https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3894

Dar v Focus Homes Ltd & 2 others (Environment and Land Case E064 of 2026) [2026] KEELC 3894 (KLR) (29 June 2026) (Ruling) Neutral citation: [2026] KEELC 3894 (KLR) Republic of Kenya In the Environment and Land Court at Nairobi Environment and Land Case E064 of 2026 CA Ochieng, J June 29, 2026 Between Naureen Dar Plaintiff and Focus Homes Limited 1st Defendant Spire Bank Limited 2nd Defendant Garam Investments Auctioneers 3rd Defendant Ruling 1.What is before the Court for determination is the Plaintiff’s Notice of Motion application dated 23rd February 2026, in which she seeks the following Orders:a.Spent.b.Spent.c.Pending hearing and determination of the suit, a temporary injunction do issue restraining the Defendants, whether by themselves, their agents, servants or otherwise, from advertising, proclaiming, attaching, auctioning, selling, transferring, disposing of, alienating, or in any manner whatsoever dealing with L.R No. 37/369(I.R No. 69578), including specifically Apartment No. 7 on the Second Floor of Block B, and all apartments constructed thereon.d.The Costs of this Application be borne by the Defendants.e.Such further or other orders be made as this Honourable Court may deem just and expedient for the preservation of the suit property. 2.The application is premised on grounds on its face and on the Plaintiff’s supporting affidavit. She avers that she is the lawful purchaser and beneficial owner of Apartment Number 7, Second Floor, Block B, erected on L.R. No. 37/369 (I.R. No. 69578) situated at Upper Hill vide purchase from the 1st Defendant, by way of a Lease for the unexpired residue of fifty (50) years from 1st April 1996. Further, that she paid the agreed purchase price of Kenya Shillings Thirteen Million (Kshs. 13,000,000/=) in full. 3.She contends that upon purchase, she was granted possession of the said Apartment No. 7, herein referred to as the “suit apartment”, which she has utilized continuously for the past twelve (12) years, either personally or through lawful tenants under valid lease agreements. She claims that despite having paid the full purchase price, the 1st Defendant frustrated registration of the Lease in her favour thus to secure and protect her proprietary interest, she registered a Caveat against L.R. No. 37/369 (I.R. No. 69578) herein referred to as “the suit property”, on 15th September 2017. 4.She claims that she has come to learn that the 1st Defendant subsequently obtained financial facilities from the 2nd Defendant, and used title to the suit property as security, arrangements she was not privy to. Further, that she did not consent to the suit apartment being subjected to a Charge. She explains that on or about 2018, the 3rd Defendant, advertised the said apartment for sale by public auction. Further, that upon discovering that advertisement, she wrote to it informing them that she had lodged a Caveat against the title to the suit property, no Charge existed at the time of registration of her Caveat; and that her apartment was fully paid for. 5.She avers that she just learnt that the 3rd Defendant, acting on instructions of the 2nd Defendant, had once again advertised the suit property for public auction scheduled for 24th February 2026 at 11:00 a.m. Further, that the said Gazette advertisement dated 2nd February 2026 expressly listed the suit apartment among the units to be sold in one consolidated auction exercise. 6.She argues that unless restrained, the Defendants intend to dispose of the suit apartment to third parties, thereby creating third-party interests that may be difficult to reverse and render this suit nugatory. Further, that since she has leased the apartment, she faces exposure to litigation, financial claims and reputational damage from tenants whose contractual rights would be disrupted. Responses 7.The 1st Defendant filed a replying affidavit in support of the Plaintiff’s application, sworn by its director, one Jitan Shantilal Dhanan, who claims that the 1st Defendant is the registered proprietor and owner of the suit property. He explains that by a letter of offer dated 27th June 2013, the 1st Defendant entered into a facility takeover agreement with Equatorial Commercial Bank (now the 2nd Defendant) where the latter was to take over the 1st Defendant’s credit facility in the principal sum of Kshs. 200,000,000.00 from Bank of Baroda, which the 1st Defendant had borrowed for the development of thirty (30) unit apartments on the suit property. 8.He admits that the 1st Defendant pledged the title to the suit property to the 2nd Defendant, for the creation of a first legal charge over 20 (twenty) apartments erected on the suit property, but the Charge was not formally registered. He claims that it was a term of the contract between the 1st and 2nd Defendants that the sale proceeds from the apartments sold would be paid to the 2nd Defendant and so would be any rental income received from letting of the units be assigned to it, in settlement of the said facility, and any surplus thereafter would be available to the borrower. He acknowledges that it was the 1st Defendant’s task and responsibility to procure purchasers for the apartments and ensure that the purchase price was remitted to the Lender. 9.He contends that upon receipt of the sale proceeds from the properties sold, the Lender was obliged to discharge the lease agreements held as securities, which was to be done for each apartment in the sequence they would be sold. Further, that the Plaintiff paid the full purchase price by remitting Kshs.13,000,000.00 to the 2nd Defendant. However, even after payment of the full purchase price, the 2nd Defendant refused to release the title to the suit property in order to register a lease in favour of the Plaintiff. 10.He insists that by 2016, all the apartments had been sold, with proceeds of sale remitted by the purchasers to the 2nd Defendant but the 2nd Defendant varied interest rates and inflated the loan account thereby alleging that the 1st Defendant remained indebted to it. Subsequently, it issued a demand letter dated 14th November 2017, in which it claimed alleged outstanding amounts under the credit facility advanced. 11.He confirms that the 1st Defendant received a further Charge instrument dated 3rd January 2018 from the 2nd Defendant, which was registered against the property on 29th January 2018, and that the said Charge is materially different from the unregistered 2013 Charge executed by the 1st Defendant. He claims that notwithstanding the said differences, the 2nd Defendant has purported that the 2018 registered Charge is the same instrument executed by the 1st Defendant in 2013. 12.He reiterates that on 19th April 2018, the 2nd Defendant issued a ninety (90) days statutory notice to the 1st Defendant purporting to exercise its power of sale over the suit apartment. He confirms that the 1st Defendant challenged the said statutory notice in High Court Commercial Suit E373 of 2018, contending that it was based on a forged Charge. Further, upon hearing, the suit was dismissed but aggrieved by the said decision of Mulwa J delivered on 19th September 2024, the 1st Defendant challenged the entire decision vide Civil Appeal E790 of 2024, which is pending before the Court of Appeal with judgment set to be delivered on 26th June 2026. 13.He reaffirms that it would be unjust and contrary to public policy and morality for the 2nd Defendant to benefit from the Plaintiff’s proceeds of sale of her apartment while purporting to sell the same in exercising the alleged statutory power of sale based on a forged 2018 Charge instrument. Further, that the Plaintiff was not a party to Commercial Suit E373 of 2018. 14.The 2nd Defendant filed a replying affidavit in opposition, sworn by Samuel Wamaitha, Equity Bank’s Manager, Legal services. He avers that pursuant to Gazette Notice No. 660 dated 27th January 2023, Equity Bank (Kenya) Limited acquired certain assets, including litigation matters in relation to the impugned loan book from Spire Bank Limited. 15.He acknowledges that a legal Charge was created over twenty (20) flats erected on the suit property, for Ksh.200,000,000/=. He claims that the suit apartment is in the schedule of the Charge document as one of the apartments that was to be charged. He also avers that the loan to the 1st Defendant was disbursed on 5th December 2013 and that the Charge dated 3rd January 2018 was registered on 29th January 2018. 16.He claims that on 14th November 2017, the 2nd Defendant issued a demand letter for the payment of kshs.139,670,354.72 which was outstanding. While he acknowledges that HCCC 373 OF 2018 between the 1st and 2nd Defendants, was filed and determined by the High Court, he contends that the suit apartment is among the Charged properties, which the Court allowed to be sold through a public auction and that the judgement by Mulwa J is yet to be set aside. 17.He also contends that by virtue of the Charge document, the 2nd Defendant has a superior right over the suit property. Further, that the 1st Defendant still owes the 2nd Defendant and that the loan continues to accrue interest. He insists that the Plaintiff has no prima facie case and that she is not deserving of the orders sought as she failed to disclose material facts to the Court. 18.The 3rd Defendant did not file a response. 19.The application was canvassed by way of written submissions. Submissions 20.The Plaintiff submits that she has satisfied all the conditions for the grant of a temporary injunction as set out in Giella v Cassman Brown (1973) E.A, having demonstrated a prima facie case founded on full payment of the purchase price of the suit apartment in 2013, long-standing possession of over twelve (12) years and a registered caveat dated 17th September 2017, predating the impugned Charge. Further, that title held by the 1st Defendant is held in trust for her, as it could not lawfully create a Charge over property in which it no longer held beneficial interest. 21.She also submits that she stands to suffer irreparable harm that cannot be adequately compensated by an award of damages, given the unique nature of the suit property and the risk of the same passing to third parties favours the preservation of the suit apartment. 22.To buttress her averments, the Plaintiff relied on the following decisions: P.J. Dave Flowers Limited v Limuru Hills Limited & 2 others [2022] KECA 129 (KLR) and Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR). 23.The 1st Defendant’s submissions mirror those of the Plaintiff. It submits that the Plaintiff has met the threshold in Giella v Cassman Brown & Company (supra). 24.On its part, the 2nd Defendant submits that the suit is res judicata HCCC 373 OF 2018 where Justice Mulwa made a decision on injunctive orders, which were sought in the said matter by the 1st Defendant herein. 25.It also submits that the Plaintiff is not entitled to the injunctive prayers sought because at the time of purchasing the suit apartment, the 2nd Defendant’s interest had been registered in the title, the Plaintiff even paid the purchase price to the 2nd Defendant in settlement of the debt but she failed to disclose the said material fact. Further, that the 1st Defendant defaulted in repayment and it is trite that an injunction cannot issue where there is an outstanding debt. 26.It also submits that the Plaintiff will not suffer irreparable injury because once a property is granted as security, it is a commodity for sale. Further, that its statutory power of sale has crystallized and any loss that would be occasioned by the Plaintiff from the sale would be calculable on the basis of the real market value of the suit apartment. 27.To buttress its averments, the 2nd Defendant relied on the following decisions: Housing Finance Company of Kenya Limited v Attorney General [2015] eKLR; Kenya Commercial Bank Limited v Jeremy Will Tsuma [2014] eKLR and Kenleb Construction Ltd v new Gatitu Service Station Ltd & another [1990] eKLR. Analysis and Determination 28.Upon consideration of the instant Notice of Motion application including the respective affidavits and rivalling submissions, the only issue for determination is whether the Plaintiff is entitled to orders of interlocutory injunction restraining the Defendants from interfering with the suit apartment. 29.In line with the principles established in the case of Giella v Cassman Brown (1973) E.A and the definition of a prima facie case as enumerated in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR), I will proceed to determine whether the Plaintiff has established a prima facie case to warrant the orders of interlocutory injunction as sought. 30.The Plaintiff’s case is that while she purchased the suit apartment, paid the full purchase price to the 1st Defendant and has utilized it continuously for the past twelve (12) years, the 1st Defendant frustrated registration of the Lease in her favour. Further, that she later found out that the 1st Defendant had Charged the title to the suit property (L.R. No. 37/369 (I.R. No. 69578), where her apartment sits to secure financial facilities advanced by the 2nd Defendant and that the 3rd Defendant, acting on the instructions of the 2nd Defendant, had advertised the suit apartment for sale by public auction in exercise of the 2nd Defendant's alleged statutory power of sale. She maintains that she neither consented to the creation of the Charge nor was she privy to the transaction between the 1st and 2nd Defendants. 31.The 1st Defendant acknowledges that the Plaintiff paid the full purchase price. It insists that the failure to register the Lease was occasioned by the 2nd Defendant’s refusal to release the title documents. It contends that it would be unjust for the 2nd Defendant to retain the Plaintiff's purchase price while simultaneously exercising its statutory power of sale against the suit apartment, which the Plaintiff fully paid for. 32.On its part, the 2nd Defendant contends that the suit is res judicata HCCC 373 OF 2018 and that its statutory power of sale is lawful and superior to the Plaintiff's claim. It is not disputed that HCCC 373 OF 2018 was dismissed by the High Court and the Appeal on the said decision will be determined by the Court of Appeal on 26th June 2026. 33.In the case of Andrew Muriuki Wanjohi v Equity Building Society Ltd & 2 others [2006] eKLR, it was held that:‘Whenever the applicant offered the suit property as security, he was fully conscious of the fact that if the borrower did not meet his obligations, the suit property could be sold off. Therefore, in the event that it later became necessary for the suit property to be sold off, by the chargee, the chargor could not be heard to complain that his loss was incapable of being compensated in damages. He had had the said property evaluated in monetary terms. He had then told the chargee that he knew the property to be capable of providing the chargee with the peace of mind, of knowing that the money given as a loan would become recoverable, even if the borrower did not pay it. By offering the suit property as security the chargor was equating it to a commodity which the chargee may dispose of, so as to recover his loan together with interest thereon. Therefore, if the chargee were to sell off the suit property, the chargor’s loss could be calculable, on the basis of the real market value of the said property.’ 34.In this instance, it has emerged that the 1st Defendant Charged the suit property to obtain a loan to construct apartments thereon. The 1st Defendant has not denied that even though the Plaintiff purchased one of the apartments on the suit property and paid the full purchase price, it is yet to settle the full loan. I note there was no partial discharge of the Apartment purchased by the Plaintiff. 35.It is trite that once a property is offered as security, it can be sold in case of default. At this juncture, I opine that even though the Plaintiff paid the full purchase price but since the suit property, where the suit apartment is situate, was still Charged to the 2nd Defendant, she cannot escape from the fact that the 2nd Defendant was entitled to receive the full amount it was owed. Further, the court cannot separate the suit apartment from the Charged property since there is no evidence of partial discharge of the said apartment. I note the Court in HCCC 373 OF 2018 had already dealt with the issue of the Charge over the suit property, which suit had been filed by the 1st Defendant. 36.Based on the facts as presented, while associating myself with decisions cited, I find that the Plaintiff has not established a prima facie case to warrant the orders of interlocutory injunction as sought against the Defendants. 37.In further associating myself with the decision Nguruman Ltd. Vs. Jan Bonde Nielsen (2014) eKLR where the Court of Appeal held that where a party has failed to establish a prima facie case, the Court need not proceed to make a determination of the other two limbs on injunction and I will decline to do so. 38.In the circumstances, I find the instant Notice of Motion application unmerited and will proceed to dismiss it. 39.Costs will be in the cause. DATED SIGNED AND DELIVERED AT NAIROBI THIS 29TH DAY OF JUNE, 2026CHRISTINE OCHIENGJUDGEIn the presence of:Ouma for PlaintiffKioko for 1st DefendantMs Kamau for 2nd DefendantCourt Assistant: Vena