On November 5, 2008, Kenneth Ndung'u Mburu entered into a loan agreement with Absa Bank where he received Sh2,550,000.
The loan was secured by legal charges over Mburu's residential property.
Fast forward to April 18, 2023, Absa issued a statutory notice demanding Sh1,388,436.55, which it stated was the outstanding amount in respect of the loan.
Mburu went ahead and paid the amount, and proceeded to request that the bank issue the discharge of charge and release of the original certificate of title for the suit property to him.
A discharge of charge is a process to redeem the original title from the bank upon the settlement of the housing loan with the financier.
As one would expect, after sending a request you have to wait for a response, which is what Mburu did until he concluded that no response was forthcoming.
This led him to file a suit and a notice of motion seeking Order 40 Rule 1 of the Civil Procedure Rules to temporarily bar the bank from selling the suit property in exercise of its statutory power of sale.
The order may be granted if the property in dispute is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree.
Mburu argued that he had fully settled his liability as demanded by the bank under the charge- the cost that an individual, company, or other entity incurs by borrowing money.
The court heard that he was worried that the bank may maliciously or even inadvertently sell the suit property despite the fact that he has fully settled his liability.
On its part, Absa opposed the application submitting that Mburu is yet to settle the debt collection charges as per the fee note the bank had sent him on May 30, 2023.
It however confirmed that he had complied with the statutory notice and paid the demanded outstanding sum.
The bank told the court that the loanee is obliged to pay on demand all expenses it incurred or suffered in the enforcement of the charge.
Absa contended that it had not discharged the Certificate of Title for the suit property as Mburu had not settled its advocate’s fees.
It argued that the application was premature and without merit as the suit property is not yet advertised for sale by auction.
It added that the security realisation process was at its initial stages and the subsequent statutory notices may be issued in due course.
The court concluded that since Mburu had not paid the costs demanded for enforcing the charge, he could not expect Absa to execute any discharge of charge or release the title documents.
This is because he was still indebted.
It further said in the matter that Mburu had submitted on the amount sought by the bank being unreasonable, the same will be determined at the trial.
"...and if the Plaintiff (Mburu) proves his case on that point, he would be entitled to a refund and/or damages as the case might be," Milimani Court's Judge David Majanja said.
Delivering the judgment on September 26, 2023, Majanja said the application lacked merit and dismissed it.
"I find and hold that the Plaintiff has not made out a prima facie case as it remains indebted to the Bank for the incidental costs relating to the enforcement of the Charge," the judgement reads.
Prima facie is defined as true, valid, or sufficient at first impression.