[2022] KEHC 1475 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL DIVISION

CIVIL APPEAL NO. E520 0F 2021

MOHAMED ABUBAKAR................................................................................APPLICANT

-VERSUS-

BENJAMIN SILA T/A LEGACY AUCTIONEERS SERVICES.....1ST RESPONDENT

ELIJAH NJOGU MUHORO...............................................................2ND RESPONDENT

HF GROUP.............................................................................................3RD RESPONDENT

JOE OWAKA AGER.............................................................................4TH RESPONDENT

RULING

1. There are three live prayers in the motion dated 23rd August 2021 and brought by Mohamed Abubakar (hereafter the Applicant. Prayer (5) is seeking that pending the hearing and determination of the appeal herein, this court be pleased to issue a temporary injunction to restrain Benjamin Sila t/a Legacy Auctioneers Services , Elijah Njogu Muhoro, HF Group, and Joe Owaka Ager (hereafter the 1st, 2nd , 3rd and 4th Respondents, respectively) from completing the purported sale of all that property known as Apartment No. 5 within Green Gardens Apartments, Thompsons Estate, Lavington situate at L.R No. 330/49, emanating from unlawful and procedural auction conducted on 30th September, 2021 .

2. Prayer (6) seeks that that pending the full hearing and determination of the appeal this court be pleased to issue and order of temporary injunction to restrain the Chief Land Registrar from effecting any proprietary changes regarding the ownership of all that property known as Apartment No. 5 within Green Gardens Apartments, Thompsons Estate, Lavington situate at L.R No. 330/49(hereafter the suit property). The Land Registrar is not a party to the suit, and the affidavit of service on record, sworn by Ruth Wanjiru Ndichu and dated 13th September does not include the said officer as one of the parties served with the motion. In in any event, the prayer no. (6) directed at him was not specifically canvassed. Equally, prayer (7) seeking an order to compel the 1st Respondent to produce before the Court the proceedings of the auction conducted in respect of the suit property on 30th September 2019 was not canvassed.

3. The motion is expressed to be brought under Section 3 & 3A of the Civil Procedure Act, and Order 42 Rule 6 of the Civil Procedure Rulesinter alia and is based on the grounds on the face of the motion, as amplified in the supporting and supplementary affidavits of the Applicant. To the effect that the Applicant had participated in and was the highest bidder at Shs. 17,650,000/- at the auction in respect of the suit property but the 1st Respondent denied him proper documentation to enable him pay the 25% requisite deposit through his bank; that his bank declined to make a transfer in the absence of documentation; and that upon return to the auction venue, he discovered that the 2nd Respondent, an employee of the 3rd Respondent who had irregularly bid on behalf of his employer as the second highest bidder, had been unlawfully issued with the memorandum of sale.

4. That aggrieved by the turn of events, he subsequently filed a suit being Milimani CMCC No. 7320 of 2019 and an application seeking injunctive relief against the Respondents; that the application was heard and determined; and that being dissatisfied with the with the subordinate court’s ruling delivered on 30th July, 2021 dismissing his interlocutory application, he has now preferred this appeal. He deposes that he has an arguable appeal with a high chance of success and will suffer injustice if this court does not issue the orders sought as the Respondents will proceed to finalize the sale of the suit property, thereby occasioning him irreparable loss, and thereby rendering his appeal nugatory. The Applicant expresses willingness to deposit the sum of Kshs.17,650,000/- as security.

5. The motion was opposed through the replying affidavit sworn on behalf of the 1st, 2nd, and 3rd Respondents by Christine Wahome, who describes herself as the Legal Manager of the 3rd Respondent. She views the motion as misconceived, incompetent, devoid of merit, bad in law and an abuse of the process of the court and asserts that the Applicant has not demonstrated how the intended appeal will be rendered nugatory, showing that the 3rd Respondent lacks the financial means to reimburse him upon his appeal succeeding. She avers that the Applicant has not placed any material before the court to warrant the granting injunction orders or established that he would suffer substantial loss if the orders sought are denied. That, on the contrary, granting the said orders would cause greater hardship upon the 2nd and 3rd Respondents through continued loss arising from the incomplete transaction, a state that has subsisted for over two years; that it would be inequitable and prejudicial to injunct the Respondents from completing the transaction when the 2nd Respondent successfully bid for and purchased the suit property at the auction.

6. The 4th Respondent filed a what is entituled as a “Notice of Cross Appeal” dated 6th September 2021. Pursuant to the provisions of Order 42 Rule 1 of the Civil Procedure Rules, an appeal or cross-appeal to this Court is by way of a memorandum of appeal. The 4th Respondent also opposed the motion through his replying affidavit dated 21st September, 2021. He deposed that he is the legal and beneficial owner of the suit property, which property was at all material relevant times charged to the 3rd Respondent but was irregularly sold at the disputed auction. He too reiterates the Applicant’s particulars of the said irregularity and sums up his own grievances regarding the ruling of the lower Court. Thus, he asserts that it is only fair and just that the court grants the orders sought, else the 3rd Respondent would proceed to complete the sale of the suit property, thereby rendering the appeal nugatory.

7. The motion was canvassed through written submissions followed by oral highlighting. The Applicant anchored his submissions on the provisions of Order 42 Rule 6(6) of the Civil Procedure Rules and the decision in Patricia Njeri & 3 Others v National Museum of Kenya [2004] eKLR as to the powers of this Court, in exercise of its appellate jurisdiction, to grant a temporary injunction pending appeal. On the arguability of his appeal, the Applicant relied on the decision in Ecobank Kenya Limited v First Choice Mega Stores Limited, Kisii ELC Misc. Civil App. No. 20 of 2017, section 100 (1), (2) & (3) of the Land Act and his grounds of appeal to submit that his appeal raises serious issues deserving the Court’s consideration.

8. Contending that the 3rd Respondent’s interest in the matter is the recovery of the loan amount, he reiterated his readiness to make good his bid at the auction, thus no greater hardship would be visited on the 3rd Respondent. He asserted that the sale of the suit property to the 3rd Respondent would cause him irreparable loss and render his appeal nugatory. It was his position that he had met the test set out in Giella v Cassman Brown & Co. Ltd (1973) EA 358 by establishing a prima facie case; likelihood of suffering irreparable damage and demonstrating that the balance of convenience tilts in favour of the Applicant.

9. Counsel for the 1st, 2nd and 3rd Respondents relied on the principles articulated in Madhupaper International Limited v Kerr [1985] eKLR and Patricia Njeri & 3 Others v National Museum of Kenya [2004] eKLRregarding the grant of injunction pending appeal. To the effect that Applicant must first of all show that his appeal or intended appeal is arguable, and second that if the injunctive orders are denied, the appeal will be rendered nugatory. On the first consideration, counsel while dissecting the grounds raised in the Applicant’s memorandum of appeal, submitted that no arguable points have been raised by the Applicant to warrant this court’s exercise its discretion to grant an injunction pending appeal.

10. Counsel submitted that the Applicant’s attraction to the suit property on account of its alleged uniqueness and or location is not acceptable as demonstration that the completion of the sale of the house to the 3rd Respondent would render his appeal nugatory. Counsel cited several decisions, including Kenya Agricultural Research Institute (KARI) v Farah Ali, Chairman Isahakia Self Help Group & Another [2011] eKLR,and Bilha Mideva v Everlyne Kanyere [2016] eKLR. She asserted that the 1st to 3rd Respondents continue to endure hardship as the completion of sale of the suit property has been pending over two arising from injunctive orders earlier issued in the subordinate court. Counsel reiterated that the Applicant has also not demonstrated that 3rd Respondent does not have the financial means to compensate the Applicant if the appeal ultimately succeeds. In conclusion, citing Paul Gitonga Wanjau v Gathuthi Tea Factory Company Ltd & 2 Others [2016] eKLR it was submitted that Applicant has failed to satisfy the principles laid down in Giella v Cassman Brown (supra) and the court was urged to dismiss the motion.

11. On his part, the 4th Respondent equally cited PatriciaNjeri & 3 Others v National Museum of Kenya [2004] eKLR concerning court’s powers to grant a temporary injunction pending appeal. As to whether a prima facie case had been made out, he reiterated his affidavit material and answered in the affirmative, and relied on EcobankKenya Limited(supra), Rule 15 of the Auctioneers Rules, 1997 and Section 91 (1) & 100 of the Land Act. Further, counsel cited Suleiman v Amboseli Resort Ltd [2004] KLR 589and Albert Mario Cordeiro & Another v Vishram Shamji, Nairobi HCCC No. 329 of 2014 and asserted that no greater hardship will be inflicted on the 3rd Respondent in view of the Applicant’s offer to deposit the entire purchase price as security if ordered by the court and that in the event, the 1st, 2nd, and 3rd Respondents will not be prejudiced. Finally, he submitted that the motion herein has satisfied conditions in Giella v Cassman Brown and warrants the court’s intervention by way of a temporary injunctive order.

12. The Court has considered the rival affidavit material and submissions made in respect of the motion. The motion is premised on the provisions of Order 42 Rule 6 (6) of the Civil Procedure Rules. The relevant part of Order Rule 6 of the Civil Procedure Rules provides that:

“(1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside………….

(6) Notwithstanding anything contained in subrule (1) of this rule the High Court shall have power in the exercise of its appellate jurisdiction to grant a temporary injunction on such terms as it thinks just provided the procedure for instituting an appeal from a subordinate court or tribunal has been complied with.”

13. Visram J (as he then was), distilled the applicable principles guiding the grant of injunction pending appeal in Patricia Njeri & 3 Others -Vs- National Museum of Kenya [2004] eKLR. The learned Judge stated:

“The Appellants did, however, pray (in the alternative) for an order of injunction pending appeal. There was no dispute that the court can, in a proper case grant an injunction pending appeal. What are the principles that guide the court in dealing with such an application"

In the Venture Capital case (Venture Capital and Credit Ltd –Vs- Consolidated Bank of Kenya Ltd Civil Application No. Nairobi 349 of 2003 (UR)) the Court of Appeal said that an order for injunction pending appeal is a discretionary matter. The discretion must, however, be “exercised judicially and not in a whimsical or arbitrary fashion.” This discretion is guided by certain principles some of which are as follows:

a) The discretion will be exercised against an Applicant whose appeal is frivolous (See Madhupaper International Limited –Vs- Kerr [1985] KLR 840 which cited Venture Capital). The Applicant must state that a reasonable argument can be put forward in support of his appeal (J. K. Industries –Vs-KCB 1982 – 88) KLR 1088 (also cited in Venture Capital.

b) The discretion should be refused where it would inflict greater hardship that it would avoid (See Madhupaper supra).

c) The Applicant must show that to refuse the injunction would render his appeal nugatory (See Butt –Vs- Rent Restriction Tribunal [1982] KLR 417 (cited also in Venture Capital).

d) The Court should also be guided by the principles in Giella –Vs- Cassman Brown & Company Ltd [1973] EA 358 as set out in the case of Shitukha Mwamodo & Others (1986) KLR 445 (also cited in Venture Capital).” See also Mukoma –Vs Abuoga [1988] KLR 645. ”

14. I propose to start with the well settled principles in Giella -Vs- Cassman Brown & Co. Limited [1973] EA 358 as reiterated in Nguruman Limited vs Jan Bonde Nielsen & 2 Others (2014) eKLR ,the latter which is particularly illuminating as to the principles applicable to applications for interlocutory injunctions. The Court described the role of the judge in such application to be merely to consider whether the principles for the grant of the interlocutory injunction were met. The Court further observed that:

“...Since the fundamentals about the implications of the interlocutory orders of injunctions are settled, at least over four decades since Giella’s case, they could neither be questioned nor be elaborated in detailed research. Since those principles are already ...... by authoritative pronouncements in the precedents, they may be conveniently noted in brief as follows:

In an interlocutory injunction application, the Appellants 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.

c) allay any doubts as to (b) by showing that the balance of convenience is in his favor.”

15. The Court further stated that the three conditions apply separately as distinct and logical hurdles to be surmounted sequentially by an applicant. Such that, it is not enough that the Appellants establish a prima facie case, they must further successfully establish irreparable injury, that is, injury for which damages recoverable at law could not be an adequate remedy. And where there is doubt as to the adequacy of damages, the court will consider the balance of convenience. Conversely, where no prima facie case is established, the court need not consider irreparable injury or balance of convenience. The Court of Appeal emphasized that the standard of proof is to prima facie standard.

16. Regarding the definition of a “prima facie case” the Court stated:

“Recently, this court in Mrao Ltd. V. First American Bank of Kenya Ltd & 2 others [2003] KLR 125 fashioned a definition for “prima facie case” in civil cases in the following words:

“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. 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 appellant’s case upon trial. That is clearly a standard, which is higher than an arguable case.

We adopt that definition save to add the following conditions by way of explaining it. The party on whom the burden of proving a prima facie case lies must show a clear and unmistakable right to be protected which is directly threatened by an act sought to be restrained, the invasion of the right has to be material and substantive and there must be an urgent necessity to prevent the irreparable damage that may result from the invasion. We reiterate that in considering whether or not a prima facie case has been established, the court does not hold a mini trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right which has been or is threatened with violation. Positions of the parties are not to be proved in such a manner as to give a final decision in discharging a prima facie case. The Appellants need not establish title it is enough if he can show that he has a fair and bona fide question to raise as to the existence of the right which he alleges. The standard of proof of that prima facie case is on a balance or, as otherwise put, on a preponderance of probabilities. This means no more than that the Court takes the view that on the face of it the appellant’s case is more likely than not to ultimately succeed."

17. Concerning the condition for the successful applicant to demonstrate a prima facie case which condition also ties in with the requirement on the such applicant to demonstrate that he has an arguable appeal, it is not denied that the Applicant herein was the highest bidder at the disputed auction conducted on 30th September 2019, and that he did not comply with the terms of the auction in the advertisement notice to pay 25% of the bid price “by cash or banker’s cheque at the fall of the hammer”. He blames the 1st Respondent for failing to give him documentation to enable him effect his decision to transfer the money by the mode of a Real Time Gross Settlement (RTGS), to the account whose details he was supplied with. There is no evidence from the Applicant’s bank which allegedly declined to transfer funds for this reason, to support the claims. Nor is there evidence, despite the Applicant’s repeated assertions, that at the material time was possessed of the funds required for the requisite 25% deposit. Equally, upon a reading of Rules 18 (3) of the Auctioneers Rules, the memorandum of sale, the document he claims to have been denied by the 1st Respondent, could only issue”on receipt of the proceeds of the sale” by the auctioneer.

18. The Applicant’s other key complaint relates to the application of section 100 of the Land Act. Section 100 of the Land Act provides that:

“(1) Otherthan in the circumstances provided to in subsection (3), a chargee exercising the power of sale may, with leave of the Court, purchase the property.

(2) A court shall not grant leave unless the chargee satisfies the court that a sale of the charged land to the chargee is the most advantageous way of selling the land so as to comply with the duty imposed on the chargee by Section 97(1).

(3) If the charged land is to be sold by public auction, the chargee may bid for and purchase the charged land at that public auction so long as the price bid for the charged land by the chargee is the greater of—

(a) the highest price bid for that land at the auction; and

(b) an amount equal to or higher than the reserve price, if any, put upon the land before the auction, whichever amount is the greater.

(4) …. .”

19. I agree with the submissions of the 1st to 3rd Respondents that where a chargee exercises the option in sub-section 3 above, he does not require leave of the Court to bid at the public auction, and further note that there is no requirement, as asserted by the Applicant for the chargee to declare the fact at the public auction. There is uncontroverted evidence that following the Applicant’s failure to pay the requisite deposit, the second highest bidder, the 2nd Respondent, in compliance with subsection 3(a) above, raised his bid to match the Applicant’s bid which was the highest at the auction (see annexure MA 4 to the Applicant’s supporting affidavit). In conclusion, it is apparent that the Applicant’s chief complaints relate to the exercise of the chargee’s power of sale which had apparently properly arisen. The said power is not to be interfered with willy-nilly.

20. In Mrao’s case (supra), the Court of Appeal had this to say:

“In recent times a tendency has developed in the Superior Court of treating applications by a mortgagor for a temporary injunction to restrain a mortgagee from exercising his statutory power of sale just like any application for injunction in an ordinary suit. The circumstances in which a mortgagee may be restrained from exercising his statutory power of sale are set out in Halsbury’s Laws of England, Vol. 32 (4th edition) paragraph 725 as follows:-

“725 When mortgagee may be restrained from exercising power of sale. The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has began a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however, if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.”

21. Section 99 of the Land Act in protecting the purchaser who buys charged property from the chargee provides inter alia that:

“(3) A person to whom this section applies is protected even if at any time before the completion of the sale, the person has actual notice that there has not been a default by the chargor, or that a notice has been duly served or that the sale is in some way, unnecessary, improper or irregular, except in the case of fraud, misrepresentation or other dishonest conduct on the part of the chargee, of which that person has actual or constructive notice.

(4) A person prejudiced by an unauthorised, improper or irregular exercise of the power of sale shall have a remedy in damages against the person exercising that power.”

22. Without further delving into the merits of the Applicant’s appeal, it appears that the Applicant has not demonstrated a prima facie case as to the existence “of a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter”(see Nguruman’s case). The complaints raised by the 4th Respondent in his affidavit primarily mirror those of the Applicant, and for reasons given earlier, the 4th Respondent does not yet have a competent appeal before this Court whose grounds could be considered. He has not complied with the procedure for instituting an appeal before this Court as envisaged in Order 42 Rule 6(6) of the Civil Procedure Rules.

23. Concerning what comprises an arguable appeal, the Court of Appeal stated in Stanley Kang’ethe Kinyanjui V Tony Keter & 5 Others [2013] eKLRthat:

“The first issue for our consideration is whether the intended appeal is arguable. This court has often stated that an arguable ground of appeal is not one which must succeed but it should be one which is not frivolous, a single arguable ground of appeal would suffice to meet the threshold that an intended appeal is arguable”.

See also Denis Mogambi Mong’are V. Attorney General & 3 Others Civil Appeal No. Nairobi 265 of 2011 (UR 175/2011)where the same Court stated that:

“An arguable appeal is not one that must necessarily succeed, it is simply one that is deserving of the court’s consideration.”

24. Applying the test above to the facts of this case, the Court is also not persuaded that the Applicant has demonstrated an arguable appeal. Equally,the Applicant has not demonstrated that he will suffer irreparable damage or how the appeal would be rendered nugatory if a temporary injunction is denied. The fact that the Applicant was attracted by the unique location and other features of the subject suit property and may never find another like it, appears merely sentimental, and does not suffice as evidence of irreparable damage.

25. The value of the subject house is evidently quantifiable and damages for the loss of the opportunity to purchase it would likely be adequate compensation for the Applicant who was merely a bidder with no real vested interest therein. He had admittedly not paid any monies towards the purchase price and has not shown that the 1st to 3rd Respondents would be unable to compensate him by way of damages. InGeorge Gathura Karanja v George Gathuru Thuo & 2 Others [2019] eKLR,the Court of Appeal stated that:

“[A]n appeal/intended appeal is said to be rendered nugatory where the resulting effect is likely to be irreversible. See the case of Stanley Kang’ethe Kinyanjui versus Tony Ketter & 5 Others, Civil Appeal No. 31 of 2012 where this Court stated inter alia thus:

“Whether or not an appeal will be rendered nugatory depends on whether or not what is sought to be stayed if allowed to happen is irreversible, or if it is not reversible whether damages will reasonably compensate the aggrieved party.”

26. Ultimately, the Court finds the exhortation by the Court of Appeal in Madhupaper International Limited v Kerr [1985] KLR 840to aptly apply to the facts of this case:

“The Court of Appeal’s jurisdiction to grant an injunction pending an appeal is discretionary and is to be exercised judicially and not arbitrarily. It would be wrong to grant the injunction where the appeal is frivolous or where to grant it would inflict greater hardship than it would avoid. In this case, to grant an injunction pending appeal would be wrong as it would probably inflict greater hardship than it would avoid.”

27. The chargee exercised its power of sale in 2019 pursuant to default by the 4th Respondent, but two years later, the sale has yet to be completed due to this litigation. The Applicant’s offer to deposit the entire purchase price is not supported by any evidence of his means, and besides, in the circumstances of this case, any order that would effectively maintain the status quo would inevitably inflict greater hardship than it would avoid.

28. In Charter House Investments Ltd. V Simon K. Sang & 3 Others (2010) eKLR, the Court of Appeal stated: -

“Injunction is an equitable and discretionary remedy, given when the subject matter of the case before the Court requires protection and maintenance of the status quo. The award of a temporary injunction by Courts of equity has never been regarded as a matter of right even where irreparable injury is likely to result to the applicant. It is a matter of sound judicial discretion, in the exercise of which the Court balances the convenience of the parties and possible injuries to them and to third parties.”

29. Reviewing all the circumstances, the Court does not feel assured that this is a proper case for granting a temporary injunction pending appeal, and the motion dated 23rd August 2021 is hereby dismissed with costs.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 17th DAY OF MARCH 2022

C.MEOLI

JUDGE

In the presence of:

For the Applicant: Absent

For the 1st,2nd & 3rd Respondents: Mr Kibara

For the 4th Respondent: Mr Walukhwe

C/A: Carol