Tarsisio Kinyuru M’mukindia v Barclays Bank of Kenya Limited [2018] KEELC 4801 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT AT MERU

ELC CASE NO. 189 OF 2016

TARSISIO KINYURU M’MUKINDIA ……...………..PLAINTIFF/APPLICANT

VERSUS

BARCLAYS BANK OF KENYA LIMITED……DEFENDANT/RESPONDENT

R U L I N G

1. The Notice of Motion dated 10th October, 2016 seeks the following orders:-

1. Spent.

2. That pending inter-partes hearing of the application, a temporary injunction be issued, restraining the defendant/respondent, its auctioneers, successors, assigns, employees, servants, agents and anyone else acting or claiming for, through or on its behalf, or acting at its behest, directions and/or instructions, from selling through a public auction or any other manner, the Plaintiff’s /applicant’s L.R. Numbers Nkuene/Mitunguu/1366 and 1367.

3. That pending hearing and determination of the suit or until further court orders, a temporary injunction be issued restraining the defendant/respondent, its auctioneers, successors, assigns, employees, servants, agents, and anyone else acting or claiming for, through or on its behalf, or acting as its behest, directions and/or instructions from selling through a public auction or any other manner, the plaintiff’s /applicant’s L.R. Numbers Nkuene/Mitunguu/1366 and 1367.

2. The application is supported by the following grounds:-

i. That the Defendant/Respondent intends to sell the Plaintiff’s/Applicant’s two parcel of land via public auction on 14. 10. 2016, yet the plaintiff/applicant has repaid over a half of the loan

ii. That the Respondent has never served the Applicant with any notice as required in law.

iii. That the Applicant is supposed to clear the subject loan in the year 2018 and is willing so to do.

3. Tarsisio Kinyuru  M’Mukindia, the applicant has  sworn a suppoting affidavit of 10:10:2016 where he states as follows:-

1. That in or about 2012, the defendant’s/respondent’s Meru branch advanced to him a loan of Ksh,2, 000, 00/= plus a further sum of Ksh. 2,200,000/= which it called a revolving loan. Applicant offered his two parcels of land to wit: L.R Nos. NKUENE/MITUNGUU/1366 and 1367 as collateral for that loan.

2. That Applicant has been servicing the said loan and so far, he has repaid over a half of it but strangely, the defendant/respondent has advertised to sell his afore-said two parcels of land, through a public auction on 14. 10. 2016 as per a copy of a Daily Nation Newspaper , annexed hereto and marked “TKM1”.

3. That the afore said intended sale is illegal, malicious and fraught with utmost bad faith, since Applicant has never been issued with the mandatory notice of the intended Public Auction, as ordained in law.

4. That Applicant and his family live on the suit lands which they have extensively developed, where they have a stone dwelling houses, a kitchen, bananas etc whose worth is about Ksh. 8,500,000/=.

5. That family  permanent dwelling house was utterly burnt down when they were in church on a certain  Sunday 04:09:2016, whereby all their properties and documents therein including the charge/loan documents were reduced to ashes, as per the photographs and police abstract annexed as “TKN 2” and “TKM 3”

6. That to demonstrate bad faith, the Defendant/ respondent has unreasonably refused to give Applicant a copy of the charge document and/or a statement of his account showing the amount paid and the sum outstanding, despite visiting and requesting for the same upon elucidating the effect of the said inferno.

7. That the defendant/ respondent and its auctioneers have gallantly vowed to auction the suit lands, unless Applicant fully defrays the balance of the loan at once before 14:10:2016, yet Applicant is supposed to pay till 2018.

8. That the defendant/respondent has absolutely declined to even inform Applicant the balance of the loan.

9. That Applicant is willing to pay the balance of the loan on a monthly basis as he has been doing.

10. That unless the said intended auction is halted, most urgently, Applicant and his family shall be unjustly rendered homeless, landless, vagabonds and vagrants, contrary to the law and interest of justice.

4. One Lucas Gikungu, the Corporate recoveries Officer of the Respondent has sworn an affidavit dated 27:10:2016 stating that:-

5. Plaintiff has admitted to obtaining the loan facility, and in addition, Defendant also advanced to the Plaintiff Asset Finance Loan amounting to Kshs. 1,923,400. 00.

6. The last facility offer letter dated 3rd July, 2014 was duly accepted by the Plaintiff whose purpose was to “restructure overdraft and short-term loan facilities”, provided that the loan would be repaid in 48 monthly instalments of Kshs. 87, 500. 00.

7. The plaintiff has admitted that the loan is secured by a charge over the suit properties dated 24th March, 2011.

8. It was a term of the charge that:

a. Clause 3: The Charge secured among others the principals amount, all interest, costs, taxes, liabilities, charges obligation and expenses.

b. Clause 4 and 21: The Security would be continuing security for payment and discharge in full of all money, obligations and liabilities.

c. Clause 6 (d): The Chargor would keep the premises insured against loss or damage by fire among others.

d. Clause 6 (e) The Chargor would deposit with the Bank policies of insurance and pay premium for the insurance cover.

e. Clause 7: It would constitute an event of default should the Chargor fail to pay when demanded any sum due and owing to the Bank or fails to comply with any term or condition of any facility from the Bank or fails to perform or discharge any obligation or liability of the Chargor to the Bank.

f. Clause 8: Upon happening of an event of default, the Bank’s remedies shall include selling the property.

9. Contrary to the Plaintiff’s averments at paragraph 3 of the Supporting Affidavit, which amounts to perjury, the Plaintiff is a serial defaulter and has not been paying the monthly instalments as per the terms of the loan facility.

10. As at 21st October, 2016 the balances were as follows:-

Account Type Principal due Arrears Interest total

1 Ordinary Loan A/C 1,925,000. 00 1,239,528. 25 686,520. 55 3,851,048. 80

2 Asset finance A/C

462,560. 95 114,681. 90 577,242. 85

3 Costs A/C Business Bouquets)

64,919. 90

64,919. 90

Total as at 21st October,2016 4,493,211. 55

11. As a result of the continuous default, the Defendant issued the Plaintiff with various demand letters but the Plaintiff did not regularize the default.

12. The Defendant proceeded to issue all the mandatory statutory notices as follows:

i. Three months statutory notices dated 28th October, 2015

ii. Forty days statutory notice dated 5th May, 2016.

See page 35 to 41 of the exhibit for copies of the notices and certificate of posting.

13. Upon lapse of the said statutory notices and no compliance by the plaintiff, the Defendant proceeded to instruct auctioneers who issued the following notices:

i. 45 days redemption dated 4th August,2016

ii. Notification of sale received and signed by the plaintiff on 5th August, 2016.

iii. Notification of sale received and signed by the Plaintiff on 5th August 2016.

See page 42 to 46 of the exhibit for copies of the   notices and certificate of posting.

14. As stated in paragraph 3 of the Replying Affidavit, the property was duly advertised for sale in the daily newspapers. See page 47 to 48 of the exhibit.

15. The Plaintiff has never informed the Bank about the house being burnt down. In any event, the Plaintiff was under obligation under Clause 6 (d) of the charge to keep the premises insured.

16. The Plaintiff has never requested the Bank for copies of the charge or any other document. No evidence of the alleged request has been tendered.

17. The alleged burning of the suit premises has no bearing or relevance to the Bank exercising it statutory power of sale.

18. It is also immaterial whether the Plaintiff resides in the suit property. The suit property was used as security for repayment of loan and the Plaintiff knew the consequences of default.

19. It is therefore clear that the Plaintiff’s entire suit is baseless and intended to aid the Plaintiff to avoid his contractual obligations and to use this Court to execute an illegal scheme.

20. The Respondent further avers that cases before Court should be decided on the basis of facts, law and evidence and that contracts are made to be performed.

21. Further, Respondent states that those who come to equity must do equity and hence failure to service the loan takes the applicant outside the realm of the exercise of Court discretion.

22. The bank also states that it has complied with all the requisite provisions of the law.

23. The Bank further contend, that applicant has not demonstrated that he stands to suffer irreparable damage and that the application is an abuse of the courts process.

Determination

24. The applicant approached the Court under a Certificate of Urgency whereby he obtained Interim Orders of Injunction on 11. 10. 16. These orders were extended on 3. 11. 16 and again on 15. 12. 16.

25. On 15. 12. 16, directions were given for the application to be canvassed by way of Written Submissions. Such Submissions have since been filed and exchanged and the court has considered the same.

26. I frame the  issues for determination as follows;

i. Whether Plaintiff was advanced the alleged loan and if so, whether there is any default in Repayment.

ii. Whether Applicant was served with the Requisite Notices.

iii. Whether the orders sought for are merited.

Loan advancement and repayment

27. In his submissions applicant has admitted that he was advanced a loan facility by the Respondent to the tune of Sh.4 200 000 which was to be repaid in 48 instalments of Sh. 87,000.  However, Applicant denies having been in advanced the sum which is termed as asset Finance of Sh. 1,923 400.  Applicant avers that if such a sum was ever given, then it would have been secured and there would have been evidence to that effect.

28. I find that amongst the documents availed as annexures by the Respondent is the Statement of Account for the Applicant in respect of Account No. 077FLBY112170001. It has a heading “Statement of Loan Account”. It shows that the Principal Disbursal was for Sh . 1,923,400.

29. Applicant has not commented on this information. He has not denied that this is his account and that the sum mentioned was actually disbursed into his account. He cannot therefore just disown the advance on Asset finance.

30. It is clear that July 2014 was not the first time Applicant was getting a loan from the Respondent. Even in the plaint, the applicant has admitted getting a loan of 4,200,000 in the year 2012. Documents availed by the Respondent show that Applicant had been advanced a loan in January 2011 and another in April 2013.

31. The purpose of the loan of 03:07:14 was “restructureoverdraft and short term loan facilities”. The security for this loan was the “existing security, the one listed in Part A schedule 1 of the commercial Term”. The mentioned schedule contains the following information.

“Charge over property Title Numbers Nkuene/ Mitunguu/1366 and Nkuene/Mitunguu/1367 in the name Tarasisio Kinyura  M’Mukindia …”

32. In light of the foregoing, I am inclined to believe that the loan was advanced.

Did the applicant repay the loan as agreed?

33. The term loan agreement of 3. 07. 14 shows that payment was to be effected in 48 monthly instalments of Sh. 87, 500.

34. The statements of account availed by Respondent shows that for the Account No. [particulars withheld], the payments were only regular for few months after the disbursement in July 2014. By April 2015, the fixed monthly payments are not detectable.

35. Thereafter on 13. 5.15 Respondent issued the Applicant a demand notice, and another of 15. 06. 15, before the statutory Notice was issued on 28. 10. 15. Applicant has not made any comments regarding these demand letters. It is hence apparent that Plaintiff had fallen into arrears by May 2015.

36. Applicant contends that he has paid half of the loan amount. However Courts have over and over again stated that the Court cannot re-write agreements or contracts for the parties.

37. In Patricia Bini vs Melina Investment Ltd & 3 Others 2015 e KLRJustice Angote stated thus :-

“It is trite law that Courts cannot re-write contracts for the parties neither can they imply terms that were not part of the contract….”

38. My conclusion on the issue of default is that applicant has defaulted on the payments.

Were the requisite notices served?

39. Applicant claims that the requisite notices of the intended sale was not served upon him.

40. The statutory notice of 28. 10. 15 contains the relevant information as stipulated under Section 90 of the Land Act. The address used in posting the same is the address that Applicant was using when he was getting the loan.

41. Charges power to sell is provided for under Section 96 (1) of the Land Act. In compliance with the aforementioned law, the Chargee issued the notice to sell dated 05:05:16.

42. The redemption Notice is dated 04:08:16 while the notification of sale (Auctioneers Notice) is dated 09:08:16.

43. In all these notices the given address of the applicant is the same. It cannot therefore be true that Applicant was not issued with the requisite Notices.

Whether the orders sought by the applicant can be granted.

44. Applicant has stated that his house got burnt and he has no documents appertaining to the contract. He avers that Respondent has unreasonably refused to give him a copy of the Charge Document and or a statement of his account.

45. In his initial affidavit of 10:10:16 Applicant has not demonstrated to the Court that he had engaged the Respondent formally on this issue. It is only in the affidavit of 13:12:16 that he has annexed a handwritten letter to the Respondent informing the Respondent of the calamity that had befallen him.

46. The question (which begs for an answer), is, how comes when the Applicant was approaching the Court on 10:10:16, he never requested for an order to be given the documents he is referring to in paragraph 7 of his affidavit of 10:10:16.

Prima facie case.

47. This is a case where by the court has established that funds were disbursed to the applicant and all the requisite notices were issued but the default continues. I find that applicant has not established a prima facie case with a probability of success.

48. The present case is rather similar to the case of TurboHighway Eldoret Ltd & Anor vs Bank of Africa Nakuru ELC No. 363 of 2015, cited by Respondent where it was held that “In our case, I am not persuaded that the Plaintiffs have demonstrated a prima facie case with a probability of success. Significantly, they have failed to demonstrate that there has not been default or that the statutory power of sale has not arisen. Despite alleging that no statutory notices were sent, on the contrary, I have seen the notices and I believed that they were properly sent. From the material presented, I do not see how I can stop the Bank from proceeding to sell the properties in issue.”

Irreparable damage.

49. Issues of land are sensitive and sentimental; see ThomasMungiria & 9 Others vs. Joseph Mutuma & 4 Others [2012] e KLR.

However, applicant was aware that the security for the loan was precious commodity (Land). The case of Daniel Ndege Ndirangu v Barclays Bank of Kenya Limited & another Nakuru High Court Civil suit No 8 of 2012 “B” aptly captures this point. In that case Justice Emukule referred to the case of Sambai Kitur v Standard Chartered Bank & 2 others, Eldoret HCCC NO. 50 OF 2002 where the Court emphasized that:  “It must also be noted that when a chargor lets loose its property to a chargee as security for a loan or any other commercial facility on the basis that in the event of a default it be sold by a charge. The damages are foreseeable. The security is henceforth commodity for sale or possible sale without prior concurrence and consent of the chargee. How can he, having defaulted to pay loan arrears prompting a chargee to exercise its statutory power of sale, claim that he is likely to suffer loss and injury incapable off compensation by an award of damages? Such an argument is definitely misplaced and has not merit. It is immaterial that the property is a family residence, a fact well known to the Chargor at the time of offering it as security to the charge. The upshot of all these is that following the Giella principles, the loss of injury that the applicant stands to suffer should he succeed in this suit is capable of being compensated in damages adequately”

Balance of convenience.

50. On this point, the court has taken into account the opportunities given to the defaulter (applicant). As already noted earlier on, the default appears to have accrued in May 2015 (almost three years ago). There is no evidence that Applicant is servicing the loan. And he has not given   the Court any suggestion on how he plans to pay the balance since in his own words, he has paid half way.

51. I also note that the Interim Orders of injunction were issued way back on 12:10:16 (one year and two months ago). For all this time, Applicant has not demonstrated any enthusiasm on how he is paying the debt.

52. The submissions by the applicant that he is willing and ready to defray the outstanding amount of the loan are hence not convincing at all. The balance of convenience should not tilt in his favour.

53. My final conclusion is that the application of 10:10:16 has no merits and the same is hereby dismissed with costs to Respondent.

DATED, SIGNED AND DELIVERED IN OPEN COURT AT MERU THIS DAY OF  24th JANUARY, 2018 IN THE PRESENCE OF:-

Court Assistant:Janet/Galgalo

Rimita H/B for Carp peters for Plaintiff /Applicant present

Njenga H/B for Kimani for Defendant /Respondent present

HON. L. N. MBUGUA

ELC JUDGE