Kagonia v Serene Valley Properties

1st defendant. Upon inquiry, the plainti was informed that the 2nd defendant took over the project from the 1st defendant and was handling the settlement of claims made by various parties associated with the project. The plainti contends that in the cause of her advocates' correspondence with the 1st and 2nd defendants, she discovered that the suit property was marked as unsold and that the 2nd defendant was at liberty to sell the same to a third party pursuant to a deed of settlement signed between the 1st and 2nd defendants. 4. The 1st defendant supported the application through written submissions dated 25/4/2022, led by M/s Mutanda Law Advocates. The 1st defendant conrms that it entered into an agreement with the plainti for the sale of the suit property. The 1st defendant adds that it approached the 2nd defendant for nancing of the housing project and subsequently entered into various agreements with the 2nd defendant including an escrow agreement dated 27/3/2013 to facilitate receipt of sale proceeds of the units to be sold in the housing project. The 1st defendant further contends that despite the 2nd defendant being well aware that the agreement between the 1st defendant and the plainti existed, the 2nd defendant proceeded to execute a sale agreement for the sale of the suit property with a third party, one Florence Ann Wamathwe Thairu. It is the 1st defendant’s case that the interim injunction should be granted for purposes of good order in the proceedings and to enable the plainti prove her claim in the suit. 5. The 2nd defendant opposes the application through its replying adavit sworn by Kuria Njinu on 22/6/2022 and written submissions dated 12/7/2022, led by M/s Muriu Mungai & Company Advocates LLP. Its case is that Unit B9 is part of the properties charged in its favour as security for loan facilities granted to the 1st defendant to facilitate development of the housing project. The 2nd defendant adds that clause 13 of the charge instrument registered on 28/2/2013 expressly prohibited the 1st defendant from selling, leasing, agreeing to lease, or parting with possession of the suit property without the prior written consent of the 2nd defendant. The 2nd defendant contends that it never approved the sale of the suit property to the plainti and that it was not privy to nor is it bound by any terms of any agreement between the plainti and the 1st defendant. The 2nd defendant contends that the plainti has not established a prima facie case against it. 6. I have considered the parties’ respective cases and submissions. The single question to be determined in the application is whether the plainti has satised the criteria upon which trial courts exercise jurisdiction to grant interlocutory injunctive reliefs. The relevant criteria were outlined by the Court of Appeal for East Africa in Giella v Cassman Brown (1973) EA 358. First, the plainti is required to demonstrate a prima facie case with a probability of success. Second, the plainti is required to demonstrate that if the injunction is denied, she would stand to suer injury that may not be indemniable through an award of damages. Third, should the court have doubt on both or either of the above two limbs, the application is to be decided on a balance of convenience. At the stage of disposing the plea for an interlocutory injunctive relief, the court does not make conclusive or denitive ndings on the key issues in the suit. Denitive and conclusive ndings are reserved for judgment after trial. 7. The plainti initiated this suit to ventilate a claim of a purchaser seeking an order of specic performance of a land contract. At this interlocutory stage, it does emerge from the case put forth by the 1st defendant that the 1st defendant does not contest the plainti’s claim. The party contesting the plainti’s claim is the 2nd defendant. The 2nd defendant is a nancial institution that provided the funds that were used to develop the housing project in which Unit B9 (the suit property) is located. Unit B9 is only one of the 30 units that have been developed using loan facilities provided by the 2nd defendant. The land together with all the units constitute the security that the 1st defendant gave to https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/22136/eng@2023-11-28 2

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the 2nd defendant. There exist: (i) a legal charge; (ii) a further charge; and (iii) a second further charge against the land together with all the developed units. 8. The plainti would not be in court now if the 1st defendant redeemed the charged properties by repaying the loan. The plainti is in court because the 1st defendant has failed to repay the loan. Much as the 1st defendant would want to support the plainti, they are doing so well aware that they are the cause of the plainti’s predicament. Having said that, let me turn to the key issue in this ruling. 9. Whereas the plainti seeks to enforce a purported land contract against the two defendants, at this interlocutory stage, no evidence of any compliant land contract between the plainti and the 2nd defendant has been placed before this court to demonstrate a prima facie case in relation to the plea for an order of specic performance of the land contract by the 2nd defendant. If the plainti has that evidence, she has not placed it before this court. In the absence of evidence of a compliant land contract that satises the requirements of Section 3(3) of the Law of Contract Act, between the plainti and the 2nd defendant, I do not think the plainti can be said to have demonstrated a prima facie case with the probability of success as against the 2nd defendant who is a chargee. 10. The second reason why I do not think the plainti has established a prima facie case is that there was disclosure from the outset by the two defendants that Unit B9 was sold to one Florence Ann Wamathwe Thairu at Kshs 16,000,000. Despite the disclosure, the plainti elected not to join the said purchaser as a party to this suit. She wants the said purchaser to be condemned unheard. Kenya’s civil legal system does not permit that. 11. Thirdly, the plainti seeks orders of specic performance in relation to Unit B9 which is only one out of 30 units that have been developed on the parcel of land using loan facilities provided by the 2nd defendant. She, however, seeks an injunctive order in relation to the entire parcel of land on which the 30 units have been developed. I do not think the plainti has placed before this court evidence that would constitute a prima facie case in relation to the entire parcel of land together with all the 30 units so as to warrant the above relief. 12. Fourth, the payment voucher dated 14/12/2013 which the plainti is waving as evidence of payment of purchase price indicates that the plainti paid to the 1st defendant [a limited liability company] cash amounting to Kshs 5,030,000 on 3/5/2013; 11/6/2013, and 9/12/2013. At that point in time, there existed a charge registered on the suit land on 28/2/2013 in favour of the 2nd defendant. Clause 13 of the charge dated 27/2/2013 expressly prohibited the 1st defendant against selling any part of the suit land without the written consent of the 2nd defendant. The prohibition reads thus: “ 13. The chargor shall not sell, transfer, lease, agree to leave, accept surrenders of leave, charge or part with the possession of any part of the property without the prior written consent of Shelter Afrique” 13. Beside the above prohibition of unauthorized sale, there was a formal requirement for remittance of purchase price into the escrow account that had been opened by the two defendants. At this point, no evidence of remittance of the above money into the escrow account has been given by the plainti. What is being waved is a voucher relating to cash money allegedly paid to the 1st defendant during the subsistence of the charge. On its part, the 1st defendant gave a totally contradictory version on how the alleged purchase price was paid. 14. For the above reasons, I have no doubt that the plainti has failed to establish a prima facie case with the probability of success. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/22136/eng@2023-11-28 3

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15. On the adequacy of damages, special condition (B)(d) of the agreement dated 25/4/2012 provided for refund of purchase price as the remedy available to the plainti in the event of non-completion by the 1st defendant. On that basis, the court takes the view that should the plainti’s claim succeed against the 1st defendant, damages will be an adequate remedy. 16. Having found that the plainti has not established a prima facie case against the 2nd defendant, and that damages would be an adequate remedy, the principle of balance of convenience would not apply in the circumstances of this application. 17. In the end, the application dated 11/4/2022 is rejected for lack of merit. Costs shall be in the cause. DATED, SIGNED AND DELIVERED VIRTUALLY AT THIKA ON THIS 28TH NOVEMBER 2023 B M EBOSO JUDGE In the presence of: Mr Odari for the plainti Mr Opole for the 2nd defendant Mr Wamote for the 1st defendant Court Assistant: Hinga/Osodo https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/22136/eng@2023-11-28 4

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