IN THE HIGH COURT OF KENYA
IBRAHIM SEIKEI T/A MASCO ENTERPRISES.........APPELLANT
AND
DELPHIS BANK........................................................... RESPONDENT
[An Appeal from the decision and ruling of Chief Magistrate'sCourt, Kisumu delivered on 3rd October 2003 by J.M. MungutiEsq. R.M. IN CMCC No. 623 OF 2003]
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RULING OF THE COURT
The application for my determination is an interlocutory appealfrom the ruling of Hon Mr. Munguti the Resident Magistrate,Kisumu who rejected the application for an order of injunction to restrain the respondent from advertising for sale land parcelnumber Kisumu/Manyatta "A'/2927. The trial magistrate in hisbrief ruling held:
"It is clear that the applicant wants to hide underhis business name to frustrate the defendant. The merefact that the applicant's land may be sold is not anirreparable damage. One can buy a parcel of landanywhere and I believe when the applicant offered it assecurity he knew very well that the same can be sold."The appellate was aggrieved by the ruling above andpreferred six grounds of appeal in that the trial court did notconsider the principles of granting injunction, the merit of thematter was not considered and above all there was no chargecreated upon the applicant's property upon which the respondentwould exercise its statutory power of sale, as there was nofurther charge over the parcel of land to entitle the respondentto exercise the power its alleging to exercise. The applicantstated that he had a financial accommodation with the defendantfor KSh.40, 000/= and therefore a charge was created over hisproperty. It was the submission of Mr. Muma Advocate for theappellant that a further facility was requested and granted,though no further charge was created entitling the respondent to
Exercise its statutory power of sale. The terms and conditions ofthe two facilities were different; hence, Mr. Muma Advocatesubmitted that was a prima facie case with a probability ofsuccess. And on the balance of probability we demonstrated byway of deposit slips that the earlier facility was paid. The trialmagistrate failed to appreciate that the property the defendantwere intending to sell did not have a charge over it. The propertywas over KSh.550, 000/= in value and the balance of convenienceheavily tilted in favour of the appellant. He further submittedthat the second facility was granted to Masco Hauliers and therelationship between the first recipient Masco Enterprises andthe second recipient should have been determined at a fullhearing. Mr. Muma Advocate referred me to the famous Mboqo& Another Vs. Shah Civil Appeal No. 5/1967 which laid downthe principles an appellate court would consider beforeinterfering with the exercise of the discretion of the trial court.He also referred to Civil Appeal No. 68/1986 Banana HillInvestment Ltd. Vs. Pan African Bank and 2 Others. TheCourt interalia held: that in borderline case and where the courtis in doubt, it would decide the application on the balance ofconvenience.
The respondent through Mr. Odongo Advocate opposed theapplication who stated that both the appeal and the applicationhave no merit. He stated that under the charge, the respondentreserved its right under Sec. 83 and 84 of RLA and there was noneed to create a further change. The charge itself created,provision that the charge shall be a continuing security forfurther advances to protect the interest of the respondent. Itis not for the appellant to cry that the statutory power of salehad not accrued, the moment he defaulted.
Mr. Odongo submitted that there was no material beforethe learned magistrate, that the charge was either defective orinvalid. He stated that the defendant/appellant was justchanging his trade names from fiasco Enterprises to MascoHauliers, while actually the person who received the monies is theappellant. He referred me to order 29 Rule 1 and I entirely agreewith him that the two names do not make any difference, as thereal entity with capacity is IBRAHIM SEIKEI, the recipient ofthe monies advanced. He referred to Milimani Commercial CourtCivil Case No. 360 of 2001: Dr. Simon Waiharo Chege Vs.Paramount Bank of Kenya Ltd. Where it was held by RinqeraJ.: (as he was then)
"In my view once land has been charged it Ipsofacto, becomes a commodity for sale. And there is nocommodity for sale whose sale would be uncompensablebydamages. It stands to reason that if any property cannot be sold, it becomes useless as security---------------- the
Law has always been settled that if damages would be anadequate remedy, equity would not normally intervene.An applicant who seeks an injunction in thosecircumstances must show that his is exceptional."I must appreciate that what is before me for determinationis an interlocutory appeal and the case is pending before thelower court. And definitely there is a lot in store to be canvassedbefore the trial court, so I must not make conclusive finding slest not to prejudice the case of the parties. The injunction wasrejected by the trial court and the exercise of my powers andthat of the trial court is purely discretionary, it would not beright to whimsically substitute my discretion with that of the trial court unless:
"1) the magistrate misdirected himself on law or
2) That he misapprehended the facts or
3) That he took account of matters of which heshould not have taken an account or
4) That he failed to take account of matters ofwhich he should have considered or
5) That his decision though discretionary wasexpressly wrong and did not have the supportof the law and facts of the case. See MbogoVs. Shah (Supra)"
The factors to be considered in the grant of aninterlocutory injunction are well settled and known and I can dono better then quote the case of E.A. Industries Vs. Trufoods(1972) E.A. 420:
"A first an applicant must show a prima facie casewith a probability of success. Secondly, an interlocutoryinjunction will not normally be granted unless theapplicant might otherwise suffer irreparable injury,which would not adequately be compensated by an aword of damages. Thirdly if the Court is in doubt, itwill decide an application in the balance of convenience."It is not in dispute that the appellate is indebted to therespondent and it is also not in dispute monies were advanced atthe request of the appellant. The monies advanced were in twoportions though the security provided is one, in which a chargewas created and validly registered. What the appellant wants me to do is to restrict and/or prevent the respondent from theexercise of its statutory power, which it acquired by virtue ofthe charge which was created over the suit property. I muststate that our courts would be reluctant to prevent the exerciseof statutory power of sale. Unless there is no basis or if it wasexercised to oppress the chargor or if the chargee had no suchpower in the first instance. I am saying so because the powerstems from an Act of Parliament, which gave due consideration toall factors in respect of a relationship concluded under thatspecific Act of Parliament. The statute breaths its air from thecontractual obligation of the parties which has been reduced intoa document and a court cannot restrict or prevent the exerciseof such right acquired through an Act of Parliament and fortifiedby a contractual document: We must protect the intention of theparties so that every party adheres to his contractual duty to theother. The appellant was advanced the money on the strength ofthe security he provided to the Bank and he had an obligation torepay the monies under the terms agreed.
In HCCC No. 2/2000 Mombasa Mrao Ltd. Vs. FirstAmerican Bank of Kenya Ltd. & 2 Others. S. K. Shah aCommissioner of Assize held:
"That a property ceases to be a security andbecomes a millstone instead if it cannot be realizedupon default."
The appellant admits to have received two differentamounts of money from the respondent, However he states thatthe second loan was advanced to Masco Hauliers and there was nofurther charge in respect of the second loan. The main object ofour Banks is to make profits and the moment he requested thesecond loan and he was advanced, the appellant knew or ought tohave known such monies was payable since the Banks do not givetheir monies as a gratuity or love for human kind. I must say thatMasco Enterprises and Masco Hauliers do not have legal capacitybut the person who has the capacity to request and be advancedmonies is the appellant and does not matter whether he wastrading under so many different trade names. The securitydocument provided is in the names of Ibrahim A. Seikai and thetitle No. is Kisumu/Manyatta "A'72927 and that is the propertythe Banks wants to sell in exercise of its statutory power of sale.There is no evidence that the first loan was repaid, although itwas rightly submitted by Mr. Odongo the charge had a provisionmaking it a continuing security for other and/or further advancesto the appellant. In any case Sec. 83 and 84 of Cap 300 adequately protects the interest of the respondent in thesecurity document. Since the appellant has failed to honour hisobligation under the terms of the charge the respondents had toexercise its powers of sale either through a public auction or bya private treaty.
There is no material before me that a prima facie case wasestablished by the appellant and I cannot issue an injunctionagainst a party wanting to exercise its statutory power of salemerely because the amount due is in dispute. No monies whetherdisputed or admitted was paid into court to make feel that theappellant is acting in good faith, even though he has notestablished a clear case, which is bound to succeed at the trial orhas a chance of success during the hearing of the matter. I amnot satisfied that the appellant's case fails under the first limpof the requirement of the grant of injunction.
In terms of damages and whether the appellant wouldsuffer irreparable damages which the respondent is incapable ofcompensating, I state the current value of the property is K5h.550,000/= and in my view the Bank would be in financialposition to pay the amount in the event such Is ordered. Theword used is "normally" an injunction should not be granted eventhough the applicant has a strong case, However I must state at this juncture the appellant's case is less than strong to benefitfrom the discretion of the court. In my view the appellant can beadequately and sufficiently be compensated in damages as theBank has the power and capacity to compensate for the value ofthe property. And since the property was offered as a securityit become an automatic commodity for sale for it is not agravestone. When the appellant put his hand into the mouth of alion he cannot be heard crying that the lion is about to bite hishand, for he knew the consequences of his action or his in action.Having received the monies from the respondent and havingdefaulted he has no other excuse apart from the spuriousallegation, which to me are not tangible and credible evidence toenable me grant the orders sought.
On balance of convenience, my assessment is that there isno doubt in my mind and the balance of convenience heavily tilts infavour of the respondent who wants to legitimately exercise itsrightful statutory power without any infringement on the rightsof the appellant.
Lastly, having gone through all the documents filed by theparties hereto, I have discovered that the appellant made severalrepayment proposals and he failed to honour any of them. He hasbeen given time in order to redeem the charged property by making the necessary payments to the respondent. He evenaccepted several proposals that were made to him but he appearsless inclined to play fairly. If the appellant wants to redeem hisproperty the avenue is not to seek refuge in court but to pay thedebt.
I have objectively considered the application and have tothe conclusion that there is no material, there is no evidence andthere is no reason to disturb the ruling of the trial court. Theapplication is dismissed with costs.Dated and delivered at Kisumu this 19 day of May 2004.
MOHAMED WARSAMEAG. JUDGE
Delivered in the presence of:
Mr. Ongeri holding brief for Muma for the appellant.
Mr. Odongo for the respondent.
Mr. Ongeri: We pray for leave to appeal.
Mr. Odongo: No objection.
Court: Leave to appeal is granted.
MOHAMED WARSAME
AG. JUDGE
making the necessary payments to the respondent. He evenaccepted several proposals that were made to him but he appearsless inclined to play fairly. If the appellant wants to redeem hisproperty the avenue is not to seek refuge in court but to pay thedebt.
I have objectively considered the application and have tothe conclusion that there is no material, there is no evidence andthere is no reason to disturb the ruling of the trial court. Theapplication is dismissed with costs.
Dated and delivered at Kisumu this 19th day of May 2004.
MOHAMED WARSAME
A.G. JUDGE