Unique Energy Solutions Limited & 2 others v Credit Bank Plc

is the Managing Director of the 1st Applicant and husband of the 3rd Applicant herein. Briefly, the 1st Applicant applied for credit facilities from the Respondent Bank all totalling to Kshs.60,590,000/= between the years 2016 and 2018 whereby the 2nd and 3rd Applicants were guarantors and the said loan facilities were secured through Legal Charge over L.R. No.10079/43 which contain the 2nd and 3rd Applicants’ matrimonial home and Title No.Ndumberi/Riabai/7037. That as at 21st July, 2022, the 1st Plaintiff/Applicant had repaid the loan amount plus interest leaving a balance of Kshs.10,839,406/=. However, due to among others, the incident of Covid-19 Pandemic, termination of the 1st Plaintiff’s/ Applicant’s contracts with a major client coupled with a depressed economy, the 1st Plaintiff/Applicant was unable to meet its financial obligation and requested for restructuring of its said loan, and the Respondent offered it a term loan restructure facility for the said Kshs.10,839,406/= vide an offer letter dated 21st July, 2022. 3. That the 1st Plaintiff/Applicant continued to encounter challenges in keeping up with instalment repayments and the 2nd and 3rd Plaintiffs/Applicants requested the Respondent to allow them sell the other collateral known as Title No.Ndumberi/Riabai/2303 by Private Treaty so as to plough the proceeds thereof towards the full repayment of the said loan and the Respondent acceded to this request subject to a very enormous condition that the 1st Plaintiff/Applicant makes a lump sum payment of Kshs.6,000,000/= and valuation of the said collateral properties to establish their current market price and forced sale value. 4. The Plaintiffs/Applicants go on to state that the collateral properties were valued and assigned open market values of Kshs.56,000,000/= for L.R. No.10079/43 while Title No.Ndumberi/Riabai/7037 was valued at Kshs.35,000,000/=. The Respondent then proceeded to issue Notices for sale to exercise its Statutory Power of Sale and singled out property known as L.R No.10079/43 which it advertised for sale by public auction on 25th June, 2021. This aggrieved the Plaintiffs/Applicants and they instructed an independent valuer who established that the said property had been undervalued. That later, on 18th June, 2024, the Respondent served the 2nd and 3rd Plaintiffs/Applicants with a Notification of Sale relating to the other property known as Title No.Ndumberi/Riabai/7073. 5. It is the Plaintiffs’/Applicants’ contention that the intimated sale of the properties is illegal, wrongful, vindictive, capricious, oppressive, unscruptous, unconscionable, callous, unfair, unjust, unreasonable, indiscriminative and motivated by ulterior motives to impoverish and have them landless by ensuring they lose their matrimonial home without any factual justification. 6. Therefore, the Plaintiffs/Applicants seek for orders to stop the sale of their properties particularly, L.R. No.10079/43 as they stand to suffer irreparable loss and that they have a prima facie case with high chances of success. 7. In response, the Respondents opposed the application vide a Replying Affidavit sworn by Wainaina Francis Ngaruiya, the Head of its Legal Department o 13th august, 2024 wherein it confirmed granting the Applicants various credit but they failed to clear the balance which stood at Kshs.11,999,187.01 as at 24th June, 2024. The Respondent also confirms that the loan amounts was secured by the two suit properties. The Respondent contends that when the Applicant failed to clear the balance of loan, it issued the requisite Notices on both properties in exercise of its Statutory Power of Sale and served the same via Registered Post through same Postal Address the Applicants provided. The Respondent also confirms that it ensured a current valuation of the properties which was not faulted. 8. The court directed the parties to canvass the application by way of written submissions and the Applicants filed their submissions dated 24th September, 2024 while the Respondent filed theirs dated 25th September, 2025. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 2

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Analysis and Determination 9. Having carefully read through the Notice of Motion application, the Supporting Affidavit thereof, the Replying Affidavit alongside the submissions filed by respective parties, this Court finds the main issue for determination being whether the Plaintiff/Applicant has satisfied the condition required to warrant grant of orders for interlocutory injunction. 10. The orders for interlocutory injunction was discussed in the case of Nguruman Limited –vs- Jan Bonde Nielsen & 2 Others [2014] eKLR which relied on the principles established in the Giella –vs- Cassman Brown & Co Ltd [1973] EA 358 and held as follows:“ In an interlocutory injunction application, the applicant has to satisfy the triple requirements to; (a) establish his case only at a prima facie level, (b) demonstrate irreparable injury if a temporary injunction is not granted, and (c) ally any doubts as to (b) by showing that the balance of convenience is in his favour. These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established that all the above three conditions and stages are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially.” 11. With regard to what constitutes a prima facie case, in the case of Mrao Ltd -vs- First American Bank of Kenya Ltd & 2 Others [2003] KLR 125 considered what constitutes a prima facie case and held that: “ In civil cases, a prima facie case is a case in which on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or rebuttal from the latter” 12. In this case, to determine whether the Applicant has established a prima facie case, the court is required to determine whether the rights of the Applicants have been infringed upon by the Respondent. It is not in dispute that the Defendant/Respondent advanced the sum of Kshs.60,590,000/= between the years 2016 and 2018, which loan was secured by properties L.R. No.10079/43, which is a matrimonial property and Title No.Ndumberi/Riabai/7037. It is also not in dispute that the 1st Plaintiff/Applicant for whatever reason, defaulted in repayment of the said loan facility which was restructured upon its request but it still failed to clear the balance, which, according to the Applicant stood at Kshs.10,839406/= as at 21st July, 2024.What is in issue is whether the Respondent in exercise of its Statutory Power of Sale, served the Applicant/Plaintiff with requisite Statutory Notices. 13. It is trite that a lender, in this case, the bank has a legal right to sell a borrower’s charged property in order to recover a loan in the event of a default. However, this must be undertaken in strict adherence to procedural requirements stipulated under the law. Failure to adhere to these laid down procedures would render the sale irregular and or unlawful. 14. The procedural requirements for the exercise of the power of sale are outlined on the Land Act. They include issuance of proper Notices, obtaining the current valuation of the charged property and conducting a public auction at the best obtainable prizes. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 3

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15. The laid down procedures for recovery of loan from a defaulter is found in the following provisions of law. 16. Section 74(1) of the Land Act that states:[74]. 17. (a) where the forfeiture is set aside by the court on the grounds that it was procured by the lessor in fraud of the sublesee; or (b) where the court grants relief against the forfeiture under Section 76, every such sublease and other interest shall be deemed not to have determined. Notice before forfeiture. Section 90(1) states that;[1]. 18. The forfeiture of a lease determines every sublease and every other interest appearing in the register relating to that lease, but– “If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or any part thereof due under any charge or in the performance or observation of any covenant, express or implied, in any charge, and continues to be default for one month, the chargee may serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be.” Section 96(2) provides:[90]. (2) 19. The notice required by subsection (1) shall adequately inform the recipient of the following matters— (a) the nature and extent of the default by the chargor; (b) if the default consists of the non-payment of any money due under the charge, the amount that must be paid to rectify the default and the time, being not less than three months, by the end of which the payment in default must have been completed; (c) if the default consists of the failure to perform or observe any covenant, express or implied, in the charge, the thing the chargor must do or desist from doing so as to rectify the default and the time, being not less than two months, by the end of which the default must have been rectified; (d) the consequence that if the default is not rectified within the time specified in the notice, the chargee will proceed to exercise any of the remedies referred to in this section in accordance with the procedures provided for in this sub-part; and (e) the right of the chargor in respect of certain remedies to apply to the court for relief against those remedies. According to the Applicants, they were only served with Statutory Notices in respect with property L.R No.10079/43 and not Title No.Ndumberi/ Riabai/7037. They stated that the Defendant/ Respondent served upon the 1st Plaintiff/Applicant a ninety (90) days Notice dated 15th June 2023, another Notice dated 24th July, 2023 as required under Section 96(2) of the Land Act, a forty (40) days Notice to sell and Notification of sale dated 12th April, 2024 followed by a Notice to sell by public auction dated 25th June, 2024 and an advertisement of sale in the Daily Nation Newspaper dated 10th https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 4

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July, 2024. The Applicants stated that they were never served with any Notice by the Defendant/ Respondent in respect of Title No.Ndumberi/ Riabai/7037. 20. In response, the Respondents stated that they served upon the Applicants a ninety (90) days Notice issued on 15th June, 2023, a forty (40) days Notice to sell on 16th October, 2023 and a forty five (45) days redemption Notice on 14th July, 2024 via registered post by the same postal and attached the certificate of postage as evidence to support this. 21. A reading of the respective affidavits, attached documents and submissions filed by the parties confirms the position presented by the Respondents, hence the burden of proof shifts back to the Applicant to prove that they did not receive the said Notices that were sent through the postal address they provided in the charge instrument through registered post. In the case of Maithya –vs- Housing Finance Corporation of Kenya HCCC No. 1129 of 2002 as follows:“ It is the Plaintiff who alleged that he was not served with the Statutory Notice. Once the Defendant provided evidence of that service the burden of proof shifted to the Plaintiff. This shifting of burden of proof is based on the rule that “he who asserts must prove.” See the book of Principles of Evidence by Alan Taylor 2nd Edition. The onus was on the Plaintiff to prove non-service of the Plaintiff. In view of the fact that the Plaintiff failed to prove the same the Plaintiff has failed to satisfy that burden. It is obvious that the Plaintiff could have obtained information from the Post Master General on whether the said notice was posted and the whereabouts of it. The Plaintiff did not on prima facie basis do so.” 22. A perusal of the documents which include the letter of offer, charge instrument and the Notices which were taken out and served upon the Applicants confirm the same postal address. The Applicants did not provide any evidence to controvert this and confirm the position that they did not receive the said Notices. This is the same address that was used to serve them the Notices in regard to L.R. No.10079/43. This court finds it hard to believe that the Applicants received some Notices and not all through the same postal addresses. 23. In view of this, this court finds that the Applicants have not discharged their burden of proof to show that they were not served with the requisite Notices when they have not provided any other address that would have been used, other than the same one which appears in all the documents presented herein. 24. On the issue of valuation of the suit properties, the court is guided by the provisions under Section 97(1) and (2) of the Land Act which provides:Duty of chargee exercising power of sale. 97. 25. (1) A chargee who exercises a power to sell the charged land, including the exercise of the power to sell in pursuance of an order of a court, owes a duty of care to the chargor, any guarantor of the whole or any part of the sums advanced to the chargor, any chargee under a subsequent charge or under a lien to obtain the best price reasonably obtainable at the time of sale. (2) A chargee shall, before exercising the right of sale, ensure that a forced sale valuation is undertaken by a valuer. It is the Applicants’ argument that the properties, particularly L.R. No.10079/43 was grossly undervalued. The Defendant valued the two properties as follows:- https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 5

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a. Property L. R. No.10079/43 given an open market value of Kshs.58,000,000/= and a forced sale value of Kshs.43,500,000/=. b. Property title No.Ndumberi/Riabai/7073 was given an open market value of Kshs.35,000,000/= and forced sale value of Kshs.26,250,000/=. 26. It is the Applicant’s contention that their own independent valuers M/S Epiconsultant Limited confirmed their fears on undervaluation of the property when vide a report dated the 5th June, 2024, annexed to the Supporting Affidavit as exhibit ‘PTK-8’ established the current value of the property known as L.R. No.10079/43 at Kshs.80,000,000.00 as opposed to the Kshs.58,000,000.00 assigned by the Defendant’s valuers. According to the Plaintiffs’ the undervaluation viliates the intended sale by public auction, then makes it an unfair dealing. 27. However, in this Court’s view, it is not sufficient for an Applicant to merely claim that the intended selling price is not the best price obtainable at the time of producing a Counter Valuation Report. The Applicant must indeed demonstrate why the Valuation Report the Respondent Bank intends to rely on in disposing the property does not give the best obtainable at that material times. The Applicant ought to have shown could show among other things that the Respondents’ valuer is unqualified, or not competent to carry out the valuation, or that the valuation by the Respondents was carried out in consideration of irrelevant factors while omitting the relevant ones. Unfortunately in this case, the Applicants have not filed evidence to show that the valuation done by Transcounty Valuers Limited on 5th March, 2024 was a complete undervaluation in the circumstances. The Applicants have not demonstrated that Transcounty Valuers Limited were either unqualified or that they took into consideration irrelevant facts and left out the relevant ones thus arriving at a gross undervaluation. Be that as it may, this Court has considered the Respondents’ valuations and is satisfied that they were carried out three to four months before the date scheduled for public auction in line with Rule 11(b)(x) of the Auctioneers Rules. Therefore, it is the Court’s considered view that the Respondents complied with Section 97(2) of the Land Act. 28. Based on the foregoing, the Respondents having established that they properly served the Notices and this Court having been satisfied that the provisions of Section 97(2) were complied with, it then follows that the Applicants have not established a prima-facie case. This Court is guided by other decisions such as the decision in the case of Joseph Wambua Mulusya –vs- David Kitu & Another[2014]eKLR where it was observed that the ingredients for granting injunction are sequential so that if one fails to satisfy the first one, the other in condition cannot necessarily be considered. 29. In this case, the Applicants have failed the first hurdle and have not met the first condition for establishing a prima-facie case, hence it would not be necessary to consider whether the other two conditions have been met. 30. As such, this Court finds the application at hand lacks merit and proceeds to dismiss the same with costs to the 1st Respondent. It is so ordered. RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT KIAMBU THIS 5 TH DAY OF MAY , 2025. D. O. CHEPKWONY JUDGE In the presence of: https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 6

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M/S Nyanja counsel for 1st and 2nd Plaintiffs Mr. Githinji counsel for 3rd Plaintiff M/S Abiaza holding brief for M/S Maitai counsel for the Defendant Court Assistant - Martin https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/13998/eng@2025-05-05 7

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