https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/13121

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MERU** **CIVIL SUIT NO. E022 OF 2025** **JANE NKATHA MUTUERANDU………….............................……PLAINTIFF/APPLICANT** **VERSUS** **YETU SACCO LIMITED………..............................…...…1ST DEFENDANT/RESPONDENT** **VIEWLINE AUCTIONEERS……...............................……2ND DEFENDANT/RESPONDENT** **RULING** 1. Coming up for determination is the plaintiff/applicant’s application dated 29th September 2025, in which she seeks the following orders; 2. Spent. 3. **THAT** pending the inter-partes hearing of this Application, this Honourable Court be pleased to issue an order of temporary injunction restraining the Respondents or their agents, employees, assigns, representatives and servants from conducting the public auction scheduled for Wednesday 1st October 2025 with respect to the land Title No. Nkuene/L-Mikumbune/2510 measuring approximately 0.865Ha (the suit property). 4. **THAT** pending the inter-partes hearing of this Application, this Honourable Court be pleased to issue an order of temporary injunction restraining the Respondents or their agents, employees, assigns, representatives and servants from selling, transferring, disposing of or in any way dealing adversely with the land Title No. Nkuene/LMikumbune/2510 measuring approximately 0.865Ha (the suit property). 5. **THAT** pending the hearing and determination of the main suit filed herewith, this Honourable Court be pleased to issue an order of temporary injunction restraining the Respondents or their agents, employees, assigns, representatives and servants from advertising for sale, selling, transferring, disposing of or in any way dealing adversely with the land Title No. Nkuene/L-Mikumbune/2510 measuring approximately 0.865Ha (the suit property). 6. **THAT** costs of this Application be provided for. 7. The application is premised upon the grounds set out on its face and is supported by the applicant’s affidavit sworn on even date. 8. The applicant’s case is that she applied and qualified for an overdraft facility with the 1st Respondent and her guarantor offered the parcel of land known as Title No. Nkuene/L-Mikumbune/2510 (the suit property) as security. That there was a delay in repaying the loan, which was occasioned by a delay from the national government in clearing money owed to her through her business entity known as Mizpah Contractor Agency, as the same was in the process of being verified by the Pending Bills Verification Board. 9. The applicant further states that 29th September 2025 her attention was drawn to a newspaper advertisement by the 2nd Respondent advertising a public auction with respect to the suit property. That she is not aware of and has not received any of the statutory notices that ought to be sent to her as required under Sections 90 and 96 of the Land Act. That the 2nd Respondent had scheduled the purported auction for Wednesday 1st October 2025. 10. The applicant avers that the suit property is her matrimonial home and includes further pieces of land purchased after the overdraft facility agreement was entered into. That she stands to suffer irreparable loss if the illegal sale of the suit property is allowed to proceed as the process mandated by the Land Act has not been followed. 11. The applicant states further that there seems to be a scheme by the Defendants/Respondents to sell the charged property without her knowledge. 12. The Applicant acknowledged that she owes the 1st Respondent a total outstanding amount of about Kshs. 8,000,000/- but avers that she has not been given an opportunity to redeem herself before the sale of her matrimonial home. 13. The application was opposed by the 1st respondent vide a replying affidavit sworn by Diana Kawira, its Credit Recovery Manager. 14. She depones that the Applicant, via a loan application form, approached the 1st Defendant/Respondent for a loan facility of Kshs. 25,000,000/=. That the 1st Defendant/ Respondent considered and approved the loan facility vide a letter of offer dated 21/02/2024 whereby the Applicant was required to make a monthly payment of Kshs. 580,247/=. That the applicant further committed to make a payment of Kshs. 6,000,000/= (Six Million shillings only) on or before 30/06/2024, being proceeds of the construction contracts availed to support the application of the loan. That a further charge was created over the property known as NKUENE/L- MIKUMBUNE/2510 (subject property) registered in the name of Jameson Machuguma Mutwerandu and the loan facility of Kshs. 25,000,000/= was advanced on 21/02/2024. 15. It is further deponed that since the disbursement of the loan, the Applicant has persistently refused, and/or neglected to make loan repayments in accordance with the agreed-upon terms stated in the offer letter and fell into arrears, upon which interest began to accrue. That the 1st Defendant/Respondent in compliance with the law issued a 3 months’ Statutory Notice dated 16/10/2024 to the plaintiff/applicant and the chargor. That the said Notice informed the Plaintiff/ Applicant and the chargor that the loan had been defaulted on for a period of over 30 days and that the total arrears being in default then was Kshs. 916,395.66 as at 12/10/2024 and that the total outstanding debt was Kshs. 24,049,819.37. 16. It is further deponed that following non-compliance with the said 3-months Statutory Notice to the Plaintiff/ Applicant and the chargor, the 1st Respondent issued a 40 days’ Notice of Intention to sell dated 12/02/2025 calling for the redemption of entire loan amount and accrued interest that stood at Kshs. 23,900,512.33 as at 12/02/2025. 17. It is further deponed that the Plaintiff/ Applicant and the chargor having ignored the foretasted notices and having failed, refused and or neglected to regularize the loan account or present any acceptable proposals, the 1st defendant/respondent proceeded to issue instructions to the 2nd respondent to proceed and dispose the secured property by way of public auction. That upon instructions by the 1st Defendant/ Respondent, the 2nd respondent proceeded to serve a 45 days Redemption Notice on 30/06/2025 calling for the redemption of the properties by paying a sum of Kshs. 24,094,378.44. That the Plaintiff/ Applicant and the chargor were also served with the Notification of sale that the charged properties were to be disposed by way of Public Auction on 09/09/2025, outside Nkubu Post Office, Nkubu Town. 18. The 1st respondent further avers that in compliance with the law it instructed Fidelity Valuers Limited, a licensed valuer, to conduct the requisite valuation whereby the property was valued at a market value of Kshs. 34,000,000/= and a forced value of Kshs. 25,500,000/=. 19. In a nutshell, the 1st respondent avers that all due process was observed as were all requirements of the law. That therefore, all the allegations of illegality or irregularity of the process are baseless and have no factual or legal backing. 20. In her supplementary affidavit, the applicant avers that the overdraft facility was advanced on the express understanding that it would be serviced from the proceeds of construction activities of her business entity, Mizpah Contractor Agency. That the delay in repayment is not due to willful default but due to the National Government’s delay in settling verified pending bills owed to her entity. That she has on multiple occasions, both in writing and orally, requested the 1st defendant/ respondent to restructure the loan to align with the cash flow from government receipts, a foreseeable circumstance within the banking relationship, especially considering that this material fact was known to it. That the 1st Defendant has, however, refused to act in good faith and thereby destroyed her legitimate expectation that it would act reasonably. That she genuinely believes that a chargee’s refusal to restructure a loan where default is temporary and for reasons beyond the chargor’s control may amount to an unreasonable exercise of the power of sale. 21. In reference to the Valuation Report dated 12 April 2025, the applicant avers that under Rule 11(b) of the Auctioneers Rules 1997 and standard banking practice, a valuation for purposes of forced sale must be current, meaning it should be less than twelve months old as at the date of an intended auction. 22. It is the applicant’s contention that the Defendants/Respondents are keen on proceeding on an expired and legally worthless valuation, an act that is contrary to the law and with immense prejudice to her, considering that even as of 12th April 2025, the valuation was grossly undervalued compared to other properties located in a similar prime area in Meru County. 23. Parties filed submissions, which I will not rehash. I will refer to them where necessary. 24. Being an application for interlocutory injunction, the applicant has the onus to present a case that meets the threshold set out in the well-known case of **Giella vs Cassman Brown Ltd(1973), EA 358** where it held as follows ; ***“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not be adequately compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience."*** 1. Therefore, the applicant is bound to exhibit that; 2. *A prima facie case* with a probability of success 3. *That damages would not be adequate compensation* 4. *If in doubt the court is decide the matter on a balance of convenience.* 5. As to what constitutes a prima facie case, the parties have correctly cited **Mrao Limited v First American Bank of Kenya Limited (2003) KECA 175 (KLR),** where it was held as follows; ***“A prima facie case in a civil application includes but is not confined to a "genuine and arguable case". It is a case which on the material presented to court; a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the other party as to call for an explanation or rebuttal from the latter."*** 1. The applicant admits that she has defaulted on the payment as agreed in the loan agreement between the parties. Her case is that there was an agreement that the loan repayments would be derived from the pending payments due to her business entity. 2. In my view, and looking at the loan agreement, there was nothing of the sort agreed between the parties. A declaration of the source of funds on the part of the applicant did not amount to acceptance that the loan would only be repaid upon the applicant’s receipt of payment. The 1st respondent was not privy to the contracts between the applicant and her purported clients. The applicant’s duty was to make the monthly repayments as agreed. 3. From a look at the statement of account, it is clear that the applicant was in persistent default on the loan. For instance, in the whole of 2025, she only paid a total sum of Kshs. 60,618/=, which was not even enough to meet one monthly instalment. 1. The claim by the applicant appears to be geared at asking the court to rewrite the contract between the parties. Once the parties execute a contract between them, it is their duty to perform their obligations therein. The court is only called upon to enforce a contract, not to alter it to the advantage of one party. The applicant was the one in breach of the contract and the respondent was correct to invoke its statutory power of sale. 2. The applicant claims that she was never issued with the statutory notices. 3. The 1st respondent has clearly exhibited all the notices issued and they are all in compliance with the provisions of sections 90 and 96 of the Land Act. The service of the same has been exhibited by the 1st respondent through certificates of postage showing that both the applicant and the chargor were duly served with all the requisite notices. 4. The 2nd respondent also filed an affidavit of service indicating that he served the Auctioneer’s notice by physically appending the notice on the suit property and by registered post. 5. On the question of valuation, 1st Respondent has a duty set by the law at section 97(2) of the Land Act to obtain the best price reasonably obtainable at the time of the sale. The said section provides as follows**; -** **(2) A chargee shall, before exercising the right of sale, ensure that a forced sale valuation is undertaken by a Valuer*.*** 1. It is not in dispute that the property was valued prior to the intended sale. The valuation confirms that the property’s market value was Kshs. 34,000,00/=. The forced market value was assessed at Kshs. 25,500,000/=. The claim that the valuation report was outdated is baseless since the process of recovery of the loan by sale of a secured property is not an overnight activity. The difference of 3 to 4 months is minimal. The forced sale value is within the threshold set out under the Land Act. 2. I therefore find that the valuation report meets the requisite threshold. 3. Having looked at the matter, I find that the applicant has not presented a *prima facie* case with any probability of success. 4. On whether there will be substantial loss incapable of compensation by way of damages, the court is guided by several authorities. The Court of Appeal in **Nguruman Limited v Jan Bonde Nielsen (2014) eKLR,** had this to say as to what amounts to an irreparable injury: - ***” An injury is irreparable where there is no standard by which their amount can be measured with reasonable accuracy or the injury or harm is such a nature that monetary compensation, of whatever amount, will never be adequate remedy.”*** 1. Equally, in the case of **Pius Kipchirchir Kogo versus Frank Kimeli Tenai (2018) eKLR** the court defined an 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.”*** 1. It is trite law that once a party offers a security for a loan that security becomes a commodity for sale. This was reiterated in **Bii v Kenya Commercial Bank Limited (2001) KLR 458** where it was held as follows; **“Is the applicant’s probable injury capable of being adequately compensated in damages? I have no doubt that it is. The applicant has known all along that the securities he offered for his charge debt would be realized if default was made in the repayment. As I have said severally, once property is offered as security it by that very fact becomes a commodity for sale. And there is no commodity for sale whose loss cannot be compensated adequately in damages. So, although Mr Wandaba’s eloquence nearly induced in me tears of sympathy for the applicant, I am on a rational consideration of the matter impelled to conclude that the applicant’s loss is perfectly compensable by an award of damages and that the bank is capable of meeting any such award. The Application fails on this ground too.”** 1. In **Kihara v Barclays Bank (K) Ltd (2001) 2 EA 420**, the Court addressed the same issue and held thus: - ***“The mere fact that a borrower has a claim in damages against a lender which is equal to or in excess of the debt due does not at law entitle it to resist the lender’s attempt to exercise its statutory power of sale when this has properly arisen…As the Plaintiff had put up the property as security for the loan with full knowledge that should he default it would be sold, he had converted it into a commodity for sale and there was no commodity for sale the loss of which could not be adequately compensated in damages.”*** 1. The Applicant, through the charge voluntarily executed by the chargor, charged the property with full knowledge that, in the event of default, it would be subject to sale to realize any outstanding balance. 2. It is thus my view that the applicant has also failed to meet the threshold in the second test under **Giella v Cassman Brown** **Limited** (supra). 3. Even on a balance of convenience, the odds are greatly stacked against the applicant. 4. In **Amir Suleiman – Versus - Amboseli Resort Limited (2004) eKLR,** the learned judge offered elaboration on what is meant by “balance of convenience” and stated; - ***“The court in responding to prayers for interlocutory injunctive reliefs should always opt for the lower rather than the higher risk of injustice.”*** 1. Looking at the matter I find that the balance of convenience tilts in favour of the 1st respondent who advanced the applicant funds with the expectation that the applicant would observe her obligations, which did not happen. The 1st respondent has the right to exercise the power of sale as agreed. Once the applicant fell into arrears, then under the contract between the parties, the entire balance became due and payable. 2. It is evident that the applicant only came to court to buy time. She had no valid reason to stop the proposed sale of the property that she, through the chargor, had offered as security. 3. From the foregoing, I find that the application lacks any merit and it is dismissed with costs. 4. The 1st respondent is at liberty, should there still be default of payment, to proceed to exercise its statutory power of sale. 5. For the avoidance of any doubt, the respondent need not issue any fresh statutory notices under the Land Act, having duly issued them when applicant defaulted. The respondents should only ensure that they comply with the law on a current valuation and advertisement of the property. 6. Orders accordingly. **Dated, signed and delivered at Meru this 18th day of August 2026.** **H.M. NYAGA** **JUDGE**