https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7890

Glee Hotel Limited & another v Equity Bank (Kenya) Limited (Commercial Case E846 of 2025) [2026] KEHC 7890 (KLR) (Commercial and Tax) (4 June 2026) (Ruling) Neutral citation: [2026] KEHC 7890 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Case E846 of 2025 MO Ado, J June 4, 2026 Between Glee Hotel Limited 1st Plaintiff Mary Wambui Mungai 2nd Plaintiff and Equity Bank (Kenya) Limited Defendant Ruling Introduction 1.Before the Court is the Plaintiffs’ Notice of Motion dated 13th April 2026 seeking, principally, an extension of time by sixty (60) days to comply with the consent judgment recorded on 24th February 2026 and, in the alternative, an order suspending or postponing the Defendant’s statutory power of sale and other enforcement remedies over L.R. Nos. 5989/200 and 5989/215 pending completion of a refinancing transaction by Kenya Commercial Bank Limited (“KCB”). 2.The background of the dispute concerns credit facilities advanced by the Defendant to the Plaintiffs and related entities. The facilities are secured by various securities, including charges over L.R. Nos. 5989/200 and 5989/215 upon which Glee Hotel is constructed. 3.Following negotiations, the parties recorded a consent on 24th February 2026. Under that consent, the Plaintiffs undertook to pay the Defendant Kshs. 7,750,000,000 within forty-five (45) days in full and final settlement of the outstanding indebtedness. The consent expressly provided that time would be of the essence. It further provided that in default of payment within the stipulated period, the Defendant would be entitled to rescind the settlement and recover the full indebtedness together with interest and costs and proceed with enforcement of its securities. 4.The forty-five-day period expired without payment being made. The Plaintiffs contend that they have substantially progressed a refinancing arrangement with KCB and that the delay has arisen from the complexity of the transaction and the due diligence requirements imposed by the proposed financier. They therefore seek the intervention of the Court under sections 103 and 104 of the Land Act. 5.The application is opposed by the Defendant through a Replying Affidavit sworn by Anastacia Wanjiru on 17 April 2026 and a Notice of Preliminary Objection dated 14 April 2026. 6.The Defendant contended that the parties voluntarily compromised the dispute through the consent judgment; that the Court is functus officio; that there is no order capable of being stayed; and that the application is, in substance, an attempt to vary the terms of a binding consent judgment without the Defendant’s concurrence. 7.The application was canvassed by way of written submissions. The Applicant filed submissions dated 18th April 2026, whilst the Respondent’s submissions are dated 17th April 2026. Analysis and Determination 8.I have carefully considered the application, the responses thereto, including the Preliminary Objection, and the parties’ respective submissions. The issues arising for determination are:i.Whether the Preliminary Objection is merited.ii.Whether the Court should grant the relief sought under sections 103 and 104 of the Land Act. Whether the Preliminary Objection is Merited 9.The Defendant raised a Preliminary Objection contending, in substance, that this Court lacks jurisdiction to entertain the application as the dispute was conclusively compromised by the consent judgment recorded on 24 February 2026. The Defendant further contends that the Court is functus officio and that the application amounts to an impermissible attempt to vary a binding consent judgment. 10.The principles governing preliminary objections are settled. In Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, the Court stated that a preliminary objection consists of a pure point of law which, if argued successfully, may dispose of the suit. 11.In the present case, there is no dispute that on 24 February 2026 the parties recorded a consent which was adopted as an order of the Court. Under that consent, the Plaintiffs agreed to pay Kshs 7,750,000,000 within forty-five (45) days in full and final settlement of the indebtedness, failing which the Defendant would be at liberty to rescind the settlement and proceed with recovery of the full indebtedness and enforcement of its securities. 12.A consent judgment has a contractual effect and is binding upon the parties. In Brooke Bond Liebig (T) Ltd v Mallya [1975] EA 266, the Court held that a consent judgment may only be set aside on grounds that would justify setting aside a contract. The Court of Appeal reiterated in Flora N. Wasike v Destimo Wamboko [1988] eKLR that a consent order has contractual force and cannot lightly be interfered with. 13.Similarly, the Court of Appeal in Board of Trustees National Social Security Fund v Micheal Mwalo [2015] KECA 782 (KLR), stated as follows on the binding nature of a consent judgment: -“The judgment arose from a consent of the parties to the suit. The law pertaining to setting aside of consent judgments or consent orders has been clearly stated. A Court of law will not interfere with a consent judgment except in circumstances such as would provide a good ground for varying or rescinding a contract between parties. To impeach a consent order or a consent judgment, it must be shown that it was obtained by fraud, or collusion, or by an agreement contrary to the policy of Court.” 14.The Plaintiffs do not allege fraud, mistake, misrepresentation, collusion, or any other ground upon which the consent may be set aside. Indeed, they expressly accept both the indebtedness and the validity of the consent. 15.The application before Court seeks, in effect, an extension of the period agreed by the parties for payment of the settlement sum. That period was an essential term of the consent. Time was expressly made of the essence, and the Defendant's acceptance of the discounted settlement figure was predicated upon payment being made within the stipulated period. 16.To grant the extension sought would, in my view, necessarily alter the terms of the consent and substitute a different bargain from that voluntarily agreed by the parties. This Court has no jurisdiction to rewrite the parties' contract. As was stated in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, a court of law cannot rewrite a contract between parties. 17.The upshot of the foregoing is that the Preliminary Objection raised by the Defendant therefore succeeds, but only to that extent. 18.I am unable, however, to agree with three aspects of the Preliminary Objection. 19.First, I do not accept the contention that there is nothing capable of being stayed. The subject consent expressly contemplated enforcement measures in the event of default, including realization of the securities. The Defendant's right to enforce those remedies, in the view of the Court, creates a live enforcement process that, in principle, can be suspended or restrained by a court where justice of the case demands. 20.In Mutiso v Mutiso [2022] KEHC 13688 (KLR), the Court (Odunga J – as he then was), in allowing a stay in relation to an order which dismissed an appeal (and therefore classically negative), stated as follows:“As regards the nature of the order sought to be stayed, I agree that ordinarily courts do not stay negative orders. In this case, however, this Court not only dismissed the appeal but also corrected an error made by the trial court, hence made a positive order in its award…… Accordingly, I find that this is a matter in which a stay ought to be granted on conditions.” 21.Second, I do not accept the contention by the Respondent that this Court, in the circumstances of this case, is functus officio. While it is indeed true that the doctrine of functus officio prevents a court from revisiting the merits of its final decision, the present application does not invite the Court to reconsider the consent judgment. The application simply invokes the Court’s distinct statutory jurisdiction (sections 103 and 104 of the Land Act) arising after default. It is settled that where statutory rights arise post-default, those rights remain justiciable. 22.Finally, I do not accept the argument that sections 103 and 104 of the Land Act are wholly inapplicable merely because a consent judgment exists. Those provisions confer statutory jurisdiction upon the Court to grant relief against the exercise of a chargee's remedies. The existence of a consent judgment does not, without more, extinguish that statutory jurisdiction. 23.The upshot of the foregoing is that I find the Respondent’s Preliminary Objection partially merited. Whether the Court Should Grant Relief Under Sections 103 and 104 of the Land Act 24.Having considered the Preliminary Objection, I now turn to the substantive application. 25.The Plaintiffs seek two principal forms of relief. First, they seek a sixty (60)- day extension within which to comply with the consent judgment entered on 24 February 2026. Secondly, and in the alternative, they seek an order suspending or postponing the Defendant's statutory power of sale and other enforcement remedies over L.R. Nos. 5989/200 and 5989/215 pursuant to sections 103 and 104 of the Land Act. 26.In so far as the application seeks an extension of time within which to pay the sum agreed under the consent judgment, I am unable to grant the relief sought. 27.As pointed out in the preceding paragraphs of this ruling, the consent recorded on 24 February 2026 represented a negotiated settlement between the parties. Under its terms, the Defendant agreed to accept Kshs 7,750,000,000 in full and final settlement of the indebtedness on condition that payment was made within forty-five (45) days, with time being of the essence. The amount agreed and the period within which it was to be paid formed the core consideration for the compromise reached by the parties. 28.The Court cannot ignore the commercial context in which the consent was entered into. The Defendant's willingness to accept the discounted settlement figure was plainly predicated on payment being made within the stipulated timeframe. To extend that period would be to alter a fundamental term of the bargain struck by the parties. 29.As the Court of Appeal observed in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another (supra), a court of law cannot rewrite a contract for the parties. Parties are bound by the terms they freely agree upon, and the function of the Court is to enforce those terms, not to substitute them with terms that it considers fairer or more convenient. 30.In the present case, granting an extension of time for payment would amount to varying a central term of the consent judgment. 31.Accordingly, prayer (iv) of the application, to the extent that it seeks a sixty (60)- day extension within which to comply with the consent judgment entered on 24 February 2026, must fail. 32.The position is different, however, in relation to the alternative prayer seeking suspension or postponement of the Defendant's statutory remedies under the Land Act. 33.Sections 103 and 104 of the Land Act confer upon the Court a distinct statutory jurisdiction to grant relief against the exercise of a chargee's remedies. Section 103 (1) permits a chargor to apply for relief against the exercise of the remedies provided under section 90(3). The provision states that:“An application for relief against the exercise by the chargee of any of the remedies referred to in section 90(3) may be made by—(a)the chargor…” 34.Section 104, on the other hand, empowers the Court, where appropriate, to suspend, postpone or otherwise regulate the exercise of those remedies having regard to the circumstances of the case. Section 104 (2) specifically provides as follows: -“A court may refuse to grant an order under subsection (1) or may grant any relief against the operation of a remedy that the circumstances of the case require and without limiting the generality of those powers, may –a.cancel, vary, suspend or postpone the order for any period which the court thinks reasonable;b.extend the period of time for compliance by the chargor with a notice served under section 90;c.substitute a different remedy or the one applied for or proposed by the chargee or a different time for taking or desisting form taking any action specified by the lessor in a notice served under section 90;d.authorise or approve the remedy applied for or proposed by the chargee, notwithstanding that some procedural errors took place during the making of any notices served in connection with that remedy if the court is satisfied that—i.the chargor or other person applying for relief was made fully aware of the action required to be taken under or in connection with the remedy; andii.no injustice will be done by authorising or approving the remedy, and may authorise or approve that remedy on any conditions as to expenses, damages, compensation or any other relevant matter as the court thinks fit. 35.From the statutory scheme, it is clear that the exercise of the jurisdiction does not necessarily involve variation of the parties' contractual rights. Rather, it concerns the timing and manner in which statutory remedies may be exercised. Parliament expressly conferred that discretion upon the Court in recognition of the equitable considerations that may arise in the realization of charged property. 36.Consequently, I therefore agree with the Plaintiffs that the Court retains jurisdiction under sections 103 and 104 of the Land Act notwithstanding the existence of the consent judgment. 37.The fact that the consent remains binding does not deprive the Court of the statutory authority to regulate the exercise of remedies available to a chargee under the Land Act. 38.In Showcase Properties Limited v Kenya Commercial Bank Ltd [2014] KEHC 6465 (KLR), this Court (E.K.O. Ogola J), in granting a 10-month extension under Section 104 (2) (b) and (c) of the Land Act, stated as follows: -“There is a reason why this court is called a Commercial Court. Its Rulings and Judgments are foremost aimed to aid business, and not to kill them. Where there is a possibility that the party in default may be helped to come back to a profitable path, this court will most certainly lend a hand. The Plaintiff borrowed Kshs.200,000,000/=. It has since paid over Kshs.69,000,000/= and has fallen into arrears of over Kshs.33,000,000/=. I am inclined to give the Plaintiff a period of 10 months from the date of this Ruling to put its house in order and to commence the loan repayment.” 39.The primary question therefore becomes whether the circumstances of this case justify the exercise of that discretion. 40.The Plaintiffs rely upon an ongoing refinancing process with Kenya Commercial Bank Limited. They have exhibited material showing that discussions were initiated and that the proposed transaction progressed beyond a mere expression of interest. The Court accepts that efforts were made towards securing alternative financing. 41.At the same time, the Court cannot ignore the fact that the present application was filed on 13 April 2026 seeking a sixty-day extension. By the time this ruling is delivered, that period is almost entirely spent. 42.The Plaintiffs have not placed before the Court any supplementary evidence demonstrating that the refinancing has been completed. There is no evidence of an executed facility agreement, no binding commitment by the proposed refinancier (KCB), no undertaking to discharge the Defendant's debt, and there is no evidence that any part of the settlement amount has been paid. 43.Indeed, despite enjoying the practical benefit of preservation of the status quo during the pendency of this application, the Plaintiffs remain in substantially the same position as when the application was filed. 44.Ordinarily, those circumstances would justify refusal of the relief sought. Courts do not suspend a chargee's remedies indefinitely on the basis of speculative future events. 45.Nevertheless, the jurisdiction conferred by sections 103 and 104 is intended to permit the Court, in appropriate cases, to temper the immediate exercise of statutory remedies where there remains a realistic prospect of redemption. 46.In Showcase Properties Limited v Kenya Commercial Bank Ltd [supra], the Court was categorical that “where there is a possibility that the party in default may be helped to come back to a profitable path, this court will most certainly lend a hand.” 47.In the present case, the Court is mindful that the securities sought to be realized include a substantial hospitality establishment. I am also mindful that the Defendant's ultimate objective is recovery of the debt, and that realization of the securities is merely one avenue towards that end. 48.Balancing the competing interests of the parties, I am satisfied that the Plaintiffs should be afforded one final and strictly limited opportunity to redeem the charged properties. 49.However, given the absence of demonstrable progress since the filing of the application, the relief granted must be short, conditional and final. Disposition 50.Accordingly, I issue the following final orders:i.The Plaintiffs' prayer for extension of time to comply with the consent judgment is declined.ii.Pursuant to sections 103 and 104 (2) (a) of the Land Act, the Defendant's statutory power of sale and all other remedies available under section 90(3) of the Land Act in respect of L.R. Nos. 5989/200 and 5989/215 are hereby suspended and postponed for a final period of thirty (30) days from the date of this ruling.iii.The suspension granted herein shall not operate to vary, amend or postpone the obligations arising under the consent judgment dated 24 February 2026.iv.The suspension is on condition that the Applicant pays to the Respondent a sum of Kshs. 100,000,000/- within 7 days of the date of this Ruling, in default of which the order of suspension shall automatically lapse without further order of the Court.v.Upon expiry of the thirty (30) day period, or upon default of the condition set out in (iv) above, whichever occurs first, the Defendant shall be at liberty to exercise its statutory remedies and all other rights available under the consent judgment, the charge instruments and the law without the necessity of seeking further leave of the Court.vi.The Plaintiff/Applicant, having occasioned the application, shall bear the costs of this application. 51.It is so ordered. DATED, SIGNED, AND DELIVERED AT NAIROBI THIS 4TH DAY OF JUNE 2026HON. MR. JUSTICE MOSES ADOJUDGE OF THE HIGH COURTIn the Presence of:Moses C/ANdwigo h/b for Mumia………………for the Plaintiff/ApplicantKiragu Kimani SC & Lawson Ondieki…………for the Defendant/Respondent