Case ID:163036

Yurub Investment Limited & another v Diamond Trust (K) Ltd & another [2020] eKLR

Case Metadata

Case Number:

Civil Case139 of 2018

Parties:

Yurub Investment Limited & New Nyanza Wholesalers Limited v Diamond Trust (K) Ltd & Dalali Traders Auctioneers

Date Delivered:

05 Jun 2020

Case Class:

Civil

Court:

High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Case Action:

Ruling

Judge(s):

Maureen Akinyi Odero

Citation:

Yurub Investment Limited & another v Diamond Trust (K) Ltd & another [2020] eKLR

Court Division:

Civil

County:

Nairobi

Disclaimer:

The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & TAX DIVISION

CIVIL CASE NO.139 OF 2018

YURUB INVESTMENT LIMITED..........................1

ST

PLAINTIFF/APPLICANT

NEW NYANZA WHOLESALERS LIMITED........2

ND

PLAINTIFF APPLICANT

VERSUS

DIAMOND TRUST (K) LTD...............................1

ST

DEFENDANT/RESPONDENT

DALALI TRADERS AUCTIONEERS...............2

ND

DEFENDANT/RESPONDENT

Consolidated with

CIVIL CASE NO.451 OF 2017

LABURMAN COURTS LIMITED..................................PLAINTIFF/APPLICANT

VERSUS

DIAMOND TRUST BANK (K) LTD.........................DEFENDANT/RESPONDENT

RULING

(1) Before this Court are two applications for determination. The first is the Notice of Motion dated

8

th

November 2017

by which

LABURMAN COURTS LIMITED,

the Plaintiff/Applicant sought the following Orders:-

“1. SPENT

2. SPENT

3. THAT pending the hearing and final determination of the suit herein, the Honourable court do issue a permanent order to refrain the Defendant/Respondent whether by itself, its agents, servants or any other person acting on its authority from recovering, purporting to recover, advertising for sale, selling or in any other manner whatsoever interfering with the Plaintiffs/ Applicant’s property L.R. No.209/ 1063 Nairobi on account of the charge dated 29

th

2009 created over the property.

(2) The second application is the Notice of Motion dated

6

th

April 2018

by which

YURUB INVESTMENTS LTD

(the 1

st

Plaintiff/Applicant) and

NEW NYANZA WHOLESALERS LTD

(the 2

nd

Plaintiff/Respondent) seeks the following Orders:-

“1. SPENT

2. SPENT

3. SPENT

4. SPENT

5. SPENT

6. THAT pending the hearing and determination of the suit filed herein, the Respondents by themselves, their officers, servants, agents or any person acting by or through their authority be restrained from advertising the suit property for sale.

7. THAT pending the hearing and determination of the suit filed herein, the Respondents by themselves, their officers, servants, agents or any person acting by or through their authority be restrained from attaching, selling, disposing of alienating, trans-ferring or in any way interfering with the Applicants interest in the suit property by way of a public auction or private treaty and/or otherwise howsoever from interfering with the Applicants’ interest in the property.

8. THAT pending the hearing and determination of the suit filed herein, an order do issue directing the 1

st

Respondent to furnish the Applicants with a detailed and updated statement of Accounts in respect of the amounts being claimed.

9. THAT pending the hearing and determination of the suit filed herein, an order do issue directing the 1

st

Respondent to furnish the Applicants with the following:-

(i) Copies of Letters of offer in respect to the said amounts;

(ii) copies of executed charge documents;

(iii) Correspondence relating to revision of interest rates.

10. THAT this application be heard inter-partes on such date and at such time as this Honourable Court may direct.

11. THAT the costs of the Application be in the cause.”

(3) The application which was premised upon

Order 40 Rule 1

of the

Civil Procedure Rules 2010

and

Section 3A of the Civil Procedure Act

and all other enabling Provisions of the law was supported by the Affidavit of even date sworn by

ASHA HERSI MOGHE,

the Managing Director of the Applicant Companies.

(4) The 1

st

Defendant/Respondent

DIAMOND TRUST BANK KENYA LIMITED

opposed the two Applications in doing so relied on the three (3) Replying Affidavits as follows:-

(i)

The Replying Affidavit dated

29

th

January 2018

by

Lwanga Mwangi

a Debt Recovery Officer with the Bank in

HCCC No.451 of 2017

.

(ii)

The Replying Affidavit dated

28

th

June 2018

sworn by

Lwanga Mwangi

in

HCCC No.139

of 2018

consolidated with

HCCC No.451 of 2017.

(iii)

Further Replying Affidavit dated

1

st

November 2018

sworn by

Tarminder

Umesh

in

HCC NO.139 of 2018

consolidated with

NRB HCCC NO.451 of 2017.

(5) On

3

rd

December 2018

this file was consolidated with

HCCOM Case No.451 of 2017 LABURNAM COURTS LIMITED –VS- DIAMOND TRUST BANK KENYA LIMITED

. Since the prayers sought by the Notice of Motion dated

8

th

November 2017

have been subsumed into the prayers being sought in the Notice of Motion dated

6

th

April 2018

and given the consolidation of the two files I will render my determination in respect of the Notice of Motion dated

6

th

April 2018

.

(6) The application was canvassed by way of written submissions. The Plaintiff/Applicants filed their written submissions on

26

th

November 2018

whilst the Defendant/Respondent filed its submissions on

6

th

November 2018

. On

3

rd

December 2018

parties appeared in Court to highlight those written submissions.

BACKGROUND

(7) The 1

st

Defendant/Respondent (“

the Bank

”) advanced financial facilities to the 1

st

and 2

nd

Plaintiff/Applicants as follows:

(i) Facilities aggregating to the sum of

Kshs.196,000,000/=

to the 1

st

Applicant which were secured by a legal charge dated the

18

th

day of

December 2009

, a further charge dated

24

th

August 2012

and a second further charge dated

28

th

August 2013

over the property known as

LR.NO.209/1063

(hereinafter referred to as the “

suit property

”).

(ii) The Bank also advanced facilities aggregating to

Kshs.336,000,000/=

to the 2

nd

Applicant which were secured a legal charge dated

18

th

December 2009,

a second charge dated

28

th

June 2011

, a further charge dated

24

th

August 2012

and a third further charge dated

30

th

January 2013

over the suit property.

(8) The 1

st

Applicant is the registered proprietor of the suit property and it also acted as a guarantor of the said loan facilities. The companies had been diligently servicing the facilities until some point its business started experiencing some turbulence and financial difficulties, subsequently falling behind on some scheduled payments. The Bank consequently caused to be advertised the suit property for sale by the 2

nd

Respondent. This prompted the Applicants to approach this Honourable Court seeking urgent interlocutory orders inter alia that:-

· Pending hearing and determination of the Application, the Respondents by themselves, their officers, servants, agents or any person acting through their authority be restrained from attaching, selling, disposing of, alienating, transferring or any other way interfering with the Applicant’s interest in the property.

ANALYSIS AND DETRMINATION

(9)

I have carefully considered the written submissions filed by both parties. The only issue for determination is whether the Plaintiff/Applicants have met the threshold for the grant of an interlocutory injunction in line with

Order 40 Rule 1(a)

of the

Civil Procedure Rules 2010.

(10) The celebrated case of

GIELLA –VS- CASMAN BROWN & COMPANY [1973] E.A 385

set out the conditions precedent to the grant of an interim injunction. In that case it was held that:-

“The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”

PRIMA FACIE CASE

(11) The definition of a “

prima facie

” case was given in the case of

MRAO –VS- FIRST AMERICAN BANK OF KENYA and 2 OTHERS

as follows:-

“A prima facie case in a Civil Case includes but is not confined to a “genuine or 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 latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the applicant’s case upon trial. That is clearly a standard which is higher than an arguable case.”

(12)

There is no dispute and the Plaintiff/Applicant readily accept that they received and benefitted from the loan facilities granted to them by the bank. Likewise, there is no contest that the said loan facilities fell into arrears. The Plaintiff’s equally concede that the said facilities were secured by various charges over the suit property.

(13) The key question then in this matter is whether the Defendant Bank was legally justified to move to exercise its statutory duty of sale.

Section 90(1)

of the

Land Act, 2012

provides that:-

“If a charger 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 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.

Section 96(1)

of the same Act provides that:-

“Where a chargor is in default of the obligations under a charge and remains in default at the expiry of the time provided for the rectification of that default in the notice served on the charger under Section 90(1), a chargee may exercise the power to sell the charged land.

(14) The Applicants contend that the Defendant Bank failed to issue them with the requisite statutory notices under the law. The Defendant Bank on its part insists that statutory notices were properly served in full compliance with the Land Act.

(15) Annexed to the Supporting Affidavit dated

8

th

November 2017

sworn by

Amina Hersi Moghe

a Director of

Laburnam Ltd

, is a Statutory Notice of sale dated

23

rd

May 2017

[Annexture “

A HM2

”]. Further in that same affidavit at paragraph 8, 9 and 10 is a confirmation by the deponent (on behalf of the Applicant) that said Statutory Notice was in fact received. The said

Amina

Hersi Moghe depones

as follows:-

“8. THAT on 23

rd

May 2017 the Defendant/Respondent issued statutory notices to remedy the default under Section 90 of the Land Act 2012.

9. THAT upon receipt of the statutory notice in Paragraph II above our advocates responded pointing out that the Plaintiff/Applicant had paid fully the loan and therefore the Statutory Notice was misplaced and ought to have been withdrawn.”

(16) In light of this clear admission it is mischievous and disingenuous not to mention borderline perjury for the Applicants to claim that they were not served with statutory notices.

(17) Furthermore, the said Notices were sent to the Postal Address of the 1

st

Plaintiff/Applicant and were copied to the other parties. The Applicants responded to the Section 90 Notice through their Advocates and are therefore estopped from denying receipt of the same.

(18) The Notices under

Section 96

of the

Land Act

were sent to the Applicant by way of registered mail. The existence of prepaid stamp is sufficient proof of this fact. In the case of

ESTHER KEMUMA MOGAKA &OURU POWER LTD –VS- DIAMOND TRUST BANK,

Misc ELC No.284 of 2016

it was held:-

“The notices show on the face of it that they were sent under certificate of posting and are embossed with prepaid stamps denoting the same were paid for. Under clause 24(0) of the instrument of charge dated 13

th

April 2010 any notice or demand for payment was deemed to have been received or served 5 days following the date of posting provided the notice or demand was properly addressed.

I therefore find the Plaintiffs’ allegations that no statutory notices were issued to be a mere “

red herring

” thrown in as an attempt to confuse issues.

(19) The Plaintiff/Applicant takes issue with the amounts being claimed by the Defendant Bank.

(20) The Banks position is that at

31

st

January 2018

the amounts due under the three facilities was

Kshs.175,964,762.77, Kshs.371,263,613.00

and

Kshs.16,231,260.51

respectively. In any event it is trite law that a dispute over accounts cannot bar the Banks right to exercise its statutory power of sale. In the

MRAO

case [supra]

Hon Justice Richard Kwach

(as he then was) held as follows:-

“The circumstances in which a mortgagee may be restrained from exercising his statutory power of sale are set out in Halbury’s Laws of England, vol.32 (4

th

edition) paragraph 725 as follows:-

“725 when mortgagee may be restrained from exercising power of sale.

The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because the mortgagor has began a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged

. He will be restrained, however, if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.”

(emphasis added)

VALUATION

(21)

The Plaintiff/Applicants claim that the Defendant Bank breached

Section 97(2)

of the

Land Act

in that at the time when the suit property was being advertised for sale no recent valuation had been conducted on the suit property. The Applicants aver that the last valuation on the suit property was conducted way back on

7

th

April 2004.

Again I note with consternation that this is an outright lie being peddled by the Applicants.

(22) The Defendant Bank avers that a valuation was conducted on the suit property on

24

th

July 2018

. A copy of said Valuation Report s annexed to the Further Replying Affidavit of

Tarminder Umesh

dated

1

st

November 2018

as (Annexture

“TU2

”)

(23) Based upon the foregoing, I find that the Plaintiff/Applicants have failed dismally to show a prima facie case in order to warrant the orders being sought in their application.

IRREPARABLE HARM

(24) The Applicants plead that should the sale of the suit property by auction be allowed to proceed, they stand to suffer irreparable harm that cannot be adequately compensated by an award of damages.

In the case of

NGURUMAN

LIMITED –VS- JAN BONDE NIELSEN (2014) eKLR,

the Court of Appeal held thus:-

“On the second factor, that the applicant must establish that he “

might otherwise

” suffer irreparable injury which cannot be adequately remedied by damages in the absence of an injunction, is a threshold requirement and the burden is on the applicant to demonstrate, prima facie, the nature and extent of the injury. Speculative injury will not do; there must be more than an unfounded fear or apprehension on the part of the applicant. The equitable remedy of temporary injunction is issued solely to prevent grave and irreparable injury; that is injury that is actual, substantial and demonstrable; injury that cannot “

adequately

” be compensated by an award of damages. An injury is irreparable where there is no standard by which their amount can be measured with reasonable accuracy or the injury or the harm is such a nature that monetary compensation, of whatever amount, will never be adequate remedy.”

(25) Further in

PAUL GITONGA WANJAU –VS- GATHUTHI TEA FACTORY COMPANY LTD & 2 OTHERS [2016] eKLR

, the Court relied on

Halsbury’s laws of England

to define irreparable loss and stated that:

“First, that the injury is irreparable and second, that it is continuous. By the term irreparable injury is meant injury which is substantial and could never be adequately remedied or atoned for by damages, not injury which cannot possibly be repaired and the fact that the Plaintiff may have a right to recover damages is no objection to the exercise of the jurisdiction by injunction, if his rights cannot be adequately protected or vindicated by damages.”

(26) The Applicants having voluntarily charged the suit property to the Bank and having received and benefitted from the facilities granted to them cannot now claim that they stand to suffer “

irreparable harm

” if the property is sold due to default. In the case of

ANDREW M. WANJOHI –VS- EQUITY BUILDING SOCIETY & 7 OTHERS [2006] eKLR

, the Court held thus:-

“…by offering the suit property as security the chargor was equating it to a commodity which the chargee may dispose of so as to recover his loan together with interest thereon.”

(27) The value of the suit property is quantifiable and may be compensated by an award of damages. Indeed

Section 99(4)

of the

Land Act 2012

provides that:-

“A person prejudiced by an unauthorized, improper or irregular exercise of the power of sale shall have remedy in damages against the person exercising that power.”

All in all, I find the Applicants have failed to demonstrate that they stand to suffer irreparable harm if the sale is allowed to proceed.

BALANCE OF CONVENIENCE

(28) This is a facility which was granted to the Applicants way back in the year

2012

. To date the facility remains in arrears. The Applicants have not demonstrated that they are servicing said facility. The bank is entitled to recover its monies.

In

AMIR SULEIMAN –VS- AMBOSELI RESORT LIMITED [2004] eKLR, Hon Justice J.B Ojwang

(now retired) stated:-

“The Court in responding to prayers for interlocutory injunctive reliefs, should always opt for the lower rather than the higher risk of injustice.”

My view is that in this case the balance of convenience tilts in favour of the Defendant/Bank.

(29) Finally it is pertinent to note that

Hon Justice Francis Tuiyott

a Judge of the High court in

Nairobi HCCC NO.175 of 2018

considered an application for injunctive relief over the same property. In that case the Hon Judge ruled thus:-

“THAT the Bank is at liberty to exercise its statutory power of sale upon issuing a proper notice under the Auctioneers Rules.”

The Applicants did not bring this decision to the attention of this court which amounts to material non-disclosure. This application is an attempt to review or cause this court to sit on appeal over the decision of a Judge of concurrent jurisdiction, which is an abuse of court process.

CONCLUSION

(30) Based on the foregoing, I find no merit in the current application and I decline to grant the injunctive orders sought. The application dated

6

th

April 2018

is hereby dismissed in its entirety. Costs are awarded to the 1

st

Defendant/Respondent.

Dated in

Nairobi

this…

5

th

..day of

June

2020

.

...........................................

Justice Maureen A. Odero