Joyce Waigumo Gachuhi & Another v Kenya Women Microfinance Bank PLC

5) That the Court be pleased to issue such other or further orders as it may deem just and expedient in the circumstances. 2. The application is premised on the grounds set out on its face and is supported by the affidavit of Joyce Waigumo Gachuhi, the 1st Plaintiff /Applicant. 3. The Applicants’ claim is that the 1 st Plaintiff is the registered trustee and owner of the suit property, which was charged to the Defendant as security for a loan facility of Kshs. 200,000,000/= advanced to the 2 nd Plaintiff on 21st August 2015. 4. The Applicants’ claim that, although the facility was for Kshs. 200,000,000/=, the Defendant initially disbursed Kshs. 159,730,223.78, repayable over 120 months at monthly instalments of Kshs. 3,510,000/=. The Applicants state that by 20th July 2026, they had paid Kshs. 422,146,367.92 and contend that the outstanding balance ought to have been Kshs. 3,167,549.66. 5. They dispute the Defendant’s demand for a further Kshs. 172,772,083.78, which they allege comprises unlawful penalties and charges. The Applicants further state that while discussions concerning the disputed charges were ongoing, the Defendant issued a 45-day notice and subsequently advertised the suit property for sale by public auction on 31st July 2026 through Timeless Dolphin Auctioneers. RULING ELC LC E337 OF 2026 2 of 15

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6. They contend that the intended sale is unjustified and contrary to the agreement and the law, and that it would occasion them irreparable loss and damage, the suit property being the 1 st Plaintiff’s matrimonial home where she resides with her son, Alex Gachuhi, for whom she holds the property in trust. The Applicants therefore seek, inter alia, an account of the loan, removal of the disputed penalties and charges, and an injunction restraining the intended sale. The Respondent’s Replying Affidavit 7. The Defendant opposed the application through the Replying Affidavit sworn by Marion Wasike, its Head of Legal Services. The Defendant states that it is a microfinance bank licensed by the Central Bank of Kenya and that, by a facility letter dated 5th June 2015, it advanced the 2 nd Plaintiff a facility of Kshs. 200,000,000/= secured by a legal charge over the suit property registered in the name of the 1st Plaintiff. The charge was executed on 21st July 2015 and registered on 22nd July 2015, and the Defendant states that the accompanying affidavit confirmed that the property was not matrimonial property. 8. The Defendant states that the facility was disbursed in tranches, comprising an initial Kshs. 159,730,223.78, followed by Kshs. 20,000,000/=, Kshs. 12,000,000/= and Kshs. 8,260,000/= advanced between September and November 2015, resulting in an outstanding amount of Kshs. 202,732,009.08 by 21st November 2015. A further charge of Kshs. 40,000,000/= was subsequently registered on 30th March 2016, and a further top-up facility of Kshs. 25,000,000/= was granted in October 2017. RULING ELC LC E337 OF 2026 3 of 15

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9. Following the COVID-19 pandemic, the Applicants sought restructuring of the facility. Under a Facility Letter dated 3 rd May 2021, the arrears were capitalised and the facility rescheduled over a fresh 120-month period, with interest at 16.25% per annum and default interest at 2% per month on arrears. The amount outstanding, inclusive of capitalised arrears, was stated to be Kshs. 109,078,138.28, and the Applicants accepted the restructuring terms. After falling into arrears again, the Applicants sought relief from the default interest. This resulted in a Deed of Settlement under which they acknowledged a total indebtedness of Kshs. 165,738,800.27 as lawfully due. The Defendant waived Kshs. 10,525,872.71 in default interest and suspended interest on arrears of Kshs. 55,684,850.75 for the period from 1st February to 31st July 2024. The Applicants undertook to clear the arrears within six months and to repay the principal sum of Kshs. 99,528,076.78 through monthly instalments of Kshs. 1,970,000/= over 90 months from February 2024. The Defendant states that the Deed expressly provided that default would render the debt immediately due and payable and entitle it to exercise its power of sale. 10. The Defendant maintains that the Applicants again defaulted by failing to clear the arrears and maintain the agreed instalments. Further restructuring proposals made in July 2024 and through the Applicants’ advocates in February and April 2025 were rejected as unacceptable. The Defendant thereafter issued a statutory notice dated 9th June 2025, indicating arrears of Kshs. 87,321,785.48 and a total loan balance of Kshs. 174,931,342.75, followed by a 40-day notice dated 2nd October 2025 showing an outstanding amount of Kshs. 172,867,846.20. A further proposal by the Applicants on 28th February 2026 to pay Kshs. 500,000/= monthly, together with such RULING ELC LC E337 OF 2026 4 of 15

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additional amounts as their business would permit, was rejected on 10th March 2026. 11. The Defendant states that the suit property was valued by Orion Valuers on 20th April 2026 at a market value of Kshs. 190,000,000/= and a forced sale value of Kshs. 142,500,000/=. On 5th May 2026, it instructed Timeless Dolphin Auctioneers to proceed with the sale, which was scheduled for 31 st July 2026. As at that date, the outstanding amount was stated to be Kshs. 171,837,190.75, exclusive of continuing interest and interest on arrears. 12. The Defendant denies that the Applicants have demonstrated any illegal or hidden charges, contending that the allegations are unparticularised and unsupported by evidence and that the request for an account is an afterthought. It further disputes the alleged undervaluation of the property, maintains that any loss arising from a sale would be compensable in damages, and contends that the 1st Plaintiff’s occupation of the property does not defeat its statutory power of sale, the property having been voluntarily offered as security. The Defendant consequently urges the Court to dismiss the application and allow it to proceed with the exercise of its statutory power of sale. The Respondent’s Grounds of Opposition 13. The Defendant further opposed the application on the grounds that the Applicants are undeserving of equitable relief for failing to make full and frank disclosure of material facts and for approaching the Court with unclean hands. It contends that although the Applicants acknowledge the existence of the loan, they have sought to create the impression that the facility was fully RULING ELC LC E337 OF 2026 5 of 15

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repaid while omitting material matters, including the Further Charge, subsequent restructuring arrangements and the Deed of Settlement, under which they acknowledged their indebtedness. 14. The Defendant also challenges the Applicants’ delay in seeking relief, noting that the first statutory notice was issued on 9 th June 2025, the second on 2nd October 2025, and the auctioneer’s redemption notice on 5th May 2026, yet the application was only filed on 22 nd July 2026, shortly before the scheduled auction. On the issue of a prima facie case, the Defendant maintains that the Applicants voluntarily obtained the loan facilities and executed the relevant securities, repeatedly sought restructuring of the facility, and expressly acknowledged their indebtedness under the Deed of Settlement. It therefore contends that its statutory power of sale had accrued upon default and that the requisite statutory procedures were duly complied with. 15. The Defendant further argues that the Applicants’ alleged payment of Kshs. 422,146,367.92 does not, without more, demonstrate that the contractual obligations were extinguished, particularly in view of the applicable interest, charges, penalties and subsequent restructuring arrangements. It also disputes the allegation of undervaluation, noting that the Applicants have not produced any competing valuation evidence. 16. On irreparable loss, the Defendant contends that the suit property was voluntarily offered as security and became liable to sale upon default and compliance with the law. Its use as a residence, it argues, does not in itself preclude the exercise of the statutory power of sale. As to the balance of convenience, the Defendant maintains that the Applicants have persistently RULING ELC LC E337 OF 2026 6 of 15

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defaulted despite repeated indulgences, have neither offered to redeem the property nor deposited the disputed amount, and that restraining the Defendant from exercising its statutory rights would prejudice it and its depositors. It consequently contends that a dispute regarding the precise amount due under a charge does not, by itself, constitute sufficient grounds for restraining a chargee from exercising its statutory power of sale. Analysis and Determination 17. The history of the matter shows that on 30th July 2026, the Court issued interim orders that : “The Defendant, its agents, servants, employees, proxies and Timeless Dolphin Auctioneers were thereby restrained from selling, alienating, transferring or otherwise interfering with the suit property pending the inter partes hearing of the application. 18. The Applicants were to pay costs incurred for public auction and the costs was to be agreed between the parties and, in default, assessed by the Court. 19. The Applicants were directed to file a supplementary affidavit and written submissions within fourteen (14) days from 30th July 2026. The Defendant was granted a further fourteen (14) days thereafter within which to respond. At the time of writing this Ruling, neither the Applicants' supplementary affidavit and submissions nor the Defendant's submissions were on record. Issues for Determination RULING ELC LC E337 OF 2026 7 of 15

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20. Having considered the application, supporting affidavit, replying affidavit and the Grounds of Opposition and the material on record, the issue for determination is: Whether the Applicants have satisfied the legal requirements for the grant of a temporary injunction pending the hearing and determination of the suit. 21. The jurisdiction of this Court to grant temporary injunctions is donated by Section 63(c) of the Civil Procedure Act, read with Order 40 of the Civil Procedure Rules, which empower the Court to preserve property that is in danger of being wasted, damaged, alienated or wrongfully dealt with pending determination of a suit and in order to prevent the ends of justice from being defeated. 22. The Court also exercises jurisdiction under Section 13 of the Environment and Land Court Act to grant appropriate reliefs necessary for the preservation of property pending determination of disputes falling within its jurisdiction. 23. The principles governing the grant of interlocutory injunctions are well settled. In Giella v Cassman Brown & Co Ltd [1973] EA 358 , the Court stated: “The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury which would not adequately be RULING ELC LC E337 OF 2026 8 of 15

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compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.” 24. The Court of Appeal subsequently restated and elaborated the principles in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others (Civil Appeal 39 of 2002) [2003] KECA 175 (KLR). The Court held: “The principles which guide the Court in deciding whether or not to grant an interlocutory injunction are that:the applicant must show a prima facie case with a probability of success; an interlocutory injunction would not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not be adequately compensated by an award of damages; if the court was in doubt, it would decide the application on the balance of convenience.” 25. On what constitutes a prima facie case, the Court of Appeal in the same decision stated: “A prima facie case in a civil application included but was not confined to a genuine and arguable case. It was a case which, on the material presented to the court, a tribunal properly directing itself would conclude that there existed a right which had apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.” The Court further made it clear that: “A prima facie case is more than an arguable case. It is not sufficient to raise issues. The evidence must show an infringement of a right, and the probability of success of the applicant’s case upon trial. That is clearly a standard which is higher than an arguable case.” RULING ELC LC E337 OF 2026 9 of 15

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26. The subsequent decision of the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] KECA 606 (KLR) emphasised that the three requirements are distinct and sequential. An applicant must first establish a prima facie case; thereafter demonstrate irreparable injury; and only where the Court is in doubt proceed to consider the balance of convenience. 27. The first question, therefore, is whether the material before the Court demonstrates an apparently infringed right belonging to the Applicants. It is not disputed that the 2nd Plaintiff obtained loan facilities from the Defendant. It is equally not disputed that the suit property was voluntarily offered as security for those facilities and that a Legal Charge was executed and registered. 28. The Defendant has placed before the Court the history of the lending relationship, including the Further Charge of Kshs. 40,000,000/=, the subsequent top-up facility, the 2021 restructuring and the Deed of Settlement. 29. Of particular significance is the Deed of Settlement under which, according to the Defendant's evidence, the Applicants acknowledged that the total debt, including arrears and interest, was Kshs. 165,738,800.27 and was lawfully due. 30. The Applicants have not, at this interlocutory stage, demonstrated that the Deed of Settlement was rescinded, set aside, discharged or otherwise RULING ELC LC E337 OF 2026 10 of 15

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rendered ineffective.The Applicants' principal contention is that they had paid Kshs. 422,146,367.92 by 20th July 2026 and that the amount properly due was only Kshs. 3,167,549.66, whereas the Defendant demanded Kshs. 172,772,083.78. 31. The Court accepts that there is a genuine dispute between the parties concerning the amount outstanding. The existence of that dispute, however, does not by itself answer the question whether the Defendant's statutory power of sale is unlawfully being exercised. The Applicants are required to demonstrate more than the existence of an accounting dispute. They must demonstrate a right apparently infringed by the Defendant and a probability that the challenge to the Defendant's right to realise the security will succeed. 32. The Applicants have alleged that the Defendant has included illegal penalties and charges. However, the allegation is not sufficiently particularised at this stage. The Applicants have not identified with precision which contractual provision or statutory provision has been violated by a particular charge or interest component so as to render the Defendant's power of sale unlawful. Nor have the Applicants demonstrated, on the material presently before the Court, that the loan was fully discharged or that the Defendant has no amount outstanding under the contractual arrangements governing the facility. 33. The aggregate amount allegedly paid by the Applicants cannot, without a proper examination of the contractual interest, default interest, fees, RULING ELC LC E337 OF 2026 11 of 15

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restructuring arrangements and appropriation of payments, conclusively establish that no amount remains payable. 34. This Court is not, at the interlocutory stage, called upon to conduct a final reconciliation of the loan account. That is a matter which may properly arise at the trial if the parties' pleadings and evidence place the account in issue. 35. The Applicants' own conduct shows that the 1 st Applicant acknowledged arrears in her letter dated 15th January 2024 and sought concessions from the Defendant. The parties thereafter entered into a Deed of Settlement. Further restructuring proposals were subsequently made in 2024, 2025 and 2026. That conduct, in the Court’s view, is inconsistent, at least prima facie, with the proposition that the entire loan had already been discharged. 36. The Court must also consider whether the statutory power of sale had accrued. The Defendant's evidence is that statutory notices were issued from June 2025 onwards, followed by a further notice dated 2 nd October 2025 and the auctioneer's notices culminating in the intended auction of 31st July 2026. 37. The Applicants have not demonstrated, on the material before the Court, a specific defect in the statutory notices sufficient to invalidate the Defendant's statutory power of sale. The allegation that the Defendant was acting unlawfully therefore remains insufficiently demonstrated. 38. The Court also notes that the Defendant obtained a valuation of the suit property on 20th April 2026 from Orion Valuers, placing the market value at RULING ELC LC E337 OF 2026 12 of 15

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Kshs. 190,000,000/= and the forced sale value at Kshs. 142,500,000/=. The Applicants have not placed before the Court a competing professional valuation demonstrating that the Defendant's valuation was materially deficient or that the Defendant intended to sell the property at a gross undervalue. 39. The Court is therefore unable, on the material before it, to conclude that the intended sale constitutes an infringement of an identifiable right of the Applicants sufficient to satisfy the first limb of Giella and Mrao cases. 40. The Court understands that the circumstances of each case must be determined on their own evidence. In the present matter, however, the Applicants have not established the additional element necessary to elevate the accounting dispute into a prima facie case against the Defendant's statutory right to realise the security. 41. The Court therefore finds that the Applicants have not established a prima facie case with a probability of success. 42. Having found that the Applicants have not established a prima facie case with a probability of success, the Court will not proceed to consider the remaining limbs of the test for grant of interlocutory injuction. This approach is consistent with the decision in Akute v Pop & 8 Others [2025] KEELC 5327 (KLR), where the Environment and Land Court, upon finding that no prima facie case had been established, held that irreparable injury and the balance of convenience need not be considered. The Court observed that the three hurdles must be considered distinctly, sequentially RULING ELC LC E337 OF 2026 13 of 15

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and logically, without leap-frogging to the subsequent limbs. The position is also settled by the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] KECA 606 (KLR), as already discussed earlier. Final Determination 43. For the foregoing reasons the Court finds that the Applicants have failed to satisfy the established principles for the grant of an interlocutory injunction. In particular, the Applicants have failed to establish a prima facie case with a probability of success. 44. In the Court’s view, the dispute regarding the amount due, including the allegations concerning interest, penalties and charges, does not, without more, establish a sufficient basis for restraining the Defendant from exercising its statutory power of sale. 45. The Court further finds that the Applicants have not demonstrated, prima facie, any sufficient defect in the statutory process or evidence establishing that the Defendant is proceeding with the sale in breach of its statutory duty of care. 46. The Court is nevertheless mindful that the Defendant's right to realise the security remains subject to compliance with the Land Act and all other applicable law. 47. In the result the court issue the following orders; A) The Notice of Motion dated 22nd July 2026 fails and is hereby dismissed. RULING ELC LC E337 OF 2026 14 of 15

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B) The interim orders issued by this Court on 30th July 2026 are hereby discharged and vacated. C) The costs of the Notice of Motion dated 22nd July 2026 are awarded to the Defendant/Respondent. Delivered, dated and signed via Microsoft Teams this 24 th day of September 2026. HON. L. G. KIMANI JUDGE ENVIRONMENT AND LAND COURT The Ruling read in the presence ofGatwiri for Defendant /Respondent Kariuki for Applicant RULING ELC LC E337 OF 2026 15 of 15

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