Momentum Credit Limited v Kamau (Civil Appeal E023 of 2022) [2024] KEHC 9976 (KLR) (4 June 2024) (Judgment)
Neutral citation:
[2024] KEHC 9976 (KLR)
Republic of Kenya
Civil Appeal E023 of 2022
SN Mutuku, J
June 4, 2024
Between
Momentum Credit Limited
Appellant
and
Martha Wangari Kamau
Respondent
(Being an appeal from the entire ruling and consequential orders by Senior Resident Magistrate Hon B. Cheloti (ms) issued and delivered on 4th November, 2021 at the Chief magistrate’s court at Kajiado In Civil Suit No E225 of 2021)
Judgment
Introduction
1.The parties herein entered a contractual arrangement on 29th September 2020 in which the Respondent was granted a credit facility by the Appellant for Kshs 330,000. The said loan was to be repaid in equal monthly instalments for a period of eighteen (18) months.
2.The facility was restricted through a loan restructured arrangement on 5th January 2021 at which date the Respondent owed Kshs 333,876. The restructured loan amount was to be repaid in twenty-four (24) monthly instalments of Kshs 31,273 beginning 5th February 2021.
3.The Respondent breached the agreement and fell into arrears. The Appellant issued a 7-day notice from 15th April 2021 demanding payment of the arrears, which at this date stood at Kshs 29,461. The Respondent did not heed the notice. The Appellant commenced realization process of its security triggering the filing of an application under certificate of urgency. She obtained an interim injunction on 6th July 2021. Ultimately, the trial court granted her an interlocutory injunction pending the hearing of the suit. It is that injunction that has necessitated this appeal.
Memorandum of Appeal
4.The Appellant, being aggrieved and dissatisfied with the entire Ruling and orders arising from the trial court delivered on 4th November, 2021 (Hon B. Cheloti, SRM) has filed an appeals setting forth the following Grounds of Appeal:i.The learned magistrate erred in fact and in law by granting the Respondent an interlocutory injunction pending determination of the suit by failing to demonstrate how the Respondent satisfied the principles and or requirements of granting an interlocutory injunction.ii.The learned magistrate erred in fact and in law by granting the Respondent an interlocutory injunction pending determination of the suit by failing to elucidate how the Respondent established a prima facie case.iii.The learned magistrate erred in fact and in law by granting the Respondent an interlocutory injunction pending determination of the suit by failing to elucidate how the Respondent shall suffer irreparable harm incapable of being compensated by an award of damages.iv.The learned magistrate erred in fact and in law by granting the Respondent an interlocutory injunction pending determination of the suit by failing to elucidate how the balance of convenience lies with the Respondent.v.The learned magistrate erred in law and in fact and misdirected herself by taking into account irrelevant considerations in granting the Respondent an interlocutory injunction pending determination of the suit.vi.The learned magistrate erred in fact and in law by wholly misdirecting the application of law and irregularly granting the Respondent an interlocutory injunction pending the hearing and determination of the main suit.
5.The Appellant urged that the trial’s court ruling and consequential orders be set aside and cost of the appeal be awarded to the appellant.
6.The appeal was canvassed by way of written submissions.
Appellant’s submissions
7.The Appellant filed his submissions dated 23rd August, 2023. The Appellant’s submissions are centered on whether the trial court misdirected its application of the law in affirming an order of temporary injunction in favour of the Respondent.
8.The Appellant relied on Giella v Cassman Brown & Co. Ltd [1973] EA 358 and Mrao Limited v First American Bank of Kenya Limited & 2 others [2003] eKLR and submitted that, the test for grant of injunctions is:a.Whether the applicant has advanced a prima facie case with a probability of success.b.Whether the applicant has suffered irreparable loss which would not be adequately compensated by an award of damages, andc.With which party does the balance of convenience lie?
9.While relying on Margaret Njoki Migwi v Barclays Bank of Kenya Ltd [2016] eKLR as affirmed in James Maina & 3 others v Attorney General & 4 others [2017] eKLR, the Appellant submitted that:
10.It is submitted that the Respondent’s application did not meet the threshold established in Giella v Cassman Brown and that the trial court misdirected itself in finding that it did for the reasons that (a) the Respondent failed to establish a prima facie case with a reasonable prospect of success as she did not provide evidence in support of her allegations as to the unjustifiable increase in her loan amount, (b) the Respondent failed to establish or demonstrate that she would suffer irreparable damage that could not be compensated by way of damages, and (c) the Respondent failed to prove with sufficient evidence that the balance of convenience tilted in her favour at it was littered with mere averments.
11.The Appellant submitted that the trial magistrate misapplied the well-established principles in granting interlocutory injunctions when she held that:
12.It was submitted that the trial magistrate ruled in favour of the Respondent without any evidential basis whatsoever and therefore the orders of the trial court should be set aside on the basis of the decision in Mbogo & another v Shah [1968] EA 93 as affirmed in In Southern Star Sacco Ltd v Vanancio Ntwiga [2021] eKLR, where the Court of Appeal held that:
13.The Appellant submitted that the Respondent did not demonstrate a prima facie case as defined in Mrao case. It was submitted that contrary to the allegations by the Respondent that the Appellant overcharged her, there was a contract which she signed; that the loan facility was restructured upon application by the Respondent, but she defaulted in making payments and that she signed the agreement and therefore she had a contractual obligation to make payments on the facility.
14.The Appellant argued that a dispute that is mathematical in nature or on the interest charged or on accounts is not a ground for an injunction as per the Court of Appeal in Francis J.K Ichatha v Housing Finance Company of Kenya Ltd [2005] eKLR where the court held that:
15.It is further submitted that the Respondents did not furnish the trial court with any evidence that the account was overcharged and that it is trite law that he who alleges must proof as stipulated by sections 107(1), 109 and 112 of the Evidence Act.
16.The Appellant relied on Abdul Jalil Yafai v Farid Jalil Mohammed [2015] eKLR that made reference to National Bank of Kenya Ltd v Pipleplastic Samkolit (K) Ltd & another [2002] EA 503 to emphasize the point that “a court of law cannot re-write a contract between the parties and that parties are bound by the terms of their contract unless coercion, fraud and undue influence are pleaded and proved.”
17.It was their submissions that the Respondent accepted the terms of the loan restructure and is estopped from turning her back on the contractual repayment obligations that she consented to willingly.
18.It is the Appellant’s case that the Respondent offered her vehicle as security for the loan facility; that at all material times she knew that the vehicle would be repossessed if she defaulted in her loan repayments; that by offering the vehicle as security, the Respondent gave it up as a commodity for sale in the event of default and therefore the Respondent did not prove irreparable loss. The Appellant relied on Andrew Muriuki Wanjohi v Equity Building Society Ltd & 2 others[2006]eKLR cited with approval in Kitho Civil and Engineering Company Limited v National Bank of Kenya [2021]eKLR, where the court held that:
19.The Appellant submitted that the Respondent did not prove balance of convenience tilted in her favour and argued that by the trial court restraining its efforts to repossess and dispose of the suit vehicle, the balance of convenience lies with them as the loan remains unpaid and continues to attract interest. The Appellant relied on Stek Cosmetics Limited v Family Bank Limited & another [2020]eKLR where the court held that:
Respondent’s Submissions
20.The Respondent’s Submissions were filed on 22nd November, 2023. She has raised 2 issues for determinationi.Whether the trial magistrate erred in law and fact by granting the Respondent an interlocutory injunction restraining the appellant from repossession, sale and or disposal of the suit motor vehicle.ii.Who should bear the costs of the application?
21.She submitted that the trial court applied the requirements for temporary injunction set out in the case of Giella v Cassman Brown [1973] EA 358 and that she proved that she had a prima facie case. She submitted that she lawfully obtained a loan facility which she has been servicing on monthly basis and that she later realized that she was being overcharged; that the Appellant attached the suit property without notice and the same was to be disposed of via public auction and that the amount owned and the amount demanded were beyond the margins of the loan amount including the interest and hence she has an arguable case.
22.She argued that she has suffered an irreparable injury that would not be adequately compensated by an award of damages; that she has been servicing the loan diligently and that the sale of her vehicle would cause her irreparable injury, compared to the Appellant. She relied on the case of Alternative Media Limited v Safaricom Limited (2004) eKLR where it was held that:
23.She submitted that the balance of convenience tilts in her favour as she has been using the suit vehicle as her main tool of trade in ensuring that the said loan facility has been paid, and that if the orders are set aside, it would cause injustice to her.
24.The Respondent relied on Nguruman Ltd v Jan Bonde Nielsen (2014) eKLR where the court held that:
25.On the issue of cost, she submitted that costs follow the event as provided under section 27 of the Civil Procedure Act. She urged that the application be dismissed with costs to her.
Analysis and Determination
26.Mindful that this is a first appeal and the duty placed on this court to re-evaluate and re-consider the evidence and arrive at my own conclusion, I have read the entire record of Appeal, the Application and supporting documents as well as parties’ submissions.
27.The Memorandum of Appeal lists six (6) grounds. In my view, grounds 1, 2, 3 and 4 are related. They relate to whether the trial magistrate applied the principles of granting injunctions as set out in various authorities. Ground 5 questions the trial magistrate’s consideration of irrelevant matters in granting the interlocutory injunction and Ground 6 is questioning her error in misdirection the application of the law.
28.The facts of the case before the lower court are clear from the pleadings and the documents relied on in this appeal. I have summarized the case in the introductory part of this judgment, and I need not repeat them in the determination of this matter.
29.It is trite that before an order for an injunction, whether interlocutory or otherwise, can be issued, a party coming to court to seek such orders must satisfy the principles set out in the case of Giella v Cassman Brown & Co. Ltd [1973]EA 358.
30.I have read the impugned ruling. The trial magistrate narrated the case for each party as captured in their pleadings and in one paragraph stated:
31.The trial magistrate, in her ruling, did not demonstrate in her reasoning, how the Applicant had satisfied the principles for grant of an injunction. The issue before her, with respect, was not about whether the case raised triable issues. It was about whether the Applicant had demonstrated that she had a prima facie case with a probability of success; whether she had suffered irreparable loss which would not be adequately compensated by an award of damages, and where the balance of convenience lay.
32.As can be seen from the Ruling, the trial court relied on the Applicant’s Supporting Affidavit dated 5th July 2021 and the Appellant’s Replying Affidavit sworn on 13th August 2021. Submissions of the parties’ are mentioned but there is nothing to show that those submissions were analyzed and the reasoning of the trial court based on those submissions.
33.My reading of the pleadings of the parties show that the Respondent does not dispute that she was advanced a loan facility by the Appellant and her named motor vehicle used as security. It is not denied that the loan facility was restructured. What seems to be the problem is that the Respondent claims to have been charged a higher figure. This is a matter to be determined during full trial where the evidence to be adduced can be tested through cross-examination.
34.Given that this matter is still pending, I have restrained myself from making pronouncements that may prejudice any of the parties. It is however clear to me that the trial court is in error in arriving at a conclusion that the Respondent had satisfied the principles for granting an injunction without demonstrating how this was done.
35.The arguments by the Appellant are plausible. There trial magistrate is in error. The Respondent did not demonstrate to satisfaction that the principles of granting an injunction as stated in various authorities cited had been proved.
36.I agree with the Appellant. In so agreeing, I am alive to the applicable principles set out in Mbogo & another v Shah, [1968] EA, that:
37.It is my finding that the trial court misdirected itself in exercising its discretion. It did not delve into considering whether the Respondent has placed sufficient material before it to demonstrate to the satisfaction of the court that she had a prima facie case with a probability of success; that she stands to suffer irreparable injury that an award of damages cannot adequately compensate her and that the balance of convenience tilted in her favour. It is my considered view that an award of damages would be an adequate remedy if the Appellant had proceeded to attach the motor vehicle and the Respondent were to succeed in her claim.
38.Consequently, the Appeal herein is merited. I will and do hereby allow it with costs to the Appellant. Orders shall issue accordingly.
DATED, SIGNED AND DELIVERED THIS 4TH JUNE 2024.S. N. MUTUKUJUDGE