Fatuma Mohamed is in trouble.
She is currently battling auctioneers to protect her family’s only inheritance over a Sh4 million loan taken out in 2015.
Gulf African Bank and Garam Investment Auctioneers are after her mother’s property, a parcel of land known as Title Number Mombasa/Block XII/294, and the buildings and/or improvements on the property over the loan. The property is registered in Ms Mohamed’s name and has been so registered since 2015.
In a desperate bid to save the property from the auctioneer’s hammer, Ms Mohamed informed the court that the debtor, Fatia Mbulwa Salim, who used the property as security for a loan, died on April 10, 2016.
It claimed that the bank’s managers were aware of Mbulwa’s death because at least two of its officials attended the borrower’s funeral.
According to court records, she is the biological daughter of her late mother, Zuhura Salim Ali, and therefore the legal representative of her estate, having been granted a Limited Grant Ad Litem to file the case.
She said that her late mother was the registered owner of the property. On September 30, 2015, the bank offered to advance Sh4 million to Mbulwa through its Murabaha finance facility, which was secured by a legal charge on the property in question.
“It was the bank’s responsibility to ensure that the facility was repaid by the principal debtor before her death in April 2016,” she said.
She also claimed that neither the borrower nor the chargor were served with the required statutory notices, which were allegedly served after both (the chargor and the borrower) had died.
Their argument is that since the borrower died in 2016, any statutory notice allegedly served after that date is null and void. A statutory notice addressed to a deceased person, she claims, is null and void.
“The bank has not provided any evidence to show that the notices were properly served and therefore the statutory power of sale has not yet arisen,” she said through her lawyer.
Ms Mohamed also raised concerns about the bank and the auctioneer’s handling of the property, which she described as illegal, and feared that they would proceed and sell the property.
“If this happens, all the beneficiaries of the estate will suffer irreparable loss and damage that cannot be compensated by any monetary award,” she said.
She also claimed that any attempt by the bank to use its statutory power to sell the property would be invalid because the statutory notices had allegedly been served on the deceased.
The bank, through senior legal officer Lawi Sato, argued that even if the statutory notices issued in this case were invalid, there was no basis for an injunction that would last longer than the time required to issue new statutory notices.
“Ms Mohamed’s approach and attitude demonstrate that she is not interested in exercising the equity of redemption, but rather is intent on never repaying the loan that is duly due and owing to the bank,” he said.
The lawyer also argued that the issue of statutory service of notice is incontrovertible, as Ms Mohamed proposed to repay the loan in a letter dated September 30, 2019.
Mr Sato also said it would be completely unjust to grant an injunction against the sale, citing the fact that the default on the loan facility started in July 2018 and the loan remains unpaid to date.
“The appeal will not become moot if the injunction is refused, nor will Ms Mohamed suffer irreparable harm. The loan will continue to grow and the beneficiaries of the chargor’s estate and the borrower’s estate will see their inheritance further diminished,” it said.
The bank also claimed that Ms Mohamed had written a letter assuring the financial institution that after the statutory notices were issued, members of the deceased borrower’s and chargor’s families were making plans to clear the default and offered to repay the debt in instalments of Sh25,000.
According to the bank, the debt was outstanding and the amount due as of October 19, 2021 was Sh2.6 million, with interest and default charges continuing to accrue.
Ms Mohamed had applied to the Magistrate’s Court in 2021 for an injunction to stop the bank and the auctioneer from selling the property for the debt. Her case was dismissed, prompting her to appeal to the High Court.
Mombasa presiding judge Olga Sewe agreed with Ms Mohamed that the requisite statutory notices had been served following the deaths of the chargor and the borrower.
“I am satisfied that Ms Mohamed has established a prima facie case in relation to the service of the statutory notices. The way to reduce the risk of injustice would be to grant the appellant an interlocutory injunction as prayed for,” the judge said.
Justice Sewe noted that where both the borrower and the chargor are deceased, justice requires that the parties first be given the opportunity to pursue their appeal to its logical conclusion before the charged property is sold. BY DAILY NATION