https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6894

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA** **COMMERCIAL AND TAX DIVISION** **MILIMANI LAW COURTS** **HCCC E343 OF 2019** **UNLIMITED DIRECTIONS KENYA LIMITED.................PLAINTIFF** **VERSUS** **HFC LIMITED....…………………..……..............1ST DEFENDANT** **LEGACY AUCTIONEERING SERVICES………….2ND DEFENDANT** **RULING** 1. There are two applications before the court by the plaintiff and the 1st defendant. 2. On 30.1.2023, a date for ruling in respect of the two applications was scheduled for 19.4.2023 by **Hon. Dorah Chepkwony’**. However, she was transferred before the ruling could be delivered. 3. The matter was subsequently allocated to this court after the pendency of the ruling was brought to its attention. 4. The background is that the plaintiff and the 1st defendant entered into a loan agreement dated 24.9.2015 and a charge was registered on 1.12.2015 over the suit property. **Plaintiff’s application** 1. The plaintiff filed the notice of motion dated 3.5.2021 seeking temporary injunctive reliefs to: - 2. **restrain the 1st defendant or its agents from evicting or interfering with its peaceful occupation of Apartments Numbers A2, A3, A4, A5, A7, B1, B2, B4 and B5 Suite Life Apartments erected on L. R. No. 1/844 Kilimani Area (the suit property) pending the hearing and determination of the suit.** 3. **to restrain the 1st defendant or its agents from transferring, alienating, encumbering or disposing of the suit property pending the hearing and determination of the suit.** 4. **to set aside the sale and/ or transfer of the suit property to the 1st defendant and to revoke the titles issued to it.** 5. The application is supported by an affidavit sworn by the plaintiff’s director, **Robert M. Kioko** on 3.5.2021. 6. The 1st defendant opposed the application through a replying affidavit sworn by **Christine Wahome**. **1st defendant’s application** 1. On the other hand, the 1st defendant filed the notice of motion dated 1.12.2021 seeking that the revenue collected from the charged property be deposited in a joint interest earning account to be opened by the parties’ advocates pending the hearing and determination of the suit. 2. The application was supported by an affidavit sworn by **Christine Wahome** on 1.12.2021. 3. The plaintiff filed a replying affidavit sworn by **Robert M. Kioko** on 20.9.2022. 4. The 1st defendant filed a further affidavit sworn by its legal manager, **Belinda Ng’ang’a**. **Plaintiff’s case** 1. The plaintiff confirmed that the suit property is charged to the 1st defendant on account of a loan facility taken for various business endeavors. However, it disputed the amount sought to be recovered by the respondent, prompting this suit. 2. The plaintiff’s gravamen is that the 1st defendant’s exercise of statutory power of sale over the suit property was marred by illegalities and irregularities of procedure. It highlighted that it learnt about the transfer of the suit property at the **Kilimani Police Station** on 28.4.2021 when the 1st defendant’s officer, **Joseph Kamau** was summoned by the OCPD after he attempted to evict it from the suit property in the company of armed goons. 3. According to the plaintiff, the 1st defendant’s attempts to sell the suit property were futile as the bids fell short of the reserved price. It contended that the 1st defendant transferred to itself ownership of the suit property without seeking and obtaining leave of the court as per **section 100 (1) of the Land Act**. That it breached its duty to obtain the best reasonable price possible. That it did not bid for the property during the auction on 30.4.2019 as per **sections 97 (1) and 100 (3) of the Land Act**. That it did not inform the plaintiff of the sale and account to the plaintiff the way the proceeds of sale were utilized. 4. The plaintiff claimed that the 1st defendant has the transfer forms in its possession and that it would transfer the suit property if not restrained causing it prejudice. That it is prudent that the suit properties be preserved so that its claim is not defeated. **1st defendant’s response** 1. In response, the 1st defendant contended that: - 2. The plaintiff does not dispute the loan default. 3. It issued the plaintiff with the requisite statutory notices before exercising its statutory power of sale. 4. It is the registered proprietor of the suit property after the fall of the auctioneer’s hammer on 30.9.2019 and registration of transfers over the suit property in its name on 22.7.2020. 5. The plaintiff has wrongfully denied it access to the suit property. 6. The plaintiff has wrongfully converted to its own use revenues collected from the suit property. 7. The revenues from the suit property will be well preserved if the orders sought are granted. 8. It will be in the interests of justice for the court to grant the orders sought. **Plaintiff’s reply** 1. The plaintiff denied knowledge of the debenture dated 19.11.2015 and registered on 2.12.2015 conferring upon the 1st defendant power to sell the suit properties in the event it defaulted in honouring its secured obligations. 2. The plaintiff contended that it had not wrongfully and illegally denied the 1st defendant access to the suit property because the public auction was irregular and illegal. That it has not collected rents on the suit property as the apartment units are unoccupied. 3. The plaintiff asserted that the 1st defendant has breached its right to property under **Article 40 (1) of the Constitution**; right to peaceful and quiet possession and its right to equity of redemption under **section 89 of the Land Act**. That collection of revenue from the suit property and depositing of the funds into a joint interest earning account would further the infringement of its rights. 4. The plaintiff contended that the 1st defendant’s application is an abuse of the court process and ought to be dismissed with costs. That the 1st defendant would not be prejudiced if the orders sought in its application are not granted. **Submissions** 1. The plaintiff filed written submissions dated 17.4.2023 and the 1st defendant filed written submissions dated 30.1.2023. 2. The plaintiff urged the court to allow its application for temporary injunctive reliefs as it has met the conditions. It asserted that the 1st defendant ought to be condemned to pay the costs of the application as it flouted the laws on the procedure for exercising its statutory power of sale. 3. The plaintiff also argued that there is no basis for the preservation of rental income from the suit property because the property has been registered in the 1st defendant’s name illegally. 4. The plaintiff further submitted that the court ought to cancel the public auction, declare the improper transfer of the suit property unconstitutional and have the 1st defendant re-issue fresh statutory notices and kick-start its exercise of statutory power of sale. 5. The plaintiff relied on: - 6. **Eastern Bakery v Castelino [1958] EA 462** 7. **Football Kenya Federation V Kenyan Premier League Limited & 3 Others [2015] eKLR** 8. **Foss v Harbottle (1843) 2 Hare 461** 9. **Salomon v Salomon [1897] AC 78** 10. **Victor Mabachi& Another v Nurturn Bates Ltd, Civil Appeal NO. 247 of 2005 [2013] eKLR** 11. **Multichoice Kenya Ltd v Mainkam Ltd & Anor. (2013) eKLR** 12. **Civicon Limited v Kivuwatt Limited & 2 Other [2015] eKLR** 13. **Martin Kirima Baithambu v Jeremiah Miriti [2017] eKLR** 14. **Palmy Company Limited v Consolidated Bank of Kenya Limited [2014] eKLR** 15. The 1st defendant argued that through its application, the plaintiff is inviting the court to conduct a mini-trial on issues which should be canvassed at the main hearing. 16. The 1st defendant submitted that the plaintiff has not satisfied the legal standard for the grant of injunctive orders. That the public auction in question was pursuant to **section 100(3) (a) and (b) of the Land Act** and therefore the requirement of **section 100(1) and (2)** does not apply. That the advertisement notice is duly acknowledged by the plaintiffs in their exhibits and the Transfer forms are duly produced by it as exhibits therefore fully in the plaintiff’s knowledge. 17. The 1st defendant argued that the order for cancellation of Title cannot issue at interlocutory stage. That the documents subject to the order for production are duly filed in this court. That pending the hearing and determination of the legality of the public auction, the rent collected from the property subject of the suit property should be collected in an escrow account and that it is only fair that the suit property be preserved from wastage and that the rent proceeds be placed in a joint-interest earning account. 18. The 1st defendant thus urged the court to allow it application and to dismiss the plaintiff’s application. 19. The 1st defendant relied on: - 20. **Giella v Cassman Brown & Co. Ltd (1973) EA 358** 21. **Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KLR 125** 22. **Palmy Company Limited vs Consolidated Bank of Kenya Limited [2014] eKLR,** 23. **Olkasasi Limited v Equity Bank Limited [2015] eKLR** 24. **Silas Misoi Yego t/a Siro Investments v Transnational Bank Limited & another [2020] eKLR** 25. **Jatomy Supermarkets Limited & another v Family Bank Limited & another [2022] KEHC 10265 (KLR)** 26. **Anne Wachisi Situma & another v I & M Bank Limited & 2 others [2021] eKLR** 27. **Zum Zum Investment Limited v Habib Bank Limited [2014] eKLR** 28. **Studertek Powers Systems (E.A) Ltd & another v Housing Finance Company Ltd [2020] eKLR]** 29. **Mohamed Abubakar v Benjamin Sila t/a Legacy Auctioneers Services & 3 others [2022] eKLR** 30. **Silas Misoi Yego t/a Siro Investments v Transnational Bank Limited & another** 31. **Nguruman Limited v Jane Bonde Nielsen and 2 Others [2014] eKLR** 32. **Robert Mugo wa Karanja v Ecobank (Kenya) Limited & ano. [2019] eKLR** 33. **Wilstone Mdindi Mwawugunga v Kenya Women Microfinance Bank Plc [2022] eKLR** 34. **Emfil Limited v Attorney General & 423 others [2016] eKLR** 35. **Omboko v Speaker & Chairperson of Busia County Assembly Service Board & 6 others (Petition E005 of 2020 [2022] eKLR** 36. **Francis M Kimani & another v Nancy W Munyua & 2 others [2018] eKLR** 37. **Lilian Waturi Wa Mbugua also Known as Lilian Waturi Mbugua v Geofrey Ngichiri Mubea & 4 others [2020] eKLR** 38. **Clara Jerotich Kangogo & another v Boaz Kaino [2018] eKLR** 39. **JNG v LWK [2021] eKLR** **Analysis and Determination** 1. A successful applicant for a temporary injunction should establish a ***prima facie*** case with a probability of success, that irreparable harm that cannot be compensated by way of damages if the injunction is not granted and that the balance of convenience tilts in favour of granting the injunction. **Giella v Cassman Brown [supra]** 2. A *prima facie* case is one which on evidence presented, there exists a right which has apparently been infringed by the opposite party. **Mrao Ltd v First American Bank of Kenya Ltd [supra]** 3. In **Nguruman Limited v Jan Bonde Nielsen & 2 Others [supra]** the Court of Appeal cautioned that ***“…in considering whether or not a prima facie case has been established, the Court does not hold a mini trial and must not examine the merits of the case closely.”*** 4. It is common ground that the plaintiff and the 1st defendant entered into the loan agreement dated 24.9.2015 and a charge was registered on 1.12.2015 over the suit property. 5. The plaintiff filed this suit claiming that the 1st and 2nd defendants conducted an irregular, fraudulent and illegal public auction of the charged property. It contends that the 1st defendant did not comply with the conditions of sale. That they failed to carry out a professional valuation 12 months before the auction. That the 1st defendant exercised its statutory power of sale when the facility was not due. 6. The plaintiff further contends that the 1st defendant breached its right to property, right to peaceful and quiet possession and its right to equity of redemption. That it also breached its duty to obtain the best reasonable price for the charged properties. That it sold the property at 25% less than the market value. That in 2015, the property had been valued at Kshs. 275 million yet a reserve price of Kshs. 198 million was set for the public auction. 7. Conversely, the 1st defendant argues that the public auction in question was pursuant to **section 100(3) (a) and (b) of the Land Act** and therefore the requirement of **section 100(1) and (2)** does not apply. That the advertisement notice is duly acknowledged by the plaintiffs in their exhibits and the Transfer forms are duly produced by it as exhibits therefore fully in the plaintiff’s knowledge. 8. From the arguments presented, the requirements, scope and application of **section 100(1)**, is one of the major subjects for trial. 9. The plaintiff claimed that it only learned about the public auction sale to the 1st defendant when on 28.4.2021 the 1st defendant’s officer, **Joseph Kamau** was summoned by the OCPD after he attempted to evict it from the suit property in the company of armed goons. The 1st defendant claimed that the plaintiff had notice of the public auction because it produced a copy of the advertisement in its replying affidavit. 10. In its replying affidavit of September 2022, the plaintiff produced a copy of the advertisement of the public auction slated for 30.9.2019. It was published in the *Daily Nation* of 16.9.2019. 11. The replying affidavit of 2022 comes after the date of the alleged eviction attempt in 2021. The core of the matter are notices issued to the plaintiff of the auction before it took place. 12. Thus, at this interlocutory stage, the court only restates that the questions on any notices issued to the plaintiff in respect of the auction beforehand or lack thereof forms a *prima facie* issue for trial to establish whether the statutory requirements under the Land Act were complied with. 13. According to a letter dated 3.10.2019, from the 2nd defendant, the 1st defendant was the highest bidder with a bid of Kshs. 198 million. The 1st defendant exhibited a valuation report of 18.2.2019 prepared by **Transcountry Valuers Limited**. The open market value was assessed at Kshs. 198 million and a forced sale value placed at Kshs. 148.5 million. 14. On the material before the court, the said valuation appears to have been undertaken within the twelve-month period preceding the sale. 15. At this interlocutory stage, this evidence may lend support to the 1st defendant’s position regarding the price realized at the auction, although its sufficiency and probative value remain matters for determination at trial. 16. Flowing from the above, the court finds that the plaintiff has established triable issues. 17. There is no contest that the property was charged and the charged property was sold to the 1st defendant via public auction. Similarly, there is also no contest that the charged property was transferred to the 1st defendant. Except the said sale by public auction and transfer of the property to the 1st defendant is the subject of these proceedings. 18. There is also not contest that the debt is owing except the plaintiff challenges the amount of the debt owed. 19. This mix of issues forms the functional foundation for the exercise of court’s discretion and the orders that will ensue. **Cancellation of the transfer** 1. An order for cancellation of a transfer of property is a mandatory and final remedy, as it encompasses the reversal of a completed legal act and determination of proprietary rights. While the court has jurisdiction to grant mandatory orders at an interlocutory stage, such relief is granted only in exceptional and clear cases, as it may have the effect of conclusively determining the suit before trial. 2. The court finds that this is not a clear case to warrant the issuance of a mandatory remedy at the interlocutory stage. **Order for production of documents** 1. The order for production of documents was framed as one to be issued pending the inter partes hearing of the application. It sought the production of the notice of advertisement of sale by public auction. This has been produced by the plaintiff. 2. The weight and sufficiency of that document in demonstrating compliance with the statutory requirements remain matters for consideration at trial. **Rent proceeds** 1. The 1st defendant sought that the revenue collected from the charged property be deposited in a joint interest earning account to be opened by the parties’ advocates pending the hearing and determination of the suit. 2. The plaintiff impugned the proposal on grounds that the apartments are unoccupied. The issue at this interlocutory stage is not confined to the question of occupancy but calls for balancing of the parties’ respective interests pending trial, including the preservation and proper accounting of any income that may be derived from the suit property. 3. The debt has not been denied except the amount of the sum due. The plaintiff has not also confirmed or shown that it has repaid the debt. 4. In these circumstances, an appropriate order should be fashioned to safeguard the interests of both parties without prejudging the substantive issues in dispute. 5. In considering the competing positions of the parties, the court is guided by the principles on irreparable harm and balance of convenience. At this stage, the plaintiff has not demonstrated that any prejudice would arise from the proposed interim arrangement or if any arise, cannot be adequately compensated by an award of damages. 6. Thus, the balance of convenience tilts in favour of maintaining the status quo, preserving and securing any revenue derived from the suit property in a joint interest-earning account, pending the hearing and determination of the suit. **Conclusion** 1. In conclusion, the plaintiff’s application is partially allowed and succeeds to the extent that both parties are hereby restrained from disposing of, transferring, or in any manner alienating the suit property pending the hearing and determination of the suit. Registration status remains as is. 2. Further, the 1st defendant’s application is allowed in the terms that any revenue derived from the suit property shall be deposited into a joint interest-earning account to be opened within 14 days from today and operated by the parties’ advocates. 3. Costs shall be in the cause. **Dated, signed and delivered through Microsoft Teams online application this 7th day of May, 2026** **-----------------** **F. Gikonyo M** **Judge** **In the presence of: -** **Ms. Asli for the Plaintiff** **Ms. Wangui for 1st defendant** **Ivan/Aggrey C/A**