https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9918

Mohamed v Gulf African Bank Ltd (Commercial Appeal E005 of 2026) [2026] KEHC 9918 (KLR) (18 June 2026) (Ruling) Neutral citation: [2026] KEHC 9918 (KLR) Republic of Kenya In the High Court at Mombasa Commercial Appeal E005 of 2026 WM Kagendo., J June 18, 2026 Between Khadija Essa Mohamed Appellant and Gulf African Bank Ltd Respondent (Being an Appeal from the Ruling and Order of Hon. L. K. Sindani, Principal Magistrate, delivered on 26th February 2026 in Mombasa CMCC No. E905 of 2025) Ruling Introduction 1.There are two applications before this Court for determination: the Notice of Motion dated 18th March 2026, and the Notice of Motion dated 17th April 2026. By agreement of the parties, both were canvassed on the basis of a single set of submissions and a single Replying Affidavit, and this ruling accordingly disposes of both. 2.The Notice of Motion dated 18th March 2026 is supported by the Appellant’s Supporting Affidavit sworn on even date and seeks the following substantive orders:a.that this Application be certified urgent and heard ex parte in the first instance;b.that pending the hearing of this Application, the Respondent, its agents, auctioneers or assigns be restrained from advertising for sale, selling, disposing of, transferring, or in any manner interfering with Apartment No. 3B erected on Title No. Mombasa/Block X/105 (“the suit property”);c.that pending the hearing and determination of the Appeal, this Court grant an order of stay of execution and/or stay of the Respondent’s statutory power of sale over the suit property;d.that the Respondent be ordered to maintain the status quo obtaining in respect of the suit property pending determination of the Appeal;e.that the Respondent be ordered to maintain the status quo obtaining in respect of the suit property pending determination of this Application; andf.that the costs of this Application be in the Appeal.1.The Notice of Motion dated 17th April 2026, brought under Certificate of Urgency following the auction advertisement of the suit property, seeks:a.that this Application be certified urgent and heard ex parte in the first instance;b.that pending the hearing and determination of this Application, a temporary injunction issue restraining the Respondent, its agents, servants, auctioneers or assigns from proceeding with the scheduled auction of the suit property slated for 23rd April 2026;c.that pending the hearing and determination of the Notice of Motion dated 18th March 2026, the Respondent be restrained from advertising, selling, disposing of, transferring or in any manner interfering with the suit property; andd.that the costs of this Application be in the cause.2.The Respondent opposes both applications through the Replying Affidavit of Lawi Sato, its Senior Manager – Legal, sworn on 28th April 2026, and through written submissions and a list of authorities dated 28th April 2026. The Appellant’s written submissions are dated 28th April 2026. Background 5.The Appellant is the registered proprietor of the suit property, which she avers is her matrimonial and only home. It is not disputed that the property was charged to the Respondent as security for a Diminishing Musharaka Sale and Lease Back facility in the sum of Kshs. 7,400,000, repayable over twenty years. 6.By a ruling delivered on 4th December 2025, the trial court dismissed the Appellant’s first application for injunction (Notice of Motion dated 18th June 2025), holding that the Appellant had not established a prima facie case, that the loss of a matrimonial home offered as security is not, without more, irreparable injury, and that the balance of convenience favoured the Respondent. 7.Subsequent to that ruling, the Respondent issued a fresh Notice to Sell dated 9th December 2025 under Section 96(2) of the Land Act, demanding Kshs. 7,250,059.64. The Appellant’s case is that, between the first ruling and the issuance of this Notice to Sell, she had made further payments totalling Kshs. 1,150,000, and that on 30th January 2026 the Respondent unilaterally diverted Kshs. 457,117 of these payments toward alleged legal fees rather than applying them to loan instalments — an act she contends artificially created or exaggerated the arrears. 8.The Appellant filed a second application before the trial court (Notice of Motion dated 21st January 2026) founded on these matters. By a ruling delivered on 26th February 2026, the trial court dismissed that application on the ground that it was res judicata, having regard to the ruling of 4th December 2025, and alternatively, that even on the merits the Appellant had not met the threshold for an injunction. It is that ruling of 26th February 2026 which is the subject of the Memorandum of Appeal dated 17th March 2026. 9.While the present applications were pending, the Respondent’s auctioneers, Trevo Auctioneers, proceeded to advertise the suit property for sale by public auction on 23rd April 2026, at a forced sale value of Kshs. 10,500,000 against an open market value of Kshs. 14,000,000, with the amount claimed stated as Kshs. 7,441,161.89 as at 10th February 2026. 10.It is common ground that, following the advertisement, the Appellant wrote to the Respondent on 26th March 2026 proposing a restructuring of the facility, reducing monthly instalments from Kshs. 90,000 to Kshs. 50,000 for six months. By letter dated 2nd April 2026, the Respondent responded “without prejudice”, indicating that it would consider the restructuring proposal only upon receipt of certain documentation, while noting that the auction remained scheduled for 23rd April 2026. Issues for Determination 11.Having considered the two Notices of Motion, the supporting and supplementary affidavits, the Replying Affidavit, and the written submissions and authorities filed by both parties, the issues that arise for determination are:a.Whether the suit property ought to be preserved pending the hearing of the applications themselves (prayer (b) of the 18th March 2026 application and prayer (c) of the 17th April 2026 application);b.Whether the order restraining the auctioneers from proceeding with the scheduled auction of 23rd April 2026 (prayer 2 of the 17th April 2026 application) remains capable of being granted;c.Whether the Appellant is entitled to a stay of execution and/or stay of the Respondent’s statutory power of sale pending the Appeal (prayer (c) of the 18th March 2026 application), applying the twin principles of arguability and nugatory effect;d.Whether, in addition to (d) above, a separate order is required to maintain the status quo pending the Appeal and pending the application (prayers (d) and (e) of the 18th March 2026 application); ande.How costs of the two applications should be borne. Analysis and Determination 12.I now address each issue in turn. a. Prayer (b) of the 18th March 2026 application and Prayer (c) of the 17th April 2026 application — restraint on advertising, selling, disposing, transferring or interfering with the suit property pending determination of the application(s) 13.These prayers are interlocutory in character: they seek to preserve the suit property pending the hearing of the applications themselves. Neither party’s submissions address this prayer in isolation; the Respondent’s submissions are directed at the broader question of injunction pending appeal, and do not specifically contest the narrower proposition that the property should not be sold while the applications which seek to halt its sale are themselves still pending. It would be incongruous, and indeed would render the applications nugatory in the most literal sense, for the suit property to be sold before this Court has even ruled on the applications seeking to prevent that sale. I find that these prayers are well-founded on their own terms, independent of the merits of the appeal, since a court seized of an application to restrain a sale must, at minimum, be able to preserve the subject matter until it rules on that application. These prayers are accordingly allowed, and now merge into and are subsumed by the orders made at paragraph 22 below, which determine the substantive position pending the appeal. b. Prayer 2 of the 17th April 2026 application — restraining the auctioneers from proceeding with the scheduled auction of 23rd April 2026 14.This prayer is, on the pleadings, the most pressing. The Appellant’s Supplementary Affidavit sworn on 28th April 2026 deposes that the auction advertisement of 23rd April 2026 constitutes a new and imminent threat to the suit property which did not exist at the time of filing the earlier application, and that unless the Court intervenes urgently, the Respondent will proceed with the auction, rendering both the pending application and the Appeal nugatory. 15.The Respondent’s Replying Affidavit and submissions do not specifically address the 23rd April 2026 auction date as a discrete matter; rather, the Respondent’s position is pitched at the general proposition that, since default is admitted and the statutory process has been complied with, the sale of the property, whenever it occurs, cannot found a claim of irreparable injury, citing John Mwashigadi Mwakisha v Housing Finance Co Ltd [2020] KEHC 4361 (KLR). 16.Where the submissions are silent on the specific question of restraining an auction whose date has already passed by the time of this ruling, this Court turns to the applicable law. The auction scheduled for 23rd April 2026 has, as a matter of fact, already passed as of the date of this ruling. Whether it in fact proceeded is not disclosed on the record before me. If it did not proceed , whether because of the pendency of this application or otherwise — then prayer 2 of the 17th April 2026 application is spent, and no order is necessary. If it did proceed, then an order restraining the auctioneers from “proceeding” with that specific auction would equally be spent, since the event sought to be restrained would already have occurred, and the proper remedy would lie not in this prayer but in the broader relief sought in prayer (c) of the 18th March 2026 application (stay of the statutory power of sale pending the Appeal), which I address at paragraphs 18–21 below. In either eventuality, prayer 2 of the 17th April 2026 application does not require a separate substantive order; it is addressed by the determination made in respect of prayer (c) of the 18th March 2026 application. c. Prayer (c) of the 18th March 2026 application — stay of execution and/or stay of the statutory power of sale pending the Appeal 17.This is the central prayer. An order in the nature of a stay of execution or stay of a statutory power of sale pending an appeal is governed by the twin principles articulated in Stanley Kang’ethe Kinyanjui v Tony Ketter & 5 Others [2013] eKLR and applied at this court station in Wazir Auto Ltd v Njoroge & another [2026] KEHC 1375(KLR): the applicant must show (i) that the appeal is arguable, and (ii) that, absent the order, the appeal would be rendered nugatory. Both limbs must be satisfied conjunctively, and an order will in any event be refused if its grant would be more injurious than beneficial. 18.On arguability: the Memorandum of Appeal’s central ground is that the learned trial magistrate erred in treating the application dated 21st January 2026 as res judicata without regard to facts said to be new and material , namely the payments totalling Kshs. 1,150,000 and the subsequent diversion of Kshs. 457,117 to legal fees on 30th January 2026, both of which post-date the ruling of 4th December 2025. The Respondent’s submissions, relying on Jampen Enterprises Limited v NIC Bank Kenya PLC & another [2022] KEHC 12164 (KLR) and Executive Curtains and Furnishings Limited v Family Finance Building Society [2007] KEHC 2437 (KLR), contend that a part-payment made after a statutory notice does not defeat an already-crystallised power of sale, and that a litigant cannot generate fresh causes of action merely by making further part-payments. 19.I have considered this submission against the specific factual premise of the Appellant’s appeal. The Appellant’s grievance is not simply that she made further part-payments after an admitted default; it is that the Respondent itself, by its own unilateral act on 30th January 2026, diverted a specific identified sum from instalment payments to legal fees , an act she contends was unauthorised by the Letter of Offer or the Variation of Terms of Banking Facilities exhibited as “KEM-1(a)”, neither of which, as exhibited, contains any clause expressly permitting such reallocation without the customer’s consent. Whether that specific post-ruling act of reallocation was capable of constituting a new and material fact taking the second application outside the doctrine of res judicata as codified in Section 7 of the Civil Procedure Act as distinct from the mere issuance of a further notice in continuation of an existing process, which the authorities cited by the Respondent correctly hold does not escape res judicata is, in my view, a point that calls for consideration by the appellate bench seized of the appeal proper. I am satisfied that this constitutes at least one bona fide arguable point within the meaning of Stanley Kang’ethe Kinyanjui (supra). 20.On the nugatory limb: the Appellant deposes, without contradiction, that the suit property is her matrimonial and only home. The Respondent, relying on John Mwashigadi Mwakisha (supra), submits that the sale of charged property pending appeal does not render an appeal nugatory because any loss is confined to the ascertainable difference between sale proceeds and property value, and is thus compensable in damages. The applicant has, however , pleaded that this is her only home and she has shown good intentions to redeem the same by making a considerable deposit and making an offer on how to off set the balanceed. 21.On a balance of convenience, I find that the Appellant is entitled to an order staying the exercise of the Respondent’s statutory power of sale over the suit property pending the hearing and determination of the Appeal. However, this Court must also have regard to the fact that the Respondent remains a secured creditor with an admittedly outstanding facility, and that an unconditional stay, granted indefinitely, could itself work an injustice on the Respondent a consideration recognised in Giella v Cassman Brown & Co Ltd [1973] EA 358 as part of the balance-of-convenience inquiry, and reflected in Wazir Auto Ltd v Njoroge & another (supra) in the caution that an order should not be granted where it would be more injurious than beneficial. The Appellant has herself, by her letter dated 26th March 2026, proposed and represented her ability to pay Kshs. 50,000 per month toward the facility and has deposed to her readiness to comply with such conditions as the Court may impose. In those circumstances, the stay sought in prayer (c) is granted on the conditions set out in the orders below. d. Prayers (d) and (e) of the 18th March 2026 application — status quo pending determination of the Appeal and pending determination of this Application 22.These prayers seek, in substance, the same protective outcome as prayer (c), framed differently: an order that the Respondent maintain the status quo obtaining in respect of the suit property ; that is, that the property remain registered in the Appellant’s name, in her possession, and unencumbered by any further enforcement step pending determination of the Appeal (prayer (d)) and pending determination of the Application itself (prayer (e)). 23.Neither party’s submissions address the status quo prayers as a distinct head of relief; the Respondent’s submissions are directed solely at the propriety of an injunction/stay pending appeal. Where the submissions are silent, this Court has regard to the established proposition, articulated in Giella v Cassman Brown & Co Ltd [1973] EA 358, that the purpose of an interlocutory order of this nature is precisely to preserve the status quo until the rights of the parties can be determined. An order maintaining the status quo, in the circumstances of this case, would be coextensive with and achieved by the stay granted under prayer (c) above; to grant a separate, free-standing “status quo” order in addition to the stay of the statutory power of sale would be otiose and would risk creating ambiguity as to the scope of what is preserved. I therefore find that prayers (d) and (e) are subsumed within, and adequately addressed by, the order made under prayer (c) at paragraph 22 above, and no separate order is necessary in respect of them. e. Costs 24.Prayer (f) of the 18th March 2026 application asks that costs of that application be in the Appeal; prayer (d) of the 17th April 2026 application asks that costs of that application be in the cause. Neither party’s submissions argue specifically against either costs formulation. Costs of an interlocutory application of this nature customarily follow the event of the appeal, and I see no reason to depart from the prayers as framed by the Appellant, which are, in any event, not opposed. Disposition 25.For the reasons set out above, this Court makes the following orders:i.The Notice of Motion dated 18th March 2026 is allowed to the extent set out herein. An order is hereby issued staying the exercise of the Respondent’s statutory power of sale over Apartment No. 3B erected on Title No. Mombasa/Block X/105, and restraining the Respondent, whether by itself, its servants, agents, auctioneers, or assigns, from advertising for sale, selling, transferring, or in any manner alienating or otherwise disposing of the said property, pending the hearing and final determination of Civil Appeal No. E005 of 2026.ii.The stay in (i) above is granted on condition that the Appellant shall, with effect from the month following the date of this ruling, pay to the Respondent the sum of Kshs. 50,000 on or before the last day of each month, being the sum the Appellant has herself proposed and represented her ability to pay, pending the hearing and determination of the Appeal. Should the Appellant default in any two consecutive monthly payments under this condition, the Respondent shall be at liberty to apply to this Court, on notice to the Appellant, for the discharge of the orders granted herein.iii.The Notice of Motion dated 17th April 2026 is, in light of order (i) above, spent. To the extent that the auction scheduled for 23rd April 2026 has not proceeded, it shall not proceed further; to the extent that any steps were taken toward its completion, the same shall not be carried into effect, in either case pending the hearing and final determination of the Appeal as provided in order (i).iv.The appeal, being Civil Appeal No. E005 of 2026, shall be set down for hearing on a priority basis. The Appellant shall ensure that the record of appeal is filed and served within thirty (30) days of this ruling, failing which the Respondent shall be at liberty to apply for the discharge of the orders herein.v.Costs of the Notice of Motion dated 18th March 2026 shall be in the Appeal. Costs of the Notice of Motion dated 17th April 2026 shall be in the cause.It is so ordered. DATED, SIGNED, AND DELIVERED IN OPEN COURT/ONLINE THROUGH MS TEAMS, THIS 18TH DAY OF JUNE 2026.HON. LADY JUSTICE W. K. MICHENI JUDGESIGNED BY/FOR:HON. LADY JUSTICE WENDY MICHENI