P M K v Fidelity Commercial Bank Limited [2017] KEHC 9999 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 138 OF 2009

P M K………………............................………………………..PLAINTIFF

- VERSUS –

FIDELITY COMMERCIAL BANK LIMITED…......................DEFENDANT

E N. K........................................................................INTERESTED PARTY

RULING

1. P M K had informed the court that on 25th October 2011, he purchased the property known as L.R. No. [particulars withheld], SOUTH ‘C’.  The said property is more readily identifiable as being House No. [particulars withheld], in HESHIMA ESTATE, NAIROBI.

2. He has now made an application seeking a declaration that he is the Legal Owner of the said suit property.

3. Secondly, he has asked the court to grant an order that would compel FIDELITY COMMERCIAL BANK LIMITED to transfer the ownership of the suit property, to the applicant; and to have the property registered in the applicant’s name.

4. It is the applicant’s case that he purchased the suit property at a Public Auction, which had been conducted by KEYSIAN AUCTIONEERS, at the behest of Fidelity Commercial Bank.

5. It is common ground that the suit property was registered in the name of S N K.  The said registered proprietor, had offered the suit property to the bank, as a security for some financial facilities which the bank had made available to him.

6. It would appear that the registered proprietor encountered some difficulties in meeting the repayments in respect to the financial facilities, and that that is what gave rise to the sale by public auction.

7. According to the plaintiff, he paid the full purchase price of Kshs.7, 500,000/-, in accordance with the terms of the Auction Sale.  However, notwithstanding the said payment, which the bank had received, the plaintiff had still been denied the use and occupation of the suit property.

8. The plaintiff described the bank as;

“…a trespasser and (who) has no colour of right to continue being in possession of the suit property….”

9. In the circumstances, the substantive suit against the bank sought an order to compel the bank to have the suit property registered in the plaintiff’s name.

10. The plaint also sought the eviction of the bank or its agents.

11. Another relief sought in the substantive suit was that the bank be compelled to pay Mesne Profits to the plaintiff, at the rate of Kshs. 65,000/- per month, with effect from 19th December 2011.

12. Although those reliefs were being sought in the substantive suit, the plaintiff had now chosen to seek them through the current application, because he holds the view that the bank had no defence to the claims.

13. When canvassing the application, Mr. Owang, the learned advocate for the plaintiff, submitted that there was no privity of contract between the plaintiff and the Third Party, E N K.  The said Third Party is the wife of S N K, the registered proprietor of the suit property.

14. At this point, it is essential that the court draws attention to the fact that the Third Party had filed an application dated 13th February 2016, seeking to be enjoined to this suit.

15. On 13th February 2017, when the case was before the court for Directions on the Third Party’s application dated 13th December 2016, Mr. Owang advocate agreed that the Third Party could be enjoined to the suit.

16. As a consequence of the consensus between the parties, E N K is now an Interested Party in these proceedings.

17. That therefore explains the plaintiff’s comment, that Ms. E.N. K lacked privity of contract with him.

18. It is common ground that the claim by the said Interested Party was not founded upon any alleged contractual relationship, between her and the plaintiff.  As the plaintiff noted, the Interested Party is asserting that she has some legal interests in the suit property on the basis of the fact it was their matrimonial property.

19. It is worthy of note that there is a case which is very much alive, at the Family Division of the High Court, Milimani, Nairobi.  The said case is E N K Vs. S N K Hccc No. 50 of 2007 (O.S).

20. The case was brought by Ms. E.N. K, pursuant to the provisions of Section 17 of The Married Women Property Act, 1882.  Through the said suit, she was seeking a declaration that the suit property herein was owned jointly, by S N. K and E.N. K.

21. Of course, as the plaintiff has clearly said, he is not a party to that case.

22. The plaintiff also submitted that the Interested Party was just a gate-crasher to these proceedings.

23. I hold a contrary view.

24. The Interested Party has been enjoined to this suit by the court.  The said lady is definitely not a gate-crasher as alluded to by the plaintiff.

25. More significantly, the plaintiff did consent to the application for the joinder of the Interested Party, to the proceedings.  Therefore, it was wrong for the plaintiff to cite the Interested Party as a gate-crasher.

26. From the pleadings and court orders exhibited by the Interested Party, it shows that on 16th October 2009, the court granted an injunction to restrain Stephen Njage Karanja from selling-off the suit property by public auction.

27. The said order had been granted after the Interested Party herein had told the court that the registered proprietor had deliberately mis-led the officials of the Ministry of Lands & Settlement to issue a new Title document for the suit property, after pretending that the original had been lost.

28. E told the court that her husband used the new title document to obtain a loan from the bank, and he thereafter deliberately refused to repay the loan.

29. Of course, as the plaintiff was not a party to the Originating Summons, he was not party to the orders directed against the defendant in that case.

30. However, E has told this court that the orders issued in her favour, were duly registered against the title of the suit property.

31. If it is true that the court orders were registered against the title to the suit property, that would imply that anybody who conducted a search on the title, would have become aware of the existence of the injunction.

32. In the circumstances, I find that the Interested Party’s claim against the plaintiff, is arguable.

33. It would therefore be wrong for the court to ignore such an arguable claim, and allow the plaintiff to assume lawful ownership of the suit property, before the court gives a hearing to all the parties.  My decision is informed by the fact, inter alia, that the bank appears to have already lodged an unsuccessful application for the discharge of an interim injunction in favour of E N K.

34. Of greater significance is the fact that the bank was already a party to the case Hccc No. 50 of 2007, by 12th November 2009, when Lady Justice Nambuye J. (as she then was), granted an injunction to restrain the bank (and S N. K) from selling the suit property.

35. On 16th October 2014, the bank filed an application (in Hccc No. 50 of 2007), seeking a declaration that the orders made on 12th November 2009 had automatically lapsed, after December 2011.

36. The very fact that the bank was seeking that declaration implies that before the declaration was made, the bank was unclear about whether or not the injunction stopping the sale, was still effective.

37. Considering that the plaintiff allegedly purchased the suit property when, (at least, at face value), there was still an injunction barring the bank from selling the said property, the efficacy of the transaction has to be determined, before the court can make conclusions on the issue of legal ownership of the suit property.

38. In the circumstances, the application dated 1st September 2016 is without any merit.  It is therefore dismissed, with costs to the respondents.

DATED, SIGNED and DELIVERED at NAIROBI this18th dayof September2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

No appearance for the Plaintiff

No appearance for the Defendant

Miss Ameyo for Kimani for the Interested Party

Collins Odhiambo – Court clerk.