to his P.O Box 43-90126 Kahawa-Makueni by the Respondent since the statutory notices were posted to Machakos Town whose postal code is 90100 hence the purported exercise of its statutory power of sale and the intended sale of the Applicant parcel of land was illegal, unlawful, null and void. Reliance was placed on the case of Co-operative Bank of Kenya Limited vs. Patrick Kangethe Njuguna & 5others[2017] eKLR where the certificate of postage did not reveal the dates when the posting was done.

30. According to the applicant, the statement of accounts supplied to him does not show his payment made from June, 2016 to August, 2017, payment of Kshs. 219,280. 40/- made in June, 2016 to January, 2017 and payment of Kshs. 251,809. 18/- made in February, 2017 to August, 2017. It was his submission that the purported comprehensive statement of account which was never supplied to the applicant, only captures payment of Kshs. 225,000/- made in March,2019 to November, 2019 and Kshs. 135,000/- made in December, 2019 to April,2020. He relied on the case of Ezekiel Osugo Angwwenyi & Another vs. National Industrial Credit Bank Limited [2017] eKLR where the court held that it cannot determine issues of accounts based on guesswork hence any bank which fails to keep proper records of account cannot make ascertainable claim against a customer.

31. It was further submitted that the respondent undervalued the applicant’s suit property through its valuer, Tysons Ltd by a difference of Kshs. 4,000,000/- for current market value and by a difference of Kshs. 3,375,000/- for Forced Sale Value hence the respondent did not intend to obtain the best price reasonably obtainable at the time of sale to protect the applicant right’s as a chargor to property.

32. According to the applicant, all the above concerns raised by the applicant can only be determined in a full trial of the main suit hence the applicant has established a prima facie case with a probability of success. Reliance was placed on the case of Rainbow Acres Ltd vs. NIC Bank Ltd [2015] eKLR, Co-operative Bank of Kenya Limited vs. Patrick Kangethe Njuguna & 5 Others(supra) and Michael Gitere & Another vs. Kenya Commercial Bank Limited[2018] eKLR.

33. On the issue whether the applicant stand to suffer irreparable loss which cannot be compensated by an award of damages if temporary injunction is not granted, it was submitted that the applicant and his family will be rendered homeless if their property is auctioned hence an award of damages will not be enough and sufficient to compensate the Applicant. According to the applicant, the forced sale value in the Respondent’s valuation report will not cater for amount being claimed and if sold in the market price as the proceeds will only benefit the respondent and the auctioneers. It was therefore submitted that the applicant will suffer irreparable injury if the injunction is not granted since he has incurred a lot of costs in loan repayment.

34. On the principle of balance of convenience, it was submitted that based on the foregoing, the balance of convenience tilts in his favour.

35. In conclusion, it was submitted that the applicant had satisfied the principles laid down in Geilla vs. Cassman Brown Case (supra) hence the applicant’s application should be allowed with costs.

Respondent’s submissions 36. On the part of the respondent, it was submitted that the applicant seems to be confusing the requirement under order 4 rule 1(4) of theCivil Procedure, 2010 as a rule of general application to all the Affidavits, yet that rule only applies to verifying affidavits and not any other affidavits at the inception of the suit.

37. Reference was made to Ajiwa Shamji Limited vs. Kenya National Highways Authority & another [2018] eKLR, in which the court cited Mombasa HCCC No. 496 of 1995 - Peter Onyango Onyiego vs. Kenya Ports Authority.

38. This court was implored to adopt the said reasoning and dismiss the arguments by the applicant that the replying affidavit is defective for want of an authority to swear affidavit from the respondent.

39. As regards the legal status of a legal charge created by an insurance company, it was submitted that the applicant was a former employee of the Respondent who sought and was granted a loan facility. As security for the same, he charged his property willingly. While at employment, he enjoyed a preferential rate of 8% which rate reverted to the commercial rate upon him leaving his employment as per the terms of the Human Resource Manual and the letter of offer that he executed. Reference was made to Daniel Munene Kabogo vs. Apollo Insurance Company Limited[2011] eKLR and George Lalla Oduor vs. Cannon Assurance (K) Ltd[2016] eKLR.

40. On the issue of jurisdiction, it was submitted that though the applicant has stated that the matter is before the High Court on grounds that it is a charged property, Court of Appeal in Law Society of Kenya Nairobi Branch vs. Malindi Law Society & 6 others[2017] eKLR stated that Magistrates have jurisdiction to hear matters reserved for the High Court and the specialized courts as long as the subject matter is within the pecuniary jurisdiction.

41. According to the respondent, the relevant statutory notices to wit, 90 Days, 40 Days and 45 Days redemption notice were served upon the applicant and the said notices were specific that they were served upon the applicant’s registered post-office domiciled at Kalawa and/or Makueni. As regards the 45 Days redemption notice, it was submitted that the affidavit by the Auctioneer which is uncontroverted, showed how it was served. It was therefore submitted that from the foregoing, the 90- and 40-Days Notices were served vide the postal addresses stated in the letters at Kalawa and Makueni as per the certificates of postage. Further, the 45 Days redemption notice was served physically which is the best mode of service.

42. According to the respondent, it is now trite law that a dispute as to the amount outstanding cannot be a ground for an injunction and reliance was placed on the case ofMrao Limited -vs- First American Bank of Kenya Ltd & 2others [2003] eKLR.

43. On the issue of valuation, it was submitted that this is not a ground for injunction. According to the Respondent:a.No material evidence has been placed to show that the respondent violated the provisions of section 97(2) of the Land Act. Once the Respondent has undertaken a forced sale valuation, the burden shifts to the applicant to prove that the value arrived at by the respondent's valuer was not the best price reasonably obtainable at the time.b.It is not sufficient for the applicant to merely claim that the intended selling price is not the best price obtainable at the time by producing a counter-valuation report. The applicant must satisfactorily demonstrate why the valuation report that the respondent intends to rely on in disposing of the suit property does not give the best price obtainable at the material time.c.The applicant further needs to show, for instance, that the respondent's valuer is not qualified or competent to carry out the valuation, or that the valuation was carried out in consideration of irrelevant factors or that the valuation was done way before the time of the intended sale. The applicant has thus not shown that:i.The respondent’s valuer is not qualified or competent to carry out the valuationii.The valuation was carried out in consideration of irrelevant factors.iii.The valuation was done way before the time of the intended sale

44. According to the respondent, a difference in the amount in the valuation report is not a ground for issuance of the injunction. There is no evidence placed by the applicant to show that the report by respondent’s valuers did not meet the test applicable when valuing the property. It was contended that the valuation by the 1st respondent’s valuers meets all the test applicable to valuers when carrying out valuation reports. The said valuer considered all the variables in arriving at the figures for open market value and forced sale value. In support of the submissions, the respondent relied on Charles Alex Njoroge vs. National Bank of Kenya Ltd & Another [2015] eKLR where the court quoted the cases of Zum Zum Investment Limited vs. Habib Bank Limited[2014] eKLR and Palmy Holdings Limited vs. Consolidated Bank of Kenya.

45. From the foregoing, it was submitted that the 1st Respondent complied with section 97 (2) of the Land Act by undertaking the forced sale valuation of the suit property. It was submitted that it is not sufficient for the Plaintiff to merely claim that the intended selling price is not the best price obtainable at the time by producing a counter-valuation report. In the Respondent’s view, the intended sale shall neither rob the profits of the plaintiff’s hard work and investments nor violate his right to property but rather ensure that the Respondent’s exercises its statutory right of sale of the property owing to the fact that the Applicant has defaulted on the repayment of the loan and that all statutory notices required under law were sent to him giving him the opportunity to redeem his property.

46. It was therefore submitted that the plaintiff had not established a prima facie case.

47. As regards irreparable loss, it was submitted that even if an injunction is not granted, the plaintiffs will not suffer any substantial loss that cannot be adequately compensated by an award of damages. This is because the subject property was offered as security to be sold in the event of default. The Plaintiffs cannot therefore be heard to say that he will suffer irreparable loss incapable of compensation by an award of damages. The property is security and can be sold at any time upon proof of default to service the loan. For this proposition the respondent relied on the case of Kitur –vs- Standard Chartered Bank & 2 others and Hyundai Motors Kenya Limited vs. East African Development Bank Ltd [2007] eKLR.

48. It was submitted that the borrower benefited from the monies lent by the defendant. The facility granted was not for free and thus the borrower must repay the same. In the event of default, the borrower must accept the consequences therefrom.

49. Regarding the balance of convenience, it was submitted that if the injunction if granted, it will inflict greater hardship on the defendant because the outstanding debt continues to accumulate interest. On the other hand, if an injunction is refused and it is found that the plaintiff was entitled to an injunction, the defendant can easily compensate the plaintiff for any loss as it is a reputable bank capable of doing so. it was therefore submitted that the defendant stands to suffer more than the plaintiff if the injunction is granted hence the balance of convenience thus tilts in favour of the defendant. For the above submission, the respondent relied on the case of Thathyvs.Middle East Bank (k) Ltd &another [2002] eKLR.

50. In the respondent’s view, the balance of convenience thus tits in favour of the 1st defendant.

51. According to the respondent, it is trite law that when a chargor offers his property as security, he offers the same as a commodity for sale and cannot therefore claim that the same has a sentimental value and the Respondent cited in support of that contention JohnNduati Kariuki T/a Johester Merchants Vs. National Bankof Kenya Ltd [2006] eKLR.

52. It was further submitted that the plaintiff has not been completely honest with this court as he held back material information from the court. Therefore, the plaintiff is seeking the court’s assistance yet he is in breach of his own contractual obligation. He cannot seek to use the court to assist him further his illegality. According to the respondent, the remedy of injunction being an equitable one, the Court will decline to exercise its discretion if the applicant is shown to be guilty of conduct which does not meet the approval of the court of equity and support for this position was gathered from Orion East Africa Ltd vs.- Ecobank Kenya Limited (2015) eKLR, where the Court of Appeal dismissed an appeal by the appellant who sought to set aside the orders of the Superior Court that declined to grant an injunction. The court found that the charge had properly been drawn and executed and that substantial amount of money had been credited to the Appellant’s account which money had been drawn and utilised. The Court also found that the appellant had not demonstrated that the debt had been repaid. The Court further held that a litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands is not entitled to any relief, interim or final.

53. This court was urged not to be converted into a haven of refuge by defaulters and this position was based on the decision of Njagi J. in Kyangaro –vs- Kenyac Commercial Bank Ltd & (2004) 1 KLR 126, which was cited with approval by Havelock, J in Patrick Mwangi & Anor –vs- Housing Finance Co. of Kenya [2013] eKLR.

54. According to the respondent, the application and suit herein seek orders that would frustrate any attempt by the respondent to exercise Its right of redemption. On a perusal of the prayers sought in the plaint, it is evident that the plaintiffs seek this court to sanctify his breach of the loan agreement and the respondent being restrained from ever exercising its right of redemption. it was contended that the applicant has not demonstrated his willingness to settle the debt and is underserving of the orders sought. On the basis of the cases quoted herein above, the grounds and reasons hereinabove stated, the respondent prayed that the plaintiffs’ application be dismissed with costs to the respondents.

Determination 55. I have considered the application, affidavit in support and in opposition and the submissions as well as the authorities relied upon.

56. Before delving into the merits of his application, I note that the respondent contends vide the replying affidavit of David Kibira Mathenge, the respondent’s Senior Manager Finance that this court does not have the pecuniary jurisdiction over this matter since the amount claimed by the Applicant to have been wrongly valued is Kshs. 13,500,000/- vis-a –vis the amount valued by the Respondent of Kshs. 9,500,000/-. According to the Respondent, the proper forum is the Magistrate’s Court pursuant to section 7 of the Magistrate’s Court Act. Section 7 provides for the pecuniary jurisdiction of the magistrates courts as follows;(1)A magistrate's court shall have and exercise such jurisdiction and powers in proceedings of a civil nature in which the value of the subject matter does not exceed —(a)twenty million shillings, where the court is presided over by a chief magistrate;(b)fifteen million shillings, where the court is presided over by a senior principal magistrate;(c)ten million shillings, where the court is presided over by a principal magistrate;(d)seven million shillings, where the court is presided over by a senior resident magistrate; or(e)five million shillings, where the court is presided over by a resident magistrate.

57. However, article 165(3) of the Constitution provides as follows:(3)Subject to clause (5), the High Court shall have—(a)unlimited original jurisdiction in criminal and civil matters;………………(e)any other jurisdiction, original or appellate, conferred on it by legislation.

58. Article 165(5)(6) and (7) thereof on the other hand provides that:(5)The High Court shall not have jurisdiction in respect of matters—(a)reserved for the exclusive jurisdiction of the Supreme Court under this Constitution; or(b)falling within the jurisdiction of the courts contemplated in article 162 (2).(6)The High Court has supervisory jurisdiction over the subordinate courts and over any person, body or authority exercising a judicial or quasi-judicial function, but not over a superior court.(7)For the purposes of clause (6), the High Court may call for the record of any proceedings before any subordinate court or person, body or authority referred to in clause (6), and may make any order or give any direction it considers appropriate to ensure the fair administration of justice.

59. The courts contemplated in article 162(2) are those with the status of the High Court to hear and determine disputes relating to employment and labour relations; and the environment and the use and occupation of, and title to, land. A reading of both section 7 of the Magistrate’s Court Act and article 165(3)(a) of the Constitution reveals that subject to the jurisdiction exclusively conferred to the two courts and the supreme court, when it comes to pecuniary jurisdiction, both the High Court and the Magistrate’s Courts can perfectly hear any dispute whose monetary value does not exceed Kshs 20,000,000. 00 depending on the seniority of the presiding officer under the Magistrate’s Court Act since neither the said Act nor the Constitution expressly bar the High Court from entertaining such disputes. It is in that sense that I understand the decision of Nyamu, J (as he then was) in Republic vs. Public Procurement Administrative Review Board &another Ex Parte Selex Sistemi IntegratiNairobi HCMA No. 1260 of 2007 [2008] KLR 728 in which he expressed himself as follows:“The courts guard their jurisdiction jealously, but recognize that it may be precluded or restricted by either legislative mandate or certain special contexts. Legislative provisions which suggest a curtailment of the courts’ power of review give rise to a tension between the principle of legislative mandate and the judicial fundamental of access to courts. Judges must search for critical balance and deploy various techniques in trying to find it. The court has to look into the ouster clause as well as the challenged decision to ensure that justice is not defeated. In our jurisdiction, the principle of proportionality is now part of our jurisprudence. Anyone bred in the tradition of the law is likely to regard with little sympathy legislative provisions for ousting the jurisdiction of the Court, whether in order that the subject may be deprived altogether of remedy or in order that his grievance may be remitted to some other tribunal…It is a well settled principle of law that statutory provisions tending to oust the jurisdiction of the Court should be construed strictly and narrowly. It is a well established principle that a provision ousting the ordinary jurisdiction of the Court must be construed strictly meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the Court.”

60. It follows that any provision purporting to limit the jurisdiction of the High Court must itself derive its validity from the Constitution itself and must do so expressly and not by implication unless the implication is necessary for the carrying into effect the provisions of the Act.

61. In this respect in Kenya Airways Limited vs. Kenya Airline Pilots AssociationNairobi HCMA No. 254 of 2001 [2001] KLR 520, Visram, J (as he then was) held, based on Anisminic Ltd. vs. The Foreign Compensation Commission & Another [1969] 1 All ER 208, that in determining whether the High Court has power to correct an error on the face of the record by way of certiorari notwithstanding the ouster clause, a distinction is to be drawn between an error of law which affects the jurisdiction and one which does not.

62. In matters of jurisdiction of superior courts, it is however my view that one ought to take in consideration the well-known principle as enunciated in East African Railways Corp. vs. Anthony Sefu[1973] EA 327, where it was held that“It is, a well established principle that no statute shall be so construed as to oust or restrict the jurisdiction of the Superior Courts, in the absence of clear and unambiguous language to that effect.”

63. It therefore my view and I hold that the mere fact that the High Court and the Magistrate’s Courts have concurrent jurisdiction in matters whose pecuniary jurisdiction does not exceed Kshs 20,000,000. 00 does not by implication mean that the High Court is stripped of the jurisdiction to entertain such matters. The fact that the applicant’s property has been valued at a price below 20 million does oust the jurisdiction of this Court. This court has an unlimited original jurisdiction. I find this Court is properly seized to hear and determine the application before it.

64. Section 11 of the Civil Procedure Act, however, provides that:Every suit shall be instituted in the court of the lowest grade competent to try it, except that where there are more subordinate courts than one with jurisdiction in the same district competent to try it, a suit may, if the party instituting the suit or his advocate certifies that he believes that a point of law is involved or that any other good and sufficient reason exists, be instituted in any one of such subordinate courts: Provided that—(i)if a suit is instituted in a court other than a court of the lowest grade competent to try it, the magistrate holding such court shall return the plaint for presentation in the court of the lowest grade competent to try it if in his opinion there is no point of law involved or no other good and sufficient reason for instituting the suit in his court; and(ii)nothing in this section shall limit or affect the power of the High Court to direct the distribution of business where there is more than one subordinate court in the same district.

65. It is clear that section 11 aforesaid provides for the procedure for filing suits. It does not purport to provide for the jurisdiction of the courts. Accordingly, it cannot be the basis for a finding that the High Court has no jurisdiction to entertain a matter whose pecuniary jurisdiction falls within the jurisdiction of the Magistrate’s Court. That was the opinion held in Francis S/O Mwijage vs. Boniface S/O Kabalemeza Mwanza HCCA No. 84 of 1968 [1969] EA 146, where it was held that though section 13 of the Civil Procedure Code, [Similar to section 11 of the Civil Procedure Act], provides that every suit shall be instituted in the court of the lowest grade competent to try it, that section, however, is a rule of procedure, not of jurisdiction and does not deprive higher courts of jurisdiction, which they already possess.In other words, while the Magistrate’s Courts Act confers on every tier of the Magistrates Court respective pecuniary jurisdiction, it is not the legal instrument that confers jurisdiction on the High Court. Accordingly, it cannot be invoked to limit the High Court’s pecuniary jurisdiction. Where however, this court finds that there exists concurrent jurisdiction with the Magistrate’s Court, the High Court in the exercise of its powers under section 18 of the Civil Procedure Act and its supervisory jurisdiction, ought to transfer the same to the lowest court having the jurisdiction to try the matter. That, however, is not the same thing as saying that the High Court lacks jurisdiction.

66. On the applicant’s part, he contends that the respondent’s Senior Manager Finance replying affidavit sworn on December 8, 2021 is defective for want of the authority from the respondent in the form of a resolution in a meeting by the Directors.

67. In Presbyterian Foundation & another vs. East African Partnership Limited & Another [2012] eKLR the Court expressed itself as follows:-“…The Civil Procedure Rulesdo not define what an authorized officer of a company is. If the Rules Committee had intended that in cases involving corporations, affidavits be sworn by either the directors or company secretaries nothing would have been easier than for it to have expressly stated so. Accordingly, we must apply the ordinary grammatical meaning of the word “authorize” which is defined by oxford Dictionary as “sanction”, give authority, “commission.” That being the position, whether or not the 2nd Plaintiff was given authority to swear the verifying affidavit is a matter of evidence and cannot certainly be the subject of a preliminary objection unless the said fact is admitted. There exists no law or precedent to support the argument that a Plaintiff Company is obliged to file a resolution of said Company authorizing the appointment of counsel to act on behalf of the said Company…In the supporting Affidavit dated 8th April 2019 and the supplementary Affidavit dated 26th June 2019, Shane Leahy stated that he was a Director of the Plaintiff Company and had been duly authorized to swear the Affidavit on behalf of the Company. This in my view is sufficient…”

68. A similar position was taken by the Court of Appeal in Saraf Limited vs. Augusto Arduin [2016] eKLR where the Court stated that:-“…We know of no law that makes it a requirement for a limited liability company that has been sued to furnish proof or to demonstrate that it’s Board of Directors or its shareholders have authorized it to defend the suit. If this were the law, logistical reasons would render it difficult or near impossible for companies to defend suits having regard to the strict time-lines within which appearance and defence must be filed. A limited liability company is a legal person with capacity to sue and be sued (se Solomon & Solomon [1897]AC 22 (H.L). Because it has no blood and tissue, a limited liability company acts through its Board of Directors. The directors are invested with management and superintendence of its affairs and may lawfully exercise all its powers subject to the Articles of Association and to the law…”

69. Hewett, J. in Assia Pharmaceuticals vs. Nairobi Veterinary Centre Ltd. Nairobi (Milimani) HCCC No. 391 of 2000 on his part held that:“It is settled law that where a suit is to be instituted for and on behalf of a company there should be a company resolution to that effect…As regards litigation by an incorporated company, the directors are as a rule, the persons who have the authority to act for the company; but in the absence of any contract to the contrary in the articles of association, the majority of the members of the company are entitled to decide even to the extent of overruling the directors, whether an action in the name of the company should be commenced or allowed to proceed. The secretary of the company cannot institute proceedings in the name of the company in the absence of express authority to do so; but proceedings started without proper authority may subsequently be ratified.”

70. Based on these decisions, I see no reason to warrant finding that the replying affidavit of the respondent’s Finance Manger is defective for want of authority.

71. The applicant is seeking an order of temporary injunction against the Respondent whether by itself, its agents, servants and/or employee from selling his parcel of land L.R Machakos/Kiandani/5011 located at Mwanza area along Machakos-Nairobi road and the storey building built on the land.

72. The court’s discretion to grant temporary injunction is provided for under order 40 rule (1) and (2) of the Civil Procedure Rules, 2010 which provide that:1. Where in any suit it is proved by affidavit or otherwise—(a)that any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; or(b)that the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the plaintiff will or may be obstructed or delayed in the execution of any decree that may be passed against the defendant in the suit, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further orders.(1)In any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgment, apply to the court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained of, or any injury of a like kind arising out of the same contract or relating to the same property or right.(2)The court may by order grant such injunction on such terms as to an inquiry as to damages, the duration of the injunction, keeping an account, giving security or otherwise, as the court deems fit.

73. The principles guiding the grant of interlocutory application are now well settled. Those principles were set out in East African Industries vs. Trufoods [1972] EA 420 and Giella vs. Cassman Brown & Co. Ltd [1973] EA 358. In Nguruman Limited vs. Jan Bonde Nielsen & 2others [2014] eKLR the court restated the law as follows:“In an interlocutory injunction application, the applicant has to satisfy the triple requirements to;(a)establish his case only at a prima facie level,(b)demonstrate irreparable injury if a temporary injunction is not granted, and(c)allay any doubts as to (b) by showing that the balance of convenience is in his favour.These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established that all the above three conditions and stages are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. See Kenya Commercial Finance Co. Ltd V. Afraha Education Society [2001] Vol. 1 EA 86. If the applicant establishes a prima facie case that alone is not sufficient basis to grant an interlocutory injunction, the court must further be satisfied that the injury the respondent will suffer, in the event the injunction is not granted, will be irreparable. In other words, if damages recoverable in law is an adequate remedy and the respondent is capable of paying, no interlocutory order of injunction should normally be granted, however strong the applicant’s claim may appear at that stage. If prima facie case is not established, then irreparable injury and balance of convenience need no consideration. The existence of a prima facie case does not permit “leap-frogging” by the applicant to injunction directly without crossing the other hurdles in between. It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or both that the question of balance of convenience would arise. The inconvenience to the applicant if interlocutory injunction is refused would be balanced and compared with that of the respondent, if it is granted.”

74. While reiterating the said principles, Ringera, J (as he then was) in Airland Tours & Travel Limited vs. National Industrial Credit Bank Nairobi (Milimani) HCCC No. 1234 of 2002 stated that in an interlocutory application the Court is not required to make any conclusive or definitive findings of fact or law, most certainly not on the basis of contradictory affidavit evidence or disputed propositions of law. That was the same position adopted in the dicta in Nairobi High Court Civil Case No. 517 of 2014 –Lucy Nungari Ngigi & 4 Others vs. National Bank of Kenya Limited &anor (2015) eKLR where it was stated:“....I am also aware that the 1st defendant has raised issues in respect of the mortgage herein, their right to exercise the statutory power of sale, breach of the addendum, default of repayment of the loan etc. They have also raised some accountability issues from the 2nd defendant on the purchase price. But even these queries should be reserved for and determined at the trial. These issues are in direct conflict with issues raised by the Plaintiffs and the 2nd defendant. At this stage I should not make any comments or findings, or express opinions on the substantive issues in controversy in order to avoid hurting the trial herein...”

75. However, the court is not excluded from expressing a prima facie view of the matter and the court is entitled to consider what else the deponent to the supporting affidavit has stated on oath which is not true, for example, when he denies being served with the statutory notices and considering the already exposed untruth of the applicant with regard to service of statutory notices one is not inspired to have much confidence in the truth of her deposition that she did not appear before an advocate to execute the charge and have the effects of the pertinent provisions of law explained to her.

76. It was therefore held by Ringera, J (as he then was) in Dr. Simon Waiharo Chege vs. Paramount Bank of Kenya Ltd. Nairobi (Milimani) HCCC No. 360 of 2001:“The remedy of injunction is one of the greatest equitable relief. It will issue in appropriate cases to protect the legal and equitable rights of a party to litigation which have been, or are being or are likely to be violated by the adversary. To benefit from the remedy, at an interlocutory stage, the applicant must, in the first instance show he has a prima facie case with a probability of success at the trial. If the Court is in doubt as to the existence of such a case, it should decide the application on a balance of convenience. And because of its origin and foundation in the equity stream of the jurisdiction of the Courts of judicature, the applicant is normally required to show that damages would not be an adequate remedy for the injury suffered or likely to be suffered if he is to obtain an interlocutory injunction. As the relief is equitable in origin, it is discretionary in application and will not issue to a party whose conduct as appertains to the subject matter of the suit does not meet the approval of the eye of equity.”

77. According to the Court of Appeal in Esso Kenya Limited. vs. Mark Makwata Okiya Civil Appeal No. 69 of 1991:“The principles underlining the granting or refusal of injunction are well settled in several decisions of the court. Where an injunction is granted, it will preserve or maintain the status quo of the subject matter pending the determination of the main issue before the court. The merits or demerits of granting injunction orders deserve greater consideration. The court should avoid granting orders which have not been asked for in the application before it or determine issues in the suit before the actual hearing. In cases where an award of damages could be adequate compensation, an injunction should not be granted. On an application for an injunction in aid of a plaintiff’s alleged right, the court will usually wish to consider whether the case is so clear and free from objection on equitable grounds that it ought to interfere to preserve property without waiting for the right to be finally established. This depends upon a variety of circumstances, and it is impossible to lay down any general rule on the subject by which the court ought in all cases to be regulated, but in no case will the court grant an interlocutory injunction as of course...The court ought to look at the allegations in the affidavits by the plaintiff and the defendant and weigh them whether there is a possibility of the plaintiff succeeding or whether there is a possibility of quantifying damages. Only in cases of doubt court will proceed on the basis of the balance of convenience while being aware that formal evidence will be adduced at the hearing...The principle underlying injunctions is that the status quo should be maintained so that if at the hearing the applicant obtains judgement in his favour the respondent will have been prevented in the meantime from dealing with the property in such a way as to make the judgement nugatory…As it is settled law that where the remedy sought can be compensated by an award of damages then the equitable relief of injunction is not available.”

78. Therefore, though at an interlocutory stage the court is not required and indeed forbidden to purport to decide with finality the various relevant “facts” urged by the parties, the remedy being an equitable one, the Court will decline to exercise its discretion if the supplicant to relief is shown to be guilty of conduct which does not meet the approval of the Court of equity. Injunction being an equitable remedy, the court is enjoined to look at the conduct of the supplicant for the injunctive orders, the surrounding circumstances whether the orders sought are likely to affect the interests of non-parties to the suit, the issue whether an undertaking as to damages has been given as well as the conduct of the Respondent whether or not he has acted with impunity. The Court is also, by virtue of section 1A(2) of the Civil Procedure Act, enjoined to give effect to the overriding objective as provided under section 1A(1) of the said Act in exercising the powers conferred upon it under the Civil Procedure Act or in the interpretation of any of its provisions. One of the aims of the said objective as interpreted by the Court of Appeal is the need to ensure equality of arms, the principle of proportionality and the need to treat all the parties coming to court on equal footing.

79. What then constitutes a prima facie case? In the case of Mrao Ltd vs. First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, the Court of Appeal held as follows:“The principles which guide the Court in deciding whether or not to grant an interlocutory injunction are, first, an applicant must show 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...A mere scintilla of evidence can never be enough: nor can any amount of worthless discredited evidence. It is true that the Court is not required at that stage to decide finally whether the evidence is worthy of credit, or whether if believed it is weighty enough to prove the case conclusively: that final determination can only properly be made when the case for the defence has been heard. It may not be easy to define what is meant by “prima facie case”, but at least it must mean one on which a reasonable tribunal, properly directing its mind to the law and the evidence could convict if no explanation is offered by the defence...The terms “prima facie” case, and “genuine and arguable” case do not necessarily mean the same thing, for in using another term, namely a sustainable cause of action, the words “prima facie” are frequently used to refer to a case which shifts the evidential burden of proof, rather than as giving rise to a legal burden of proof in the manner of considering, which was in relation to the pleadings that had been put forward in the case. It would be in the appellant’s interest to adopt a genuine and arguable case standard rather than one of a prima facie case, the former being the lesser standard of the two...In civil cases a prima facie case is a case in 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 to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.”

80. While adopting the same position the Court of Appeal in Nguruman Limited vs. Jan Bonde Nielsen & 2others [2014] eKLR added that:“The party on whom the burden of proving a prima facie case lies must show a clear and unmistakable right to be protected which is directly threatened by an act sought to be restrained, the invasion of the right has to be material and substantive and there must be an urgent necessity to prevent the irreparable damage that may result from the invasion. We reiterate that in considering whether or not a prima facie case has been established, the court does not hold a mini trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right which has been or is threatened with violation. Positions of the parties are not to be proved in such a manner as to give a final decision in discharging a prima facie case. The applicant need not establish title it is enough if he can show that he has a fair and bona fide question to raise as to the existence of the right which he alleges. The standard of proof of that prima facie case is on a balance or, as otherwise put, on a preponderance of probabilities. This means no more than that the court takes the view that on the face of it the applicant’s case is more likely than not to ultimately succeed.”

81. In determining this matter, the court is enjoined to not only consider the contractual instruments entered into between the parties herein but also the legal regime guiding the transaction in question. That the position of the Court of Appeal in Keziah Njambi Maingi t/a Arrivals Textile Shop vs. Barclays Bank of Kenya Limited (2016) eKLR where it made the following remarks with regards the exercise of statutory power of sale:“A charge is not merely a contract of lending between a lender and a borrower. It is also governed by the elaborate statutory provisions in part VII of the Land Act and Part V of the Land Registration Act. By section 90 and read with section 96(1) of the Land Act, the chargee has power to exercise power of sale of the charged land, if, inter alia, the chargor defaults in payment of money due under a charge and if all, the requisite notices have been served on the chargor.”

82. In this case it is not in dispute that the Applicant was the registered owner of parcel of land No. Machakos/Kiandani/5011 (the suit property). The Applicant does not dispute that he was advanced a loan by the Respondent. It is not disputed that the parcel of land was charged as security for the loan repayment. It is not disputed that the Applicant was an employee of the Respondent but later ceased to be an employee of the Respondent before he could complete paying the loan.

83. As to whether the applicant has made a prima facie case with a probability of success, the Applicant contended that the defendant, being an insurance Company is not authorized to advance loans at an interest rate hence can only recover the amount advanced. Without purporting to determine the issue, I am aware of the decision in Daniel Munene Kabogo vs. Apollo Insurance Company Limited [2011] eKLR, where Ojwang, J (as he then was) stated that:“The plaintiff, who moved this court, while admitting that there was a charge agreement between himself and the defendant, and that under this charge he had received loan-monies, made no straightforward case demonstrating that such monies were non-repayable. The burden of the plaintiffs’ case was that the defendant was bound by the Insurance Act to limit itself to insurance business; and that the provisions of the Banking Act did not allow the defendant to lend money, nor, much less, to lend at interest rates which had not been approved by the Central Bank of Kenya.This argument misses the real relationship, of immediate legal relevance, that held the parties together: there was a consensus ad idem, under which a charge document was prepared, and duly signed by the plaintiff; under this charge, certain monies were advanced to the plaintiff, on specified terms; part of the charge contract related to premium payments on certain policies taken out by the plaintiff; in the normal play of these transactions, the plaintiff was under duty to make periodic payments to the defendant; the plaintiff, after some time, became reluctant to make the said payments; the effect was that the plaintiff was in default, in performing the terms of the original contract. These fundamentals are, in my opinion, not qualified by rather peripheral questions now raised by the plaintiff: such as, the defendant having advanced the loan contrary to some law; the defendant failing to conduct its mortgage arrangement as a financial institution as defined in the Banking Act; the defendant failing to charge the interest rates stipulated under the Central Bank of Kenya Act. In my opinion, the defendant was only conducting its normal business of insurance, and at the same time rendering related services to its customers.Consequently, I hold that the plaintiff has not shown the merits of his case, which, consequently, must be dismissed. I dismiss the suit, and award costs to the defendant.”

84. Similar position was adopted in George Lalla Oduor vs. Cannon Assurance (K) Ltd [2016] eKLR where it was held as follows:“In this case the plaintiff attempted to adduce parole evidence in order to contradict documentary evidence. However as was held in Kenya Commercial Finance Company Ltd vs. Kipng’eno Arap Ng’eny & Another (supra), parole testimony cannot be received to contradict, vary, add to or subtract from the terms in which the parties have deliberately agreed to record any part of their word…This was the position adopted by the Court of Appeal in Husamuddin Gulamhussein Pothiwalla Administrator, Trustee and Executor of The Estate of Gulamhussein Ebrahim Pothiwalla vs. Kidogo Basi Housing Corporative Society Limited and 31 Others Civil Appeal No. 330 of 2003 that:“A court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge. It is clear beyond peradventure that save for those special cases where equity might be prepared to relieve a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain.”I have considered the decision inOrion East Africa Ltd vs. Housing Finance Co. of Kenya Ltd Nairobi HCCC No. 914 of 2001 where the learned Judge expressed himself as follows:“When any loan account goes into arrears, penalty interest is normally chargeable and, in this case, even going by the letter of 27th May,1998, I have referred to hereinabove, this account went into arrears and cannot be said to have been properly serviced. Penalty interest was therefore called for and I cannot see any valid complaint on that. As to charging of interest rate that were not part of the agreement, the applicant did sign the charge through its Director and Director/Secretary on 18th March, 1997. ”In this case the plaintiff had the benefit of advice from his own legal representative.I further agree with the position adopted in Fina Bank Limited vs. Spares & Industries Limited (supra) that save for those special cases where equity might be prepared to relieve a party from a bad bargain it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain. In the said case the Judge was faulted for substituting what he thought ought to have been proper rate of interest in place of what was agreed by the parties.On the issue whether the defendant had the powers to advance loans on securities, the Central Bank of Kenya was clear that it does not regulate insurance companies and the plaintiff was referred to Insurance Regulatory Authority but it seems that the plaintiff failed to take this very apt advice seriously. However, a reading of section 50 of the Insurance Act seems to permit the insurance companies to invest by way of advancement and to take securities. The plaintiff has not shown in what manner this provision was violated by the defendant. In the premises I agree with the decision in w but also in assuming in Coast Brick & Tiles Ltd & Others vs. Premchand Raichand Ltd (supra) that the Court ought not to have sympathy for debtors who after executing valid security documents and benefiting therefrom, later turn around challenging the validity thereof years when the Bank commences the realisation of the securities in order to frustrate the bank from the said realisation.”

85. In this regard, Pall, J (as he then was) in the case Muhani & Another vs. National Bank of Kenya Ltd [1990] KLR 73 stated as follows:“The mortgagor who has given an express power of sale cannot by starting a suit perhaps a perfectly hopeless suit derogate from that which it has in express terms conferred upon the mortgagee by the instrument namely a statutory power of sale and to hold otherwise would be simply to tear up the instrument which contains the contract agreed upon by the parties...The very object of the legislation granting a chargee a statutory power of sale would be negated if the courts interfere with his statutory or contractual powers unless, of course there is an allegation of fraud or improper exercise of the power of sale.”

86. Based on the foregoing, I am not ready to find that this particular issue raises a prima facie case for the purposes of grant of injunctions.

87. The second issue raised is that of the service of statutory notices. According to the Applicant, he was not served with the statutory notices through registered post as alleged by the Respondent as certificate of postage in the Respondent’s annextures bear the postal address Machakos Town whose postal code is 90100b when the notices purported to have been served by Philips International Auctioneers and even the Charge instrument bear his postal address as P.O Box 43-90126, Kahawa-Makueni. To controvert this allegation, the Respondent exhibited the said notices and what, in its view, constituted evidence of service of the said notices. However, the said evidence indicated, at least in one of them, that the destination of the letter was ‘Machakos Town [90100]’ and not to P.O BOX 43-90126, Kalawa-Makueni as the body of the notices indicated. Section 90(1) of the Land Act, 2012 provides that:If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or any part thereof due under any charge or in the performance or observation of any covenant, express or implied, in any charge, and continues to be default for one month, the chargee may serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be.

88. On the other hand, section 96(1) of the same Act provides that:Where a chargor is in default of the obligations under a charge and remains in default at the expiry of the time provided for the rectification of that default in the notice served on the chargor under section 90 (1), a chargee may exercise the power to sell the charged land.

89. In light of the uncertainty as to the destination of the said notices, I find that there was a possibility that the statutory notices were sent to the wrong address hence the statutory power of sale intended to be exercised by the respondent was un procedural and/or illegal. In Nyagilo Ochieng &another Vs. Fanuel Ochieng & 2others Civil Appeal No. 148 of 1995 [1995-1998] 2 EA 260 the Court of Appeal while dealing with section 74(1) of the repealed Registered Land Act held that:“It is trite that before a chargee can exercise his/her/its statutory power of sale there must be compliance with section 74(1) of the Registered Land Act (Cap 300 Laws of Kenya). This section obliges the chargee to serve, by registered post, the relevant statutory notice. Three months after the chargor’s receiving such notices the bank’s power of sale arises. This is the basis upon which the bank can put up the properties for sale. The appellants stated, in their plaint, that they did not receive any statutory notices. This averment should have put the bank on guard. It is for the chargee to make sure that there is compliance with the requirements of section 74(1) of the Registered Land Act. That burden is not in any manner on the chargor. Once the chargor alleges non-receipt of the statutory notice it is for the chargee to prove that such notice was in fact sent. Although the last known address of the appellants was correct, it must be understood that in face of the denial of receipt of statutory notice or notices it is incumbent upon the chargee to prove the posting. It would have been a very simple exercise for the bank to produce a slip or letters containing statutory notice or notices. The bank did not do so. Instead an officer from the bank simply produced file copies of the notices to prove that the same were sent. Even on a balance of probability it is not sufficient to say that a file copy is proof of posting. Unless the receipt of statutory notice is admitted, posting thereof must be proved and upon production of such proof the burden of proving non-receipt of such notice or notices shifts to the addressee as is contemplated by section 3(5) of the Interpretation and General Provisions Act, Cap 2, Laws of Kenya. It is quite possible that such notices were sent but that fact, in the face of the denial of receipt, must be proved. It is possible that the letters addressed to the two appellants were received by the first respondent who avoided telling the appellants of anything about the same as he was the “villain in the matter”. In the absence of proof of such posting the Court is constrained to hold that the sale by auction was void. The learned Judge fell into error and misdirected himself when he held that the notices were sent to their correct address on the supposition alone that the postal address of the appellants was P. O. Box 120, SARE…In coming to the conclusion, the Court has reached, it cannot but entertain the view that the bank ought to have been more careful in proving service of the statutory notices. Failure of such proof has resulted in an innocent purchaser for value being deprived of the title to the suit properties.”

90. The applicant also took issue with the rate at which the interests were being loaded onto the account which according to him was not contractual. The issue of interest however, may not be such a crucial issue where default is acknowledged since that would only go to prove that the amount due is disputed. However, as held the case of Mrao Limited -vs- First American Bank of Kenya Ltd & 2others [2003] eKLR:“The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has began 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.”

91. What I understand the court to be saying is that where the mortgagee disputes the amount claimed, for him to get an injunction stopping the sale, he has to pay the amount, claimed by the mortgagee to be due, into court. However, he may obtain an injunction if he claims that under the terms of the mortgage the amount is excessive. In that event, it is my view that for him to benefit from the orders of injunction he must deposit the amount that he admits to be due from him to the mortgagee.

92. In this case the applicants claim follows under the latter category of claims. I note that the respondent’s acceptance letter dated June 28, 2016 confirming its willingness to grant the applicant a loan, stipulated that the interest to be charged for the loan repayment was 8% or as may be directed by the Management and subject to the requirements of the Commissioner of Tax. In the charge instrument I note that it is indicated that the interest to be charged was 8% per annum (variable) while in statement of accounts, the interest charged was 8% per month on a reducing balance contrary to the terms of the Charge instrument. In the Redemption Notice, the interest was to be charged at 14% per annum while in the statutory demand the interest to be charged was 13. 5% per annum plus a default interest of 10% per annum.

93. Section 84(1) of the Land Act provides that;Where it was contractually agreed upon that the interest rate is variable, the interest rate of interest payable under a charge may be reduced or increased by a written notice served on the charger by the charge.

94. Based on the above document, the applicant’s claim that the amount claimed is excessive in accordance with the terms of the mortgage cannot be said to be frivolous since there is no evidence that he was notified before the various variations in the interest rates was effected. However, he has not expressed his readiness and willingness to pay the amount that he acknowledges is due and owing from him to the respondent.

95. Regarding the allegations of undervalue, section 99(4) of the Land Act provides as follows:A person prejudiced by an unauthorised, improper or irregular exercise of the power of sale shall have a remedy in damages against the person exercising that power.

96. Dealing with such a scenario, the court in Joyce Wairimu Karanja vs. James Mburu Ngure & 3others [2018] eKLR appreciated that:“both statutory and decisional law have clearly stated that the remedy for a mortgagee who has suffered damages as a result of improper auction, is not to reverse the auction against an innocent purchaser – but in damages.”

97. A similar position was adopted in Bomet Beer Distributors Ltd &another vs. Kenya Commercial Bank Ltd & 4others [2005] eKLR, where the court held that:“The fact that they have alleged that the sale by public auction was fraudulently conducted by the chargee does not prima facie proof that they are entitled to the orders of injunction sought. Statutory provisions in the event of such an eventuality is clear. If a party is aggrieved by the way the sale was conducted by public auction, he can only seek to be awarded damages…What is clear is that once a property has been knocked down and sold in a public auction by a chargee in exercise of its statutory power of sale, the equity of redemption of the chargor is extinguished. The only remedy for the chargor who is dissatisfied with the conduct of the sale is to file suit for general or special damages…The balance of convenience tilts in favor of the 5th Defendant who purchased the property at the public auction. He has invested his financial resources but has been unable to enjoy the use of the said properties. It would be inequitable to keep the 5th Defendant away from his property just because the plaintiffs feel aggrieved by the way the chargee exercised its statutory power of sale in a public auction.”

98. Therefore, as the statute provides for a specific remedy, the remedy of injunction is not available in those circumstances.

99. In the premises, I find that the applicant has established a prima facie case as regards the service of the notices only. In my view of the above findings I find that the Applicant has established a prima facie case worthy of trial in the main suit.

100. Regarding the second principle whether the applicant has proved that that he stands to suffer irreparable injury, it was explained in Nguruman Limited vs. Jan Bonde Nielsen & 2others[2014] eKLR that:“On the second factor, that the applicant must establish that he “might otherwise” suffer irreparable injury which cannot be adequately remedied by damages in the absence of an injunction, is a threshold requirement and the burden is on the applicant to demonstrate, prima face, the nature and extent of the injury. Speculative injury will not do; there must be more than an unfounded fear or apprehension on the part of the applicant. The equitable remedy of temporary injunction is issued solely to prevent grave and irreparable injury; that is injury that is actual, substantial and demonstrable; injury that cannot “adequately” be compensated by an award of damages. An injury is irreparable where there is no standard by which their amount can be measured with reasonable accuracy or the injury or harm is such a nature that monetary compensation, of whatever amount, will never be adequate remedy.”

101. The general position is that an injunction ought not to be granted if the applicants may be compensated by an award of damages. In John Nduati Kariuki T/A Johester Merchants vs. National Bank of Kenya Ltd Civil Application No. Nai. 306 of 2005 [2006] 1 EA 96 the Court of Appeal held as follows:“A bank has no money of its own and it is axiomatic that it uses public funds to trade with. The applicant having obtained a large amount of those funds and had full benefit of it and having offered securities knowing fully well that they would be sold if he defaulted on the terms stated in the security documents, cannot be heard to say that the securities are unique and special to him as the bank is capable of refunding such sums as may be found due to the applicant, if any, and that capacity has not been challenged.”

102. In this case, the Applicant contends that if the orders are not granted Applicant’s property will be auctioned rendering his family homeless despite that the property was offered as security for the loan repayment. However, according to Ringera, J in the case Elijah Kipng’eno Arap Bii vs. Kenya Commercial Bank Limited [2001] eKLR:“…once property is offered as security it by that very fact becomes a commodity for sale. And there is no commodity for sale whose loss cannot be compensated adequately in damages.”

103. It was however held by Ringera, J (as he then was) in Martha Khayanga Simiyu vs. Housing Finance Co. of Kenya & 2othersNairobi HCCC No. 937 of 2001 [2001] 2 EA 540 that:“A statutory notice which does not give the plaintiff a period of three months from the date of service to redeem the charged property as required by Section 74(2) of the RLA is defective…The chargee has no lawful power to sell the charged property for default in payment of charge debt unless and until the chargor has been served with a notice in writing demanding such payment and the chargor has failed to comply within three months of the date of service of such notice…The irregularities in the exercise of the power of sale, which are remediable in damages, do not in the premises comprehend failure to serve adequate statutory notice…Service of both an adequate statutory notice and notification of sale are necessary conditions precedent for the valid exercise of the statutory power of sale under the R.L.A and without compliance with those statutory commands, there can be no valid exercise of the power of sale and therefore it cannot be said that the chargor’s equity of redemption is extinguished in any sale conducted in breach thereof. Neither can it properly contended that the chargor’s remedies if any such sale has taken place is in damages as provided in Section 77(3) of the Act. Without compliance with those conditions precedent, the purported sale would be void and liable to be nullified at the instance of the chargor…Once a property has been charged to secure financial accommodation it ipso facto becomes a commodity for sale and there is no commodity for sale whose loss cannot be compensated in damages but the law is not that an interlocutory injunction can never issue where damages would be an adequate remedy and the Respondent is in a position to pay them. That is the normal course but not the invariable course. The court has to take into account the conduct of the Respondent and the gravity of the breaches of law or contract alleged otherwise it would confer a carte blanche on those who are rich enough to pay all quantums of damages to ride roughshod over the rights of other persons. The rich do not fear to pay damages and they must be compelled to submit to the authority of the law by being put to other perils.”

104. I associate myself with Korir J. in Stars & Garters Restaurant & another vs. National Bank of Kenya Limited [2019] eKLR that:-“…a chargor whose security is sold without compliance with the statutory provisions and the terms of the mortgage will suffer irreparable loss. Whereas it is true that a security offered to secure a loan can be sold where there is default in payment of the loan, it is also correct that a genuine and sincere mortgagor in taking a loan intends to pay the same. The loss of a property sold in breach of statutory provisions translates to irreparable loss. Once the property is sold in compliance with the law, it cannot be recovered from the purchaser who has bought it in a public auction. In such circumstances it cannot be said that money will be adequate compensation to the mortgagor. It is therefore find and hold that the applicants have established that they will suffer irreparable loss if injunctive orders are not issued.”

105. In the case of Joseph Siro Mosioma vs. Housing Finance Company of Kenya Limited & 3others [2008] eKLR it was held as follows by Warsame, J (as he was then) that;“...that damages is not automatic remedy when deciding whether to grant an injunction or not. Damages is not and cannot be substituted for the loss which is occasioned by a clear breach of the law, in any case, the financial strength of a party is not always a factor to refuse an injunction. More so a party cannot be condemned to take damages in lieu of his crystallized right which can be protected by an order of injunction.”

106. Based on my finding as regards, the prima facie validity of the notice I find that the applicant has established both a prima facie case and possibility of irreparable loss being occasioned to him if the injunction is not granted. In the circumstances, I am not called upon to deal with the third condition.

107. In the premises, I grant an order of temporary injunction restraining the respondent whether by itself, its agents, servants and/or any other person working under the defendant’s/applicant’s instructions and authority from auctioning, dealing with, alienating or in any other way disposing off the plaintiff’s/applicant’s parcel of land LR Machakos/Kiandani/5011 located at Manza area along Machakos-Nairobi Road opposite KMTC Manza Campus within Machakos Town pending the hearing and determination of the main suit.

108. The costs of this application to abide by the outcome of the suit.

109. I however appreciate that this is a commercial dispute. Default is not denied but the amount is in dispute. In my view, it is in the interest of all parties that the dispute be brought to an end as soon as possible so as to avoid escalation of interest.

110. Accordingly, this matter is referred to mediation. Consequently, there will be a stay of proceeding pending the said process for a period of 60 days or unless otherwise directed by this court.

111. It is so ordered.

RULING READ, SIGNED AND DELIVERED AT MACHAKOS THIS 13TH DAY OF JUNE, 2022. G.V. ODUNGAJUDGEIn the presence of:Mr Kilonzo for the PlaintiffMr Kithinji for Mr Kigata for the RespondentCA Susan