World Explorer Safaris Limited v NCBA Bank Kenya Limited & another [2022] KEHC 15122 (KLR)

World Explorer Safaris Limited v NCBA Bank Kenya Limited & another (Civil Case E007 of 2022) [2022] KEHC 15122 (KLR) (14 July 2022) (Ruling)

Neutral citation: [2022] KEHC 15122 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Case E007 of 2022

SN Mutuku, J

July 14, 2022

Between

World Explorer Safaris Limited

Applicant

and

NCBA Bank Kenya Limited

1st Respondent

Regent Auctioneers

2nd Respondent

Ruling

1. World Explorer Safaris Ltd, the Applicant, brought this application through a Notice of Motion dated March 21, 2022 under Articles 40 of the Constitution of Kenya, Sections 90, 96(2) and 97(2) of the Land Act No. 6 of 2012, sections 1A, 1B, 3A of the Civil Procedure Act, Order 40rules 1(a), 2(1), & 2 of the Civil procedure rules seeking following orders:(i)Spent.(ii)Pending the hearing and determination of this application, temporary injunction be issued to stop and restrain the Defendant herein whether acting by itself, or through its agents M/s Regent Auctioneers or their employees, servants, assignees and/or agents or any person working under their express and/or implied authority, from selling by public auction or private treaty, transferring, alienating, disposing, entering, leasing, appointing a receiver, trespassing, the Plaintiff’s Title No. Kajiado/Kaputei central/1361. (iii)Pending hearing and determination of the main suit, a temporary injunction be issued to stop and restrain the Defendant herein whether acting by itself, or through its agents m/s Regent Auctioneers or their employees, servants, assignees and/or agents or any person working under their express and/or implied authority, from selling by public auction or private treaty, transferring, alienating, disposing, entering, leasing, appointing a receiver, trespassing, the Plaintiff’s Title No. Kajiado/Kaputei central/1361. (iv)That cost of this application be provided for.

2. This application was supported by an Affidavit sworn by Jatin Ashok Shah on March 21, 2022, a director of World Explorer safaris Ltd. From the averments contained in that affidavit, the Applicant is the registered owner of parcel of Land Known as Kajiado/Kaputei Central/1361 which property had been advertised for sale by the 2nd Defendant on instructions by the 1st Defendant on March 30, 2022. His case is that the default in repaying the loan was due to hard economic times brought about by Covid19 Pandemic. Attempts to resolve the issue has not been successful. The deponent claims that the Applicant has not been served with the statutory notices and seeks to be allowed to redeem the property.

3. The Application is opposed through a Replying Affidavit dated March 29, 2022. It is the case for the 1st Defendant/Respondent that by a letter of offer dated November 21, 2016, the 1st Defendant extended credit facility of Kshs. 20,000/, one (1) overdraft facility of USD 150,000 and second overdraft facility for Kshs. 10,000,000, all totalling to Kshs. 10,200,000 and USD 150,000. Legal charges were secured over Kajiado/Kaputei Central/1361 and Office number G14, 5th Floor erected on Land Reference Number 1870/ix/181 Krishna Centre Nairobi. Applicant’s directors executed guarantee and indemnity over the said credit facilities.

4. It is the case for the 1st Defendant that all requisite statutory notices have been issued: on October 11, 2017, on January 22, 2018 and on February 23, 2022. The arrears owed are Kshs. 19,443,801. 31 and USD 255,809. 18 as at March 29, 2022. The property has been valued by a registered valuer prior to the intended Auction.

Submissions 5. The Application was canvassed orally in court on May 10, 2022. Counsel for the Applicant submitted that the Applicant is in tourism industry and that due to Covid 19 pandemic its business was adversely affected; that the Applicant approached the 1st Respondent to restructure the loan, proposing to Kshs. 3,000,000 on or before March 7, 2022 and the balance of Kshs 24,000,000 to be paid in equal instalments of Kshs 4,000,000 per month from April, 2022 but the bank rejected this proposal.

6. Court was told that the Applicant is committed to repaying the loan and is in the process of selling property to pay off the loan. It was argued that the applicant will be prejudiced if the property is sold.

7. The 1st Respondent argued that the Applicant is in default of the loan facility offered to it; that the requisite statutory notices have been issued through registered post; that several meetings have been held between the 1st Respondent and the Applicant and correspondences exchanged with a view to accommodating the Applicant to settle the loan due but nothing has come out of it.

8. It was argued that the loan now stands at Kshs 49,000,000; that the bank had discounted the loan to Kshs 28,000,000 but this discounted amount was conditional upon the same being cleared by October 28, 2021. It is the case for the 1st Respondent that they have followed the law in the attempt to recover the loan and that they have caused valuation to be carried out on the property by a registered valuer.

Determination 9. The principles for granting injunctions are well settled. In keeping with the principles in Giella vs Cassman Brown & Co Ltd [1973] E.A 358, all that this court is required to do, is to satisfy itself if (i) either party had shown a prama facie case with a probability of success; and (ii) whether, if the temporary injunction was refused, the party seeking it stood to suffer irreparable harm for which damages would not be an adequate remedy; and (iii) if in doubt, this court has to consider the balance of convenience and determine, on the facts of the case, whether the balance of convenience lay with the applicant or with the respondents.

10. Injunctions are equitable remedies that are granted by the court using its discretionary powers. The Court of Appeal in Charter House Investments Ltd v Simon K. Sang and others, Civil Appeal No. 315 of 2004 had this to say on injunctions:“Injunction is an equitable and discretionary remedy, given when the subject matter of the case before the court requires protection and maintenance of the status quo. The award of a temporary injunction by courts of equity has never been regarded as a matter of right, even where irreparable injury is likely to result to the applicant. It is a matter of sound judicial discretion, in the exercise of which the court balances the conveniences of the parties and possible injuries to them and to third parties. In the Giella case (supra) the predecessor of this Court laid down the principle that for one to succeed in such an application, one must demonstrate a prima facie case with reasonable prospect of success; that he stands to suffer irreparable damage which cannot be compensated for by an award of damages; and that the balance of convenience tilts in his favour.”

11. This leads me to the first principle for issuance of injunctions. Has the applicant presented a prima facie case with reasonable prospect of success? What amounts to a prima facie case was discussed in Mrao Ltd vs First American Bank of Kenya and 2 others, (2003) KLR 125 in the following terms:“A Prima facie case in a civil application includes but not confined to a genuine and arguable case. It is a case which on the 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 from the later”.

12. Applying this definition to this case, I find no dispute that the Applicant was granted by the 1st Respondent a loan facility which has fallen into arrears and this is admitted. The claim that the applicant was not given a chance to redeem his property due to lack of statutory notices is not true. There is on record a statutory notice of 3 month dated October 11, 2017; there is a statutory notice of 40 days dated January 22, 2018 and a notice of 30 days to the guarantors dated October 30, 2018 and a valuation of the property by Centenary Valuers.

13. I have also seen numerous correspondences between the parties on negotiations touching on the loan facility. I have noted that the applicant sought to have the loan discounted and this was acceptable leading to a discounted amount of Kshs 28,000,000 for one month from September 23, 2021 to October 23, 2021 with conditions that this be cleared by October 23, 2021 failing which the total outstanding amount as at September 23, 2021 plus any accrued interest and recovery expenses becomes due.

14. These conditions were not met. On October 19, 2021, the applicant sought for extension of time by one month to enable them settle the discounted amount. This was not acceptable to the 1st Respondent.

15. I have seen other exchanges of correspondences where the applicant had sought to settle the amounts in instalments without success. As late as when this matter was before the court pending canvassing, parties were still negotiating. This court allowed the applicant time to pay Kshs 4,000,000. On March 31, 2022, this court was told that the applicant was not able to pay that amount. This application was argued thereafter.

16. Although the applicant claims that it had not been served with the statutory notices, this issue was not submitted by their counsel. Emphasis was laid more on the time required to repay the loan and not lack of service of the notices.

17. Indeed, the applicant’s main argument during the hearing was based on how it is committed to settling the loan and urging that this honourable court should be lenient to it and extend the time within which to settle the loan. It was argued that the applicant has tried disposing off the property to a potential buyer at the valued market price and pay off the loan arrears.

18. The applicant further argued that it would suffer irreparable damage if the Respondent sells the property at a throw away cost and that the Defendant will not suffer any loss or damage if prayers sought are granted.

19. I have considered rival arguments. It is clear to me that the 1st Respondent has complied with the law. Section 90 (1) of the Land Act which provides that:If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or any part thereof due under any charge or in the performance or observation of any covenant, express or implied, in any charge, and continues to be in default for one month, the chargee may serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be. 20. The 1st Respondent has also complied with the provisions of section 96(2) which provide that:(2)Before exercising the power to sell the charged land, the chargee shall serve on the chargor a notice to sell in the prescribed form and shall not proceed to complete any contract for the sale of the charged land until at least forty days have elapsed from the date of the service of that notice to sell.

21. The applicant offered its property, now subject of these proceedings, as security for a loan facility. It must have been aware that any default in servicing the loan will lead to some consequences, which consequences translate into having its property offered as security becoming a commodity for sale so that the chargee can recovers its money. In such circumstances, I fail to find the rationale that the applicant will suffer irreparable loss that cannot be compensated by an award of damages. The 1st Respondent is seeking to recover what legally belongs to it. Even if this court were to stretch its imagination a bit further that the applicant may suffer damages in the process of the 1st Respondent recovering its money, it is my considered view that the 1st Respondent, being a financial institution, is in a position to compensate the applicant for any damage it might suffer.

22. The 1st Respondent has accommodated the Applicant to an extent of reducing the loan though conditional. They have also argued that the Applicant has failed to adhere to their payment proposals. From the conduct of the Applicant, which includes the failure to adhere to the orders made by this court to deposit Kshs 4,000,000 with the 1st Respondent even after being granted an extension to comply, it is clear that the balance of convenience tilts in favour of the Respondents.

23. The applicant has failed to reach the required threshold for a grant of the orders it is seeking. Consequently, the applicant’s Notice of Motion dated March 21, 2022 is hereby dismissed with costs to the 1st Respondent.

24. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED THIS 14TH JULY 2022. S. N. MUTUKUJUDGE