[2023] KEHC 27599 (KLR)

Jannat Auto Limited & another v Family Bank Limited & another (Civil Suit E030 of 2023) [2023] KEHC 27599 (KLR) (17 November 2023) (Ruling)

Neutral citation: [2023] KEHC 27599 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit E030 of 2023

F Wangari, J

November 17, 2023

Between

Jannat Auto Limited

1st Plaintiff

Sun Palm Limited

2nd Plaintiff

and

Family bank Limited

1st Defendant

Trevo Auctioneers

2nd Defendant

Ruling

1. This ruling relates to a Notice of Motion dated 30th March, 2023 which sought for the following orders:a.Spent;b.Spent;c.That a Temporarily Injunction do issue restraining the Defendants/ Respondents, by themselves, their servants or agent or any other person whomsoever and whatsoever from selling, or exercising in any manner the Chargee’s statutory power of sale pursuant to the Chargee’s Notice herein, or in any manner whatsoever from interfering with the Plaintiff’s rights and interest in Plot No. LR Kilifi/Jimba/405 and determination of this suit.d.Prayer (2) above be granted on temporary basis pending hearing and determination of this application interpartes.e.That the costs of this application be provided for.

2. The application was opposed. The Respondents filed a Replying Affidavit dated 28/4/2023 deponed by the 1st Respondent’s Legal Director. She made reference to the Applicant’s application dated 8/11/22 seeking to stop the sale of the suit property L.R Kilifi/ Jimba/ 670. Upon perusal of the proceedings filed, none of the above exists. It is imperative that before filing of pleadings, parties must ensure that the contents of their pleadings are correct. Nevertheless, this shall be deemed as a ‘typo’ and I shall proceed to consider the affidavit referred to as the one dated 30/3/2023 and the suit land as L.R Kilifi/ Jimba/405.

3. The Respondents stated that the loan facility advanced to the 1st Applicant as guaranteed by the 2nd Applicant, was a short term loan payable within 180 days, and the Applicants were aware of the risks of the suit property which was deposited as security, being sold.

4. The Respondents further stated that the Applicants did not establish a prima facie case with a likelihood of success, hence the issue of the Applicants suffering irreparable damage should not arise. The 1st Respondent should therefore not be restrained from exercising the power of sale. The application should therefore be dismissed with costs.

5. The application was disposed of by way of written submissions. The parties complied by filing submissions together with various authorities in support of the parties’ rival positions.

Analysis and Determination 6. I have considered the application, responses, submissions together with the authorities relied upon by the parties as well as the law and in my view, the following are the issues for determinationa.Whether the Applicant has made out a case for grant of orders of injunction;b.If the answer to (a) above is in the affirmative, what orders should issue?c.Who bears the costs of the application?

7. Turning to the substance of the application, the facts are not in dispute. The 1st Applicant was advanced a loan facility of Kshs. 25,000,000 by the 1st Respondent. The 2nd Applicant was the guarantor and its property LR No. Kilifi/ Jimba/ 405 was charged as the security property.

8. Due to the covid-19 pandemic, the 1st Applicant’s car selling business was affected hence diminishing the financial capacity to service the loan advanced. On 8/12/2021, the 1st Applicant wrote to the 1st Respondent seeking to reschedule the loan repayment period to 60 months, and gave a proposal on the mode of payment towards settling the amounts due.

9. On 2/3/2022, the 1st Respondent gave a notice for regularisation of default within next 90 days, followed by a Notice of intention to sell the charged property within 40 days. The 1st Applicant again wrote to the bank seeking to repay the loan via instalments of Kshs. 500,000 per month with a deposit of Kshs. 1,500,000.

10. The 1st Respondent declined the offer via a letter dated 29/7/2022. On 3/8/2022, the 1st Applicant made a further request for rescheduling the loan and a monthly deposit of Kshs. 500,000, in addition to a further deposit of Kshs. 2,000,000. The bank accepted the proposal but on condition that the all the vehicles in stock (1st Applicant’s business) be jointly registered with the bank. The 1st applicant states that the pre-condition was impossible to achieve as no customer would want to buy a vehicle that is already charged.

11. The 2nd Respondent under the instructions of the 1st Respondent served the Applicants with the Notification of Sale of the charged property, whose current value, according to the 1st Applicant, is Kshs. 100,000,000 due to further developments made. The Applicants deponed that by selling of the suit property, they would suffer irreparable loss yet the 1st Applicant had not refused to repay the loan and had already paid Kshs. 4,500,000 towards the loan despite the business being affected negatively by the Covid-19 pandemic.

12. This being an application for orders of temporary injunction, the principles guiding the court whether to grant the orders sought or not are settled. Those principles were set out in East African Industries vs. Trufoods [1972] EA 420 and Giella vs. Cassman Brown & Co. Ltd [1973] EA 358. In Nguruman Limited vs. Jan Bonde Nielsen & 2 Others [2014] eKLR the Court of Appeal restated the law as follows:“…In an interlocutory injunction application, the applicant has to satisfy the triple requirements to;(a)establish his case only at a prima facie level,(b)demonstrate irreparable injury if a temporary injunction is not granted, and(c)ally any doubts as to (b) by showing that the balance of convenience is in his favour.These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established that all the above three conditions and stages are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. See Kenya Commercial Finance Co. Ltd V. Afraha Education Society [2001] Vol. 1 EA 86. If the applicant establishes a prima facie case that alone is not sufficient basis to grant an interlocutory injunction, the court must further be satisfied that the injury the respondent will suffer, in the event the injunction is not granted, will be irreparable. In other words, if damages recoverable in law is an adequate remedy and the respondent is capable of paying, no interlocutory order of injunction should normally be granted, however strong the applicant’s claim may appear at that stage. If prima facie case is not established, then irreparable injury and balance of convenience need no consideration. The existence of a prima facie case does not permit “leap-frogging” by the applicant to injunction directly without crossing the other hurdles in between. It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or both that the question of balance of convenience would arise. The inconvenience to the applicant if interlocutory injunction is refused would be balanced and compared with that of the respondent, if it is granted…” (Underlying for emphasis)

13. While considering the above principles, I take caution that in an interlocutory application, the Court is not required to make any conclusive or definitive findings of fact or law, most certainly not on the basis of contradictory affidavit evidence or disputed propositions of law. (See the decision of Ringera, J (as he then was) in Airland Tours & Travel Limited vs. National Industrial Credit Bank Nairobi (Milimani) HCCC No. 1234 of 2002). However, the Court is not excluded from expressing a prima facie view of the matter and the Court is entitled to consider what else the deponent to the supporting affidavit has stated on oath which is not true. Being an equitable relief, a party seeking this remedy ought to act equitably.

14. Therefore, though at an interlocutory stage the Court is not required and indeed forbidden to purport to decide with finality the various relevant “facts” urged by the parties, the remedy being an equitable one, the Court will decline to exercise its discretion if the Applicant to relief is shown to be guilty of conduct which does not meet the approval of the Court of equity. Injunction being an equitable remedy, the court is enjoined to look at the conduct of the Applicant for the injunctive orders, the surrounding circumstances whether the orders sought are likely to affect the interests of non-parties to the suit, the issue whether an undertaking as to damages has been given as well as the conduct of the Respondent whether or not he has acted with impunity.

15. The Court is also, by virtue of section 1A (2) of the Civil Procedure Act, enjoined to give effect to the overriding objective as provided under section 1A (1) of the said Act in exercising the powers conferred upon it under the Civil Procedure Act or in the interpretation of any of its provisions. One of the aims of the said objective as interpreted by the Court of Appeal is the need to ensure equality of arms, the principle of proportionality and the need to treat all the parties coming to court on equal footing.11SeeJM v SMK & 4 Others [2022] eKLR

16. So has the Applicant established prima facie case? In Mrao Ltd vs. First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, prima facie case was defined as follows: - “...In civil cases a prima facie case is a case in which on the material presented to the Court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter…”

17. The purpose of an order of injunction is to preserve the substratum of the suit. It is a fact that the 1st Applicant is still desirous of repaying the loan, and he had already paid Kshs. 4,500,000 as at the time of filing suit. If only the 1st Respondent had considered proposals made by the 1st Applicant back in year 2021, with a deposit of Kshs. 2,000,000 and monthly deposit of Kshs. 500,000, total amount which would have been paid by now, almost 2 years later would be over Kshs. 12,000,000. That would have eased the burden for both parties herein. The parties who stands to be prejudiced if the order sought is not granted are the Applicants. To this end, I am satisfied that a prima facie case has been established.

18. As held in Nguruman (supra), having found that a prima facie case has been established, I am duty bound to consider the second facet, that is, irreparable injury. The Court of Appeal in the above case expressed itself thus: -“…The equitable remedy of temporary injunction is issued solely to prevent grave and irreparable injury; that is injury that is actual, substantial and demonstrable; injury that cannot “adequately” be compensated by an award of damages. An injury is irreparable where there is no standard by which their amount can be measured with reasonable accuracy or the injury or harm is such a nature that monetary compensation, of whatever amount, will never be adequate remedy.” (Emphasis added)

19. In Joseph Siro Mosioma vs. Housing Finance Company of Kenya Limited & 3 Others [2008] eKLR, Warsame, J (as he then was) held as follows: -“...damages is not automatic remedy when deciding whether to grant an injunction or not. Damages is not and cannot be substituted for the loss which is occasioned by a clear breach of the law, in any case, the financial strength of a party is not always a factor to refuse an injunction. More so a party cannot be condemned to take damages in lieu of his crystalized right which can be protected by an order of injunction…”

20. The current value of the suit property is said to be over Kshs. 100,000,000, though this fact is disputed by the 1st Respondent. Even though we were to consider the initial value of Kshs. 52,000,000, there is the sentimental attachment considering that this is the 2nd Applicant’s source of income. The 2nd Applicant may not get a similar kind of property with the kind of value given. I am satisfied that irreparable injury would occur if the order sought is not granted.

21. On the third limb, that is, balance of convenience, I note that the 2nd Applicant is currently in occupation of the subject property where it is running its business. In Chebii Kipkoech vs. Barnabas Tuitoek Bargoria & Another [2019] eKLR, balance of convenience was defined as follows: -“…the meaning of balance of convenience in favor of the plaintiff is that if an injunction is not granted and the suit is ultimately decided in favor of the plaintiffs, the inconvenience caused to them would be greater than that caused to the defendants if an injunction is granted and suit is ultimately dismissed...”

22. Putting all the facts into perspective, I note that if the 1st Respondent is allowed to proceed with realization of the subject property, the 2nd Applicant would lose that which it holds dear in its operations. On the contrary, the 1st Applicant still has the right to go ahead and realize the security in the event the suit is dismissed.

23. On the issue of costs, it is settled that the same follows the event. That is the import of section 27 of the Civil Procedure Act. The court reserves its discretion on whether to award costs to either party. This was well enunciated by the Supreme Court in the case of Jasbir Singh Rai & 3 others v Tarlochan Singh Rai Estate of & 4 others [2013] eKLR. Having considered the fact that this is an interlocutory application, it would be onerous to award costs to any party at this stage. Therefore, I direct that costs shall await the outcome of the suit.

24. In order to safeguard the 1st Respondent’s interests, I order that the matter be fast tracked. Notice is hereby issued to all parties that once the matter is fixed for hearing; no adjournments shall be allowed.

25. Based on the above discourse, I make the following orders: -a.The application dated 30/3/2023 is merited and the same is allowed in terms of Prayer No. (3) thereof, that is, there be a temporary order of injunction pending the hearing and determination of the main suit.b.Costs to abide the outcome of the suit.

Orders accordingly.

DATED, SIGNED AND DELIVERED AT MOMBASA THIS 17TH DAY OF NOVEMBER, 2023. …………………..F. WANGARIJUDGEIn the presence of;Maithya Advocate for the Plaintiffs/ApplicantsOdipo Advocate for the 1st Defendant/ RespondentBarile, Court Assistant