https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8178

Lubesol Kenya Ltd & another v Development Bank of Kenya & another (Commercial Case E462 of 2025) [2026] KEHC 8178 (KLR) (Commercial and Tax) (11 June 2026) (Ruling) Neutral citation: [2026] KEHC 8178 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Case E462 of 2025 BK Njoroge, J June 11, 2026 Between Lubesol Kenya Limited 1st Plaintiff Jonathan Njiine 2nd Plaintiff and Development Bank Of Kenya 1st Defendant Keysian Auctioneers 2nd Defendant Ruling 1.This Ruling is in respect of an application by the Plaintiffs who seek an injunction. This is to restrain the Bank from proceeding to exercise its statutory powers of sale. On 15th July, 2026 this Court certified this matter as urgent. The Court also issued a temporary injunction pending the interpartes hearing. This was on condition that the Plaintiffs remit a sum of Kshs. 500,000/= to the Bank on or before 28th July, 2025. The Plaintiffs were to also settle the Auctioneers charges arising out of the suspended auction. This paved way for the hearing of this matter interpartes, after the suspension of the public auction. Background Facts 2.The Applicant filed the Notice of Motion dated 13th July, 2025 seeking the following orders;1.Spent.2.Spent.3.That pending hearing and determination of the main suit, this Honourable Court be pleased to issue an order of temporary injunction to restrain the Defendants/Respondents, their servants, workmen, licensees, agents or any other persons acting on their own behalf or instructed by the Defendants/Respondents from interfering, disposing and or selling the property referred to as L.R No. 2/407- Maisonette No. 1. Kensue Maisonettes Estate- Kilimani Area, Nairobi City County.4.That costs of this application be provided for. 3.The Application was supported by the Affidavit of Jonathan Njiine. He stated that it was the Plaintiffs/Applicants’ case that the 2nd Plaintiff is the registered owner of L.R. No. 2/407, Maisonette No. 1, Kensue Maisonettes Estate, Kilimani, Nairobi. This property was charged to secure a loan facility advanced by the 1st Defendant to the 1st Plaintiff. The Applicants averred that due to financial constraints, harsh economic conditions, and unforeseen circumstances, the 1st Plaintiff’s business operations ceased. This resulted in arrears on the loan account. They stated that they had initiated negotiations with the 1st Defendant with a view to restructuring the facility and also exploring alternative financing arrangements. 4.The Applicants further contended that, despite the ongoing negotiations, the 1st Defendant instructed the 2nd Defendant to sell the charged property. This is by way of a public auction to recover an alleged outstanding sum of Kshs. 30,519,216.12. The Auction was scheduled for 16th July, 2025. They maintained that the Defendants had failed to serve the mandatory statutory notices and had not provided a current valuation as required by law. Consequently, they argued that the intended sale threatened to unlawfully deprive them of their matrimonial home. This would expose the property to sale at an undervalue, and occasion them irreparable loss. That this warranted the Court’s intervention to preserve the status quo pending the hearing and determination of the application. 5.In response, the 1st Respondent filed the Replying Affidavit of Chris Waithaka sworn on 14th August, 2025. He stated that the 1st Applicant lawfully obtained loan facilities from the 1st Respondent, amounting to Kshs. 17,500,000. This was subsequently enhanced to a facility of Kshs. 19,200,000. The facilities were secured by, among other securities, a Third-Party Charge over L.R. No. 2/407, Maisonette No. 1, Kensue Maisonettes, Kilimani, owned by the 2nd Applicant. The 1st Respondent contended that the Applicants voluntarily executed the charge instruments and letters of offer. That they accepted the terms of repayment, thereby acknowledging the 1st Respondent’s right to exercise its statutory remedies. This is including the power of sale, in the event of default. 6.According to the 1st Respondent, the Applicants persistently defaulted on their repayment obligations. This prompted the issuance of statutory notices under the Land Act in 2023 and the commencement of recovery measures. The Applicants repeatedly acknowledged their indebtedness through their advocates and sought indulgence. This was on the basis that they were in the process of disposing of another property to settle the debt. However, they failed to honour their promises despite several extensions and accommodations granted by the 1st Respondent. Consequently, the Respondent instructed auctioneers (the 2nd Respondent) to proceed with the realization of the charged property. It further commissioned a valuation of the property pending the public auction. The valuation returned an assessment of the property at a market value of Kshs. 25,000,000/= and a forced sale value of Kshs. 18,750,000/=. 7.The 1st Respondent further maintained that all requisite statutory notices, including the redemption notice and notification of sale, were duly issued and served upon the Applicants. It submitted that the proposed public auction was lawful and justified. It maintained that the Applicants had concealed material facts including their admission as to their indebtedness. That they had approached the Court without clean hands while seeking orders that would effectively rewrite the parties’ contractual obligations. Therefore, the Application failed to satisfy the principles for the grant of an injunction. That granting the orders sought would occasion substantial prejudice to the 1st Respondent, which was owed over Kshs. 30 million and continued to accrue interest. Issues for determination 8.The Court has carefully considered the Application and the response as well as the written submissions. The Court has also taken keen note of the oral highlights by Counsel for the parties. The Court frames a single issue for determination as follows;a.Whether the Applicants have met the threshold for grant of a temporary injunction. Analysis 9.Temporary injunctions are provided for under Order 40 Rule 1 of the Civil Procedure Rules, 2010, which provides that -“Where in any suit it is proved by affidavit or otherwise-a.that any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; orb.that the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the plaintiff will or may be obstructed or delayed in the execution of any decree that may be passed against the defendant in the suit, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further orders." 10.In an application seeking an interlocutory injunction, the burden rests upon the Applicant to demonstrate to the Court that the circumstances warrant the grant of the injunctive relief sought. The Court in the case of Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR when dealing with an application where an order for an injunction was being sought, held 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, andc.ally any doubts as to (b) by showing that the balance of convenience is in his favour.” 11.The Court of Appeal in the case of Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR, considered what constitutes a prima facie case and stated the following-“So what is a prima facie case" I would say that in civil cases it 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 as to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the Applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.” 12.Have the Applicants established a prima facie case? It was the Applicants’ case that the Defendants/Respondents’ intended exercise of the statutory power of sale is tainted by irregularities and illegalities. That this rendered the process unlawful. They contended that the Respondents were seeking to dispose of L.R. No. 2/407, Maisonette No. 1, Kensue Maisonettes Estate, Kilimani, Nairobi City County, by way of public auction. This is without complying with the mandatory procedures prescribed under the law, thereby justifying the Court’s intervention. 13.On the other hand, the 1st Respondent submitted that following the Applicants’ default in servicing the loan facilities, the 1st Respondent duly issued the requisite statutory notices dated 29th March, 2023 and 31st August, 2023, together with a 45-day Redemption Notice and Notification of Sale. All these notices were dispatched by registered post and exhibited in the Replying Affidavit. They further contended that they had afforded the Applicants numerous indulgences and opportunities to regularize the account. This is including accommodating the Applicants’ proposal to settle the debt from the proceeds of an intended sale of another property. However, the Applicants failed, neglected, and/or refused to honour their repayment obligations. That they only made a token payment of Kshs. 500,000/= without any substantive effort to clear the outstanding debt. 14.The Court notes that it is undisputed that the Applicants owe the 1st Respondent. That the Applicants do not dispute that they indeed owe the 1st Respondent. The issue in contention is whether the 1st Respondent served the Applicants with the statutory notices. A cursory look at the evidence attached to the Respondents’ response shows only one receipt as proof of dispatch of a registered article. It is dated 5th September, 2023. It is the evidence of postage of a Statutory 90 days’ Notice to the Applicants, to redeem the property. There is no other proof of dispatch or certificate of posting of the other two notices. 15.The Court has held that where the Borrower disputes service or receipt of the statutory notice, the burden shifts to the Bank to prove that they did indeed serve the notices. It is not enough to attach the notices as the Court needs to be satisfied as to the service. The Court follows the decisions in Cordeiro & another v Shamji [2015] KEHC 6977 (KLR); Terracraft (K) Limited & another v KCB Bank Kenya Limited [2020] KEHC 10323 (KLR); John Dominic Obel & another v Consolidated Bank of Kenya Ltd & another [2015] KEHC 6778 (KLR) and David Komen Sirimu v Consolidated Bank of Kenya Ltd & another [2016] KEELC 182 (KLR). 16.There is no proof of service of the Notice to sell Under Section 96 (2) of the Land Act. It is a statutory requirement and cannot be waived away or ignored. 17.In essence, the Court finds that the Applicants have established a prima facie case. 18.On the second limb, have the Applicants demonstrated that they will suffer irreparable loss? The case of Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR defines irreparable injury as follows:“Irreparable injury means that the injury must be one that cannot be adequately compensated for in damages and that the existence of a prima facie case is not itself sufficient. The Applicant should further show that irreparable injury will occur to him if the injunction is not granted and there is no other remedy open to him by which he will protect himself from the consequences of the apprehended injury.” 19.On this issue, the Applicants submitted that the auction scheduled for 16th July, 2025 would unlawfully deprive the 2nd Plaintiff/Respondent and his family of their matrimonial home, with the risk of being sold below market value. 20.In contrast, the Respondents submitted that the Applicants would not suffer irreparable loss incapable of compensation by an award of damages in the event the charged property was sold. This is because the law provides adequate remedies where a sale is found to have been wrongful. They argued that the only prejudice alleged by the Applicants was their sentimental attachment to the property, which is not a sufficient basis for the grant of an injunction. Further, it was contended that by voluntarily charging the property as security for the loan facility, the Applicants accepted the risk that the property could be realized upon default and cannot now rely on that eventuality as a ground to restrain the exercise of the statutory power of sale. 21.This is a Court of law and it would not suffer to watch a wrong being committed merely because the wrong doer can offer compensation by way of damages. The Court follows the decisions in Ochieng & another v Ochieng & 2 others [1996] KECA 205 (KLR) and Consolidated Media Ltd & 3 others v Spire Bank Limited & another [2021] KEHC 9356 (KLR). 22.On a balance of convenience, the Court finds that the balance tilts in favour of preserving the status quo. Once the sale takes place it may not be easily reversible. In any event the orders that will be proposed by this Court will facilitate the rectification of the process so as to comply with the law. Any harm or inconvenience to the Respondent will be in terms of delay. This in the eyes of this Court is a lesser injustice than disposal of the charged property through a flawed process. 23.The Court reminds itself that it has a duty to do no harm. That in balancing between two competing interests or inconveniences, it has to act or lean in a manner that causes the least inconvenience. It therefore augurs well to this Court that the appropriate notices be issued and served, before the exercise of the Statutory Power of Sale crystallizes. The Court is persuaded by the decision of Justice Hoffman in the English Case of Films Rover International Ltd & Others v Cannon Film Sales Ltd [1986] 3 All ER 772 (Ch D) when he said as follows: -“A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong'..." 24.The upshot is that the Application herein is merited on the grounds stated.1.The Court then asks itself who should bear the costs of this application? Costs lie at the discretion of this Court. Costs ordinarily follow the event. For the reason that the Applicants admit their indebtedness, the fair order is let each party bear it’s or their own costs.2.That leaves the Court to consider the issue of the Auctioneers costs. The Court had earlier directed the Applicants to pay the same as a condition for the exparte injunction granted herein. As it turns out, the process of instructing the Auctioneer stemmed from a flawed process. This is in that mandatory Notices under Section 96 of the Land Act were neither served nor was there proof of service. In the circumstances, it would be unfair to saddle the Applicants with such costs.3.This Court sets aside its earlier order directing the Applicants to settle the Auctioneers costs. If such costs have already been paid, then the same are recoverable from the 1st Respondent who may credit the same on account of the Applicants towards reducing the debt. Determination 25.The Plaintiffs/Applicants’ application by way of a Notice of Motion dated 13th July, 2025 is allowed in the following terms;a.That pending and until the issuance and service of a fresh Notice in compliance with Section 96 of the Land Act, this Honourable Court Hereby issues an order of a temporary injunction to restrain the Defendants/Respondents, their servants, workmen, licensees, agents or any other persons acting on their own behalf or instructed by the Defendants/Respondents from interfering, disposing and or selling the property referred to as L.R No. 2/407- Maisonette No. 1. Kensue Maisonettes Estate- Kilimani Area, Nairobi City County.b.That upon issuance of the Fresh Notice under Section 96 of the Land Act, the temporary injunction issued herein shall lapse.c.Each party to bear its own costs of this Application. 26.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 11TH DAY OF JUNE, 2026.NJOROGE BENJAMIN K.JUDGEIn the presence of:Mr. Kabuchu for the Plaintiffs/Applicants.Mr. Kobia holding brief for Mr. Kiunga for the Defendants/Respondents.Mr. John Paul - Court Assistant