Naomi Kathure Githaka v Capital Sacco Limited & I G Ringera t/a Viewline Auctioneers [2021] KECPT 259 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.502 OF 2020

NAOMI KATHURE GITHAKA.....................................................CLAIMANT

VERSUS

CAPITAL SACCO LIMITED.............................................1ST RESPONDENT

I.G RINGERA T/A VIEWLINE AUCTIONEERS..........2ND RESPONDENT

RULING

1. The Application for determination is dated 17. 12. 2020 and it is brought under Order 40 Rule 1 and Rule 4 Civil Procedure Rule, Section 3A Civil Procedure Act Cap 21 Laws of Kenyaand all other enabling provisions.

The same seeks for Orders:

a. That this Application be certified as urgent and service of this Application be dispensed with at the first instance.

b. That a temporary injunction restraining the Respondents their agents, employees and/or servants or any other party from trespassing, encroaching, intruding, advertising for sale, selling or in any way interfering with the Claimant/Applicants possession and ownership as regards properties knownas NGANDONI/KIRIGI/T.206 and NGANDONI/KIRIGI/T.188 pending hearing and determination of this Application.

c. That a temporary injunction restraining the Respondents their agents, employees and/or servants or any other party from trespassing, encroaching, intruding, advertising for sale, selling or in any way interfering with the Claimant/Applicants possession and ownership as regards properties knownas NGANDONI/KIRIGI/T.206 and NGANDONI/KIRIGI/T.188 pending hearing and determination of this suit against the Respondent.

d. That the costs be in the cause.

2. The Application is based on the grounds on the face of the Application and Supporting Affidavit. Naomi Kathure Githakasworn on 17. 12. 2020 to wit she stated she is the legal and owner of land parcel No. NGANDONI/KIRIGI/T.206 and NGANDONI/KIRIGI/T. 188

She is a business woman selling clothes at Gikomba, Nairobi area and applied for a loan as a member/shareholder of 1st Respondent to the tune of Kshs.2,000,000/=.

On 2. 10. 2017 and the same was secured by the property above.

Barely a month later Gikomba market was destroyed by fire and she lost all her wares and stuck to the tune of Kshs.6,800,000/=.

She thus registered for an overdraft of Kshs.300,000/= from 1st Respondent on 2. 10. 2018. unfortunately on 7. 11. 2018 the market was destroyed by fire again and got another loss of Kshs.4,500,000/=.

3. That she has been making regular payments through Mpesa platform on 1st Respondent pay bill and the same is not reflected on her Statement of Accounts.

The 1st Respondent instructed the 2nd Respondent to exercise right of sale and deny her rights to her property. The claim by 1st Respondent that she is a defaulter is malicious, baseless and far fetched. That is in the interest of justice the Respondent be restrained from their illegal and unjustifiable action during Covid- 19 pandemic to interfere with the Claimant possession and respective property.

4. The Respondents filed a Replying Affidavit dated 4. 2.2021 in opposition to the Application. The Replying Affidavit was sworn by Frankline Mwiti Muriungi the Branch Manager Capital Sacco and he stated it was true sometime in 2017 the Applicant approached the Respondent for a loan of Kshs.2,200,000/= which was charged against her property NGANDONI/KIRIGI/T.206 registered under Joseph Githaka Munyi andNGANDONI/KIRIGI/T. 188 registered in her name.

5. On 10. 5.2017 Joseph Githaka Munyi registered a charge over NGANDONI/KIRIGI/T.206 in favor of 1st Respondent for a maximum of Kshs. 1,000,000/= as a guarantor for the Applicant and as such a loan of Kshs.2,200,000/= was disbursed to the Applicant.

In 2018 the Applicant further made an Application for another loan of Kshs.300,000/= over and above the aforementioned securities and shares .....

6. That loan number LN00029406(the Kshs.30,000/=)fell in arrears on 2. 10. 2018 while LN00000220 ( Kshs.2,200,000/=) fell in arrears as of 1st November 2018.

The loans remain unpaid as LN00000220has arrears of Kshs.2,016,736. 50/= and LN00029406 has arrears of Kshs.607,592. 58/=. Despite several calls to the Applicant all her premises have been dishonored.

A demand was done by the 1st Respondent Advocate Messrs.’ Mutuerado Muriithi & Company Advocates on 15. 3.2019.

The Applicant did not respond and thus the Respondent issued a Notice of Breach of Contract dated 24. 4.2016 under Section 90 (1) (2) (3) ( e) as read with Section 85 and 103 of the Land Act 2012.

Upon the Notice of Breach of Contract the Applicant proposed a payment plan committing to pay Kshs.80,000/= per month towards the loan arrears as at 26. 4.2019.

The Applicant did not honour the commitment.

7. The Respondent thus issued a notice of sale pursuant to Section 96/2 Land Act 2012.

They issued instructions to the 2nd Respondent authorizing them to advertise Title No. Ngandori/ Kirigi/T. 206 and T. 188 for sale by Public Auction.

The  2nd Respondent served on the Applicant 45 days Redemption Notice and Notice of Sale via registered post.

They aver the 1st Respondent has followed procedure laid down under Section 96 (2) Land Act 2012towards redemption of the Applicant’s property to receive the loan.

That contrary to the Applicant’s claim the loan went into arrears in 2018 well before Covid 19 pandemic. That the Applicant’s Application Notice of Motion should be dismissed with costs to the 1st Respondent.

8. The Applicant filed a Further Affidavit sworn on 11. 3. 2021 and filed on 31. 3.2021 where she stated she is a victim of couple of misfortunes that have very affected her capacity to repay the loan in exact installments as agreed by 1st Respondent. She reiterated on 3 occasions her business in Gikomba has been razed by fire.

9. That her business was insured by Equity Insurance Agency Limited and after assessment she is to be paid Kshs.2,475,000/= but she is yet to be compensated. She has been affected by covid-19 like any other business.

she reiterates that she has approached the 1st Respondent for restricting of the loan repayment but the 1st Respondent has not obliged.

That she stands to suffer loss if the 2 parcels of land are sold by the 1st Respondent.

10. The parties filed submissions as directed by the Tribunal. The Applicant filed their submissions dated 12. 3.2021 on 31. 3.2021.

The 1st and 2nd Respondent filed their written submissions dated 20. 4.2021 on even date

Analysis

The issues in the above case are :

1. Whether the Applicant has built the threshold to be granted an injunction.

2. Whether Force Majeure/act of God is an excuse for granting Interim Orders.

Issue one:

Whether the Applicant has built the threshold for an injunction.

One the first issue on whether an injunction should issue against the Claimant the principles of injunctions are premised in the case of Giella –vs- Cassman Brown [1973] EA 358as reiterated in the case of Nguruman Limited - vs- Jan Bonde Nielsen & 2 others Civil Appeal No. 77 of 2012 [2014] eKLR where the Court of Appeal held that:

“ in an interlocutory injunction Application the Applicant has to satisfy the triple requirements to establish his case only at:

a. Prima facie level

b. demonstrate irreparable injury if a temporary injunction is not granted and

c. ally any doubts as to (b) showing that the balance of convenience is in his favour.

These are the 3 pillars of which risks the foundation of any Order of injunction interlocutory or permanent. It is established that all the above 3 conditions and states are to be applied as separate distinct and logical hurdles which the Applicant is expected to surmount sequentially...”

11. In the case of Mrao Limited – vs- first American Bank of Kenya Limited [2003] eKLR in which the court gave a determination of a prima facie case the court stated:

“......in civil cases, it is a case in which, on the material presented to the court a Tribunal properly directed itself will conclude that there exists a legal right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”

12. The question then is in the present case does the Applicant have legal right and has the same been infringed.

The Applicant does have a legal right however the same has not been infringed as the Respondents have submitted that the Applicant issued the suit property as security and the possibility of sale in case of default in servicing the loan was a fact known to them. The Respondents quoted the case of Stars and Gaters Restaurant and Another - vs- National Bank of Kenya Limited

The loan has been in arrears since 2018 and despite promises the Applicant has not fulfilled her promises.

The Respondent further quoted case of:

Jamii Bora Scandinavia AB –vs- Richard G. Njoba and Another 2013 Judge stated that:

“.........There are correspondences also showing that the Defendant has not honored various agreements to repay the debt. This is a court of equity. It is one of the premises of equity that he who seeks equity must perform equity. In my finding the Defendants have not performed equity and therefore a court of equity cannot easily come to their rescue..”

On the 2nd pillar of irreparable harm the Applicant indicates she will suffer harm if her property is sold as that is where she gets her livelihood and if Respondent is not restrained she will be at a loss.

13. The case of Pius Kipchirchir Kogo- vs Frank Kimeli Telai [2018] eKLR in which the court stated “ irreparable injury means that the injury must be one that cannot be adequately compensated for in damages and that the existence of a Prima Facie Case is not itself sufficient.

The Applicant should further show that irreparable injury will occur to him if the injunction is not granted and there is no other remedy open to him by which he will protect himself from the consequences of the apprehended injury....”

14. Question is what type of irreparable harm would the Applicant suffer if not granted the injunction

Is there another remedy open to her?

The answer is in the affirmative.

If and when Applicant repays her loan the harm of sale of property will no longer be in abeyance...

Last and 3rd pillar is balance of convenience ..

In the same case of Pius Kipchirchir Pius Kipchirchir Kogo- vs Frank Kimeli Telai [2018] eKLR,

“ The meaning of balance of convenience will favour the Plaintiff is that if an injunction is not granted and the suit is ultimately decided in favour of the Plaintiff the inconvenience caused to the Plaintiffs would be greater than that which would be caused to the Defendant’s if injunctive is granted but the suit is ultimately dismissed. Although it is ....balance of convenience  it is really the balance of inconvenience and it is for the Plaintiff’s to show that the inconvenience caused to them be greater than that which may be caused by the Defendant’s inconvenience be equal, it is the Plaintiff who suffer.....”

In the instant case the Respondent is also suffering inconvenience of unpaid loans despite the challenges being faced by the Applicant.

15. One will then ask which is greater inconvenience between the two?

In the case of Robert Mugo wa Karanja – vs- Ecobank (Kenya) Limited and Another [2019] eKLR where the court in deciding on an injunction Application stated:

“ Circumstances for considerate before granting a temporary injunction under Order 40 Rule 1 of the Civil Procedure Rules requires proof that any property in dispute in a suit is in a danger of being wasted, damaged or alienated by any part of the suit or wrongfully sold in execution of a ......or that the Defendant threatens or intends to remove or dispose the property; the court is in such situation enjoined to grant a temporary injunction to restrain such acts.....”

However, case of Ochola Ka.....Holding Limited - vs- Guardian Bank Limited [2018] eKLR where the court while commenting on behavior of a Claimant after an injunction stated:

“The court is alive to the fact that interlocutory injunction being an equitable remedy would be discharged upon being shown the person ..........

16. Issue two:

Whether Force Majeure/act of God is an excuse for granting Interim Orders.

The Applicant avers her business has been affected by 2 calamities of fire in Gikomba and Covid – 19 whilst it is true the Applicant has been affected the Respondent’s loan is still owing and we are left to think what is the Respondent’s recourse?

The Respondent’s would be disadvantaged if everyone blamed Covid – 19 pandemic for non-payment of loans. As quoted in Eric  Kanja Wairiuko vs Mary Muthoni Njue & Another; Epicenter Africa Limited (interested Party) [2021]eKLR, the judge relied on the definition of “force Majure” by the Black’s Law Dictionary stating “ Black’s Law Dictionary defines “force Majeure” as “ an event or effect that can be neither anticipated nor controlled. The term includes both acts of nature (example floods and hurricanes ) and acts of people.”

To the end in the interest of justice we give a temporary injunction against the Respondent pending;

1. Statement of Accounts and reconciliation to be filed by 1st Respondent within 30 days from today.

2. Applicant to give a payment schedule 14 days after receipt

3. Any default by the Applicant in the repayment schedule the interim orders shall collapse.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH  DAY OF AUGUST, 2021.

Hon. B. Kimemia  Chairperson  Signed 19. 8.2021

Hon. J. Mwatsama Deputy Chairperson Signed 19. 8.2021

Mr. Gitonga Kamiti Member  Signed 19. 8.2021

Tribunal clerk   R. Leweri

Chelangat for Claimant: Present

Mureithi for Respondent: Present

Mention for further directions on 6. 10. 2021.

Hon. B. Kimemia  Chairperson  Signed 19. 8.2021