SALOME WANJIRU MWANGI v NATIONAL BANK OF KENYA LTD [2009] KEHC 3207 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS)

CIVIL CASE 327 OF 2006

SALOME WANJIRU MWANGI….……......………PLAINTIFF

- VERSUS-

NATIONAL BANK OF KENYA LTD................DEFENDANT

RULING

The plaintiff filed an application pursuant to the provisions of Order XXXIX Rules 1,2,3,7 & 9 of the Civil Procedure Rules seeking orders of temporary injunction to restrain the defendant by itself or its agents from selling, alienating, disposing of or in any way interfering with the plaintiff’s ownership of LR No. 209/376/52, Hurlingham, Nairobi (hereinafter referred to as the suit property) pending the hearing and determination of the main suit.  The application is supported by the annexed affidavit of the plaintiff and the grounds stated on the face of the application.  The application is opposed.  The defendant swore three replying affidavits in opposition to the plaintiff’s application.  The said affidavits were sworn by two employees of the defendant.  They were Zipporah Mogaka and Josephat Kariuki Kamau, the managers recoveries.  Josephat Kariuki Kamau swore two affidavits in response to the plaintiff’s application.

At the hearing of the application, I heard submissions made by Mr. Orowe for the plaintiff and Mr. Mwaura for the defendant.  Mr. Orowe submitted that the defendant had the intention of selling the suit property which was worth Kshs.14 million for debt of Kshs.250,000/=.  He submitted that the defendant owed the plaintiff the sum of Kshs 1. 4 million arising out of an industrial court award which directed the defendant to pay to the plaintiff her terminal dues.  He submitted that the plaintiff maintains that the defendant has not fully paid the terminal dues as directed by the industrial court and therefore the defendant cannot purport to claim that the plaintiff owes it in respect of a loan advanced to the plaintiff in the course of her employment. He reiterated that from the pleadings, it was clear that the defendant still owed the plaintiff her redundancy package which was to be applied to offset the loan owed by the plaintiff to the defendant.  He submitted the interest charged by the defendant was unconscionable as the defendant had charged the plaintiff a rate of interest that was beyond the maximum allowable interest of 25% per annum.  He explained that from the bank statements supplied by the defendant, it was clear that the amount recovered from the redundancy package due to the plaintiff was not credited to her loan account.  He submitted that the plaintiff had thus established that she owed no money to the defendant to entitle the defendant exercise its statutory power of sale by selling the charged property to recover an alleged outstanding amount.  He urged the court to allow the application with costs.

Mr. Mwaura for the defendant opposed the application.  He submitted that the plaintiff had all along acknowledged indebtedness to the defendant.  She made proposals on how she intended to settle the debt.  The defendant accepted the proposal and on several occasions restructured the debt of the plaintiff.  He maintained that from the statements annexed to the replying affidavits, it was evident that the plaintiff still owed the defendant certain sums which by 18th April, 2006 had escalated to Kshs.259,109/=.  He submitted that part of then outstanding amount owed by the plaintiff was offset by the redundancy payment made to the plaintiff after the industrial court had rendered its decision.  He reiterated that the defendant had been paid in full the amount owed to the plaintiff in regard to her redundancy package.  He explained that the redundancy package that was awarded to the plaintiff did not exempt the plaintiff from being held liable on account of the commitment that she had made when she executed the instrument of charge.  In his view, it was apparent that the plaintiff was seeking injunction on the basis of disputed accounts which cannot be a basis for a grant of the said interlocutory relief. He submitted that if the plaintiff desired the court to grant the order sought, then she should deposit the disputed amount in court.  Otherwise, he reiterated that the defendant acted within its rights when it sought to exercise its statutory power of sale.  He urged the court to dismiss the plaintiff’s application with costs.

I have carefully considered the rival arguments made by counsel for the parties to this application.  I have also considered the pleadings filed by the parties in support of their respective opposing positions.  The issue for determination by this court is whether the plaintiff established a case to enable this court grant her the interlocutory injunction sought. The principles to be considered by this court in determining whether or not to grant the interlocutory injunction sought are well settled.  In Giella vs Cassman Brown [1973] EA 358 at page 360 Spry VP held that:

“The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa.  First, an applicant must show a 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.  (E.A. Industries v. Trufoods, [1972] E.A. 420).”

In the present application, certain facts are not in dispute.  It is not disputed that the plaintiff was an employee of the defendant. She worked for the defendant for a period of 24 years before she was terminated from employment in 1998. In 1989, the plaintiff was advanced a loan to purchase a residential house (the suit property) The said loan was advanced to the plaintiff on concessionary rate of interest of 3% per annum.  The amount advanced was to be recovered from the plaintiff’s salary.

The plaintiff’s termination from employment was due to the fact that she had participated in a strike which had been called by her union to agitate the withdrawal of a regulation which had been introduced by the government which required bank employees who were benefiting from concessionary rates of interest in loans advanced to them to pay tax on the said benefit.  At the time of her termination, the bank did not pay the plaintiff any terminal dues.  The affected bank employees, including the plaintiff, filed suit before the industrial court challenging their termination from employment.  On 7th March 2001, the industrial court ordered the banks, including the defendant, to deem those employees who had been terminated from employment as having been declared redundant with effect 17th August 1998.  A panel was to be constituted to determine the amounts due to each employee who had been so declared redundant.  According to the said panel’s calculations, the plaintiff was entitled to be paid a total sum of Kshs 971,481. 50 as redundancy pay.  The defendant confirmed this amount as duly payable to the plaintiff including a further sum that was to be paid to the plaintiff as pension.

From this court’s evaluation of the facts of this case, it is clear that the dispute between the plaintiff and the defendant relate to whether the defendant had paid in full the amount due to the plaintiff on account of her redundancy package.  It is common ground that the parties to this suit had agreed that part of the said redundancy package was to be applied to offset the loan that was then outstanding.  The defendant applied part of the redundancy package to offset the loan.  However, it appears that a balance of Kshs 51,576. 25 remained outstanding as of 3rd February 2002. The plaintiff disputes this amount.  According to the plaintiff, this amount accrued as a result of the application of a  commercial rate of interest  to the plaintiff’s loan account before the industrial court had made the decision varying the decision by the banks terminating its employees from employment to declaring them redundant.

I think the plaintiff has a point in this regard.  The defendant could not have applied a commercial rate of interest on the plaintiff’s loan account while at the time it was holding the plaintiff’s terminal dues which attracted no interest.  This court is of the view that the plaintiff established a prima facie case when she argued that the defendant ought to have taken into account the decision of the industrial court in determining the rate of interest that was to be applied to the loan advanced to the plaintiff.  It was evident from correspondence exchanged between the plaintiff and the defendant that the bone of contention all along has been whether the defendant had paid in full the redundancy package due the plaintiff and whether the defendant had indeed credited the plaintiff’s loan account with the correct sum deducted from the plaintiff’s redundancy package.

Although the defendant forcefully argued that the issue of the redundancy package of the plaintiff  should not be considered  in tandem with the issue whether the plaintiff owed the amount in respect of the charge over the suit property, having considered that facts of this case, I hold that  in so far as the  defendant had accepted to apply part of the redundancy payment to offset the loan, and there being a dispute whether the defendant had actually applied the said amount to offset the loan, then the issue whether the redundancy payment was indeed paid cannot be separated or divorced  from whether the plaintiff paid the outstanding loan.

I therefore hold that the plaintiff has established a prima facie case to entitle this court grant her the interlocutory injunction sought. The defendant is restrained from adversely dealing with the suit property in terms of prayer 1 of the application pending the hearing and determination of the suit.  The plaintiff shall have the costs of the application.  So that the plaintiff does not abuse the due process of the court, the parties to this suit are ordered to conclude all preliminary issues, including discovery and settlement of issues within thirty (30) days of today’s date after which a hearing date for the main suit shall be fixed by the registry on priority basis.  It is so ordered.

DATEDat NAIROBIthis17th day of JUNE2009.

L. KIMARU

JUDGE