Zainabu Ayub Mohamed & another v Rafiki Microfinance Ltd [2019] KEELC 3315 (KLR)
The bottom line
#A Kenyan court stopped a bank from selling charged land because the amount actually loaned and owed was in dispute.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Does the application meet the threshold for issuance of an injunction?
- 2.Whether the applicant has established a prima facie case with a probability of success
- 3.How much was disbursed to the applicant
- 4.Whether the statutory power of sale complies with Section 90 of the Land Act
- 5.Whether the applicant will suffer irreparable loss
- 6.Where the balance of convenience lies
Key legal issues
#Prima facie case for interlocutory injunction
The applicant established a prima facie case because the amount disbursed under the further charge is in dispute - the offer letter indicated Kshs 5,000,000/-, the charge Kshs 3,500,000/- and the statement of accounts Kshs 5,000,000/- disbursed.
The court applied the Giella v Cassman Brown principles and the Mrao Ltd definition of a prima facie case. On the documents, the second letter of offer indicated a facility of Kshs 5,000,000/-, the registered charge Kshs 3,500,000/- and the statement of accounts a disbursement of Kshs 5,000,000/-. This discrepancy raised a genuine and arguable case on indebtedness that could only be resolved at the trial of the main suit.
Compliance of the statutory notices with Section 90 of the Land Act
Although the respondent provided proof of service of the requisite notices, the dispute over the amount disbursed meant the validity of the exercise of the statutory power of sale could not be sustained at the interlocutory stage.
The court set out the requirements of Section 90(2) of the Land Act - the notice must state the nature and extent of default, the amount to be paid to rectify it, the time for payment, the consequences of default and the chargor's right to relief - and Section 96(2) requiring a notice to sell at least 40 days before completion. The plaintiffs alleged the notice was undated, did not specify the parcel and demanded amounts not disbursed. The court held proof of service existed but the disbursement discrepancy defeated the respondent at this stage.
Irreparable loss
The applicant failed to demonstrate irreparable loss; the burden lay with the applicant and he did not discharge it.
Under the second Giella limb, the applicant had to show irreparable harm not compensable by damages. The court noted neither party addressed damages adequacy in submissions, but held that the burden rests on the applicant, who failed to prove irreparable loss. Despite this failure, the court still went on to grant relief on the balance of convenience limb.
Balance of convenience
Granting the orders sought carried the lower risk of injustice, so the court granted the orders sought on the balance of convenience.
Relying on Suleiman v Amboseli Resort Limited, the court adopted the 'lower risk of injustice' test. The status quo was that the plaintiffs remained in occupation and control of the land; maintaining it posed the lower risk of injustice pending determination of the actual amount disbursed and the true state of indebtedness at trial.
Legal principles established
#- A prima facie case in a civil application is a genuine and arguable case in which a right has apparently been infringed so as to call for an explanation or rebuttal from the opposite party.
- Where the amount disbursed under a charge is in dispute, the chargor has a prima facie case, since the amount disbursed must be clearly determined before any exercise of the statutory power of sale.
Court orders
#- 1.An injunction restraining the defendant from selling/advertising/transferring land parcel PIONEER/NGERIA BLOCK 1 (EATEC)/973 pending the hearing and determination of the suit
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original civil jurisdiction over the suit land (land parcel PIONEER/NGERIA BLOCK 1 (EATEC)/973); interlocutory application under the Civil Procedure Rules seeking an injunction pending hearing of the suit
Relief refused
#Damages or any other relief beyond the interlocutory injunction
The application was an interlocutory one; the dispute over the amount disbursed and compliance with the statutory notices is left for determination at the hearing of the main suit.
Costs
The judgment does not record any order as to costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
I find that the applicant has established a prima facie case.
with the discrepancy on the amount disbursed, it follows that the applicant has a prima facie case as the amount disbursed must be clearly determined before any action is taken to redeem it.
the burden to prove that there will be irreparable loss lies with the applicant, and he has failed to prove the same.
I do find that it granting the stay in this matter would have a lower risk of injustice and I do grant the orders sought.
Issues in the judgment
#The court refers to granting 'the stay' although the application sought an injunction, and the disposition does not formally set out the injunction order in numbered form.
The arrears figure is inconsistently stated - Kshs 3,961,732.75 in the respondent's case versus Kshs 3,962,732.75 in the applicants' submissions on the statutory notice.
The suit land is referred to variously as parcel number 973 in the application and 937 in the defendant's list of undisputed facts.
The names of the plaintiffs and of the defendant bank are never expressly stated in the judgment; parties are identified only by role, with the 1st plaintiff's name appearing only in the collateral description.
The judgment records no costs order notwithstanding the respondent's request that the application be dismissed with costs.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Zainabu Ayub Mohamed & another v Rafiki Microfinance Ltd [2019] KEELC 3315 (KLR)", Case Analysis (2019). Not stated in the judgment (plaint and notice of motion dated 30th June 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3315/eng@2019-05-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.