Taghi Hossein Zaddeh & Frontier Haulage & Construction Company Limited v. Gulf Africa Bank Limited (2018) eKLR
Court: High Court of Kenya at Nairobi, Milimani Law Courts, Commercial and Tax Division
Category: Civil
Judge(s): D. S. Majanja J.
Judgment Date: August 24, 2020
Country: Kenya
Document Type: PDF
Number of Pages: 3
Case Summary
Full Judgment
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: D. S. MAJANJA J.
CIVIL CASE NO. 328 OF 2018
BETWEEN
TAGHI HOSSEIN ZADDEH ............................................ 1ST PLAINTIFF
FRONTIER HAULAGE & CONSTRUCTION
COMPANY LIMITED ....................................................... 2ND PLAINTIFF
AND
GULF AFRICA BANK LIMITED ........................................ DEFENDANT
RULING
Introduction
1. The application for consideration is the Plaintiffs’ Notice of Motion dated 11th June 2020 made under, inter alia, under Order 40 rule 1 and 2 of the Civil Procedure Rules. The Plaintiffs seek an interim injunction restraining the Defendant (“the Bank”) from selling the following properties; KAJIADO/KAPUTEI-NORTH 29575, 29576,259577, 29578, 29579, 29580, 29581 and 29582 (“the suit properties”) and demanding any other any additional sum pending the hearing and determination of the suit on condition that the 2nd Plaintiff (“the Company”) pay Kshs. 2,547,796.27. The Plaintiffs also seek an order directing the Bank to provide them with a statement of account for the Company’s loan account.
Plaintiffs’ Case
2. The application is supported by the affidavit of Taghi Hosein Zaddeh, a director of the Company, sworn on 10th June 2020. The Company’s case is that it has paid off Kshs. 45,813,322.21 being the principal loan amount plus interest of Kshs. 2,262,602.56 making a total of Kshs. 48,075,924.77 as at June 2020 being the 36th month with the intention of paying off the loan before its tenure. It contends that the only issue between the parties is the interest payable for the 36 months it has taken to clear the principal amount. By its calculation, the only amount due and payable to the Bank as at June 2020 is Kshs. 2,547,796.27 which it is ready and willing to pay and which, according to its calculations, would settle its loan obligations with the Bank.
3. The Company further states that it has requested the Bank to provide confirmation of the amount payable in order to settle all its liabilities before maturity but the Bank has refused to do so. It also accuses the Bank of continuing to misapply, without any justification, any money paid by it with the intention of defeating its efforts to clear the loan and reach an early settlement. The Company’s case therefore is that it seeks the orders in the application to stop the Bank from impeding its right to settle the loan before the scheduled time while continuing to demand interest to its detriment.
4. The Plaintiffs submit that they will be able to demonstrate that the Bank has over time frustrated their efforts to discharge their liabilities for its own benefit and that its refusal to accept settlement, levying of additional interest and misapplication of the amounts paid by the Company as well as its continued threat to sell the suit properties is likely to cause them irreparable harm.
Defendant’s Case
5. The Bank has opposed the application through the affidavit of Lawi Sato, its Legal Officer, sworn on 22nd July 2020. He deponed that the Plaintiffs’ application is based on misrepresentation and material non-disclosure. He pointed out that the statements of account have always been supplied as they are part of its bundle of documents relied in this case and were indeed supplied when the matter was scheduled for mediation on 27th February 2020.
6. As regards the facility, the Banks position is that the facilities extended to the Company are based on Sharia Banking principles which do not permit charging of interest but rather pre-calculated profits on the principle which is computed and monthly instalments spread over the tenure of the facility and in the event of default, the borrower pays default damages. Mr Sato deponed that from the facility letters, the agreed fixed period for repayment of the principal and profit is up to 12th June 2021 and in order to keep up with that schedule, the Company was required to pay Kshs. 1,354,746.39 monthly. Based on the terms of payment, Mr Sato deponed that it was misleading for the Company to claim that only Kshs. 2,547,796.27 was outstanding.
7. The Bank also contended that the Company had admitted default. For example, by a letter dated 3rd October 2016, it admitted its facility, “is still in arrears and we are ready to sit and negotiate.” By a letter dated 17th October 2016, it requested for restructure of the loan facility by requesting to pay, “profit on default payment from January 2016 in 3 (three) instalments.” The Bank also relied on its letter dated 13th April 2020 addressed to the Company where it rejected the Company’s request to pay Kshs. 5,000,000.00 in full and final settlement of the balance of Kshs. 20,562,597.10 then outstanding. It also referred to a consent recorded in court on 22nd August 2020 in which, the Plaintiff’s agreed, “to pay up all arrears being Kshs. 5,465,945.60 within thirty (30) days hereof” and to continue paying all monthly instalments and commitments. The Bank states that the Plaintiffs have not complied with the order and only paid Kshs. 500,000.00 on 13th July 2020 and are attempting to review the consent.
8. The Bank stated that as at 13th July 2020, the balance due from the Company is Kshs. 19,634,879.52 and USD 132,417.20. It denies mishandling the Company account and states that the any amount paid is applied to clearing accrued profits, damages and then the principal.
Determination
9. Both parties have filed written submissions which they adopted. As the application before the court is one for an interlocutory injunction, the parties agreed the principles guiding the exercise of this court’s discretion are those settled in Giella v Cassman Brown [1973] EA 348. The applicant has to satisfy three requirements; establish that it has a prima facie case with a probability of success, demonstrate irreparable injury if a temporary injunction is not granted, and if the court is in doubt show that the balance of convenience is in its favour.
10. The Plaintiffs’ case is that the Bank is unreasonably refusing to accept Kshs. 2,547,796.27 in settlement of the loan. That position is grounded on the assumption that the Company has been paying all instalments as they fall due but this is not the position as is clearly evidenced by the statements of account provided by the Bank and the loan repayment schedule. The Plaintiffs also proceed on the assumption that the all the payments would go toward clearing the principle amount without regard to the profits and damages flowing from the default.
11. The uncontroverted fact is that the Company has been in default. This is put beyond doubt by the order issued on 22nd August 2020 as follows:
1. THAT an order be and is hereby granted suspending the auction slated for tomorrow (23rd August, 2018) but on condition that:
(a) The Plaintiffs pay the auctioneers charges (agreed or taxed) within 7 days hereof.
(b) The Plaintiffs pay all the sums in arrears being Kshs. 5,465,945/06 within 30 (thirty) days hereof.
(c) All monthly commitments and installments shall continue to be paid by the Plaintiffs as they fall due.
2. THAT in default of any of the 3 conditions set out above, the Defendant shall be at liberty to proceed with realization process without the need of issuing further notices either under the Land Act or the Auctioneers Rules.
3. THAT mention on 26th September 2018.
12. One interesting feature of the Plaintiffs’ application is that they did not disclose the fact that there was an order. This is material non-disclosure that would disentitled them to an injunction. They have also not shown that they have complied with it to date. The order itself is an admission of indebtedness. Further, the Bank’s assertion that the Company has only paid Kshs. 500,000.00 has not been controverted. Since the Plaintiffs have not complied with the order, the court cannot now issue an injunction as prayed in the application as the right to sell the suit properties is a direct consequence of non-compliance with the order.
13. What the Plaintiffs now seek is for the court to rewrite the contract between the parties. As was stated by the Court of Appeal in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another NBI CA Civil Appeal No. 35 of 1999 [2001] eKLR. “A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.” The terms of payment are defined in the facility and it is not for this court to vary them outside the scope permitted by the law.
14. It is clear that the Plaintiffs have not established a prima facie case with a probability of success. They have failed to comply with a court order and do not deserve any discretion in their favour.
Disposition
15. The Notice of Motion dated 11th June 2020 lacks merit. It is dismissed with costs.
DATED and DELIVERED at NAIROBI this 24th day of AUGUST 2020.
D. S. MAJANJA
JUDGE
Mr Muumbi instructed by Muumbi and Company Advocates for the Plaintiffs.
Mr Kimani instructed by Walker Kontos Advocates for the Defendant.
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