Mwangi (Suing as the Administrator of the Estate of Rushia Nyokabi Mwangi Deceased) v M-Oriental Bank Limited [2023] KEHC 24727 (KLR)

Mwangi (Suing as the Administrator of the Estate of Rushia Nyokabi Mwangi Deceased) v M-Oriental Bank Limited (Civil Suit 6 of 2023) [2023] KEHC 24727 (KLR) (1 November 2023) (Ruling)

Neutral citation: [2023] KEHC 24727 (KLR)

Republic of Kenya

In the High Court at Kitale

Civil Suit 6 of 2023

AC Mrima, J

November 1, 2023

Between

Peter Njau Mwangi (Suing as the Administrator of the Estate of Rushia Nyokabi Mwangi Deceased)

Plaintiff

and

M-Oriental Bank Limited

Defendant

Ruling

Introduction 1. This ruling relates to an application by way of a Notice of Motion dated 18th August, 2023. The application was taken out by the Plaintiff in his capacity as the Administrator of the Estate of Rushia Nyokabi Mwangi (Deceased).

2. The suit herein centres around the financial dealings of the Deceased with the Defendant prior to her demise on 7th November, 2020. And, the application, in particular, sought injunctive orders against the Bank’s attempts to realize securities used in transactions between the Bank and the Deceased.

3. The application is strenuously opposed, hence, this ruling.

The Application: 4. The application was brought under Sections 1A, 1B, 3, 3A, 63 and 81 of the Civil Procedure Act, Section 103, 104 and 106 of the Land Act and Order 40 Rule 1 of the Civil Procedure Rules.

5. It sought the following reliefs: -1. …... Spent;2. That pending the hearing and determination of this application inter partes there be temporary order of injunction restraining the defendant/respondent whether by itself, its servants and/or agents from selling the land parcels comprised in the title numbers; Nakuru Municipality Block 24/265 and 267,Uasin-Gishu/El-Lahre/45 and Land Reference No.13637/10 (I.R NO.63637) all in the names of Rushia Nyokabi Mwangi (Deceased)3. That pending the hearing and determination of the suit herein, there be temporary order of injunction restraining the defendant/respondent whether by itself, its servants and/or agents from selling the land parcels comprised in the title Numbers Nakuru Municipality Block 24/265 and 267, Uasin-Gishu/El-Lahre/.45 and Land Reference No.13637/10 (I.R No.63637) all in the names of Rushia Nyokabi Mwangi (Deceased).4. That costs of this application be provided for.5. That the Honourable court be pleased to make such further or other orders as it may deem fit and expedient in the circumstances of this case.

6. The grounds upon which the above orders were sought were contained in the body of the application and deposed to vide the Applicant’s Supporting Affidavit sworn on the even date and Supplementary Affidavit sworn on 4th October, 2023. The Applicant also filed written submissions.

7. The application is opposed through the Respondent’s Replying Affidavit sworn by one Celine Waweru on 26th September, 2023.

8. The brief facts in this matter are that the Deceased was a longtime customer to the Defendant/Bank. They enjoyed a cordial relationship. In the course of time, the Deceased sought for overdrafts and loans from the Bank. Her requests were acceded to. Several legal charges were created over properties owned by the Deceased.

9. When the Deceased passed on sometimes in November, 2020 the Bank sought to recover some outstanding amounts from the family of the Deceased, but the efforts were not fruitful. Subsequently, the Bank opted to exercise its power of sale over the charged properties.

10. Resulting from the recovery steps by the Bank, the instant suit was instituted.

11. The gravamen of the Plaintiff’s claim is mainly threefold. First, that by the time of her demise, the Deceased was not in any loan default, hence, the Bank’s interests were secured by the personal insurance covers which were precedent to advancement of any monies to the Deceased. The Bank could not, therefore, seek to recover any balances as a result of the insurance covers. The second ground was that the Bank has been issuing several demand notices with extremely varying degrees of the alleged balances over the Deceased’s loan account. Such, was argued to be at variance with the loan statements filed by the Bank. And, lastly, that the validity of the Statutory notices issued was put to test.

12. The Applicant filed written submissions. He expounded on the above grounds and referred to several decisions in support of his case. He submitted that this was a case where the Bank was seeking to unfairly dispose of the Deceased’s property and yet it would be fully reimbursed out of the Deceased’s personal insurance cover or alternatively, the Bank was negligent in not ensuring that there were valid and running personal insurance covers. Either way, the Applicant argued, was a sound reason to decline the Bank from disposing of the deceased’s property.

13. Without prejudice to the above, the Applicant further argued that going by the demand notices issued by the Bank, it was not even possible to ascertain the alleged indebtness. That, it was argued, called for a scrutiny of the loan account statements at the trial of the suit. The Applicant also decried that the mandatory statutory notices were not properly issued in law.

14. In the end, it was submitted that the Applicant had satisfied all the legal considerations for the grant of the interlocutory reliefs and the Court was urged to grant the reliefs.

15. The Respondent vide the Replying Affidavit deposed that the application ought to be disallowed since none of the conditions precedent to granting of the reliefs sought had been proved.

16. According to the Bank, the Applicant had not demonstrated any case, whether prima facie or otherwise, to warrant the grant of the orders sought. It was further its case that the issue of the alleged different balances did not hold since the basis were the Letters of Offer which the Applicant had not impugned in any way.

17. The Bank found no fault with the statutory notices issued. It vouched for utmost compliance with the law.

18. On the contention surrounding the personal insurance cover by the Deceased, the Bank argued that the cover was an additional security which was at the discretion of the Deceased and that the failure thereof by the Deceased cannot be visited upon it.

19. Through its written submission, the Bank reiterated the foregoing. It buttressed its position, through case law, and urged this Court to dismiss the application.

Analysis: 20. This Court has carefully considered the application, the Affidavits and annexures thereto as well as the submissions on record and the law.

21. Being a matter on whether injunctive reliefs ought to issue, the Court remains alive to the law governing such arena in civil disputes, being Order 40, Rule 1 and 2 of the Civil Procedure Rules and the settled judicial principles.

22. It is undeniable that the principles for consideration in injunctive reliefs are well settled courtesy of the much-celebrated case in Giella vs. Cassman Brown (1973) E.A. 358. The case developed the following three principles: -a.The Applicant to demonstrate a prima facie case with probability of success;b.The Applicant to show that will suffer irreparable loss or damage that will not be adequately compensated by an award of damages;c.If in doubt on the above two requirements, the Court to decide the matter on the balance of convenience.

23. Going forward, a consideration of the requirements will now follow.

A Prima Facie case: 24. A prima facie case was defined by the Court of Appeal in Civil Appeal No. 77 of 2012, Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR as under: -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.”

25. In Mrao vs. First American Bank of Kenya Limited & 2 Others (2003) KLR 125 a prima facie case was defined to mean:…. In a civil application includes but is not confined to a ‘genuine and arguable case’. It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the later.

26. In David Ndii & others v Attorney General & others [2021] eKLR, the Court had the following to say about a prima-facie case: -45. The first issue for determination in matters of this nature, is whether a prima facie case has been established and a prima facie case, it has been held, is not a case which must succeed at the hearing of the main case. However, it is not a case which is frivolous. In other words, it has to be shown that a case which discloses arguable issues has been raised and, in this case, arguable constitutional issues.

27. What constitutes a prima-facie case was further dealt with by the Court of Appeal in Mirugi Kariuki -vs- Attorney General Civil Appeal No. 70 of 1991 (1990-1994) EA 156, (1992) KLR 8. The Court, in an appeal against refusal to grant leave to institute judicial review proceedings by the High Court, stated as follows: -It is wrong in law for the Court to attempt an assessment of the sufficiency of an applicant’s interests without regard to the nature of his complaint. If he fails to show……. that there has been a failure of public duty, this court would be in error if it granted leave. The curb represented by the need for the applicant to show, when he seeks leave to apply, that he has a case, is an essential protection against abuse of the legal process. It enables this court to prevent abuse by busy-bodies, cranks and other mischief-makers... In this appeal, the issue is whether the applicant in his application for leave to apply for orders of certiorari and mandamus demonstrated to the High Court a prima facie case for the grant of those orders. Clearly, once breach of the rules of natural justice was alleged, the exercise of discretion by the Attorney General under section 11(1) of this Act was brought into question. Without a rebuttal to these allegations, this appellant certainly disclosed a prima-facie case. For that, he should have been granted leave to apply for the orders sought. (emphasis added).

28. In Re Bivac International SA (Bureau Veritas) (2005) 2 EA 43, the Court while expounding on what a prima-facie case or arguable case is, stated that such a decision is not arrived at by tossing a coin or waving a magic hand or raising a green flag, but instead a Court must undertake an intellectual exercise and consider without making any findings on the main matter, the scope of the remedy sought, the grounds and the possible principles of law involved.

29. The Court of Appeal in Nairobi Civil Appeal No. 44 of 2014 Naftali Ruthi Kinyua vs. Patrick Thuita Gachure & Another (2015) eKLR while dealing with what a prima facie case is, referred to Lord Diplock in American Cyanamid vs. Ethicon Limited (1975) AC 396, when the Judge stated thus: -If there is no prima facie case on the point essential to entitle the plaintiff to complain of the defendant’s proposed activities, that is the end of any claim to interlocutory relief.

30. In sum, therefore, in determining whether a matter discloses a prima-facie case, a Court must look at the case as a whole. It must weigh, albeit preliminarily, the pleadings, the factual basis, the respective parties’ positions, the remedies sought and the law.

31. Returning to the matter at hand, there is no doubt that the subject properties were registered in the Deceased’s name. The properties were eventually charged in favour of the Bank.

32. This is a commercial dispute where parties voluntarily entered into contracts. That must be respected. It, therefore, behooves a Court to act with a lot of restraint in upsetting an agreed status quo by the parties themselves. That is not say that Courts’ hands are tied in commercial disputes, but Courts must always endeavour to give effect to the wishes of the parties except in cases where it is demonstrated with clarity that arguable issues, and not frivolous in nature, are involved.

33. There are three main issues which the Applicant raised in urging the presence of a prima facie case in this matter. One of them relates to the differing amounts of money variously claimed by the Bank. A simple response to such an argument is that such calculations are always easily reconcilable and do not call for restraining reliefs unless demonstrated otherwise. For instance, a Court may consider granting an injunction when it is proved that the amounts charged are contra the duplum rule in an appropriate case.

34. The next issue was the legality of the statutory notices. Such notices have a defined purpose in the recovery process. Depending on the nature and the extent of the complaint raised, non-compliance may be a ground for granting an interim relief.

35. There is also the issue of the Deceased’s personal insurance cover on the monies advanced by the Bank. Both parties have taken divergent positions.

36. It is a fact that the monetary advances by the Bank to the Deceased were made during the life of the Deceased. Legal charges were also created over the Deceased’s properties. In such instances, the law created obligations on the parties. Further obligations were also created by the parties themselves through the legal charges.

37. One of such statutory requirements is provided for in Section 88(1)(d) of the Land Act. The provision is on the duty by a Chargor to take out an insurance cover. It states as follows: -88. Implied covenant by the Chargor:(1)There shall be implied in every charge covenants by the Chargor with the Chargee binding the Chargor: -(d)to ensure by insurance or any other means that may be prescribed or which are appropriate, that resources will be available to make good any loss or damage caused by fire to any building on the land, and where insurance is taken out, it is done so in the joint names of the Chargor and Chargee with insurers approved by the Chargee and to the full value of all the buildings;

38. The Legal charges also provided for the aspect of insurance in Clause 6 thereof. A casual consideration of the Clause 6 of the Charges and the Section 88 of the Land Act creates the impression of the need for a Chargee to be fully secured, by way of an insurance cover, in respect of all and any monetary advances made.

39. With such a position, what this suit intends to interrogate is whether the Deceased took out such insurance covers during her lifetime and if so, the effect on the demise of the Deceased. Alternatively, the suit intends to interrogate the failure by the Deceased to take out such covers and the effect thereof to the Bank especially in a case where the Deceased was not in default of any of the loans at the time of her death. This matter will also interrogate whether the Bank acted negligently and if so, whether the Estate of the Deceased is liable. All this will have to undertaken under the lenses of the 2010 Constitution.

40. The above cannot be regarded as a frivolous pursuit by the Applicant. The suit raises serious issues which have both a public-interest connotation and a constitutional underpinning. In deciding the issues, may be, the Court may even have to hear experts in the insurance and banking fields on the issue; just may be.

41. Having said as much, this Court is satisfied, without any shred of doubt, that the Applicant has successfully demonstrated a prima facie case in this matter.

42. The first requirement is, hence, satisfied.

Irreparable loss: 43. On this principle, the Court of Appeal in Nguruman Limited case (supra) expressed itself as hereunder: -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.

44. In this matter, the Applicant is apprehensive that if no injunctive orders are issued, the estate of the Deceased will be disposed of and the beneficiaries stand to suffer loss more so in a case where the Deceased had taken all precaution to ensure that she was not in default of any of the loans advanced to her by the Bank during her lifetime.

45. The loss is real. The injury is conspicuous. The charged properties are alleged to be part of the Deceased’s family home. Upsetting such a status quo and before hearing the main dispute may not augur well with the unique circumstances of this case.

46. With the demise of the Deceased, several constitutional issues including the plight of the beneficiaries and children arise. The loss is, therefore, likely to irreversibly affect many other persons. Such loss is irreparable.

47. This Court, hence, finds in favour of the Applicant on the second requirement.

Balance of convenience: 48. Applicants must also, ordinarily, demonstrate that the balance of convenience tilts in their favour just in case the Court finds itself in doubt on the first two principles.

49. In Pius Kipchirchir Kogo vs. Frank Kimeli Tenai (2018) eKLR the concept of balance of convenience was defined as follows: -The meaning of balance of convenience will favour of the Plaintiff' is that if an injunction is not granted and the suit is ultimately decided in favour of the Plaintiffs, the inconvenience caused to the Plaintiff would be greater than that which would be caused to the Defendants if an injunction is granted but the suit is ultimately dismissed. Although it is called balance of convenience it is really the balance of inconvenience and it is for the Plaintiffs to show that the inconvenience caused to them will be greater than that which may be caused to the Defendants. Inconvenience be equal, it is the Plaintiff who will suffer.In other words, the Plaintiff has to show that the comparative mischief from the inconvenience which is likely to arise from withholding the injunction will be greater than that which is likely to arise from granting.

50. The Court in Paul Gitonga Wanjau vs. Gathuthis Tea Factor Company Ltd & 2 others (2016) eKLR, also dealt with the issue of balance of convenience and expressed itself thus: -Where any doubt exists as to the Applicants’ right, or if the right is not disputed, but its violation is denied, the Court, in determining whether an interlocutory injunction should be granted, takes into consideration the balance of convenience to the parties and the nature of the injury which the Respondent on the other hand, would suffer if the injunction was granted and he should ultimately turn out to be right and that which the Applicant, on the other hand, might sustain if the injunction was refused and he should ultimately turn out to be right... Thus, the court makes a determination as to which party will suffer the greater harm with the outcome of the motion. If Applicant has a strong case on the merits or there is significant irreparable harm, it may influence the balance in favour of granting an injunction. The court will seek to maintain the status quo in determining where the balance of convenience lies.

51. Further, the Court in Amir Suleiman vs. Amboseli Resort Limited [2004] eKLR had the following to say about “balance of convenience”: -The Court in responding to prayers for interlocutory injunctive reliefs should always opt for the lower rather than the higher risk of injustice.

52. Lastly, in Robert Mugo Wa Karanja vs. Ecobank (Kenya) Limited & Another [2019) eKLR, the Court in dealing with an application for an injunction vouched as follows: -…. circumstances for consideration before granting a temporary injunction under order 40 rule 1 of the Civil Procedure Rules requires a proof that any property in dispute in a suit is in a danger of being wasted, damaged or alienated by any party of the suit or wrongfully sold in execution of a decree or that the Defendant threatens or intends to remove or dispose the property; the Court is in such situation enjoined to a grant a temporary injunction to restrain such acts...

53. In this matter, the sale of the charged properties is eminent. The Bank has already issued and allegedly served the statutory notices. Given that the issues are yet to be determined in this case, this Court finds that the balance of convenience tilts in favour of the Applicant.

54. This is a matter in which social justice under Article 10(2)(b) of the Constitution calls for some restraint on the part of the Bank as to accord the Court an opportunity to determine the issues in dispute on merit.

55. As a result, this Court finds that the balance of convenience favours the Applicant.

Disposition: 56. As the Court comes to the end of this discussion, it remains alive to the truism that this matter, being a commercial one, has an impact on the rating of the country’s ease of doing business in the world ranking. Therefore, having decided to issue the restraining orders, deliberate steps must be taken to ensure its expeditious disposition. To that end, this Court will endeavour to hear and determine the main matter within the coming three months.

57. The foregoing is the reason as to why despite this Court fixing this ruling for delivery on 16th November, 2023 it had to expedite its instant delivery.

58. Consequently, the following final orders do hereby issue: -a.Pending the hearing and determination of this case, an order of temporary injunction be and is hereby issued restraining the Defendant/Respondent whether by itself, its servants and/or agents from selling the parcels of land comprised in the title numbers Nakuru Municipality Block 24/265 and 267, Uasin Gishu/ El-Lahre/45 and Land Reference No. 13637/10 (IR No. 63637) all in the name of Rashia Nyokabi Mwangi (Deceased).b.The parties shall comply with Order 11 of the Civil Procedure Rules within 14 days of today. Liberty is hereby given to parties to file Further Lists of Documents, Lists of Witnesses and Statements, if need be, within the said period.c.This matter shall be fixed for Pre-Trial Conferencing on 20th November, 2023 and for the main hearing on the 13th and 14th December, 2023. d.Time is of essence and any defaulting party shall suffer the consequences.e.Costs of the application shall be in the main suit.It is so ordered.

DELIVERED, DATED AND SIGNED AT KITALE THIS 1ST DAY OF NOVEMBER, 2023. A. C. MRIMAJUDGERuling No. 1 virtually delivered in the presence of:Mr. D. M. Wanyama, Counsel for the Applicant/Plaintiff.Miss. Ngeiywa for Kidiavai, Counsel for the Respondent/Defendant.