SAMUEL O. TIMA & another v HOUSING FINANCE COMPANY OF KENYA & another [2012] KEHC 599 (KLR)

REPUBLIC OF KENYA

High Court at Nairobi (Milimani Commercial Courts)

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SAMUEL O. TIMA................................................................................1ST APPLICANT/RESPONDENT

LYDIANYAMBONYI...........................................................................2ND APPLICANT/RESPONDENT

VERSUS

HOUSING FINANCE COMPANY OF KENYA................................................................1ST DEFENDANT

JOSEPH KARIUKI WANYUGI.............................................................2ND DEFENDANT/APPLICANT

RULING

The application before the court is brought by a Notice of Motion dated 29th March, 2011 and taken out under Order 51 Rule : Order 40 Rules 6 and 7of the Civil Procedure Rules: Section 3A of the Civil Procedure Act: Articles 40 and 47 of the Constitution: and all other enabling provisions of the law. The applicant thereby seeks from the court Orders that the injunction order issued by this court on 4th December, 2007 be discharged and/or set aside all together: and/or that the said injunction be varied and the second defendant/applicant be allowed to collect rent from the suit premises as the sole registered proprietor pending the hearing and determination of the suit. In the alternative, the applicant seeks an order to be allowed to collect rent from the suit premises together with the plaintiffs and the rental income thereof be deposited in a joint interest earning account to be opened by the parties’ advocates.

The application is supported by the affidavit of Joseph Kariuki Wanyui, the applicant herein, and is based on the grounds that the applicant is the sole registered proprietor of the suit premises which were transferred to him on 17th January, 2007 in exercise of the first defendant’s statutory power of sale at a price of Ksh 9 Million. However, an injunction order was issued by this court in favour of the plaintiffs against the second defendant in December, 2007.   Since that date, the second Defendant/Applicant has lost rental income of more than Kshs 7 Million which has been collected by the plaintiffs from the suit premises. The Plaintiffs have not demonstrated any interest in prosecuting this suit and it is therefore in the interest of justice that the said injunction be discharged and, in the alternative, the rental income from the suit premises be held in a joint interest earning account to be opened by the two parties.

Opposing the application the Respondents filed a replying affidavit sworn by Samuel Onyancha Tima, the 1st Respondent with the authority of the 2nd Respondent.   In the said affidavit, the Respondents contend that the suit property was sold to the 2nd Defendant fraudulently and that the sale was of no legal consequence.   It was also sold at a throw away price which was further evidence of fraud.   They further contend that the sale was effected without any issue to them of the statutory notice.

During the oral canvassing of the application, Mr. Machira appeared for the 2nd Defendant/Applicant and his submissions were supported by Mr. Maondo for the 1st Defendant.   He prayed that the Applicant be allowed to collect rent to be deposited in a joint account.

Mr. Mbeya for the Plaintiff’s/Respondents adopted fully the contents of the replying affidavits and submitted that the application before the court was res judicataas the same had been canvassed and finalized by an earlier application dated 27th March, 2007. In a ruling made in that application, the court granted some injunctive orders in favour of the plaintiff and these are the ones that the 2nd defendant seeks to have set aside. He submitted that the application was an afterthought, lacked merit, and the orders should remain. He also submitted that the transfer and conveyance were irregularly made since the proper procedures were not followed. In particular, the statutory notice for sale of property was not given; the sale was conducted on 21st December, 2006 which was a Sunday; and at the time of sale, the market value of the property was Ksh 18 million. The sale price of Kshs 9 million was therefore way below the market price.   He urged the court to disallow the application for opening of joint account as the application lacks merit and is an abuse of the process of the court.

In reply, Mr. Machira for the applicant submitted that the application was not res judicata as the law was very clear that any aggrieved party could apply for an order to set aside under Order 40 Rules 6 and 7. The allegations of fraud have been traversed from paragraphs 8 and 9 of the defence and counter claim. Counsel further contended that once a statutory power of sale has been exercised, the property belongs to the purchaser, and since the suit property was registered under the Government Lands Act (Cap 280), this invites the application of Section 69 B (2) of the Indian Transfer of Property Act.

After considering the pleading and submissions of all counsel, I note that each of the parties has raised some very weighty issues. In a nutshell, the applicant’s case is that he is the sole registered proprietor and that he has been deprived of the rental income and continues to be so deprived. He is of the view that Section 69 B (2) of the Indian Transfer of Property Act is in his favour. On the other hand, the Respondents are of the view that the applicant obtained the suit property fraudulently and therefore the sale was of no legal consequence.  The property was also sold at a throw away price which was further evidence of fraud, and no statutory notice was served on them.

Against the above background, I find that each of the parties has raised some serious triable issues.   Although the plaintiffs gave an undertaking as to damages, that was some years ago. To date, the plaintiffs have allegedly collected Millions of shillings by way of rent. The longer it takes before this matter is heard and determined, the more the rent they will have collected. In the final analysis, if the suit is decided in favour of the applicant, it may prove difficulty for the plaintiffs to pay the applicant damages. In the circumstances, I find it fair and proper to grant the prayer for the rent collected to be deposited in a joint interest earning account to be opened by the parties’ respective advocates pending the hearing and determination of the suit in terms of prayer 5 of the application by Notice of Motion dated 29th March, 2011. Costs in the cause.

Orders accordingly.

L. NJAGI

JUDGE

DATEDand DELIVERED at NAIROBI this 11th day of September, 2012

ODUNGA

JUDGE