Automated Summary
Transaction Type
Lease agreement for office premises at Doctors Plaza (L.R No 209/21739).
Key Facts
The plaintiff, Dr. Gaman Ali Mohamed Gaman, entered into a lease agreement for office premises (Doctors Plaza, L.R No 209/21739) with Monarch Developers Limited in December 2013 and paid the full consideration. The property was later charged to Bank of Baroda (Kenya) Limited after the first defendant defaulted on a loan, prompting the bank to issue statutory sale notices. The plaintiff sought an injunction to prevent the sale, but the court ruled that he failed to establish a prima facie case against the bank and that the balance of convenience favored the bank.
Issues
- In whose favor does the Balance of Convenience tilt.
- Whether the Plaintiff/Applicant has established a prima facie case with overwhelming chances of success.
- Whether the Plaintiff/Applicant is disposed to suffer Irreparable loss, if the orders sought are not granted.
Holdings
- The court determined that the Plaintiff/Applicant would not suffer irreparable loss if the orders sought are not granted, as any loss would be compensable in monetary terms. The Plaintiff's potential damages include recovery of the purchase price and special damages, but not irreparable harm.
- The balance of convenience was found to tilt in favor of the 2nd Defendant/Respondent, who holds a legitimate charge over the suit property. The 2nd Defendant's statutory rights have accrued, and the Plaintiff's lack of due diligence in verifying the property's status supports this conclusion.
- The court concluded that the Plaintiff/Applicant has not established a prima facie case with any realistic chance of success against the 2nd Defendant/Respondent, who is exercising her statutory power of sale over the suit property. The doctrine of privity of contract prevents the Plaintiff from enforcing rights against the 2nd Defendant, as there is no contractual relationship between them.
Remedies
The Notice of Motion Application dated 14th December 2021 by the Plaintiff/Applicant is dismissed. Costs are awarded to the 2nd & 3rd Defendants/Respondents, and the application is dismissed with costs in the same terms as ELC No. E432 of 2021.
Legal Principles
The court held that the doctrine of privity of contract prevents a non-party to a contract from enforcing its terms. Since the charge agreement was between the 1st and 2nd Defendants, the Plaintiff, who was not a party to the contract, could not maintain a cause of action against the 2nd Defendant. This principle was central to dismissing the Plaintiff's application for an injunction.
Key Disputed Contract Clauses
- The court analyzed whether the lease agreement between the Plaintiff and the 1st Defendant required the 2nd Defendant's (chargee's) prior written consent under Section 88(f) of the Land Act, 2012. The 2nd Defendant argued the lease was executed without her consent, violating the statutory covenant.
- The charge instrument between the 1st and 2nd Defendants included covenants binding the chargor, including restrictions on leasing charged land without the chargee's consent. The court emphasized these covenants in determining the validity of the 2nd Defendant's statutory power of sale.
Precedent Name
- AGRICULTURAL FINANCE CORPORATION V LENGETIA LTD
- SHANKLIN PIER V DETEL PRODUCTS LTD
- Savings & Loans (K) Limited vs Kanyenje Karangaita Gakombe and Another
- Mrao Ltd vs First American Bank of Kenya Ltd and 2 others
- Nguruman Ltd vs Jan Bonde Nielsen and 2 others
- DARLINGTON BOROUGH COUNCIL V WITSHIRE NORTHERN LTD
Cited Statute
- Land Act, 2012
- Constitution of Kenya, 2010
Judge Name
Oguttu Mboya
Damages / Relief Type
- Cost of the Application be paid to the Plaintiff in any event.
- Temporary and Mandatory Injunctions to restrain sale and suspend notices regarding Property known as Office premises situated on the 3rd floor, office space A3 of Doctors Plaza.
Passage Text
- the Plaintiff/Applicant herein would not suffer any Irreparable loss. If anything, the loss that the Plaintiff/Applicant would suffer is measurable in Monetary terms...
- I conclude that the Plaintiff/Applicant has not established any Prima facie case, with any realistic chance of success as against the 2nd Defendant/Respondent, who primarily, is the one exercising her Statutory Power of Sale in respect of the Suit Property.
- I find and hold that the Balance of convenience tilts to and in favor of the 2nd Defendant/Respondent, who holds a legitimate charge over the suit property and whose Statutory rights have since accrued, materialized and/or ripened.