[2018] KEHC 4886 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT AT KAJIADO

CIVIL CASE NO 7 OF 2017

ST PATRICKS HILL SCHOOL LTD.....PLAINTIFF/RESPONDENT

VERSUS

BANK OF AFRICA KENYA LTD...........DEFENDANT/APPLICANT

RULING

A. Introduction

[1] The Defendant in this matter through a Notice of Motion under sections 1A, 1B & 3A of the Civil Procedure Act, Order 40 Rules 6 & 7 and Order 50 Rule 1 of the Civil Procedure Rules, 2010 and all other enabling provisions of the Law, seeks to set aside the orders of injunction given on 23rd May 2017 and 13th July 2018 restraining the Defendant from issuing Demand or Statutory Notices disposing or in any other way interfering with the plaintiffs property known as title No Ngong/Ngong/28914. The Application is supported by an Affidavit of one Samuel Irungu.

B. Background and Parties Respective Cases

[2] On 23rd May 2017 and 13th July, this honorable court issued an injunction against the defendant restraining it from issuing any further Statutory Notices and/or interfering with the plaintiffs suit property in any manner whatsoever pending the hearing and determination of the main suit.

[3] Upon reading the Notice of Motion dated 15th May 2017, brought under Certificate of Urgency under section 3A of the Civil Procedure Act (cap 21), Order 40 Rules 1, 2 and 4 of the Civil Procedure Rules, 2010 and upon hearing the oral submissions of counsels for both the Plaintiff/Applicant and Defendant/Respondent together with supporting affidavits from both parties, the Court ordered as follows;

1. THAT the Defendant/Respondent do file and serve a replying affidavit within fourteen days from the date hereof.

2. THAT the Plaintiff/Applicant is granted corresponding leave to file a further Affidavit, if need be, within seven days upon service.

3. THAT pending the inter-parties hearing of the Application on 8th June 2017, the court grants interim orders of injunction restraining the defendant/Respondent from issuing nay letters, demands or statutory notices to the Plaintiff/Applicant over parcel of land title No. Ngong/Ngong/28914 and motor registration number KBM 283V and not to interfere with the status, management and or operations of the Plaintiffs schools in any manner whatsoever.

[4] It is the Defendant/Respondents submission that, the above orders have been extended severally at the instance of the Plaintiff.

On 13th July 217 further orders to be complied with by both parties. The Plaintiff made only one installment payment of Kshs 1,000,000. 00 on the 19th September 2017 in compliance with court orders. The Court further ordered that each party to file its Reconciliation Report by the 8th December 2017.

[5] To expedite the disposal of the suit, the honorable court made further orders on the 14th December 2017 and fixed the case for hearing on 2nd February 2018. In the meantime, the interim orders were extended pending the hearing and determination of the main suit.

It is the Defendants submission that the suit has never proceeded to hearing since it was fixed. That the Plaintiff has adjourned it on flimsy grounds every time the case comes up for hearing.

[6] This led to the Defendant to file the Defence/Counter Claim under a Notice of Motion and Certificate of Urgency before this Court seeking the following orders;

1. That the Application be certified urgent and heardexparte in the first instance,

2. That the Honorable Court be pleased to set aside the orders of injunction issued on 23rd May 2017 and 13the July 2018 restraining the Defendant from issuing Demand or Statutory Notices and disposing or in any other way interfering with the Plaintiffs’ property known as Title No. Ngong/Ngong/28914.

3. That the Defendant be at liberty to issue the Forty Days’ Notice and Forty-Five Days Auctioneers Notice and thereafter sell the property by way of public auction in exercise of its statutory power of sale.

[7] On 4th May 2018, the Plaintiff filed Grounds of opposition as follows;

1. That the Application by the Defendants amounts to contempt of court’s Conservatory Orders to maintain the status quo between the parties until the full hearing and determination of the suit.

2. The court order for the status quo to be maintained because parties have competing and rival claims each of which are not superior to the other.

3. The Plaintiff raised some issues touching on the illegal debits made by the Defendant and the validity of the contract relied upon by the Defendant are still pending in court for determination and the Defendant’s Application is in disregard of that position.

4. The orders relied upon by the Defendants were not made by the court on 13th July 2017. The court did not make an order that the Plaintiff should deposit termly installments under a new account with the Defendant.

5. The Defendants Application disregards the ongoing disposal of the suit pending in court.

6. The hearing of the main suit has already been set and therefore the Application by the Defendants is not urgent

C. ISSUES FOR DETERMINATION

1. Whether the Defendant’s Application amounts to contempt of court’s Conservatory orders

2. Whether the Defendant’s Application disregards the ongoing disposal of the Plaintiff’s suit and Application and whether by granting the order, the issues raised in the main suit shall be dispensed with.

3. Orders of the Court

D. ANALYSIS

1. Whether the Defendant’s Application amounts to Contempt of Court’s Conservatory Orders

[8]The jurisdiction of the court to set aside an order of injunction is set outlined under Order 40 Rule 7 Civil Procedure Rules, 2010 which provides as follows:

“Any order for an injunction may be discharged, or varied, or set aside by the court on application made thereto by any party dissatisfied with such order.”

[9] I am of the view that the conditions for the grant of an interlocutory injunction are now well settled as stated in Giella v Cassman Brown and co ltd 1973 E.A 360, Mrao v First American Bank of Kenya Ltd and 2 others 2003 klr 125,andAmerican Cynamid co v Ethicon Ltd 1975 1All E.R.The principles are: (a) an applicant must show a primafacie case with a probability of success (b) In an interlocutory injunction the applicant must show that unless injunctive orders are granted he will suffer irreparable harm which would not be adequately compensated for by damages. (c) And if in doubt in any of the above conditions the court will decide then on a balance of convenience.

[10] These principles have stood the test of time as good law applicable in our jurisprudence on interlocutory injunctions. I see no reason why they should not apply to the present application. The plaintiff’s earlier application under certificate of urgency and subsequent interim orders were issued against the defendant bank bearing in mind these conditions pending trial of the action. There is one central point to the entire dispute, whether the statutory power of sale had arisen thereby putting its validity into question. In the plaint it’s alleged by the plaintiff that the defendant is guilty of various breaches of the contract agreement rendering it unconscionable and void.

[11] On the other hand the defendant argued and pleaded that there is no dispute of existence of a legal mortgage. Further the defendant alleged and deposed that the plaintiff is in breach of the terms of the loan agreement and all procedures taken to realize the security by way of statutory power of sale was valid.

[12]What the court was able to gather from the rival affidavit evidence and brief submissions by both counsels is that the plaintiff raised a number of issues beyond the statutory notice which completely clouded the claim. In this state of affairs the granting of the order which Mr Wawire for the defendant bank makes reference to was granted to the plaintiff on the strength that the plaintiff had a prima facie case at the trial..

[13] I would have had no hesitation in saying that an application for interlocutory injunction has failed the threshold test in Cassman Brown and Mrao case by inviting a restrictive approach of interpretation. But the jurisdiction of an equity court requires it to look at the matter wholly and consider how best to achieve a just and fair outcome on the peculiar facts of the case.

[14] This is not a case where I was placing the mortgagee back to possession of the property but in exercise of discretion consistent with the principles laid down by DR SPRY in his book on equitable remedies 6th edition LBC page 447 where he stated thus Interlocutory injunctions concern with (a)The maintenance of a position that will more easily enable justice to be done when its final order is made and (b)an interim regulation of the acts of the parties that is the most just and convenient in all the circumstances.

[15] Further in the case of National Commercial Bank Ltd V Olint Corporation 2009 Wlr 1405 The Privy Council Stated; That the purpose of interlocutory injunction is to improve the chance of the court being able to do justice after a determination of the merits at the trial.

[16] In my opinion therefore the plaintiff has demonstrated through affidavit evidence which shows a primafacie case to be heard at the trial within the principles elucidated in cassman Brown and Mrao case, besides the challenge on statutory power of sale against the defendant bank whether it had arisen under the law. To me unless the matter goes for inter-parties hearing and witnesses are cross-examined the dispute cannot be wished away at the interlocutory stage including the basis of the notice.

[17] It can also be said that a right to a fair hearing and due process of the law is enshrined in our constitution under article 50. In the case of Thomas Edison ltd v Bathock 1912 15 C.L.R 679held thus: “There is a primary precept governing administration of justice that no man is to be condemned unheard and therefore ,as a general rule, no order should be made to the prejudice of a party unless he has the opportunity being heard in defence, but instance occur where justice could not be done unless the subject matter of the suit is preserved and, if that is in danger of destruction by one party or if irremediable by one party interim orders may issue to give room for the court to determine the dispute on the merits.”

[18] As already noted the entire claim from the pleadings and affidavit evidence is anchored on the sale and other disposition of land including the school located on the property. There was immediate danger of the land together with any assets in it being sold or otherwise disposed off by the defendant bank .The suit filed was yet to be heard and determined. For my part therefore in applying the principles on grant of interlocutory injunction the exercise of discretion should balance the competing rights of both parties with a resultant effect to do justice.

[19] In the instant case I agree and adopt the persuasive decision by Lord Diplock in the case of Siskena 1977 3 All E.Rat page 824 where he held. “A right to obtain an interlocutory injunction is not a cause of action, It cannot stand on its own. It is dependent on their being a pre existing cause of action against the defendant arising out of an invasion, actual, or threatened by him of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him which may or may not include a final injunction.’’

[20] I recognize that I have a discretion in the matter in one way or the other but exercisable on sound legal principles.

[21] A total scrutiny of all the affidavit evidence on record considered along with the arguments of both counsels demonstrate that the suit is based on legal charge over the property which is an essential element of the contract. Arising from the content and terms of the loan agreement the plaintiff contends that the defendant bank unilaterally has been charging exorbitant, illegal charges, illegal and non-contractual interest rates, penalties and other tariffs not provided for in the contract. On the face of it despite the claim by the defendant bank being liquidated is not such that the court can decide on it with accurate precision in absence of evidence.my argument therefore is what happens if at the end of it all the plaintiffs satisfies the court on issues stated in the statement of claim? will the defendant restore back the land with all its facilities of an international school status? What about the location and value of the property at affordable price? Can one not say the plaintiff is likely to suffer irreparable harm not compensatable in damages.

[22] These issues have no definite answer at this interlocutory stage .That is why the interest of justice demands grant of interim injunction to place parties in equal arms before an independent court far from their hostilities to ventilate their issues including summoning of witnesses..

[23] In these circumstances I find it difficult to agree with Mr wawire learned counsel for the defendant bank that we lift the conservatory orders and release the substratum of this suit to be advertised and be sold to recover the debt. It’s unfortunate this hearing and adjudication of the claim has taken longer than anticipated in our case management schedule. This is not the time for blame game but to focus on the remaining part of the trial so as to bring this proceedings to a formal closure before the court.

[24] Similarly, this court has unfettered discretion to discharge or vary or even set aside an injunction order if the ends of justice so demand, or if the injunction does not serve the ends of justice it was intended to serve when it was issued. Questions such as whether it is unjust to maintain the injunction in force or it is otherwise unjust and inequitable to let the order remain will be asked when considering an application to discharge an injunction.

[25] The Constitution of Kenya, 2010 also envisaged that conservatory orders should be granted within the framework of articles 22 and 23.

[26] Order 40 Rule 6 of the Civil Procedure Rules, 2010 allows a party who is affected by an injunction to apply to court for its discharge, variation or setting aside. Where a suit in respect of which an interlocutory injunction has been given is not determined within period of twelve months from the date of grant, the injunction shall lapse unless for any sufficient reason the court orders otherwise.

[27] In the above premise, the Applicant is within his legal rights to apply to the court to set aside the interim orders; therefore he is not acting in Contempt of court. Secondly there is sufficient cause to exercise discretion under section 3A of the civil procedure Act on inherent powers to extend interim conservatory orders against the defendant to ensure the case is heard and determined on the merits in the shortest time possible. So far as am aware the case has a hearing date to take up evidence for the remaining witnesses. Whether or not the plaintiff at the trial will not be able to present a water light case on a balance of probabilities is not relevant at this stage. Unless a party has a completely hopeless case he must be given an opportunity to challenge the facts as alluded to in the pleadings.

2. Whether the Defendant’s Application disregards the ongoing disposal of the Plaintiff’s suit and Application

[28] The Applicant states that, the interim orders were set under two conditions namely; (That the Plaintiffs Application for injunction be collapsed and matter to proceed in full trial.

a. That the Plaintiff has frustrated and delayed the hearing through unnecessary adjournments. In the circumstance the interim orders should be discharged. They relied on the case of Mobile Kitale Services Station v Mobile Oil Kenya Ltd & another [2004] eKLR

b. that the Plaintiff shall continue to pay a monthly contractual installments of towards settling the Loan. The Plaintiff has refused to pay further installments.

[29] Through its Grounds of Opposition, the Plaintiff submitted that the parties have rival and competing claims each of which is not superior to the other.

[30] The Plaintiffs Notice of Motion and suit dated 15th May 2017 touching upon issues of illegal debits made by the Defendant and the challenge on the validity of the contract relied upon by the Defendant are still pending before the court for determination and the defendants Application is in flagrant disregard of this position which is tantamount to abuse of the process of the court.

[31] I am inclined to agree with the position of the Plaintiffs in this regard. The issues raised by the Plaintiffs are being canvassed in the main suit. The Defendants cleverly avoided addressing the two important points in the opposition raised by the Plaintiffs.

[32] The issue of the contract relied upon by the Defendant is under scrutiny, the Defendant made illegal debits as per the report filed by the Plaintiffs accountant that demonstrated that the Defendant illegally debited over 42,102,106. 44/=. This is an important fact, which should not be overlooked by the court in an attempt to set aside the Interim orders. The Plaintiffs claims a rival competing claim against the defendants alleged claims in the afore stated amount. Therefore it is my view that by setting aside the interim orders various issues raised in the main suit shall be dispensed with which shall amount to miscarriage of justice.

[33] In this matter, the applicant argues that the Respondent has not met the conditions under which the interim orders were granted. They have stated that the plaintiff has frustrated and delayed the hearings through unnecessary adjournments and they have relied on the case of Mobile Kitale Services Station v Mobile Oil Kenya Ltd & another [2004] eKLR. In this case, the Plaintiffs clearly frustrated the efforts of the Court and the Defendant in delivery of justice as well captured as below;

“The plaintiff does not need the orders of the Court, they have served him well, the orders have kept the 1st defendant away from its property for 5 years and definitely the orders were not sought in good faith. It was sought to frustrate, intimidate and above all to blackmail the 1st defendant. How shall we attract investors, when we use the Courts’ orders to frustrate, intimidate and erode the confidence of the said investors. The conduct of he plaintiff negatively impacts on our economy. He does not deserve the intervention of the Court whether by use of discretion or otherwise. It is my judicial duty to take the orders; the same is discharged and set aside”.

[34] I want to depart from the facts of the above case for these reasons. In the Mobile case, the matter had been in court for five years and it clearly was unfair to allow one party to unfairly benefit from the injunctions of the court to the detriment of the other party to a suit. There was a clear indication that, the plaintiff in that case had made attempts to frustrate the hearing of the main suit. The defendant did not attempt to address the matters canvassed in the main suit at this stage. The defendant sought to rely on the delayed tactics the Plaintiff was using to continue to benefit and unfairly enjoy the fruits of the injunction, which had been issued, by the court.

[35] I agree with the Plaintiffs that the validity of the contract relied by the Defendants in making its claim is under a dispute and the determination of the same is pending before the Honorable Court therefore the Application is premature and bad in law. If the court sets a side the interim orders on this premise it shall amount to abuse of courts process and in contempt of court orders, because the issues raised in the in suit shall be dispensed with.

[36] The court has discretionary powers under Order 40 Rule 6 of the Civil Procedure Rules, 2010 not to grant an Application to set aside an interim order if there are sufficient reasonsto do so. In this case I believe there are sufficient reasons to decline the Application.

3. Orders of the Court

[37] It is the prayers of the Applicant that; if the court is inclined to maintain the interim orders, the same should be on condition that the Plaintiff continues to pay contractual monthly installments. They rely on the cases of Harrishchandra Bhovanbhai Jobanputra & another v Paramount Universal Bank Ltd & 3 others [2014] eKLR and David Wambua Ngii v Abed Silas Alembi & 6 others [2014] eKLR.

[38] The Plaintiff challenges the Defendant illegal debit of 42,102,106. 44/= which if it were to be considered, no arrears would accrue. The validity of the contract relied upon by the Defendant in making its claims is under dispute and the determination of the same is pending before the Honorable Court and therefore the Application is premature.

[39] For that reason, there may be need to sustain the Interim Orders but will not be without a condition; that the Plaintiff continues to pay monthly installments as per the extended interim orders issued by the court on 17th July 2017. This is because the Plaintiff has not demonstrated why he has not complied with the orders of the Court on opening an account and continuance repayments until further orders from this court. The relief to lift injunctive orders to stop exercise of statutory power of sale by the defendant bank is hereby denied for want of merit.

[40] Accordingly the defendant partially succeeds in the orders sought in the motion under review. Cost of the application to abide the outcome of the main suit. .

[41] It is so ordered.

Dated and delivered in open court at Kajiado this 30th day of July, 2018.

………………………………..

R. NYAKUNDI

JUDGE

In the presence of Mr. Musyoka advocated for Rigoro for the plaintiff.

No appearance for the defendant.

Court Assistant: Mateli