Swift Royal Conveyors Limited v Alios Finance Kenya Limited [2017] KEHC 4166 (KLR) | Interim Injunctions | Esheria

Swift Royal Conveyors Limited v Alios Finance Kenya Limited [2017] KEHC 4166 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL CASE NO. 127 OF 2016

SWIFT ROYAL CONVEYORS LIMITED.......................................PLAINTIFF

VERSUS

ALIOS FINANCE KENYA LIMITED …..…………………….….. DEFENDANT

RULING

1. The application before me is dated 22nd December, 2016. It seeks the following orders:-

(i)  Spent;

(ii) Spent;

(iii) That pending the hearing and determination of this suit the defendants, themselves, their agents and or their employees or anyone or any officers working under them be restrained by an order of injunction from repossessing, interfering, alienating and or otherwise dealing with motor vehicles registration No. KCD 990N, KCD 991N, KCD 992N and KCD 993N;  and

(iv) That costs of the application be provided for.

2. The application is premised on the affidavit of Ezekiel Githinji sworn on 21st December, 2016 and the grounds in support of the application. The respondent on 9th February, 2017 filed a replying affidavit. Although in paragraph 4 of the said affidavit, the deponent, Charles Nyadero states that he also relies on the grounds of opposition filed.  I perused the court file but failed to trace the same.

3. Mr. Wairagu, Counsel for the applicant’s submissions were to the effect that the respondent had attached the applicant’s motor vehicles which were later released.  The respondent however stated that he could still repossess the vehicles. Counsel relied on the case of Giella vs Cassman Brown [1973] EA 358 in urging the court to grant an interim injunction. This being for the reason that in January, 2016 the respondent increased the interest rate of the facility to 23. 5% from 14. 1%. Counsel referred to an email dated 11th November, 2016 attached to the respondent’s affidavit and contended that as per the facility letter the respondent was required to give them a month’s notice before increase of interest, but that was not done. The said email was sent to the applicant 11 months after increase of interest. He further submitted that the failure to notify the applicant as required had resulted in breach of contract and had caused difficulties to the applicant in paying the loan. Counsel therefore submitted that the applicant has a prima facie case with a probability of success.

4. On the second principle for the grant of an interim injunction, his position was that if the motor vehicles are repossessed the applicant’s transport business will suffer and that cannot be compensated by way of damages.  He cited the case of Waithaka vs Industrial & Commercial Development Corporation [2001] eKLR to support the assertion that it is not an inexorable rule that where damages may be an appropriate remedy, an interlocutory injunction should never issue and if that was the rule, the law would unduly lean in favour of those rich enough to pay damages.

5. On a balance of convenience, Mr. Wairagu submitted that the applicant in his affidavit states that he faced financial headwinds after the increase of the interest. He made reference to paragraph 10 of the replying affidavit which states that the applicant was in arrears of Kshs. 1 Million. He indicated that the applicant paid the said amount but an email attached at page 35 of the exhibits to the replying affidavit states that further action would be taken.

6. Mr. Adhoch, Learned Counsel for the respondent opposed the application by arguing that the applicant had not established a prima facie case to justify grant of orders of an injunction. They failed to disclose that they were in arrears of Kshs. 1 Million.  He submitted that clause 2 of the terms of offer gave the respondent discretion to vary the interest rates chargeable and that the applicant was duly notified of the same through an email attached at page 26 of the bundle of documents to the respondent’s replying affidavit. The said clause addresses variation of interest rates and non-payment of the loan when due, through the said email, the applicant was being informed of the variation of interest and that penalties would apply for late payments.

7. Counsel further stated that the respondent threatened to repossess the motor vehicles on 28th November, 2016 but told the Auctioneers not to do so.  He added that as at 22nd December, 2016, no threat of repossession existed but the said facts were not disclosed to the court, thus the applicant is not entitled to an equitable remedy for withholding material facts.

8. It was the respondent’s argument that the email dated 11th November, 2016 was pursuant to notices dated 7th January, 2016 and 17th December, 2015 for variation of interest rates. Counsel stated that the said documents were attached to the respondent’s list of documents filed on 8th March, 2017, whose contents were not deposed in the replying affidavit.

9. Counsel further submitted that although the applicant states that he paid Kshs. 1 Million, as at 11th January, 2017 he owed Kshs. 626,565. 27 and it had not been paid up to the date of arguing this application. It was the respondent’s view that grant of an injunction would be tantamount to rewriting a contract, which the court was urged not to do.  He relied on the case of Godfrey Ngumo Nyaga vs Housing Finance Company of Kenya Limited, Civil Appeal No. 134 of 1987 (unreported) cited in the case of Apollo Onyango Njago & Another vs  Savings & Loan Kenya Limited [2012] eKLR.

10. On the principle of irreparable damage, Mr. Adhoch submitted that if it happens that the respondent was in error, damages can be paid. He added that Kshs. 10 Million out of the principal amount is yet to be paid. He cited the case of Mureithi vs City Council of Nairobi, Civil Appeal No. 5 of 1979 to amplify the point that an injunction was being sought on speculative grounds.  He referred to the documents mentioned in paragraph 7 of the applicant’s supporting affidavit to show that there is no danger of repossession.  Counsel also relied on the case of Stephen Mbugua Mwagiru & Another vs Tatu City Ltd. & Another [2012] eKLR.

11. It was submitted that the balance of convenience tilts in favour of the respondent as the applicant was in possession of the trucks but was not making payments to the respondent.  Counsel prayed for the application to be dismissed.

12. Mr. Wairagu, in response to the foregoing stated that they had disclosed material facts in the supporting affidavit in that the applicant was having financial difficulties.

The issue for determination is if the applicant has satisfied the principles for grant of an interim injunction.

13. The applicant filed its application and supporting affidavit on 22nd December, 2016.  Judge P.J. Otieno granted the said application on exparte basis pending the hearing of the same interpartes.  It was granted on condition that the applicant was to pay the sum of Kshs. 1,000,000/= to take care of arrears of installments and Auctioneer's fees. The applicant paid Kshs. 785,454 on 23rd December, 2016 and Kshs. 600,000/= on 23rd January, 2017.

14. In paragraph 7 of the supporting affidavit, the deponent states that on 24th November, 2016, the defendant instructed Auctioneers to repossess the trucks in issue at the Kenya - Tanzania border without any notice to the applicant.  The trucks that were loaded with the applicant's client’s goods were only released after much cajoling and negotiations.

15. The bone of contention by the applicant is the allegation contained in paragraph 6 of the its supporting affidavit that on 25th January, 2016, the respondent increased the installments payable by the applicant arbitrarily and without prior notice as agreed in the facility offer letter and the applicant's repayment plan was thrown into disarray.

16.  In paragraph 8 of the said affidavit the deponent avers that it is under constant threat that the respondent would once again unlawfully send auctioneers to repossess the trucks without notice or prior contact with the applicant. In paragraph 10 thereof the deponent states that it is apprehensive that the respondent will repossess the trucks at any time, thus disrupt the applicant's business which it uses to service the loan.

17. On the issue of  interest,  the email from the respondent of 11th November, 2016 written by one Charles Nyadero states in part as follows; “on the matter of interest rate we are currently offering a rate of 23. 5% which we can consider reducing the interest (sic) for your facility subject to clearing all the outstanding arrears as above note (sic)”. The email dated 11th November, 2016 written by one Yvonne of the applicant company shows that interest rates were reviewed upwards. It states as follows in part, “Please advise us more, on why your interest rates have not been reviewed, since when the rate (sic) were raised you also did the same to our loan, but since 14th of September, the bank interests (sic) were reduced which has not been effected to our account. Kindly preview our account and let us have the reduced actual amount as per to date.”(emphasis added).

18. Apart from considering the depositions contained in the affidavits, I have also perused the documents attached thereto and rival submissions and authorities in support of the application. Although the respondent purports to have issued notices for increase of the interest rates applicable, no such notices and certificates of posting were attached to the respondent’s replying and further affidavits.  Mr. Adhoch urged the court to look at the bundle of documents which were filed by the respondent in support of its case, where the said notices have been availed. This court declines to make reference to the said documents as had the said Counsel considered the same to be relevant, he should have exhibited the same by attaching the said notices to its replying affidavit. This would have given the applicant the opportunity to rebut the same or otherwise.

19. In the case of Midroc water Drilling Co. Ltd. vs Cabinet  Secretary Ministry of Environment, Water and Natural  Resources & 2 Others [2013] eKLR, Kamau J. in declining to refer to documents attached to written submissions had the following to say:-

“The court will not consider the documents the plaintiff had been (sic) annexed to its written submissions for the reason that they were not attached to an affidavit. It was clearly erroneous for the plaintiff to have done so as any documents that a party relies upon in opposition to an application, must be introduced by way of affidavit evidence. The court will therefore only have regard to the annextures that were annexed to the affidavits that were filed by both the plaintiff and the respondent.”

20. Further, the respondent should have complied with the provisions of rule 9 of the Oaths and Statutory declaration Rules which provide as follows:-

“All exhibits to affidavits shall be securely sealed thereto under the seal of the Commissioner and shall be marked with serial letters of identification.”  Refer to Fredrick Mwangi Nyaga vs Investments & Another [2013] eKLR and Abraham Mwangi vs S.O. Omboo & Others HCCC No.  1511 of 2002. ”

21. Still on the issue of compliance, in Galaxy Paints Co. Ltd. Vs Falcon Guards  Ltd,  Civil Appeal No. 219 of 1998, the Court of Appeal stated thus:-

“The rules are designed to facilitate justice and further its ends.  They are not things designed to trip people up. They are not too technical. The Law Society of Kenya is adequately represented in the Rules Committee. But due to rampant inefficiency, negligence, dishonesty and general disregard for professional ethics on the part of the majority of the advocates in the country the Rules are abhorred.”

22.  Although the Court of Appeal in the above decision was not referring to Oaths and Statutory declaration Rules, its observation is applicable to the present instance whereby Counsel is making reference to documents it has not exhibited to its replying affidavit or its further affidavit. If the Court was to allow such practice it would encourage Counsel to ambush each other in court by introducing documents not referred to in affidavits to the disadvantage of the other party.

23. The assertion by the respondent that the applicant is in arrears is a triable issue as the applicant’s contention is that the increase of the interest rate without notice has brought about difficulties in the applicant’s repayment plan. It is clear that the applicant disclosed in its affidavit that the trucks were released by the Auctioneers after much cajoling and negotiations and that it is under constant threat of repossession of the said trucks.

24. The  case cited  by Counsel for the respondent, of Stephen Mbugua Mwagiru & Another vs Tatu City Limited & Another [2012]eKLR is distinguishable from the present position, in the said case the Court of Appeal stated that temporary injunctions cannot be issued where the defendant’s/respondent’s action is only speculated.  In the present case, there was actual repossession by an Auctioneer as a result of which, as garnered from the trove of emails attached to the replying affidavit, the applicant was to pay Kshs. 142,960 being the Auctioneer’s fees. Indeed Judge P.J. Otieno on 22nd December, 2016 granted an exparte interim injunction which was conditional on payment of Auctioneer’s fees and any arrears.

25. It is my finding that, the applicant has satisfied the grounds for grant of an interim injunction in line with the cases of Giella vs Cassman Brown & Co.  (supra) and Mrao  Limited vs First American Bank of Kenya & 2 Others  [2003]  KLR.  The latter case held that:-

“a prima facie case in a Civil application includes but is not confined to genuine and arguable case. It is a case which on material presented to the court, a tribunal properly directing itself will conclude there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal.”

26.  For the foregoing reasons, the application dated 22nd December, 2016 seeking orders in the nature of an interim injunction is hereby granted.  Costs are awarded to the applicant.

DELIVERED,DATED and SIGNED at MOMBASA on this 14thday of JULY, 2017.

NJOKI MWANGI

JUDGE

In the presence of:-

Mr. Gitonga holding brief for Mr. Wairagu for the plaintiff/applicant

Mr. E. Nyongesa holding brief for Mr. Adhoch for the defendant/respondent

Mr. Oliver Musundi - Court Assistant