TRUST BANK LIMITED v MOHAMED BAKARI MBWANA [2004] KEHC 210 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT MOMBASA

Civil Case 80 of 1998

TRUST BANK LIMITED ………………….....................................…………….  PLAINTIFF

-     v e r s u s –

MOHAMED BAKARI MBWANA …………................................………….. DEFENDANT

R U L I N G

In this case the defendant entered into a consent judgment with plaintiff on 22. 7.1998 which consent was in writing  and was filed on 23. 7.1998.  The applicant sates that he has paid in full the amount of decree .

In the meantime the plaintiff Bank has been put into liquidation.  Then on 30. 4.2004 Auctioneers issued a proclamation purportedly under instruction issued by Chokaa and Co. Advocates on 25. 3.04 to attach certain items including plot no. Kwale/Mrima/578 and improvements there.  Also a Notification of sale of motor vehicle and other items of the applicant.  The applicant disputes the banker's right to sell his property saying that he had paid the claim in full.  The plaint filed by the Bank in 1998 shows a claim of shs. 1,328,216. 70 in respect of the applicants undebtedness to the plaintiff bank.  By consent this claim was settled in accordance with the terms of the said consent.  Paragraph 4 of the consent states;-

“4. If the defendant commits default in the payment of any one

instalment on its  due date the whole amount then outstanding together with interest shall became immediately payable and the plaintiff shall be at liberty to forthwith execute the decree herein in respect of such outstanding balance.”

The consent signed by both parties was entered on record and it serves as the judgment in this case. The mode of execution falls under the provisions of Civil Procedure Rules.

It is my view the Bank for whatever reason opted to recover its debt from the applicant personally through court action.  There were not two debts but one which was secured by a chattels mortgage and a charge.  By entering into a consent judgment the rights to execute securities were extinguished.  The provision for execution in default of payment require that the Plaintiff do return to court and apply to execute his decree whereby the defendant decree- debtor would have a chance to put his case forward. In the present case he says he finalized all payments according to the consent.  There is a dispute as to what is outstanding.  The old principle of rule of law is that the disputes of this nature have to be settled in a court of law.  It is not disputed that the charger has  right to exercise his power of sale of security without referring the dispute to court.  However, that right is not to be used in oppressive manner but justily.

I find here the plaintiff is acting unjustly by failing to abide by the consent judgment which grants him a right to execute.  Purporting to sell the securities in the circumstances of this case outside the process of court is oppressive.  The Decree debtor is likely to suffer loss and injustice.  The matter ought to be dealt with through the court process.  There are authorities cited here namely Bullen & Leake 12th Edition on the issue that the applications frivolous and vexatious.  I do not find this application to be without substance.  The suit was initiated by the respondent Bank who compromised its right by entering into a consent letter.  Whether it is entitled to resort to execution of securities without reference to court when this suit is still not finalized is the question troubling the applicant and in my view it is serious matter as the respondent purports to act without allowing the applicant to be heard.

I have also perused the Ruling by Mbaluto J which is relied upon by the respondent.  In that case the matter of the recovery of the loan had not reached the court.  The applicants were seeking to restrain the bank from exercising its power of sale to recover the loan. The difference is that in this case the Bank did not attempt to sell the securities but sought to recover from the charge directly through court action.  I am, therefore, convinced that the applicant is entitled to a hearing which he can only get if the attempted recovery which the applicant denies is due is made through the court.  For example the consent judgment fixed the amount recoverable “inclusive” of interest and advocate costs at shs. 1,336,362. 85.  These have to be verified by court.  I, therefore, allow the application before the court and grant orders  prayed  for with costs to the applicant.

Dated this 15th day of October, 2004.

J. KHAMINWA

JUDGE

15. 10. 04

Ruling read in open court in presence of Mr. Kanyi

Mr. Omolo in open court.

J. KHAMINWA

JUDGE