[2022] KEHC 17233 (KLR)

Mohammed v Colt Petroleum Limited & 2 others (Civil Case E001 of 2022) [2022] KEHC 17233 (KLR) (6 December 2022) (Ruling)

Neutral citation: [2022] KEHC 17233 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Case E001 of 2022

SN Mutuku, J

December 6, 2022

Between

Hibo Mahamud Mohammed

Plaintiff

and

Colt Petroleum Limited

1st Defendant

Gulf African Bank Limited

2nd Defendant

Samuel M. Gathogo t/a Valley Auctioneers

3rd Defendant

Ruling

1. By a Notice of Motion (the Application) dated February 23, 2022, the Plaintiff herein comes to court seeking injunctive orders against the Defendants to restrain them whether by themselves, their employees, servants, workmen, and/or agents or otherwise assigns and/or any person whatsoever acting on their behalf and/or under their mandate and/or instructions from alienating, advertising for sale, offering for sale, selling, taking possession of, leasing, transferring, charging or otherwise in any manner whatsoever interfering with the Plaintiff’s parcel of land reference number Kajiado/Dalalekutuk/12635 (the suit property) Kajiado County pending the hearing and determination of this application and pending the hearing and determination of this suit. The Applicant also seeks costs of this application.

Plaintiff’s Case 2. To support her application, the Plaintiff has adduced found on the face of it and in the supporting affidavit sworn by the Plaintiff on February 23, 2022. She has stated that the 3rd Defendant has advertised for sale- and intends to sell the suit property by public auction to recover a purported outstanding amount which has not been disclosed to her; that the first legal charge was registered without her knowledge; that the 2nd Defendant purports to exercise its statutory power pursuant to an illegal charge whose particulars were never disclosed to the Plaintiff; that the charge document is null and void and of no consequence in law because the 2nd Defendant failed to follow the law in securing the said charge over the suit property and that the Plaintiff has never received any notification of sale and/or the redemption notice.

3. She has deposed in her affidavit that she is the owner of the suit property; that the 1st Defendant secured a loan facility with the 2nd Defendant using the suit property without following due process of the law. It is her case that she was approached by the 1st Defendant in May 2017 to provide collateral and act as a guarantor for the 1st Defendant to secure a revolving bank guarantee from the 2nd Defendant and she agreed to offer the suit property as security for Kshs 8,000,000 (eight million); that this facility was to be secured by registering a first charge in favour of the 2nd Defendant against the suit property.

4. She has deposed further that she signed documents in respect of the said charge without understanding how the legal charge was processed and before executing documents before a lawyer and therefore the said charge was executed illegally and is untenable, null and void ab initio. She claims that she was never furnished with the statements of account for the loan and has never had any contact with the bank or the director of the 1st Defendant. She stated that she learned about the notification for sale from a friend and immediately reached out to the director of the 1st Defendant to seek answers and that this is when she learned that the 1st Defendant had been granted a loan facility but defaulted in servicing the same.

5. The Plaintiff holds the 1st and 2nd Defendants liable for registering a legal charge over her property without following due process; registering a legal charge over her property without support of the Consent from the Land Control Board; failure to arrange for the Plaintiff’s appearance before an advocate to execute the charge; failure to disclose the terms of the legal charge to the Plaintiff; failure or refusal by the 1st and 2nd Defendants to supply the Plaintiff with the Offer Letter and Charge document, if any; failure to inform her of the default by the 1st Defendant; failure to subject the property to valuation and failure to issue her with statutory notice.

2ndand 3rdRespondents’ Case 6. The Application is opposed. The 2nd and 3rd Respondent filed Replying Affidavit on May 25, 2022 and sworn by Lawi Sato, a legal officer with the 2nd Defendat, opposing the application. It is deposed that the Plaintiff’s suit has abated for failure to cause to be issued and served Summons to enter appearance.

7. It is the case for the 2nd and 3rd Defendants that the 1st Defendant applied for a loan facility from the 2nd Defendant and this facility was advanced on the terms and conditions contained in the Letter of Offer dated April 13, 2016; that the loan was restructured and in some instances additional facilities were granted and that the Plaintiff signed the Letters of Offer either restructuring the loan facilities or granting fresh facilities and that the Plaintiff issued a personal guarantees dated April 12, 2016, June 28, 2017 and June 3, 2020.

8. It is deposed that in addition to the personal guarantees, the Plaintiff deliberately and with informed consent, offered the suit property as security and consequently permitted the registration of a Further Charge dated August 14, 2017 for Kshs 8 million and that both the Charge and Further Charge were executed before an advocate who explained the legal consequences of the Charge and Further Charge to the Plaintiff. It is deposed that the Plaintiff admits signing the Charge and Further Charge only claiming that she did not sign it before an advocate.

9. It is deposed that the Land Control Board Consents were obtained on August 17, 2016 and August 17, 2017; that statutory notices were served: three (3) month statutory notice dated April 19, 2021 was sent by registered post on April 21, 2021; the forty (40) day notice dated August 3, 2021 was sent by registered post on August 4, 2021 and a forty five (45) day redemption notice dated November 5, 2021 was sent by registered post on November 8, 2021, all through the Plaintiff’s postal address provided in the Charge and Further Charge as well as through Kajiado P O Box 15-01100 Kajiado which address the Plaintiff uses in other documents including these pleadings.

10. It is deposed that the 2nd Defendant caused to be carried out a force sale valuation ad a report was prepared dated September 29, 2021; that the Plaintiff signed all the relevant documents and ought to have retained a copy and that even if she did not retain a copy she was at liberty to ask for copies.

11. It is the 2nd and 3rd Defendants’ case that the Plaintiff does not have a valid complaint against the Defendants and she is therefore not entitled to the injunction sought; that she cannot demonstrate any irreparable injury that she stands to suffer if the injunction is refused and that even if the property were to be sold, the Plaintiff can be fully compensated by a monetary award given that the 2nd Defendant is a commercial bank capable of paying the award. It is the 2nd and 3rd Defendants’ case that the loan has outstripped the security by some millions because the suit property has a forced sale value of Kshs 15,750,000 and the highest bid at the auction slated for February 24, 2022, was Kshs 7 million and therefore the balance of convenience tilts in allowing the sale of the security at the earliest opportunity.

12. The 1st Defendant did not file any documents even though it had been served with the application.

13. The Plaintiff filed a Supplementary Affidavit in response to the Replying Affidavit in which she deposed that the 2nd Defendant was properly served by the Plaintiff hence the reason that they entered appearance; that it is true that she signed and consented to be a guarantor however the same was on the premise that the 2nd Defendant’s agent would call her to their offices and explain the process and magnitude of what was happening which was not done.

14. She denied appearing before an advocate to sign the documents and that she ought to have been informed before her consent was sought. She claimed to have been duped into signing the documents. She reiterated that statement of accounts were not availed to her and that she did not receive any notice and that the allegations that the notices were sent through her postal address is false and unsubstantiated. She stated that she has a valid and arguable case and that the value of her property is higher than the amount owed and she stands to suffer irreparable loss should the property be sold.

Submissions 15. The application is being canvassed by way of written submissions. The plaintiff filed her submissions dated September 23, 2022 on September 28, 2022. She has raised two issues for determination, namely:i.Whether the Plaintiff has established a prima facie case as set out in Giella v Cassman Brown caseii.Whether the Plaintiff is entitled to the prayers sought in their applications.

16. The Plaintiff cited Order 40 (1) (a) and (b) of the Civil Procedure Rulesto emphasize on the law governing granting of injunctions and the principles in Giella v Cassman Brown & Company Limited (1973) E A 358. She submitted that she has established a prima facie case as defined in Mrao Ltd v First American Bank of Kenua & 2 others(2003) KLR 125. She has submitted that the 2nd Defendant should be held liable for breach of the law through fraudulently making the Plaintiff sign guarantee documents without explaining to her the severity of her actions nor seeking to find out if she understood what she was doing.

17. She has submitted that she will suffer irreparable loss should her property be sold and that the balance of convenience tilts in her favour as her property is due to be sold. She urged that the prayers she is seeking be granted in her favour.

18. The 2nd and 3rd Defendants files their submissions dated September 27, 2022 on September 30, 2022. They have raised the following issues:i.Whether the suit against the 3rd Respondent should be struck out.ii.Whether the Plaintiff has a prima facie case with a probability of success.iii.Whether the Plaintiff will suffer irreparable loss should the injunction not be granted.iv.Whether the balance of convenience is in favour of the granting the injunction.

19. It has been submitted that the suit against the 3rd Defendant should be dismissed because he was acting as an agent of the 2nd Defendant, the principal who has been disclosed; that there is no allegation of any wrong doing against the 3rd Defendant and it is not clear why he has been included in these proceedings.

20. It is submitted that the Plaintiff has advanced five grounds which she considers demonstrate a prima facie case, being that she did not know what she was signing; lack of Land Control Board Consent; refusal to supply documents, forced sale valuation and service of statutory notices. It is submitted that the Plaintiff signed documents in 2017 and 2019 and in both occasions, she did not question anything at all until five years later. Further that, on both occasions there is a certificate in terms of section 56 of the Land Registration Act , 2012, confirming that an advocate explained to her the effect of the documents she was signing.

21. It is submitted that the Plaintiff has two letters of Consent from the Land Control Board, dated August 17, 2016 and August 17, 2017 and that the Plaintiff has a heavy burden to explain that those consents are irregular. It is submitted that the Plaintiff did not demonstrate that she requested for the supply of the documents and that this was refused.

22. On the forced sale valuation, it is submitted that there is a valuation report dated September 29, 2021 and therefore the 2nd Defendant has complied with section 97 of the Land Act and that the requisite statutory notices have been served addressed to the address contained in the Charge and Further Charge as well as P O Box 15-01100 Kajiado.

23. It is submitted that the Plaintiff did intent to create a charge and did indeed create one and therefore she cannot demonstrate irreparable injury since once she charged the property, it became a commercial commodity, besides, damages are an adequate remedy. It is submitted that the balance of convenience tilts in favour of the 2nd Defendant because the loan has already outstripped the security.

Determination 24. I have considered this application. Order 40 Rule 1 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; or(b)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.

25. The principles governing grant of injunctions are well spelt out in various authorities. A party seeking an injunction must demonstrate a prima facie case with a probability of success; irreparable injury which would not be adequately compensated by an award of dames and balance of convenience tilts in their favour. Has the Plaintiff met this threshold?

26. It is not disputed that the Plaintiff guaranteed a loan facility in favour of the 1st Defendant. She offered the suit property as security. The 1st Defendant defaulted in servicing the facility and necessitating the 2nd Defendant to come calling to recover the money. The Plaintiff shifts all the blame to the 2nd and 3rd Defendants that she did not know the implications of the documents she was signing and that no one explained to her. This claim by the Plaintiff is incredible and I not persuaded by it.

27. It is clear to me that the documents, Charges, she was signing are clear and she has admitted signing them willingly without any coercion or intimidation. The only issue she has is that she signed the documents with the believe that someone will explain to her the implications. She knew she was offering her property as guarantee for the loan facility. She owed a duty to herself to ensure that she does not sign any document in respect to her property without understanding the implications of the that document. To my mind, she knew exactly what she was signing.

28. As submitted by the 2nd and 3rd Defendants, the Plaintiff cannot raise the defence of non est factum (she did not know what she was signing). As stated in Koileken Ole Kipolonka Orumoi v Mellech Engineering & Construction Limited & 2 others [2015] eKLR, that “….for it to afford the defence of non est factum to the Plaintiff to deny legal instruments which he executed, he must discharge such a huge burden, and show on evidence that he tool all due care and or reasonable precautions to establish, understand and appreciate the character, nature and effect of those legal instruments” I too believe that the Plaintiff ought to have done the same.

29. The court went further to state, in Koileken case above, that;“He knew perfectly well his property was to be charged as security for loan. Other than bare allegations, the Plaintiff did not adduce any cogent evidence of apt circumstances which would entitle him to invoke the defence of non est factum.”

30. Secondly, anyone offering their property as security is aware of the consequences should there be default in servicing the facility concerned. That property becomes a commercial commodity, subject for sale to recover the amount guaranteed. In such circumstances, it is not enough to state that the party would suffer irreparable injury.

31. In the matter before the court, the 3rd Respondent is a financial institution and, in a position, to compensate the Plaintiff by an award of damages. The Plaintiff claims there was breach of the law by the 2nd and 3rd Defendants but I find no evidence demonstrating such breach.

32. Further, I find no evidence that the balance of convenience tilts in favour of the Plaintiff. On her own admission she guaranteed the 1st Defendant and signed the Charges willingly. She offered her property as security and upon default she was served with the requisite statutory notices as demonstrated in the Replying Affidavit of the 2nd and 3rd Respondent. The address used is the addressed contained in the Charges as well as P O Box 15-01100 Kajiado which address can be found in some of the documents she has filed in court.

33. The question this court must answer is whether the Plaintiff has presented evidence in court which a tribunal properly directing itself will conclude there exists a right which has apparently been infringed by the 2nd and 3rd Defendants as to call for an explanation or rebuttal from them? Going by the evidence presented in court, my answer to that question is in the negative.

34. Consequently, the Plaintiff has failed to demonstrate a prima facie case. She has failed to demonstrate irreparable injury which would not adequately be compensated by an award of damages and she has failed to demonstrate that the balance of convenience tilts in her favour. Her allegations are not supported by evidence. As far as this court can determine, the Plaintiff has failed to persuade this court that she deserves the injunctive orders she is seeking.

35. On the contrary, the 2nd and 3rd Defendant have demonstrated that they acted within the law. While I decline to strike out the case against the 3rd Defendant because this issue was raised at the submissions stage, I agree with the 2nd and 3rd Defendants in their submissions that the Notice of Motion dated February 23, 2022 lacks merit. It is hereby dismissed with costs to the 2nd and 3rd Respondent.

36. It is so ordered.

Dated, signed and delivered this 6thDecember, 2022. S N MUTUKUJUDGE3| Ruling in Kajiado Civil Case No E001 of 2022