https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9120

Equity Bank Kenya Ltd v Machoka & another (Civil Appeal E094 of 2025) [2026] KEHC 9120 (KLR) (25 June 2026) (Judgment) Neutral citation: [2026] KEHC 9120 (KLR) Republic of Kenya In the High Court at Kisii Civil Appeal E094 of 2025 AM Okutoyi, J June 25, 2026 Between Equity Bank Kenya Limited Appellant and Thomas Shem Machoka 1st Respondent Joyce Kemunto Mokua 2nd Respondent (An appeal from the Ruling of the Honourable Benard Obae Omwansa (SPM) delivered on 24th June 2025 in Kisii CMCC No. E307 of 2024) Judgment Introduction 1.This appeal emanates from the ruling of the trial court delivered on 24th June 2025 on the Respondent’s application dated 20th March 2025 seeking a temporary injunction restraining the Appellant from auctioning and/or exercising a statutory power of sale on the Respondent’s charged property being LR. NO. Nyaribari Chache/B/B/BOBURIA 9632. 2.The undisputed facts are that the Appellant advanced a loan facility of Kshs. 1,500,000/= to the principal borrower who is the interested party. The loan facility was secured by among others the registration of a legal charge over the property LR. NO. Nyaribari Chache/B/B/BOBURIA 9632 registered in the name of the Respondent. 3.The Applicant accepted the terms of the letter of offer alongside the interested party and further signed a personal guarantee and indemnity. The interested party defaulted on the loan facility and as such the appellant issued a demand notice dated 10th March 2024 to both the Respondent and the Interested Party. 4.Subsequently, on 25th April 2024, the Appellant issued a 90 days Statutory Notice to both the Respondent and the Interested Party demanding settlement of the outstanding amount of Kshs. 1,535,914.45/= that was continuing to accrue contractual interest. 5.At the hearing of this application at the trial court, the Respondent submitted that since the Interested Party had failed to pay the loan, he requested the court to pay the loan in lower installments of Kshs. 30,0000/= until payment in full. The Respondent also prayed for preservation of the suit property as it was sustaining treatment of his health complications. 6.The Appellant opposed the application on the basis that it had not met the three-pronged threshold for interlocutory injunction as established in the case of Giella v. Cassman Brown & Co Ltd (1973) and that the applicant should not be allowed to pay lower monthly instalments of Kshs. 30,000/= 7.The respondents averred that it had commenced a legal process of recovery, that the application had failed to establish a prima facie case, that irreparable harm that cannot be compensated by damages would not be occasioned and that the balance of convenience tilted in the favour of dismissing the application as the loan remained in arrears. 8.The learned trial Magistrate in a brief ruling delivered on 24th June 2025 stated that it appeared the Respondent had been duped to stand as a guarantor but that nevertheless he has to face the consequences of repaying the loan hence allowed the application and further allowed the payment proposal by the Respondent. Background of the Appeal 9.Aggrieved by the subordinate court’s ruling, the Appellant has filed this instant appeal on nine grounds summarized as follows: THAT the learned magistrate erred in law and fact by applying the wrong principles in granting a temporary injunction; disregarding the legal threshold of establishing a prima facie case, irreparable harm incapable of damages and balance of convenience; rewriting the contract between the parties; disregarding the accrual of interests and determining the entire suit at the interlocutory stage. 10.The Appellant thus prayed for the appeal to be allowed, setting aside of the ruling and substituting it with that of this court. 11.The court directed that the appeal to be canvassed by way of written submissions. Appellant’s Submissions 12.The Appellant in his submissions dated 19th of May 2026 reiterated their position at the trial court and highlighted on the failure by the learned trial Magistrate to properly exercise his discretion by granting the temporary injunction without applying the established principles in Giella v Cassman Brown & Co Ltd [1973] EA 358. 13.The Appellant further submitted that there was failure by the trial court to apply evidence and material placed before him. The Appellant averred that the learned trial Magistrate had rewritten the clear contractual terms between the parties by/= permitting repayment in monthly instalments of Kshs. 30,000 contrary to the agreed Kshs. 55,746/= and in so doing effectively determining the suit at an interlocutory stage. Respondent’s submissions 14.The respondents in their submissions dated 22nd May 2026 did not deny being in debt of the loan as a guarantor but rather called upon the court in the interest of justice to repay the loan in instalments of Kshs. 30,000/= on the grounds that the Respondent will ultimately pay the loan and the Appellant will recover the loan and this shall be done without any difficulty from the Respondent. 15.The Respondent’s cited the case of Keshuaji Jethabhai & Bros Lts v. Saleh Abduli where the courts held that the discretion to allow payment by installment depends on the debtors good faith, financial position and surrounding circumstances. The Respondent cited this together with Order 21 rule 12 of the Civil Procedure Rules. Analysis and Determination 16.The role of this court as an appellate court is to independently evaluate, reconsider the evidence adduced before the trial court and come to its own determination while bearing in mind that it neither saw nor heard the witnesses testify. (See Selle & Another V. Associated Motor Boat Company Ltd (1968) EA 123, 126 paras H-I). 17.Similarly, in Peter v Sunday Post Ltd (1958) EA 424, The court stated that;“Whilst an appellate court has jurisdiction to review the evidence in order to determine whether the conclusion reached upon that evidence should stand, this jurisdiction is exercised with caution.” 18.I have independently re-valuated and analyzed the appeal and trial record in its entirety. It is not in dispute that the Respondent guaranteed for a loan advanced by the Appellant. 19.What is in dispute has been summarized as the following two main points of determination in this appeal;a.Whether the learned trial magistrate properly exercised his discretion in granting the temporary injunction;b.Whether the trial magistrate erred in directing the amount of repayment pending trial; andc.Whether this court should interfere with the exercise of discretion.Whether the learned trial magistrate properly exercised his discretion in granting the temporary injunction 20.The principles governing the grant of interlocutory injunction are now settled. In Giella v Cassman Brown & Co Ltd [1973] EA 358, the courts held that an applicant seeking a temporary injunction must establish a prima facie case with a probability of successes, demonstrate that he stands to suffer irreparable injury which would not adequately be compensated by an award of damages and where the court is in doubt the matter should be determined on a balance of convenience. 21.This court will then proceed to analyse whether the above threshold was met in this particular case. Prima facie case 22.Upon re-evaluating the material that was before the trial court, it is undisputed that the Respondent executed a guarantee and charged his property as security for the loan that was advanced by the Appellant. It is equally undisputed that the Interested Party defaulted thereby resulting to the statutory demand by the Appellant. 23.The Respondent’s case is that he was misled into guaranteeing for the loan. Unfortunately, that contention cannot found a prima facie case. The very purpose of a guarantee is to secure repayment in the event of default by the principal borrower. 24.Likewise, the very purpose of a charge is to provide the lender with a realizable security upon default. In this case the Respondent voluntarily undertook both obligations. 25.It is this court’s view that any grievance arising from the conduct of the Interested Party does not in this particularly circumstances defeat the Appellant’s contractual and statutory rights under the guarantee and charge instruments. The court therefore finds that no prima facie case was established. 26.The Court of Appeal in Nguruman Limited v. Nielsen & 2 others (2014) emphasized that the conditions in Giella v. Cassman are sequential hurdles and not mere factors to be considered simultaneously. The court stated that where no prima facie case is established, the court need not proceed to consider the other limbs. Nevertheless, this court shall anayse the other two remaining tests for interlocutory injunctions; Irreparable damage 27.The Respondent did not demonstrate that any loss incapable of compensation by damages would be occasioned by the exercise of the statutory power of sale. In the case of Andrew Wanjohi v Equity Building Society Ltd & 2 Others (2006), the court observed that once property is offered as security, it becomes a commodity of sale and any loss arising therefrom is ordinarily compensable by damages. 28.By the Respondent voluntarily charging his property, he acknowledged responsibility of sale in the event of default. Balance of convenience 29.Even if the court were to consider the balance of probability, the same would tilt in the favour of the Appellant. The indebtedness in this case is not denied. Interest continues to accrue, the security was furnished to secure the repayment of the facility. To restrain the realization of the security in the absence of any demonstrated legal infirmity would occasion greater prejudice to the Appellant than to the Respondent. 30.Consequently, this court finds that the Respondent failed to establish a prima facie case with a probability of success, failed to demonstrate irreparable damage and failed to show that the balance of convenience favoured the grant of an injunction. The learned trial Magistrate therefore misdirected himself in granting the injunctive orders sought. Whether the trial magistrate erred by directing the amount of repayment pending trial 31.Beyond granting the temporary injunction, the learned trial Magistrate proceeded to direct that the Respondent service the facility through the repayment proposal advanced in the application of Kshs. 30,000/= instead of the contractual amount of Kshs. 55,746/=. 32.By giving that order, it altered the contractual relationship between the parties and effectively imposed repayment terms that had not been agreed upon by the parties. 33.It is trite that courts do not rewrite contracts for parties. The duty of the court is to interpret and enforce lawful bargains freely entered upon by the contracting parties. This was reiterated in the case of National Bank of Kenya Ltd. V. Pipeplastic Samkolit (k) Ltd & Another (2001) KECA 362 where the Court of Appeal observed that;“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.” 34.The Respondent did not dispute the existence of the debt. Neither did he challenge the validity of the guarantee. His plea was essential that owing to illness and hardship, he be permitted to repay the facility through smaller instalments. 35.While these circumstances may properly form the basis of negotiations between the parties, they do not empower the court at the interlocutory stage in an application for injunction to vary contractual terms or compel a lender to accept a repayment arrangement to which it has not consented. 36.By directing the repayment terms, the learned trial Magistrate ventured into matters that lay at the very heart of the dispute before the suit had been heard and determined. To grant such substantive reliefs before evidence had been taken and parties rights conclusively determined was an error by the trial court. Whether this court should interfere with the exercise of discretion 37.The principles upon which an appellate court may interfere with the exercise of discretion are well settled. In Mbogo v. Shah, (1968) EA the courts held that“an appellate court will not interfere with the exercise of the trial court’s discretion unless it is satisfied that the court in exercising its discretion misdirected itself in some matters and as a result arrived at a decision that was erroneous or unless it is manifested from the case as w whole that the court has been clearly wrong in the exercise of judicial discretion and that as a result there has been misjustice.” 38.In the present appeal, the learned trial Magistrate failed to evaluate the Respondent’s application against the settled principles governing interlocutory injunctions. The ruling contains no discernible analysis of whether a prima facie case had been established, whether irreparable injury had been demonstrated or where the balance of convenience lay. 39.Instead, the court primarily focused on the fact that the Respondent had been misled and accepted his proposal of reduced monthly installments. This court appreciates the Respondent’s predicaments and medical challenges. However compelling, these considerations cannot supplant settled legal principles and do not constitute a legal basis for granting an injunction or varying the parties’ contractual obligations. 40.This court therefore holds that the learned trial Magistrate misdirected himself both on the facts and the law, improperly exercised his discretion and arrived at a decision that cannot be sustained. 41.Before I part with this matter, this court considers it appropriate to observe that the Respondent’s plea is founded not on denial of indebtedness, but on his ill health and financial constraints. While those circumstances cannot in law, justify the grant of an interlocutory injunction or variation of parties’ contract, they are matters which the parties may, if they so wish, address through alternative dispute resolution. Disposition 42Accordingly, this appeal is hereby allowed with the following orders;a.The ruling of the subordinate court of 24th June 2025 is hereby set aside in its entirety.b.The Respondent’s notice of motion dated 20th March 2025 is hereby dismissed with costs.c.Any interim injunctive orders previously issued are hereby discharged.d.The Appellant shall have the costs of the appeal. However, bearing in mind the Respondent’s circumstances and nature of the dispute, each party shall bear its own costs of the interlocutory application before the subordinate court.It is so ordered. DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 25TH DAY OF JUNE 2026A.M. OKUTOYIJUDGEIn the presence of:Mr. Onyango for the AppellantN/A for the RespondentRuth Mokeira-Court Assistant