Kitur v Standard Chartered Bank & 2 others
High Court, at Eldoret
June 13, 2002
Civil Case No 50 of 2002
Civil Practice and Procedure - affidavit - verifying affidavits – contents of – averment that there is no suit pending over the same subject matter – meaning of pending suit – affidavit verifying the correctness of the averments contained in the plaint – false verifying affidavit – Civil Procedure Rules Order VII rule 1(1) (e)
Civil Practice and Procedure – institution of suits – type of pleadings – claims for redemption and recoveyance – claims for fraud arising from a claim of recoveyance – whether suit should be by originating summons or plaint.
Injunctions – interlocutory injunction – applicable principles in granting interlocutory injunctive reliefs.
Mortgages and Charges – statutory power of sale – exercise of power of sale – sale by public auction – sale not conducted as advertised or in accordance with the law - allegation of fraud – remedy available to the chargor – right of redemption.
The applicant filed an application under order XXXIX rules 1,2,3 and 9 of the Civil Procedure Rules. The applicant prayed that the defendant respondent be restrained by means of a temporary injunction from alienating the suit property which had been sold by the respondent in exercise of a chargee’s power of sale, pending the hearing and determination of the substantive suit. The application was on the grounds that the applicant had been denied an opportunity to redeem his property, that the property had been sold below the reserve price, and that that the sale was not conducted by public auction as required by law. The applicant also argued that there was fraud in the sale and that the sale by private treaty without leave of the court was irregular. The respondent challenged the application on the grounds that the verifying affidavit was false, that the claim should have been by originating summons, that any claim of impropriety on the part of the auctioneer in respect of the public auction had a remedy of damages and that the applicant had not fulfilled the principles set out in the case of Giella vs Cassman Brown in failing to show that the award of damages would not be adequate compensation for him.
1. The subject matter in this suit was subject to a previous suit. It was immaterial that in the previous suit, only the 1st defendant and the plaintiff were parties or that there were additional causes of action claimed in the present suit which did not feature in the previous suit.
2. The averment in the applicant’s verifying affidavit that there was no previous suit or proceedings over the same subject matter between the parties (meaning none of the parties ) was clearly false and in contravention of the rules and law.
3. The verifying affidavit being false it had to be struck out and consequently the plaint could not stand on its own without an affidavit and it had to be be struck out as well.
4. Although this was a claim for redemption and reconveyance which should have been commenced by originating summons; this matter had also a claim/allegation of fraud and relief stemming therefrom hence commencement by plaint was proper.
5. In applications for interlocutory injunctive reliefs, the applicant must demonstrate prima facie that it has a case with a probability of success, that unless an order of injunction is granted by the court the applicant may suffer loss or injury which cannot be compensated by an award of damages and in case of doubt the court should resolve the dispute on a balance of convenience. The applicant herein has a prima facie case with a probability of success.
6. The evidence revealed that there was absolutely no substance in the claim of denial to the applicant to redeem his property.
7. The mere fact that a sale by public auction was below the reserve price is not by itself evidence of fraud or mala fides on the part of the chargee.
8. Where the public auction was not properly conducted either as advertised or the sale did not conform to the law applicable, the only remedy available to the chargor is damages.
9. The damages will only be payable if fraud is proved. In the absence of fraud being established as in this case an injunction could not issue.
10. When a chargor lets loose its property to a chargee as security for a loan or any other commercial facility on the basis that in the event of a default it be sold by a chargee, the damages are foreseeable. The security is henceforth a commodity for sale or possible sale, with prior concurrence and consent of the chargor. The applicant could not having defaulted to repay loan arrears prompting a chargee to exercise its statutory power of sale, claim that he was likely to suffer loss or injury incapable of compensation by an award of damages.
11. The false averment in the affidavit coupled with the untrue assertion by the applicant that he had always offered to redeem the property were signs of bad faith. He had come for an equitable relief with unclean hands and was undeserving of an equitable relief.
1. Ochieng, Nyagilo & another v Fanuel Ochieng & another Kisumu Civil Appeal No 148 of 1995
2. Russell Co Ltd v Commercial Bank of Africa Ltd & another  KLR 633
3. Mbuthia v Jimba Credit Corporation  KLR 1
4. Giella v Cassman Brown & Co Ltd  EA 358
5. Otachi, Robert Kibagendi & another v HF Co Kenya Ltd & 3 others Nairobi Civil Appeal No 251 of 1996
1. Civil Procedure Rules (cap 21 Sub Leg) order VII rule 1(1)(e); order XXXVI; order XXXIX rules 1, 2, 3, 9
2. Auctioneers Act (cap 526) section 26 3. Registered Land Act (cap 300) sections 77(3), 74
Mr Kimaru for the Applicant.
Amolo & Gachoka Advocates for the 1st & 2nd Respondents.
Mr Manani for the 3rd Respondent.