https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12585

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT MOMBASA COUNTY COURT NAME: MOMBASA HIGH COURT CASE NUMBER: HCCC/E088/2023 ARMYTEX INTERNATIONAL SECURITY SERVICES LIMITED AND LINET AWINO AWOUR MAENDE VS EQUITY BANK (K) LIMITED AND MAKURI AUCTIONEERS RULING RULING 1. Before the Court is the Plaintiffs' Notice of Motion dated 17th June 2026 brought principally under Sections 1A, 1B, 3A and 63(e) of the Civil Procedure Act, Order 40 Rule 1 of the Civil Procedure Rules and the relevant provisions of the Land Act. The Applicants seek orders restraining the Respondents, whether by themselves, their agents or servants, from transferring, registering, alienating or in any manner dealing with L.R. No. Mainland North/Section I/19128 (Utange), L.R. No. Mainland North/Section I/21559 (Shanzu) and L.R. No. Mainland North/Section I/22289 (Bamburi) pending the hearing and determination of this suit. 2. The application is supported by the affidavits sworn by the 2nd Plaintiff, Linet Awino Awuor Maende, while the Respondents oppose it through the Replying Affidavit sworn by Beatrice Muraguri and a Preliminary Objection. 3. The Applicants contend that although the Respondents purportedly exercised the statutory power of sale by conducting an auction on 16th June 2026, the mandatory statutory procedure prescribed under the Land Act was not complied with. They maintain that they were never served with the statutory notice under Section 90 of the The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 1/ 8 Land Act, the notice to sell under Section 96(2) of the Act, or the forty-five-day redemption notice required under Rule 15 of the Auctioneers Rules before the auction was undertaken. 4. They therefore contend that the exercise of the statutory power of sale was unlawful and that unless this Court intervenes by preserving the suit properties, the intended transfer of the properties shall render the suit nugatory. 5. The Respondents oppose the application on several fronts. Firstly, they contend that the application is res judicata, the Court having previously rendered various rulings touching on the same securities. Secondly, they submit that the Applicants are admittedly in default and that the statutory power of sale had lawfully accrued. Thirdly, they argue that the Court ought not to interfere with a chargee's statutory remedies merely because the chargor has defaulted in repayment and that courts do not exercise discretion out of sympathy for defaulting borrowers. Lastly, it is submitted that the properties having been offered as commercial securities, any loss suffered by the Applicants is compensable by damages. 6. I have carefully considered the application, the affidavits on record, the rival submissions by learned counsel and the authorities cited. In my respectful view, the issues falling for determination are:- a. Whether the application is barred by the doctrine of res judicata; b. Whether the Applicants have satisfied the legal threshold for the grant of an interlocutory injunction; and c. What orders ought to issue. Whether the application is res judicata 7. The Respondents' first objection is that this Court has previously pronounced itself on several applications relating to the realization of the charged properties and that the present application is therefore barred by Section 7 of the Civil Procedure Act. 8. Section 7 of the Civil Procedure Act prohibits a court from trying any suit or issue that has been directly and substantially in issue in a former suit between the same parties and has been finally determined by a court of competent jurisdiction. 9. The principles governing the doctrine are now well settled. In Independent Electoral and Boundaries Commission v Maina Kiai & 5 Others [2017] eKLR, the Court of Appeal held that all the ingredients set out under Section 7 of the Civil Procedure Act must be satisfied before the doctrine can apply. More recently, the Supreme Court in John Florence Maritime Services Ltd & Another v Cabinet Secretary for Transport & Infrastructure & 3 Others [2021] KESC 39 (KLR) The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 2/ 8 cautioned that the doctrine should not be invoked mechanically where subsequent The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 3/ 8 proceedings arise from new facts or subsequent events giving rise to a distinct cause of action. 10. I have considered the previous rulings placed before this Court. Those applications principally sought to restrain the Respondent from exercising its statutory power of sale before the intended auction. The present application, however, challenges the legality of an auction allegedly conducted on 16th June 2026 and questions whether the Respondents complied with the mandatory statutory requirements preceding the exercise of the statutory power of sale. 11.The question whether the statutory notices required under Sections 90 and 96 of the Land Act together with the redemption notice under Rule 15 of the Auctioneers Rules were served before the auction is a question arising from subsequent events which could not have been conclusively determined before the auction itself took place. 12. Consequently, although the parties remain the same and the securities are the same, the present application raises a distinct issue founded upon subsequent events. I therefore find that the present application is not barred by the doctrine of res judicata, and the Preliminary Objection is hereby dismissed. Whether the Applicants have established a case for an interlocutory injunction 13. The jurisdiction of this Court to grant interlocutory injunctions is donated by Sections 1A, 1B, 3A and 63(e) of the Civil Procedure Act and Order 40 Rule 1 of the Civil Procedure Rules. The applicable principles remain those laid down in Giella v Cassman Brown & Co. Ltd [1973] EA 358 and restated by the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR. 14.Accordingly, the Applicants must establish a prima facie case with a probability of success, demonstrate that they are likely to suffer irreparable injury incapable of compensation by damages and, where the Court is in doubt, show that the balance of convenience lies in their favour. Prima facie case 15. The Applicants' case is founded on alleged non-compliance with the mandatory provisions governing the exercise of the statutory power of sale. They deny receipt of the statutory notices required under Sections 90 and 96 of the Land Act as well as the redemption notice prescribed under Rule 15 of the Auctioneers Rules. 16.The Respondents, on the other hand, maintain that the statutory power of sale had lawfully crystallised and that all the requisite notices were duly served. They urge the Court not to interfere with the realization of a lawful security. 17. There is no dispute that the Applicants borrowed monies from the 1st Respondent and charged the suit properties as security. There is equally no dispute that they fell The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 4/ 8 into arrears, thereby entitling the Respondent, subject to compliance with the law, to invoke the remedies available under the charge and the Land Act. 18. However, the exercise of the statutory power of sale is not automatic. It is regulated by statute. Section 90 of the Land Act requires a chargee to issue a statutory notice upon default. Section 96(2) further requires service of a notice to sell before any sale can be undertaken, while Rule 15 of the Auctioneers Rules obligates the auctioneer to issue a redemption notice before proceeding with the auction. 19. These statutory safeguards exist to protect a chargor's right of redemption. As the Court of Appeal observed in Mbuthia v Jimba Credit Finance Corporation & Another [1988] KLR 1, the equity of redemption is jealously guarded by the courts and cannot be extinguished except in strict compliance with the law. Similarly, in Kyangaro v Kenya Commercial Bank Ltd & Another [2004] eKLR, the Court held that statutory notices are intended to afford a chargor the opportunity to redeem the charged property before it is sold. 20. Whether those notices were properly served is vigorously contested. At this interlocutory stage, the Court is not called upon to make definitive findings of fact. It is sufficient that the Applicants have demonstrated a genuine dispute concerning compliance with mandatory statutory requirements. In the language employed by the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, the Applicants have established a right which has apparently been infringed and which calls for investigation at the trial. 21. I am therefore satisfied that the Applicants have established a prima facie case with a probability of success. Whether the Applicants stand to suffer irreparable injury 22.The Respondents submitted that the Applicants admittedly defaulted in servicing the loan facility and voluntarily offered the suit properties as security. Counsel argued that once property is offered as security, it becomes a commercial commodity capable of valuation and, consequently, any loss suffered is compensable by an award of damages. It was further submitted that this Court should not exercise its equitable jurisdiction out of sympathy for a defaulting borrower. 23. I have carefully considered that submission. Indeed, courts do not determine commercial disputes on the basis of sympathy. Equally, courts do not rewrite contracts freely entered into by parties. Once a borrower defaults, a chargee is entitled to realise its security provided it acts within the confines of the law. The Court must therefore strike a careful balance between protecting the contractual rights of a lender and safeguarding the statutory rights conferred upon a chargor. The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 5/ 8 24. In the present case, the Applicants do not seek the intervention of the Court merely because they have fallen into arrears. Their complaint is that the Respondents exercised the statutory power of sale without complying with the mandatory provisions of the Land Act governing realization of charged property. If that allegation is ultimately established at the trial, the exercise of the statutory power of sale would be impugned not because the Court sympathises with the Applicants, but because the law requires strict compliance with the statutory safeguards enacted to protect a chargor's right of redemption. 25. It follows that the issue before this Court is one of legality rather than sympathy. As was observed by Ringera J. (as he then was) in Waithaka v Industrial & Commercial Development Corporation [2001] eKLR, damages are not invariably an adequate remedy merely because the subject matter has a monetary value. There are circumstances where an injunction may issue to prevent an apparent violation of legal rights notwithstanding that damages may ultimately be quantifiable. 26. In the present matter, the legality of the process culminating in the auction is itself under challenge. Should transfer of the suit properties be completed before those issues are determined, the substratum of the suit may be irretrievably altered, thereby rendering the proceedings largely academic. In those circumstances, I am not persuaded that damages alone would constitute an adequate remedy. Balance of Convenience 27. If I were in doubt, which I am not, this application would nevertheless be determined on the balance of convenience. As observed by the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR, where doubt exists, the balance of convenience assumes significance. 28. One aspect of this matter that deserves mention is the conduct of the parties after the impugned auction. The supplementary affidavit filed by the Applicants shows that following the auction and after the hearing of the present application, the Applicants remitted a total sum of Kshs.13,600,000 towards reduction of the outstanding loan. Those payments were accepted by the 1st Respondent. 29. I agree with learned counsel for the Respondents that acceptance of those payments does not, without more, invalidate the auction or amount to a waiver of the Respondent's contractual or statutory rights. A lender is entitled to receive payments made towards reduction of a debt without necessarily abandoning remedies available under the security. 30. That, however, is not the end of the matter. Courts exercising equitable jurisdiction are entitled to consider the conduct of parties in determining whether interim relief ought to issue. The Respondent's acceptance of substantial post-auction payments The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 6/ 8 demonstrates that the commercial relationship between the parties has not completely broken down. It equally demonstrates that despite the dispute now before Court, the parties have continued to engage with each other concerning the indebtedness. 31.It is also evident that although this matter has been before this Court on several occasions resulting in a number of interlocutory rulings, the parties continued negotiating in the background. Those engagements appear to have resulted in concessions by both sides and culminated in the substantial payments made by the Applicants and accepted by the 1st Respondent. While this Court expresses no opinion on the legal effect of those payments upon the validity of the impugned auction, they demonstrate that channels of communication remain open and that the relationship between the parties has not irretrievably collapsed. 32.Litigation ultimately belongs to the parties. The role of the Court is to determine disputes according to law and, where circumstances permit, facilitate their just resolution. The overriding objective embodied in Sections 1A and 1B of the Civil Procedure Act requires courts to facilitate the just, expeditious, proportionate and affordable resolution of civil disputes. Equally, Article 159(2)(c) of the Constitution enjoins courts to promote alternative forms of dispute resolution, including reconciliation, mediation and negotiation, where appropriate. 33.In the circumstances of this case, the continued engagement between the parties and the Respondent's acceptance of substantial payments suggest that there remains a realistic opportunity for a commercially sensible resolution which protects the Respondent's financial interests while preserving, if legally available, the Applicants' right of redemption. Such engagement should be encouraged. At the same time, the Court must ensure that interlocutory orders do not become instruments for delaying the final determination of disputes. 34. I am therefore satisfied that the balance of convenience favours preservation of the suit properties pending the hearing and determination of the suit. The Respondents' security remains intact, while preservation of the status quo ensures that the issues concerning compliance with the statutory requirements governing the exercise of the statutory power of sale are determined before any irreversible steps are taken. Disposition 35. Consequently, and for the foregoing reasons, I make the following orders; a. The Preliminary Objection is hereby dismissed. b. Pending the hearing and determination of this suit, a temporary injunction is hereby issued restraining the Respondents, whether by themselves, their servants, agents or any person acting under their authority, from transferring, registering, alienating, The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 7/ 8 disposing of or otherwise dealing with L.R. No. Mainland North/Section I/19128 (Utange), L.R. No. Mainland North/Section I/21559 (Shanzu) and L.R. No. Mainland North/Section I/22289 (Bamburi). c. For the avoidance of doubt, this ruling does not determine the validity of the auction allegedly conducted on 16th June 2026, nor does it extinguish or vary the Respondents' contractual or statutory rights under the charge instruments. Those issues shall abide the hearing of the main suit. d. The parties are encouraged, without prejudice to their respective legal positions, to continue engaging in good faith negotiations or such alternative dispute resolution process as they may mutually agree, consistent with Article 159(2)(c) of the Constitution, with a view to exploring an amicable settlement. e. To ensure that this dispute does not remain pending indefinitely, and should the parties fail to reach an amicable settlement, this suit shall proceed for hearing on 7th October 2026. The interim orders granted herein shall remain in force pending the hearing on that date or until further orders of the Court. f. The Applicants shall continue servicing the loan account in accordance with the parties' contractual obligations or such lawful arrangements as the parties may mutually agree, without prejudice to their respective positions in these proceedings. g. The Applicants shall bear the costs of this application. 36. It is so ordered. DATED, SIGNED AND DELIVERED AT MOMBASA THIS 29th DAY OF July 2026. WENDY KAGENDOJUDGE In the presence of: • Ms. Muhindi holding brief for Mr. Ochieng for the Applicants. • Ms. Cheruiyot for Mr. Kongere for the Respondents. • Court Assistant: Bebora SIGNED BY/FOR: The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 8/ 8 □ TH E J U D I C I A R Y O F K E N Y A ★ HON. LADY JUSTICE WENDY MICHENI Mombasa High Court High Court Civil Date: 2026-07-29 15:12:55 The Judiciary of Kenya Doc IDENTITY: 28002532852330718776325527404 Tracking Number:OO5VTC2026 9/ 8