[2011] KECA 184 (KLR)

IN THE COURT OF APPEAL

AT NAIROBI

(CORAM: O’KUBASU, WAKI & AGANYANYA, JJ.A.)

CIVIL APPLICATION NO. NAI 46 OF 2011

BETWEEN

1. ALTON HOMES LIMITED

2. JOHN KANGOGO............................................APPLICANTS

AND

1. DAVIS NATHAN CHELOGOI

2. JOHN NDUATI NJUGUNA

3. SAMUEL KUGEGA NDEGWA.....................RESPONDENTS

(Being an application for injunction pending the determination of an intended appeal from the ruling and order of the High Court of Kenya at Nairobi (Okwengu, J. ) dated 25th February, 2011

in

H.C.C.Suit No. 193 of 2010)

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RULING OF THE COURT

This application is made under rules 1(2) and 5(2)(b) of the Court of Appeal Rules. It seeks the following prayers pending the lodging, hearing and determination of the intended appeal; namely:

“(a)The 1st and 2nd respondents be restrained whether by themselves or by their agents, servants or otherwise howsoever from advertising, offering for sale, leasing, mortgaging, charging transferring(other than to the 1st applicant)or assigning and/or otherwise dealing with property Nairobi Block 26/113

(b) The 1st, 2nd and 3rd respondents be restrained whether by themselves or by their agents, servants or otherwise howsoever from entering upon property number Nairobi Block 26/113, levying distress upon attaching the 1st and 2nd applicants furniture and chattels evicting the 1st and 2nd applicants from and/or in a manner whatsoever, interfering with the 1st and 2nd applicants occupation of property Nairobi Block 26/113.

(c)The 2nd and 3rd respondents by themselves or their agents, servants or otherwise howsoever be restrained from advertising, offering for sale, leasing, mortgaging charging, transferring or assigning and/or otherwise dealing with the 1st and 2nd applicants furniture and chattels distressed(sic)from the premises on Nairobi Block 26/113.

(d)The 2nd and 3rd respondents by themselves or by their agents, servants or otherwise howsoever be directed by an order of mandatory injunction to return to the 1st and 2nd applicants and at the said 2nd and 3rd respondents costs, all the furniture and chattels distressed(sic)from the premises on property Nairobi Block 26/113. ”

There was also a prayer that the costs of the application to abide the result of the appeal.

The grounds on which the application is based are set out on the body thereof and also in the affidavit in support. The grounds are similar to those set out in the memorandum of appeal dated 28th February, 2011. The brief facts of the supporting affidavit were that on 27th February, 2007 the 1st applicant entered into an agreement, herein referred to as the first agreement, wherein the said 1st applicant was to purchase the property known as Nairobi Block 26/113 from the 1st respondent at Kshs.7,500,000/=, and a deposit of Kshs3,200,000/= was paid to the 1st respondent on execution of the same; receipt whereof the said 1st respondent acknowledged. The balance of the purchase price was to be paid within 90 days from the date of execution of the 1st agreement and would be utilized by the said 1st respondent to settle the sums due to the Government of Kenya which had allocated the said property to the 1st respondent under tenant-purchase agreement on 27th February, 2007. Completion date was set for 27th May, 2007. The 1st applicant alleges that though he paid the balance of the purchase price as agreed and was given vacant possession of the property in May, 2007, the 1st respondent did not perform his part of the obligation by delivering to the former an executed instrument of transfer or complete the necessary consents and forms to facilitate the registration of the property in the name of the 1st applicant. This necessitated extension of time and the 1st agreement was varied by an addendum in writing dated 3rd May, 2009 between the 1st applicant and the 1st respondent. The terms of the addendum included an additional Kshs.2,000,000/= respectively to be paid by the 1st applicant in two equal instalments and a further Kshs.1,400,000/= to the Government of Kenya for and on behalf of the 1st respondent under the tenant purchase agreement. In spite of the 1st applicant complying with the terms of the addendum, the 1st respondent was still unable to comply with his part of the bargain; to wit, to process and ensure the registration of the transfer of the property in the name of the 1st applicant. Instead, a second agreement was entered into by the parties on 4th August, 2009 wherein the purchase price was increased by a further Kshs.5,000,000/= and terms of payment of the further amount were spelt out therein. Completion date was given another 90 days. Though the 1st applicant complied with his part of the bargain by paying the requisite amounts and issuing two post-dated cheques for Kshs.2,000,000/= the 1st respondent did not complete the sale transaction in time or at all and was guilty of the unreasonable delay and that the property was not transferred to the 1st applicant as required.

On 15th December, 2009 the 1st respondent, in further breach of the agreement of 4th August, 2009 demanded that the 1st applicant pays a further Kshs.13,958,355/= before 20th December, 2009 failing which the 1st respondent would terminate the sale transaction. And on 14th January, 2010 the 1st respondent sold and transferred the property to the 2nd respondent at a consideration of Kshs.12,000,000/=. But by then the 1st applicant had already taken possession of the same since May, 2007 and renovated and redeveloped it at a cost of Kshs.7,644,528/= apart from paying water and electricity bills on it.

On 17th April, 2010 the 2nd respondent sent his servants and/or agents (3rd respondent) to break and enter the 1st applicant’s house and they seized and took possession of his furniture, goods and chattels and wrongly removed and converted the same to their own use and have threatened to auction the same; though the 1st applicant is not a tenant of the 2nd respondent and does not owe him any money in form of rent, and/or that the said 2nd respondent had no authority to levy distress upon the said 1st applicant.

The respondents disputed the facts deposed to in the supporting affidavit. In particular the 1st respondent filed a replying affidavit to state that it was the 1st applicant who breached the terms of the 1st agreement and this led to the addendum and the 2nd agreement, both of which he too breached. This forced the 1st respondent, to sell the property to the 2nd respondent. In the meantime the 1st applicant remained in the property as a paying tenant.

The 2nd respondent also filed a replying affidavit and stated that he was the new registered proprietor of the property who had taken possession of it and he is not indebted to the 1st applicant for anything.

It appears in view of these differences, the applicants filed a suit in respect of this dispute and an application by Notice of Motion dated 27th April, 2010 in the superior court - (H.C.C.C. No. 193 of 2010) seeking injunctive orders which were granted on an exparte basis the same date but apparently when the matter was heard inter-partes, the superior court (Okwengu, J.) dismissed it on 25th February, 2011hence the intended appeal which is the subject of this application.

The considerations necessary for an application under rule 5(2)(b) are well settled, namely that there is an arguable appeal or intended appeal which is not frivolous. It is not necessary that the arguable appeal must succeed. Secondly it must be shown that if the application is not granted and the appeal or intended appeal succeeds, its result will be rendered nugatory.

In this application there are competing interests. The 1st applicant alleges he has paid a total sum of Kshs.11,000,000/= to the 1st respondent in exchange of property known as Nairobi Block 26/113. The 1st respondent does not deny having received some money from the 1st applicant but states that the 1st applicant breached the agreement by not paying the balance of the purchase price in the sum of Kshs.4. 3 million within the stipulated time. The learned Judge appears to have considered the merits of the main case and made findings of fact at an interlocutory stage, thus prejudicing the applicant’s application for injunction. Moreover, the basis of the addendum and the 2nd agreement between the parties is not clear from the record. These, in our view, are arguable points.

On the nugatory aspect the 1st respondent does not give an undertaking over the purchase price which the 1st applicant paid to him – which in any case is in excess of Kshs.6 million. In any case the ruling of the superior court does not give the basis of dismissing the applicant’s application for injunction – or whether the learned Judge exercised her discretion properly in refusing to grant the injunction sought, in the circumstances of the case.In the result we grant prayers C and D of the application dated 28th February, 2011. Costs of the application shall be in the intended appeal.

Dated and delivered at Nairobi this 15th day of July, 2011

E. O. O’KUBASU

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

JUDGE OF APPEAL

P. N. WAKI

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

JUDGE OF APPEAL

D. K. S. AGANYANYA

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JUDGE OF APPEAL

I certify that this is atrue copy of the original.

DEPUTY REGISTRAR