1.The applicant herein, Sheribiz Supplies Ltd, seeks the following orders in the application dated 5th February 2020: -
2.The application is supported by the affidavit of John Maina Chege and is based on the grounds that: -
3.The 1st respondents opposed the application through the grounds of opposition dated 17th February 2020 and the replying affidavit sworn by its Head of Legal Department Mr. Wainaina Francis Ngaruiya.
4.Mr. Ngaruiya states that the 1st defendant offered a term loan facility of Kshs. 100,000,000 to the 2nd defendant to finance the purchase of property known as L.R. No. 3734/295 and a that legal charge was created to secure the said facility. He contends that the loan was thereafter enhanced to Kshs 108,000,000 and a legal charge created on 1st April 2016. He states that the 1st defendant was not a party to the agreement between the plaintiff and the 2nd,3rd and 4th defendants and that a charge had already been registered over the suit property by the time the plaintiff was given the purported letter of offer.
5.The 1st defendant’s case is that the 2nd - 4th defendants needed to obtain its consent before entering into any legally binding agreement. The 1st defendant’s deponent adds that the amount owing to the 1st defendant is Kshs 127,761,812 which amount continues to accrue interest.
6.The application was canvassed by way of written submissions which I have considered.
7.The main issue for determination is whether the applicant has made out a case for the granting of the equitable orders of injunction.
10.In the present case, the applicant seeks orders to restrain the 1st respondent from disposing off the LR No 3734/295 by way of public auction, private treaty, transferring, appointment of a receiver, leasing or in any other way dealing with the suit pending the hearing and determination of this suit. The applicant also seeks orders of injunction to restrain the 2nd – 4th defendants from creating a 2nd or further charge on the suit property.
11.The 2nd – 4th defendants did not file any response to the application in which case, the applicant’s claim that it purchased a villa situate on the suit property, thus granting it a purchaser’s lien over the property, is not disputed. The 1st defendant, on the other hand, argued that it was not a party to the agreement between the plaintiff and the 2nd, 3rd and 4th defendants. According to the 1st defendant, the 2nd to 4th defendants needed to obtain its consent before transferring the property to another party.
12.From the undisputed facts of this case, it is clear that there were 2 tiers or sets of agreements between the parties herein, namely; the loan facility agreement between the 1st defendant and 2nd – 4th defendants for the construction of the villas on the suit property, and; the off plan purchase agreement between the plaintiff and the 2nd – 4th defendants. This is to say that the plaintiff purchased a villa in the suit property that was constructed using a loan secured from the 1st defendant. It then turns out that the 2nd – 4th defendants defaulted in the loan repayments and that the villa purchased by the plaintiff is now in danger of being auctioned by the 1st defendant in exercise of its statutory power of sale.
13.My finding is that the agreements between the parties herein are, to some extent, intertwined as each has given the parties herein rights and obligations that this court cannot ignore when determining this application. I find that the plaintiff established a prima facie case against the 2nd to 4th respondents who have not denied that they sold the subject villa to the plaintiff. I also find that while it is true that the 1st defendant has a right to exercise its statutory power of sale over the suit property following the default by the chargor in repaying the loan, the court cannot, at this interlocutory stage, overlook the interests of the plaintiff who has already demonstrated that it is bona fide purchaser of the subject property. My further finding is that the issue of whether the 2nd to 4th defendants sought and obtained the consent of the 1st defendant before selling the villa in question is an issue that can only be unpacked at the hearing of the suit. This court however finds it hard to believe that the 2nd to 4th defendants could have sold the villas on the suit property to third parties without the knowledge and/or consent of the 1st defendant.
16.In the instant case, the plaintiff demonstrated that it bought the villa from the 2nd to 4th defendants and paid an instalment of Kshs. 11,263,000 towards the said purchase. The 2nd to 4th defendants did not controvert the plaintiff’s claim that it acquired a purchaser’s lien in respect to the purchased villa. In the circumstances of this case, I find that the answer to the question on whether the applicant will suffer irreparable harm should the purchased villa be sold is in the affirmative. Should the 1st respondent proceed to sell the subject villa on account of the 2nd to 4th respondents’ default, the applicant will lose the suit property which it has already paid for.
17.My take is that looking at this case in totality, it is not possible to make a finding that the plaintiff will be able to recover its loss/damages from the 2nd to 4th defendants who have already defaulted in making the loan repayments due to the 1st defendant. The applicant’s loss is further exacerbated by the fact that the 1st defendant did not demonstrate that it notified the applicant of the intended auction of the suit property despite having been aware that the villa had been sold off plan. I find that in the circumstances of this suit, it is imperative that the subject property be preserved until the suit is heard and determined. I am guided by the decision in Orion East Africa Ltd vs Eco Bank Kenya Ltd and Another  e KLR where the Court of Appeal set out the circumstances under which a mortgagee may be restrained from exercising its statutory power of sale as follows: -
18.In view of the foregoing, I need not consider the third limb of the Giella Case. However, for avoidance of doubt, I find that the justice of this case and the balance of convenience tilts in favour of granting an order to maintain the status quo currently obtaining in the suit property so that the dispute between the parties herein can be heard on merit. The costs of this application shall abide the outcome of the main suit.
DATED, SIGNED AND DELIVERED VIA MICROSOFT TEAMS AT NAIROBI THIS 9TH DAY OF DECEMBER 2021 IN VIEW OF THE DECLARATION OF MEASURES RESTRICTING COURT OPERATIONS DUE TO COVID-19 PANDEMIC AND IN LIGHT OF THE DIRECTIONS ISSUED BY HIS LORDSHIP, THE CHIEF JUSTICE ON THE 17TH APRIL 2020.W. A. OKWANYJUDGEIn the presence of: -Mr. Gachaga for Plaintiff.Ms Mungai for Kimondo for 1st and 5th Defendants/RespondentsCourt Assistant: Margaret