[2022] KEHC 17238 (KLR)

Crested Acres Investments Limited v National Bank of Kenya Limited (Civil Case E019 of 2021) [2022] KEHC 17238 (KLR) (6 December 2022) (Ruling)

Neutral citation: [2022] KEHC 17238 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Case E019 of 2021

SN Mutuku, J

December 6, 2022

Between

Crested Acres Investments Limited

Plaintiff

and

National Bank of Kenya Limited

Respondent

Ruling

1. The applicant brought this application through a notice of motion dated August 30, 2021 under section 1A, 1B, 3A of the Civil Procedure Act and order 40 rules 1(a), 2 (1) & 2 of the Civil Procedure Rules seeking the following orders:i.Spent.ii.Pending the hearing and determination of this application, a temporary injunction be issued to stop and restrain the defendant herein whether acting by itself, or through their agents or other servants or anybody acting on its instructions from advertising, selling, transferring and alienating, disposing or selling by public auction the property known as land reference No Keekoonyoike/ilkisumet/655 situated in Kajiado West Sub county Kajiado county in the name of Evans Ombogo Matunda.iii.Pending hearing and determination of this suit, a permanent injunction be issued to stop and restrain the defendant herein whether acting by itself or through their agents or other servants or anybody acting on its instructions from selling, disposing or selling land reference No. Keekoonyoike/ilkisumet/655 situated in Kajiado West Sub county Kajiado county in the name of Evans Ombogo Matunda.iv.That cost of this application be provided for.

2. In support of the application is an affidavit sworn by Victor Mukasa Mukhwana who described himself as the director of the plaintiff. He has deposed that the defendant advertised for sale property known as land reference No Keekoonyoike/Ilkisumet/655 situated in Kajiado West sub-county in Kajiado county registered in the name of Evans Ombogo Matunda. He admitted that a loan facility was advanced to the plaintiff and that the said facility was secured by several properties including motor vehicle KBU 795P and KBU 796P all registered in the plaintiff’s name and which the defendant intended to sell. He has deposed that the valuation of the said motor vehicles is 800,000/- and that this amount is enough to offset the loan arrears.

3. He has stated that upon taking the said facility it was a term and condition that the defendant takes out an insurance cover of Kshs 60,000,000/; that the plaintiff should be allowed to offset the agreed assets at market price to liquidate the said loan; that the defendant will not suffer any loss or damage if temporary injunction is issued and that the plaintiff will suffer huge loss should the property be disposed of, and the plaintiff exposed to a suit for damages.

4. The application is opposed through an affidavit sworn by Agnes Mutisya on October 5, 2021 and a notice of preliminary objection dated September 16, 2021.

5. It is the case for the defendant that the application herein is incompetent, fatally defective and unsustainable in law in that the same is res judicata. It was her averment that there is no contention that the suit property was duly and properly charged to the defendant bank by the registered owner Evans Ombogo Matunda and Emmah Kenunto Omari and therefore the suit property is a principal security and is not in the nature of a guarantee as alleged by the plaintiff.

6. It is her averment that as a result of the default by the plaintiff and dismissal of the plaintiff’s earlier applications for injunction, the defendant sold the following securities LR No 5973/20,21,23,103 Mhasibu area of Runda Estate Kiambu county for 64 million, motor vehicle RegNos. KBU 795P and KBU 796P for 1,030,000 and 600,000 respectively and all proceeds were credited into the plaintiff’s loan account and that they have not been able to sell the other securities held due to unsuccessful and/or low bids.

7. It is the defendant’s argument that the bank’s statutory power of sale has properly crystallized and that valid statutory notices were issued and served upon the plaintiff as per the Lands Act and further that the debt has been admitted by the plaintiff. The defendant argued that the application as filed is an abuse of the court process and the same should be dismissed.

8. The defendant also raised a preliminary objection on the grounds that the present suit and notice of motion offends the principle of res judicata as there was a previous suit being Nairobi HCCC No 162 of 2016 Crested Acres Investment Limited v National Bank of Kenya in which the subject matter was directly and substantially in issue as in the present suit.

9. The deponent stated that there were two previous applications for injunctions filed by the plaintiff in the above-mentioned suit, dated May 6, 2016 which was heard and dismissed by court on February 9, 2017 and the other application dated May 30, 2017 which was dismissed by court on June 5, 2017 for being res judicata. She argued that in alternative, the proceedings herein are barred by virtue of the operation of the doctrine of issue estoppel.

Submissions 10. Through the directions of this court, the notice of preliminary objection and the notice of motion are being canvassed contemporaneously through written submissions.

11. The plaintiff filed its submissions on October 4, 2022. It is the argument of the plaintiff that this application is not res judicata because the subject matter is not the same as the subject matters in the application filed in the High Court Commercial Cause No 162 of 2016. Further, HCCC No 162 of 2016 was dismissed for want of prosecution and that it was not fully determined and the same could be cured by an application to reinstate the same. It is argued that the court in Milimani is notfunctus officio and relied on Jersey Evening Post Limited v A1 Thani [2002] JLR 542 at 550 where it is stated that:“A court is functus when it has performed all its duties in a particular case. The doctrine does not prevent the court from correcting clerical errors nor does it prevent a judicial change of mind even when a decision has been communicated to the parties. Proceedings are only fully concluded, and the court functus, when its judgement or order has been perfected. The purpose of the doctrine is to provide finality. Once proceedings are finally concluded, the court cannot review or alter its decision; any challenge to its ruling on adjudication must be taken to a higher court if that right is available.”

12. It was the plaintiff’s argument that this honourable court can only be deemed to be functus officio upon determination of all issues raised in trial and not in an interlocutory application and that they are ready to redeem the suit property by paying the current market value.

13. They submitted that indeed they took a loan facility with the defendant who in turn attached the following properties LR No 5973/20,21,23,103 Mhasibu area of Runda Estate Kiambu county, LR No 19532 Maanzoni Machakos county, motor vehicle Reg Nos KBU 795P and KBU 796P; that the properties herein are prime properties that could be easily liquidate the loan facility and that the defendant has disregarded this and advertised for sale the suit property which does not belong to the plaintiff but to their guarantor.

14. The plaintiff argued further, that it is trite law that the bank ought to exhaust its remedies before going for the guarantors. They relied on the case ofKenya Commercial Bank Ltd v Sun City Properties Ltd & 5others [2005] eKLR, where the court held that:“The view held by the bank that there was no express or implied term that it must exhaust its remedies against the principal debtor before going for the guarantors is misconceived. It is a general rule in guaranteeships that the lender has to exhaust his remedies against the principal debtor turning to the guarantor. Otherwise the law on the liability of guarantors is meaningless.”

15. It was their argument that they complied with a term and condition upon taking the loan facility and took out an insurance cover of Kshs 60,000,000/-and that the defendants claimed that they did not deduct the insurance premium yet it is clear and evident that the insurance policy was in place.

16. They argued that they have satisfied the principles for injunctive relief set out inGiella v Cassman Brown (1973) EA 358.

17. The defendants filed its submissions on October 4, 2022 in which they argued the preliminary objection. The defendant submitted that the application as drawn are incurably incompetent, fatally defective and unsustainable in law in that it offends the principle of res judicata as provided in section 7 of the Civil Procedure Act; that the plaintiff is a vexatious and frivolous litigant and the proceedings herein are an abuse of the court process and that in the circumstances the suit and the notice of motion dated August 30, 2021 should be struck out with costs.

18. The defendant argued that there were two previous applications seeking injunction filed in HCCC No 162 of 2016: one dated May 6, 2016 which was heard on merit and dismissed on February 9, 2017 and another dated May 30, 2017 which was dismissed by the court on June 5, 2017 for being res judicata in view of the earlier application dated May 6, 2016. The defendant argued that the issues and subject matter in the earlier two applications were directly and substantially similar as in the present application and that those applications were heard on merit and determined by this court.

19. They defendant relied on Kuloba’s Judicial Hints on Civil Procedure on the for res judicata as follows:“There are therefore clear conditions which must be satisfied before res judicata can be successfully pleaded, namely:a.The matter directly and substantially in issue in the subsequent suit or issue must be the same matter which is directly and substantially in issue either actually or constructively in the former suit.b.The former suit must have been a suit between the same parties or between parties under whom they or any of them claim.c.Such parties must have been litigating under the same title in the former suit.d.The court which decided the former suit must have been a court of competent to try the subsequent suit or the suit in which issue is subsequently raised.e.The matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the first suit.

20. The defendant also relied on the Court of Appeal decision in civil appeal No 36 of 1996 Uhuru Highway Development Limited v Central Bank of Kenya where it was held that:“The long and short of all this is that once an application for injunction within a suit has been heard and determined under the principles laid down in Giella v Cassman Brown a similar application cannot be brought unless there are new facts not brought before court earlier after exercise of due diligence which merit are -hearing and possible departure from the previous ruling. Such cases of course, must be very few and far in between. In the result, the appeal must fail and is hereby dismissed with cost.”

21. The defendant submitted that its statutory power of sale has duly crystallized; that they have issued and served all the statutory notices and that the debt has been admitted and therefore, that issuing an injunction will amount to unwarranted and unjustified clog on the bank’s statutory and contractual right of foreclosure. It is further argued that the suit property herein being duly charged in favour of the bank is a principal security and is not in the nature of a guarantee as alleged by the applicant.

22. In regard to the test in Giella v Cassman Brown and Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KLR, it was the defendant’s argument that there is nothing in the body of the plaintiff’s motion or supporting affidavit that warrants the grant of injunction sought to stop the realization of the security. And therefore, the application should therefore be dismissed with costs.

Analysis and Determination 23. While the notice of preliminary objection and the notice of motion are being determined contemporaneously, it is clear to my mind that making a determination on the preliminary objection takes precedent for the obvious reason that a PO raises a point of law which has been pleaded or which arises by clear implication out of pleading and which if argued as a preliminary objection may dispose of the suit (see Mukisa Biscuit Manufacturers Limited v West End Distributors Ltd (1969) EA 696).

24. It is for this reason that directions were taken that thePO be determined first. It is only after determining whether the matter being canvassed isres judicata that this court is able to proceed to determine the notice of motion should it find that the matter before it is not res judicata.

25. Section 7 of the Civil Procedure Act stipulates as follows:“No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.”

26. This principle is captured in Independent Electoral & Boundaries Commission v Maina Kiai & 5 others [2017] eKLR, where the Supreme Court, while considering section 7 of the Civil Procedure Act held that all the elements outlined under that section must be satisfied conjunctively for the doctrine to be invoked; that is:“(a)The suit or issue was directly and substantially in issue in the former suit.(b)That former suit was between the same parties or parties under whom they or any of them claim.(c)Those parties were litigating under the same title.(d)The issue was heard and finally determined in the former suit.(e)The court that formerly heard and determined the issue was competent to try the subsequent suit or the suit in which the issue is raised.”

27. Expounding further on the essence of the doctrine of res judicata, the Court of Appeal in John Florence Maritime Services Limited & Another v Cabinet Secretary for Transport and Infrastructure & 3 others [2015] eKLR rendered itself thus:“The rationale behind res-judicata is based on the public interest that there should be an end to litigation coupled with the interest to protect a party from facing repetitive litigation over the same matter. Res-judicata ensures the economic use of court’s limited resources and timely termination of cases. Courts are already clogged and overwhelmed. They can hardly spare time to repeat themselves on issues already decided upon. It promotes stability of judgments by reducing the possibility of inconsistency in judgments of concurrent courts. It promotes confidence in the courts and predictability which is one of the essential ingredients in maintaining respect for justice and the rule of law. Without res judicata, the very essence of the rule of law would be in danger of unraveling uncontrollably.”

28. While I note that the notice of motion dated May 6, 2016 in Nairobi HCCC No 162 of 2016 seeking temporary injunction relate to other properties despite the parties being the same, the application dated May 30, 2017 relate to the suit property the subject matter in this instant suit.

29. The notice of motion dated May 30, 2017 sought, among other, two reliefs of temporary injunction to restrain the defendant from selling by public auction or private treaty, disposing of or otherwise howsoever completing transfer of any sale concluded by auction or private treaty, letting, charging or otherwise howsoever interfering with the plaintiff’s possession and ownership of LR No 19532 Maanzoni Lodge area registered in the name of Crested Acres Investments Limited, LR No 12715/8787, Title No Keekonyoike/Ilkisumet/655 in the name of Evans Mobogo Matunda and KJD/Ildamat/4917 pending the hearing and determination of the application and suit.

30. The record shows that the notice of motion dated May 30, 2017 was dismissed as per the order of the court dated September 20, 2021. It seems that this was the day the order was extracted. But the wording of the order shows that parties were heard in that notice of motion and that the same was dismissed. I did not see the detailed ruling in respect of that application.

31. It is a fact that an order is extracted from either a ruling or judgment of the court. Rulings and judgments are the final determination of an application or a suit as the case may be. Section 7 of the Civil Procedure Act as discussed in Independent Electoral & Boundaries Commission v Maina Kiai & 5 others is clear that the following elements must be satisfied conjunctively for the doctrine of res judicata to arise:(a)The suit or issue was directly and substantially in issue in the former suit.(b)That former suit was between the same parties or parties under whom they or any of them claim.(c)Those parties were litigating under the same title.(d)The issue was heard and finally determined in the former suit.(e)The court that formerly heard and determined the issue was competent to try the subsequent suit or the suit in which the issue is raised.

32. It is clear to me that the above elements are present in this case. The parties before this court are the same parties in notice of motion dated May 30, 2017 in Nairobi HCCC No 162 of 2016; among the subject matter in that notice of motion was title No Keekonyoike/Ilkisumet/655 in the name of Evans Mobogo Matunda; relief sought was a temporary injunction to restrain any dealings by the defendant with that land; the issue was heard and determined by dismissing the notice of motion by a court of competent jurisdiction and the issue in that notice of motion is directly and substantially in issue in this application.

33. After careful consideration of this matter, I am satisfied that the notice of preliminary objection has merit. The application before me is res judicata and for that reason it must fail. I need not proceed with the substantive notice of motion having found that the matter is res judicata. Consequently, the notice of motion dated August 30, 2021 is hereby dismissed with costs to the defendant/respondent.

34. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED ON 6TH DECEMBER, 2022. S. N. MUTUKUJUDGE