[2021] KECPT 268 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO. 268 OF 2021 (E063/2021)

ABAI OMUSALA DAVID

T/A NEW MEGA (AFRICA) LIMITED........................................CLAIMANT

VERSUS

TOWER SACCO SOCIETY LTD......................................1ST RESPONDENT

ANTHONY KINUTHIA

T/A ANTOTECH AUCTIONEERS..................................2ND RESPONDENT

RULING

The matter for determination is the Claimant’s Application under Certificate of Urgency dated 23rd June, 2021 seeking the following Orders: -

a) Spent.

b) Spent.

c) That Motor Vehicles Registration Numbers KBZ 707Z and KBZ 711Z be released to the Plaintiff/Applicant pending the hearing and determination of the main suit.

d) That pending the hearing and determination of the suit, the Honourable Court be pleased to grant a temporary injunction restraining the Defendants herein from disposing, alienating, impounding, seizing, repossessing, soliciting or advertising for sale and/or in any manner dealing with motor vehicles registration numbers KBZ 707Z and KBZ 711Z and or any of the other 10 trucks co-owned by the Applicant and the 1st Respondent in this suit, the said being Motor Vehicles KBZ 703Z, KBZ 704Z, KBZ 708Z, KBZ 709Z, KBZ 714Z, KBZ 715Z, KBZ 716Z, KBZ 718Z, KBZ 719Z and KBZ 720Z.

The same is based on the grounds on the face of the Application and supported by the Affidavit of ABAI OMUSALA DAVIDdeponed on the 23rd June 2021.

The Application is opposed vide the Grounds of Opposition dated 1st July 2021 filed on 5. 7.2021 and the Replying Affidavit of John Kimani Maina deponed and filed on 5. 7.2021.

On 6. 7.2021 Interim Orders in terms of prayer (d) were granted till 21. 7.2021, when the Application was ordered to be dispensed with by way of written submissions.

The Interim Orders were extended till the date of the Ruling.

The Claimant filed written submissions on 23rd July, 2021 while the 1st and 2nd Respondents filed their submissions on 4th August, 2021.

We have carefully considered the Notice of Motion herein, the Affidavit in support and Supplementary Affidavit as well as the Grounds of Opposition Replying Affidavit. We have also considered the detailed written submissions filed by both parties.

Issues for Determination

1. Whether the Claimant is entitled to the order for a temporary injunction.

2. If the answer to (a) above is in the affirmative, what orders should be made by the Tribunal?

3. Who bears the costs?

The Application is premised on the provisions of Order 40 Rule 1 (a) and (b) of the Civil Procedure Rules, 2010. Order 40(1) (a) and (b) of the Civil Procedure Rules 2010 provides: -

"Where in any suit it is proved by Affidavit or otherwise—

(a) That any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; or [Rev. 2012] Civil Procedure CAP. 21 [Subsidiary] C17 – 165;

(b) That the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the plaintiff will or may be obstructed or delayed in the execution of any decree that may be passed against the defendant in the suit, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further."

The conditions for consideration further in granting an injunction is now well settled in the case of Giella v Cassman Brown (1973) EA 358and reiterated in the case of Nguruman Limited versus Jan Bonde Nielsen & 2 others CA No.77 of 2012 (2014) eKLR where the Court of Appeal held that;

“In an interlocutory injunction Application, the Applicant has to satisfy the triple requirements to:

(a) establish his case only at a prima facie level,

(b) demonstrates irreparable injury if a temporary injunction is not granted and

(c) ally any doubts as to b, by showing that the balance of convenience is in his favour.

These are the three pillars on which rests the foundation of any order of injunction interlocutory or permanent. It is established that all the above three conditions and steps are to be applied as separate, distinct and logical hurdles which the Applicant is expected to surmount sequentially…”

From the facts of the case, it is clear that the Claimant obtained a financial facility from the 1st Respondent for purposes of purchasing trucks in 2019. The Claimant started defaulting on his loan obligations and the 1st Respondent instructed the 2nd Respondent to impound the Claimant’s motor vehicles. The 2nd Respondent impounded the motor vehicles registration number KBZ 707Z and KBZ 711Z and issued a Notification of Sale for the two motor vehicles.

The issue of the loan and the default is not denied by the Claimant. However, there is a serious contest on the manner the 1st and 2nd Respondent adopted in repossessing the subject motor vehicles. On the one hand, the Claimant states that the Respondent did not follow the requisite procedure in the impounding of the motor vehicles. On the other hand, the Respondents assert that everything was done above board. There is equally a contest on whether the Claimant notified the 1st Respondent of the hardships he was undergoing. Based on these contestations, we are of the view that the same can only be fully ventilated at a full hearing and not at an interlocutory stage. We will only make a Ruling based on the material presented by both parties.

(1) Whether the Claimant is entitled to the order for a temporary injunction.

(a) Prima Facie case

Has the Claimant established a Prima facie case?

Prima facie case was defined in the case of Mrao v First American Bank of Kenya Limited & 2 Others (2003) KLR 125 as follows: -

“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.”

Both parties agree that the Claimant took a loan facility with the 1st Respondent of Kshs. 60,000,000/=.

The 1st Respondent submitted that the Claimant defaulted in the repayment of the loan therefore making it non-performing. That they were unaware of any mechanical malfunction of any motor vehicle of the Claimant since they were not informed timeously by the Claimant.

That the Claimant wrote to the 1st Respondent on 11. 6.2021 indicating the reasons leading to the delay in servicing the loan, however, the 1st Respondent did not find the reasons offered by the claimant to be sufficient. That the Claimant issued 5 cheques and paid a total of Kshs.5,000,000/= after the issuance of the proclamation and attachment. That the Claimant as at 2. 7.2021 still owes Kshs.2,902,437/-.That the Claimant therefore has not established a prima facie case.

We have carefully considered the submissions of both parties and note that the claimant has contested the procedure of proclamation, attachment and notification for sale. The claimant also paid Kshs.5,000,000/= which is a substantial amount bearing a balance of Kshs.2,902,437/= as submitted by the Respondent. We therefore find that the Claimant has established a prima facie case.

The 1st Respondent averred that the Claimant was in arrears of his loan and that is what they sought to realize. The Claimant submitted that out of Kshs. 7,8122,874. 9/= the 1st Respondent contended he was in arrears, he paid Kshs. 5,000,000/=. This fact is not denied by the 1st Respondent. The Claimant also submitted that he was experiencing financial hardship as a result of corona virus pandemic and this disrupted his operations. We take judicial notice that indeed the pandemic has impacted on all spheres of human life and this is not contested by the 1st Respondent save that the 1st Respondent does not see it as a reasonable explanation for the failure to pay. The Claimant has equally referred the court to clause 15 (b) of the letter of offer. The said clause outlines the procedure the 1st Respondent ought to adopt when a party is in arrears. The Claimant asserts that this procedure was not followed and as such, an infringement of his rights occurred.

(b) Irreparable injury

The Claimant acquired a fleet of motor vehicles courtesy of the 1st Respondent’s facility. That the Claimant defaulted in the repayment of the facility and thereafter paid the sum of Kshs. 5 million.

The 1st Respondent submitted that the Claimant would not suffer irreparable loss or damage that will not be adequately compensated by an award in damages.

We have carefully considered the submissions of the parties and note that the loan facility was acquired to obtain the motor vehicles, which were being operationalized to service the said loans. By proclaiming the same instruments/ motor vehicles, the 1st Respondent attempted to cripple the claimant, who had given an explanation on his default and who then made a substantial payment hence regularize his accounts. It therefore goes without saying that if an injunction is not granted at this instance, the claimant would suffer irreparable harm.

This is because the loan still accrues and at the same time, his sources of income would still be impounded. We note that a grant of a temporary injunction does not extinguish the legal rights of the 1st Respondent, if any exists, but merely preserves the status quo of the subject matter of the application pending the hearing and determination of the suit.

(c) Balance of convenience

In Paul Gitonga Wanjau vs. Gathuthis TeaFactor Company Ltd & 2 others (2016) eKLR, the court dealing with the issue on balance of convenience expressed itself thus: -

"Where any doubt exists as to the Applicants’ right, or if the right is not disputed, but its violation is denied, the court, in determining whether an interlocutory injunction should be granted, takes into consideration the balance of convenience to the parties and the nature of the injury which the Respondent on the other hand, would suffer if the injunction was granted and he should ultimately turn out to be right and that which injury the applicant, on the other hand, might sustain if the injunction was refused and he should ultimately turn out to be right... Thus, the court makes a determination as to which party will suffer the greater harm with the outcome of the motion. If applicant has a strong case on the merits or there is significant irreparable harm, it may influence the balance in favour of granting an injunction. The court will seek to maintain the status quo in determining where the balance on convenience lies.”

It has not been shown the prejudice the Respondents stand to suffer if the order for injunction is granted. This is because an order for injunction neither stops the 1st Respondent from demanding any outstanding amount nor does it relieve the Claimant from his obligation to pay the loan amount. On the other hand, if the injunction is not issued, the Claimant stands to lose the trucks and still be obligated to make good any shortfall. The balance of convenience thus tilts in favour of granting an injunction to the Claimant.

In totality, We are satisfied that the Claimant has met the threshold as laid in the Giella case (Supra) in the granting of an interlocutory injunction.

(2) What orders will suffice?

It is clear that there is an outstanding loan amount. It is also clear that the impounded trucks are the Claimant’s main source of income. The impounding of the two trucks is counter-productive, as stated earlier in the ruling, that the Claimant purchased the trucks and was using them to obtain resources to settle the loan. To ensure that the Claimant is in a position to fulfil his financial obligations to the 1st Respondent, it is only proper if the motor vehicles currently detained be released to the Claimant. However, the same shall be released on a running attachment. On this, I am guided by the sentiments of P.J.O. Otieno, J’s holding in Al-Riaz International Limited v Ganjoni Properties Limited [2017] eKLR.

(3) Costs

On the issue of costs, we order that they follow the cause.

In conclusion therefore, we find that the application has merits and order as follows:

a) That Motor Vehicles Registration Numbers KBZ 707Z and KBZ 711Z be released to the Claimant forthwith pending the hearing and determination of the main suit.

b) That pending the hearing and determination of the suit, a temporary injunction is issued restraining the Respondents herein from disposing, alienating, impounding, seizing, repossessing, soliciting or advertising for sale and/or in any manner dealing with motor vehicles registration numbers KBZ 707Z and KBZ 711Z and or any of the other 10 trucks co-owned by the Claimant and the 1st Respondent in this suit, the said being Motor Vehicles KBZ 703Z, KBZ 704Z, KBZ 708Z, KBZ 709Z, KBZ 714Z, KBZ 715Z, KBZ 716Z, KBZ 718Z, KBZ 719Z and KBZ 720Z.

c) Costs in the cause.

d) For avoidance of doubt, the Claimant is not relieved from his financial obligation to the 1st Respondent and in the event the Claimant defaults in his obligations, the 1st Respondent is at liberty to exercise its powers as indicated in the offer letter, procedurally.

Ruling signed, dated and delivered virtually at Nairobi this 19thday of August, 2021.

Hon. B. Kimemia Chairperson Signed 19. 8.2021

Hon. J. Mwatsama Deputy Chairperson Signed 19. 8.2021

Mr. Gitonga Kamiti Member Signed 19. 8.2021

Tribunal clerk R. Leweri

Miss Koech for Applicant

Mathenge for Respondent

Mention for Pre-trial directions:19. 5.2021

Parties to file and serve witness statements and documents within 21 days herein.

Mention 15. 9.2021.

Hon. B. Kimemia Chairperson Signed 19. 8.2021