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ELCDismissedNotice of Motion dated 11th August 2017 (suit filed 14th August 2017)· [2018] KEELC 2774 (KLR)

Mohamed Hassan Ali v Joseph Kariuki Kibaara [2018] KEELC 2774 (KLR)

Environment and Land Court of Kenya at Mombasa
18 April 2018
2,745 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Mombasa court refused to stop a bank from selling a borrower's property because the borrower admitted default and failed to prove the bank's figures were wrong.

What this practically means

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Executive summary

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This was a ruling on the Plaintiff's Notice of Motion dated 11th August 2017, brought under Order 40 Rules 1 and 2 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act, seeking an interlocutory injunction restraining the Defendant bank from selling or interfering with a house on Plot No. L.R/Mainland North/Section I/17466, and an independent audit of the Plaintiff's mortgage account and escrow account to verify the amount owing and the correctness of interest charged. The Plaintiff had obtained a Kshs.53,600,000 construction loan facility in 2013, secured by a charge over the property, which it contended was to convert into a 15-year long-term loan; it claimed it was not in arrears, that the 90-day statutory notice was premature, and that the bank had manipulated the account opening balance for 2016. The Defendant opposed, maintaining that disputes on accounts do not ground injunctions and that the notice under Section 90 of the Land Act issued after default had accrued. Applying the Giella v Cassman Brown principles, the court found the Plaintiff had not established a prima facie case with probability of success, noting the Plaintiff's director's email of 7th February 2017 admitting default. The court also held that account disputes are not a sufficient basis to restrain a chargee's statutory power of sale, that the Plaintiff failed to show irreparable injury, that a mandatory injunction to compel accounts was unwarranted, and that the balance of convenience favoured the Defendant. The application was dismissed with costs to the Defendant.

Key legal issues

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01

Prima facie case for temporary injunction

Holding

Plaintiff failed to demonstrate a prima facie case with probability of success; email of 7th February 2017 from its director admitted default, so the statutory notice issued on 14th March 2017 was not premature.

Reasoning

The court applied the Giella test and Mrao's definition of a prima facie case. The director's email admitting default and promising to regularise the account within thirty days undermined the claim of no arrears. The statutory notice issued after accrual of the Defendant's rights was therefore valid.

p. 3
02

Irreparable injury

Holding

Plaintiff failed to show injury not compensable by damages.

Reasoning

Relying on Ooko v Barclays Bank of Kenya, the court held the onus lies on the Applicant to show irreparable injury not compensable by an award of damages, and found the Plaintiff made no attempt to demonstrate irreparable loss, being content to rely on the alleged prima facie case.

p. 4
03

Mandatory interlocutory injunction to compel giving of accounts

Holding

Refused; not a strong and straightforward case warranting the exceptional remedy.

Reasoning

Citing Showind Industries, the court held that interlocutory mandatory injunctions are granted sparingly and only in exceptional circumstances where the Applicant's case is very strong and straightforward, and where the Applicant's conduct meets the approval of a court of equity. The Plaintiff's case did not meet this test.

p. 4
04

Balance of convenience

Holding

Tilts in favour of the Defendant; Plaintiff failed to discharge the burden.

Reasoning

Applying Paul Gitonga Wanjau v Gathuto Tea Factory Co. Limited, the court held the burden of proving that the inconvenience to the Applicant if the injunction is refused is greater than that to the Respondent if granted lies on the Applicant, and found the Plaintiff failed to discharge it.

p. 5

Legal principles established

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  • A dispute as to accounts is not a sufficient ground to restrain a chargee from exercising its statutory power of sale.
  • Illegal interest as a basis for granting an injunction must be supported by clear and sufficient evidence tabled in court by the Applicant.

Court orders

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  1. 1.The Notice of Motion dated 11th August 2017 is dismissed.
  2. 2.Costs of the application awarded to the Defendant/Respondent.

Authorities

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Legislation

  • Civil Procedure RulesOrder 40 Rules 1 and 2
  • Civil Procedure ActSection 3A
  • Civil Procedure Rules, 2010Order 2
  • Land ActSection 90

Cases cited (20)

  • Olympic Sports House Limited –versus- School Equipment Centre Limited
    (2012) eKLR
  • Joseph Siro Mosioma –versus- Housing Finance Corporation of Kenya And 3 Others
    Nairobi HCCC No. 265 of 2007 (unreported)
  • Suleiman –versus- Amboseli Resort Limited
    (2004) 2KLR 589
  • Alkman –versus- Muchoki
    (1984) KLR 353
  • Rameshchand Shamji Kerman Shar And Another –versus- Playfair Enterprises Limited And Another
    (2015) eKLR
  • Thara Orchards Limited –versus- Kenya Commercial Bank Limited
    (2012) eKLR
  • Palmy Co. Ltd –versus- Consolidated Bank of Kenya Limited
    (2014) eKLR
  • Bharmal Kamji Shah And Another –versus- Shah Depar Devji
  • Lalji Karsan Rabadia And 2 Others –versus- Commercial Bank of Africa Limited
    (2015) eKLR
  • East Africa Development Bank –versus- Hyndai Motors Kenya Limited
    (2006) eKLR
  • Nguruman Limited –versus- Jan Bonde Nelson And 2 Others
    (2014) eKLR
  • Giella –versus- Cassman Brown And Co. Ltd
    (1973) EA 385
  • Mrao Limited –versus- First American Bank Limited And 2 Others
    (2003) KLR 125
  • Njenga –versus- Njenga
    (1991) KLR 401
  • Kenleb Cons Limited –versus- Gathitu Services Station Limited And Another
    (1990) KLR 557
  • Rajput –versus- Barclays Bank of Kenya Limited And 3 Others
    (2004) 2KLR 393
  • Thathy –versus- Middle East Bank (K) Ltd And Another
    (2012) IKLR 595
  • Ooko –versus- Barclays Bank of Kenya Limited
    (2002) KLR 394
  • Showind Industries Limited And Another
    (2002) IEA 284
  • Paul Gitonga Wanjau –versus- Gathuto Tea Factory Co. Limited And 2 Others
    (2016) eKLR
Jurisdiction invoked
Order 40 Rules 1 and 2 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act (inherent jurisdiction)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Mohamed Hassan Ali v Joseph Kariuki Kibaara [2018] KEELC 2774 (KLR)", Case Analysis (2018). Notice of Motion dated 11th August 2017 (suit filed 14th August 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/2774/eng@2018-04-18

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.