[2022] KEHC 17234 (KLR)

Soo & another v Housing Finance Company of Kenya & another (Civil Case E017 of 2021) [2022] KEHC 17234 (KLR) (10 November 2022) (Ruling)

Neutral citation: [2022] KEHC 17234 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Case E017 of 2021

SN Mutuku, J

November 10, 2022

Between

Titus Kyalo Soo

1st Plaintiff

Mary Kanini Kyalo

2nd Plaintiff

and

Housing Finance Company of Kenya

1st Defendant

Samuel Gathii Muhoro

2nd Defendant

Ruling

1. The Applicant brought this application through a Notice of Motion dated August 13, 2021 under Order 40 (2) sub rules 1,2,3,4 of theCivil Procedure Rules, Sections 97,98,103,104(1)(a) of the Land Act No 6 of 2012, sections 1A, 1B, 3A of the Civil Procedure Act seeking orders that:i.Spentii.That due to the urgency of this application and pending hearing of this application inter partes, this Honourable Court be pleased to dispense with service in the first instance and to grant ex parte orders of temporary injunction restraining the 1st and 2nd Defendants by themselves agents and/or servants from evicting the Plaintiff from the property known as Ngong/Ngong/42987. iii.That the orders be served upon the area officer of police commanding the Division to ensure compliance.iv.That pending the hearing and determination of this suit, this Honourable Court be pleased to grant prayer 2 above.v.Costs of this application be provided for.vi.Any other reliefs that may be deemed fit and appropriate by this Honourable court.

2. The Notice of Motion is supported by an Affidavit sworn by Titus Kyalo Soo. He has deposed that he is the 1st Applicant and has been authorised by the 2nd Applicant to deal with this matter on her behalf; that they are husband and wife and registered owners of Ngong/Ngong/42897 herein after (the suit property); that on November 22, 2010 they applied for a financial facility from the 1st Defendant for which they offered the suit property as security and that despite their best efforts at repayment and unknown to them the 1st Defendant purported to sell their property without being issued with the necessary notices as per the Law.

3. It is further deposed that the Applicants became aware of the purported sale on July 27, 2021 through the 1st Respondent’s mobile alert system after the 2nd Respondent deposited the sum of Kshs 3,500,000/- into the 1st Applicant’s personal account; that on further investigations he discovered that the suit property was sold by public auction to the 2nd Respondent on September 17, 2020 and that at the fall of the hammer, the 2nd Respondent had paid a deposit of Kshs 500,000/- with the balance to be paid within 90 days. The said balance was paid 7 months later and the property ought to have been re-advertised. That an eviction notice was sent to them via email on July 31, 2021 by the 2nd Respondent.

4. It is the Applicant’s case that the suit property was their matrimonial home where they reside; that they will suffer irreparable loss if evicted as their family will be rendered homeless and that the Defendants will not suffer any prejudice.

5. The application is opposed through the Replying Affidavit of the 1st Respondent dated November 8, 2021 sworn by Christine the legal counsel for the 1st Respondent. She has deposed that the 1st Respondent had created security by way of legal charge and a further legal charge over the suit property to secure repayment of banking facilities; that the applicants defaulted on their obligation to repay the money secured as a result of which the 1st Respondent had to exercise of its statutory power of sale.

6. It is deposed, further, that contrary to the Applicants’ allegations, a valid 3 months’ statutory notice dated October 7, 2016 was issued pursuant to the provisions of section 90 of the Land Act 2012 and the same was served through registered post; that they issued a further 3 months’ notice dated September 17, 2019 as at the time the arrears had escalated to 1,407,695. 30/; that a 40 days’ notice of intention to sale dated January 3, 2020 was issued pursuant to section 96(2) of the Land Act and served through registered post.

7. It is deposed that the forced sale valuation of the suit property was carried out by Kiragu and Mwangi valuers Ltd who prepared a valuation report dated March 3, 2020; that thereafter the 1st Respondent instructed Jasrick Merchants Auctioneers to arrange for the sale of the property through public auction in exercise of its statutory power of sale and that the said auctioneers served by registered post and also physically on the suit property the requisite 45 days redemption notice dated July 15, 2020 and a notification of sale.

8. It is their averment that the public auction was advertised for September 17, 2020 in the Daily Nation publication of August 31, 2020 and that the suit property was sold and purchased by the 2nd Respondent at the bid price of Kshs 4,600,000/-. That the 1st Respondent informed the applicants of the sale through a letter dated October 8, 2020 and sent via email. That the 2nd Respondent paid a sum of Kshs 500,000/- representing more than the applicable 10% and later on December 17, 2020 paid an additional 600,000/-.

9. It is the case for the Respondents that subsequent to the sale and prior to the lapse of the completion period the 2nd Respondent sought and obtained financing for the balance of the bid price in the sum of Kshs 3,500,000/- from the 1st Respondent. They have stated that the delay in the transfer of the suit property to the 2nd Respondent was occasioned by the closure of Ngong Land Registry from November 5, 2020 until March 10, 2021 and further that corvid 19 pandemic disrupted the normal operations.

10. The 2nd Respondent filed his Replying Affidavit dated November 16, 2021. He has stated that he learned of the public auction of the suit property through an advertisement in the Daily Nation. That on September 17, 2020 he bought the suit property through the auction where he paid 500,000/- and was issued with a Memorandum of sale by the auctioneers. That there was a 90-day requirement to settle the purchase price. It was his averment that he paid a further amount of Kshs 600,000/-and sought a loan of the remaining amount of Kshs 3,500,000 from his bank (the 1st Respondent). That there was a special condition precedent to the disbursement of the funds that the offer was subject to registration of a first legal charge of the said amount against the Title of the suit property. That he was aware that the suit property was transferred in his name on June 9, 2021 and thereafter the money was released by the 1st Defendant and credited to the Applicants’ account.

11. He stated further that there was a delay with the Ngong Registry as the same was closed from November 5, 2020 to March 10, 2021 by the Ethics and Anti-Corruption Commission. It is his case that the 1st Respondent exercised its statutory power of sale in accordance with the law and that the application is an abuse of court process and an attempt to prevent him from taking vacant possession of the suit property.

Submissions 12. Through directions of this court, this application was canvassed through submission. The applicants expressed that they did not wish to file submissions as their application was comprehensible enough.

13. The 1st Respondent filed its submissions dated March 14, 2022. They argued that the applicable principles in respect of injunctive orders is well settled in the case of Giella vs Cassman brown & Company Ltd [1973] E A 358. They argued that at this interlocutory stage the Honourable Court ought not to delve into making definite findings on the issue as eventually the main case would need to be heard and determined.

14. It is the argument of the 1st Respondent that it is common ground that the suit property was sold in a public auction on September 17, 2021 and purchased by the 2nd Respondent who is the current registered proprietor but nowhere in their case did the Applicants seek orders that the transfer and registration of the suit property in the name of the 2nd Respondent be nullified and/or reversed and therefore there would be no basis of granting restraining orders for such an application.

15. The 1st Respondent cited Amarnath Enterprises Ltd & Nyali Construction & Electrical Services Limited (A joint venture undertaking) vs Uganda Property Holdings Limited & Another [2010] eKLR where the court stated that:“There is already prima facie, a lease arrangement between the defendants in respect of the suit plot. In those premises the horse has already bolted from the stable. There is no prayer in the amended plaint which seeks the nullification of the lease. In the premises, a prohibitory injunction is not available to the plaintiffs…”

16. They argued that they exercised their statutory power of sale in accordance with the law; that since the property was sold by public auction and purchased by the 2nd Respondent, the Applicants’ equity of redemption stood extinguished and hence an injunctive remedy is not available to them. To support that argument, they relied on Harishchandra Bhovanbhai Jobanputra & another vs Paramount Universal Bank Limited & 3 others [2019] eKLR in which case the Court of Appeal held that the chargor’s right of redemption over a charged property is extinguished when the property is sold by the chargee in exercise of its statutory power of sale.

17. The 1st Respondent submitted, further, that the 2nd Responent enjoys statutory protection in terms of the provisions of Section 99 of the Land Act 2012.

18. The 2nd Respondent filed his submissions dated November 16, 2021 in which he raised 2 issues for determination: whether the applicants have fulfilled the criteria for grant of an interim injunction and whether the application is malicious, devoid of merit and an abuse of the court process.

19. He submitted that as the facts stands, the applicants have fallen short of the requirements in Giella vs Cassman Brown Company Ltd [1973] E A 358 in that the applicants did not demonstrate a prima facie case. That the sale was a result of their default in their obligations to the 1st Respondent; that they were aware that the 1st Respondent was in the process of exercising its statutory power of sale as demonstrated through the notices served on them and averred that the Applicants’ application is frivolous. They relied on the authority in Trust Bank Limited vs H S Amin & Company Ltd & Another [2000] eKLR which stipulated what constitutes frivolous actions.

20. On whether the Applicants will suffer irreparable harm the 2nd Respondent argued that the same was not demonstrated. It is his case that the fact that the Applicants alleged that the suit property is their matrimonial home and if sold they stand to be homeless is not a ground for injunction. That they were at all times aware that offering the suit property as security for the loan they stood a risk of the property being sold on default in repayment. They relied on the case ofJulius Mainye Anyega vs Eco Bank Limited [2014] eKLR.

21. He argued that should the court find that the Applicants stand to suffer loss, the same be quantifiable by way of damages. That the court be further guided by section 99(4) of the Land Act 2012.

22. On Balance of convenience, it was the 2nd Respondent’s case that the same tilts in his favour. It was his submissions that he stands to lose far much than the applicants if the application is allowed arguing that he obtained a loan facility from the 1st Respondent and any further delays in obtaining vacant possession of the suit property is highly prejudicial to him.

Determination 23. I have read the application and the replying affidavits in opposition to the application. I have read and considered the submissions of the Respondents and the authorities relied on by parties. The principles of granting injunctions are well settled. A party seeking an injunction must demonstrate the following:i.There must be a serious/fair issue to be tried.ii.Damages are not an adequate remedy.iii.The balance of convenience lies in favour of granting or refusing the application.

24. In this instant matter the main claim by the Applicants is that they were not served with the statutory notices and that the sale through public auction was null and void as the 90-day period of completion of sale was not adhered to.

25. What amounts to a prima facie case was discussed in Mrao Ltd vs First American Bank of Kenya and 2 others, (2003) KLR 125:“A Prima facie case in a civil application includes but not confined to a genuine and arguable case. It is a case which on the material presented to the court, a tribunal properly directing itself will conclude there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the later”.

26. It was the Applicants’ case, and it is not disputed, that the applicants sought a loan facility from the 1st Respondent. They offered the suit property as the security for the facility. They defaulted in servicing the facility. This provoked the 1st Respondent to move to exercise its statutory power of sale.

27. To counter the claim that the applicants were not served with the statutory notices, the 1st Respondent has rebutted these claims by stating that it indeed served all the required notices to the Applicants. The 3 months’ Notice pursuant to section 90 of the Land Act is dated October 7, 2016. It was served upon the Applicants as per annexure CW8 (a) & (b). There is a certificate of postage showing that the same was sent to the Applicants. That the Respondent issued another 3 months’ Notice dated September 17, 2019 and served through registered post.

28. Further, a 40 days’ Notice was issued in pursuant to section 96(2) of the Land Act and was served through the aforementioned medium. The 1st Respondent has stated that a forced sale valuation was conducted in compliance with section 97 of the Land Act and a valuation report issued. Further that the auctioneers also issued a 45-day redemption notice dated July 15, 2020 and a notification of sale served both physically and by registered post. There is a return of service and a certificate of postage in proof of this. There was also an advertisement made in the Daily Nation on the Public auction of the suit property dated August 31, 2020.

29. I have satisfied myself that the 1st Respondent complied with the provisions of the Land Act, sections 90, 96 and 96 as well as Section 15 (d) of the Auctioneers Act. The allegations by the Applicants that they were not served and that the public auction happened without their knowledge are therefore baseless.

30. I have considered the case for the Applicants as against the arguments by the Respondents on the issue of prima facie case. It is my view that the Applicants have not established a case that fits the definition of a prima facie case as contained in the Mrao case. Their case does not meet the threshold, it is more of a mere denial that they were not served with the requisite notices without evidence to support their case.

31. On the issue of irreparable loss which would not adequately be compensated by an award of damages if an interlocutory injunction is not granted, it is my finding that the Applicants have failed to meet their obligations of repayment of the loan facility. They have argued that the suit property is their matrimonial home and the family would be rendered homeless if the orders are not granted. Does this amount to irreparable loss? I think not. It is my considered view that the Applicants have not demonstrated how they will suffer loss. The fact that they place the sentimental value on their matrimonial home is immaterial. When they applied for the loan facility, they used the said matrimonial property as security and they should have known that there would be a risk of sale when they defaulted on the repayment. In default of repayment of the loan therefore the 1st Respondent had no choice but to exercise its statutory power of sale as demonstrated in Nancy Wacici vs Kenya Women Microfinance Bank Ltd(2017) eKLR where the court stated that:“Once a power of sale has arisen, a mortgagee has the right to exercise it. The Court has no power to prevent the exercise of that power it is being properly exercised. It is a power parliament has granted a mortgagee and courts cannot and ought not to interfere if it is being exercised.”

32. On the third principle of balance of convenience, the 2nd Respondent has argued that the same tilts in his favour and that he is the one who stands to suffer irreparable loss since he is the registered proprietor of the suit property and not the Applicants.

33. It is my finding that the Applicants have not demonstrated that they stand to suffer irreparable loss that cannot be compensated by an award of damages.

34. In the final analysis, it is my considered view, and I so find, that the Applicants have not met the threshold for a grant of the orders they are seeking. The consequence of this finding is that the Notice of Motion dated August 13, 2021 has no merit and the same must fail. It is hereby dismissed with costs to the Respondents.

35. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED THIS 10TH DAY OF NOVEMBER, 2022. S N MUTUKUJUDGE