[2009] KEHC 98 (KLR)
The court found that the defendant had not served the statutory notice of sale as required under the Transfer of Property Act. Without such notice, the defendant was not empowered to sell the charged property. The court further noted that the plaintiff had demonstrated a prima facie case with a likelihood of...
Source-derived case information.
- Citation
- [2009] KEHC 98 (KLR)
- Parties
- Plaintiff: Laporte Holdings Ltd; Defendant: Equity Bank Ltd
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 752 of 2009
- Procedural Posture
- Civil Case / Interlocutory Injunction Application (chamber Summons)
- Outcome
- Application allowed. Interlocutory injunction granted as prayed.
- Legal Topics
- Interlocutory Injunctions, Breach of Financing Agreement, Loan Disbursement, Statutory Notice of Sale, Mortgage and Charge, Irreparable Harm
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Laporte Holdings Ltd
Plaintiff
Equity Bank Ltd
Defendant
Procedural Posture
Civil Case / Interlocutory Injunction Application (chamber Summons)
Legal Issues
- 1 Whether the plaintiff is entitled to an interlocutory injunction restraining the defendant from selling or disposing of land parcel LR209/11296/44 pending determination of the suit.
- 2 Whether the defendant breached the financing agreement by diverting part of the loan proceeds and unlawfully debiting the plaintiff's account.
- 3 Whether the statutory notice required under the Transfer of Property Act was served before the intended sale of the charged property.
Ratio Decidendi
The court found that the defendant had not served the statutory notice of sale as required under the Transfer of Property Act. Without such notice, the defendant was not empowered to sell the charged property. The court further noted that the plaintiff had demonstrated a prima facie case with a likelihood of success, and that the threatened sale would cause irreparable harm that could not be adequately compensated by damages. Accordingly, the court granted the interlocutory injunction restraining the defendant from selling or disposing of the property pending the hearing and determination of the suit.
Court Disposition
Application allowed. Interlocutory injunction granted as prayed.
Orders
- An interlocutory injunction is granted restraining the defendant from selling or disposing of land parcel LR209/11296/44 pending the hearing and determination of the suit.
- The defendant shall bear the costs of this application.
Full Case Text
Judgment text and source record
14 paragraphs
REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS) Civil Case 752 of 2009
LAPORTE HOLDINGS LTD................................................PLAINTIFF
VERSUS
EQUITY BANK LTD..........................................................DEFENDANT
RULING
Chamber Summons dated 8/10/2009 brought under Order 39 Civil Procedure Code seeking interlocutory injunction against the defendant pending the hearing and determination of this suit from selling or disposing off land parcel No.LR209/11296/44 and order for costs is prayed for.
The grounds upon which application is based is on the application and it is supported by affidavit of Symon Wachira Mwaniki. It is stated that the defendant has breached financing agreement with the plaintiffs by diverting part of loan proceeds. The defendant owes the plaintiff substantial damages as a result of the said breach and the defendant has unlawfully debited the first plaintiff’s account with unlawful deductions and the plaintiffs’ claim has good chances of succeeding and therefore the sale of the charged property would occasion irreparable loss and damage. It is sworn that plaintiffs and one Peter Githinji agreed to go into a joint flower growing business (the project) which project was to cost Kshs.3,500,000/=. The said project was to be implemented pursuant to an agreement between first plaintiff and a company based in Newzealand known as Plant and Floral Investment PTE Ltd.(Plant and Flora). The agreement is exhibited as “SWMI”. Pursuant to agreement “SWMI” the letter was to purchase all the produce from the said project at an agreed price. The funds were to be borrowed from the defendants Kikuyu Branch where Ambiance was a customer. Defendant requested for financing agreement SWN2, proposal for financing SWM3, letter of guarantee by second plaintiff “SWM4”. Security “SWM5” and the agreement between the first plaintiff and Plant Floral marked “SWM1”. It was a condition that the funds would be disbursed through a joint account to be operated by first defendant and Ambiance. It was understood that the project was capital intensive and therefore full amount applied for was necessary for the successful implementation of the project and the funds would be disbursed in accordance with the proposal for financing.
The defendant approved the loan and therefore full amount applied for was necessary for the successful implementation of the project and the funds would be disbursed in accordance with the proposal for financing. The defendant approved the loan facility by letter dated 26/10/2007. The defendant breached the said agreement which was based on utmost good faith. The defendant failed to disburse the whole amount applied for and secured by legal charge over the aforesaid loan. Only a sum of Kshs.1,539,400/= through the joint account was availed. The defendant in collusion with Ambiance directed a sum of Kshs.1,960,600/= into the latter’s account. As a result of the at diversion of the loan proceeds, the project collapsed. The amount lost in Kenya shillings amounts to Kshs.20,691,800/=. Furthermore on 11/8/2008 the defendant without authority debited the first plaintiff’s account with Kshs.182,000/= allegedly owed to Peter Githinji. The plaintiff has repaid to the defendant a sum of Kshs.1,375,000/= and is claiming a further sum of Kshs.3,113,344. 40. And the defendant threatens to sell the property.
The defendant has caused an affidavit to be sworn on its behalf by one Purity Kinjanjui who is described as Debt Recovery Manager. She swears that the first plaintiff has no cause of action against the defendant. Peter Githinji Wambugu borrowed the money from the bank. The second plaintiff offered to give the security and executed a charge and guarantee by a letter dated 8/5/2008. The Ambiance litigation services to the defendant to the tune of Kshs.3,594,949. 40 and a demand was made. The charge is registered under Land Titles Registry as LR209/11296/44. the notice served under the charge is by Antique Auction Ltd Notice to redeem property LR 209/1129/44 given under auctioneer for a period of 45 days from 2/9/2009. Statutory notice as provided under Transfer Of Property Act (TPA) is not served. It is only upon service Statutory Notice of sale can empower a chargee to sell the property charged without authority of the court.
As no such Notice is served or referred to, I therefore allow the application and grant injunction as prayed.
Orders accordingly.
Dated, signed and delivered at Nairobi this 11th day of December, 2009.
JOYCE N. KHAMINWA
JUDGE