Industrial & Commercial Development Corporation v Kariuki & Gatheca Resources Ltd [1977] KECA 21 (KLR)
The bottom line
#What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether, under Kenyan law, an unconditional contract of sale by a mortgagee under its power of sale immediately bars the mortgagor's equity of redemption, as in England, or whether the right of redemption continues until the sale is completed and registered, as in India
- 2.Whether the appellant, having complied with and enjoyed the benefit of the decree, was precluded from appealing against it (approbate and reprobate)
- 3.Whether any valid or enforceable contract of sale with a third party existed that could have barred the respondent's right of redemption before the tender of full payment on 1st November 1974
- 4.Whether the trial judge was right to find the appellant had acted in bad faith
- 5.Whether the matter was too complicated to have been dealt with by originating summons
- 6.Whether the appellant, as mortgagee, was prima facie entitled to costs in a mortgage redemption suit
Key legal issues
#Effect of a mortgagee's contract of sale on the equity of redemption
In Kenya, following the Indian position, a contract of sale by a mortgagee does not bar the equity of redemption; the English rule in Lord Waring does not apply because the Transfer of Property Act contains sections 54 and 60, absent from the English Law of Property Act 1925.
Section 54 of the Transfer of Property Act provides that a contract of sale of immovable property creates no interest in or charge on the property, and a sale of property above Shs 100 requires a registered instrument. Section 60 preserves the equity of redemption until extinguished by act of the parties or court order. Since no registered instrument existed and only the mortgagee had acted, the contract was merely personal and the mortgagor's right to redeem persisted until completion and registration of the sale.
Relevance of the Land Control Act to enforceability of the contract of sale
Section 6 of the Land Control Act renders a sale or agreement of sale void without Land Control Board consent, so the contract of sale to Kikko would have been unenforceable for lack of consent, which is a condition precedent.
The court held that conditional contracts of sale are common in Kenya and that section 6(1) and 6(2) of the Land Control Act, governing the suit land, make a sale void for all purposes absent Board consent within the prescribed time. This reinforces that a mortgagee's contract of sale, unconsented, could not affect the mortgagor's rights.
Approbating and reprobating the judgment
The appellant, having affirmed and enjoyed the benefit of the decree after judgment, was precluded from attacking it on appeal.
The appellant had obtained the full benefit of the judgment by receiving payment and retransferring the property. Approbation occurs after judgment; the appellant's letter of 19th August 1975 asking its advocates to forward the sum due in full and final settlement showed affirmation of the decree, not mere passive compliance, precluding an attack on the judgment.
Bad faith finding by the trial judge
The Court of Appeal respectfully disagreed with the trial judge's finding of bad faith, holding that the appellant, having warned the respondent of default and relied on an independent professional valuation, did not act in bad faith.
Both Mustafa JA and Law V-P considered that the respondent was duly warned of its default on several occasions before the appellant exercised its power of sale, and the price had been set on the advice of an independent qualified valuer, so the imputation of bad faith was unjustified. However, this finding did not affect the outcome.
Costs in a mortgage redemption suit
Although a mortgagee is prima facie entitled to costs in a redemption suit, the appellant forfeited that right by persistently denying the respondent the right to redeem after 1st November 1974; the trial judge's costs order was not a misdirection and was left undisturbed.
The court held that the appellant's conduct in denying the respondent's right to redeem after full payment was tendered placed costs in the trial judge's discretion, and no misdirection warranted interference by the appellate court.
Legal principles established
#- In Kenya, a mere contract of sale by a mortgagee under its power of sale does not extinguish the mortgagor's right of redemption; the right of redemption continues until the conveyance is registered and the sale completed, or until extinguished by act of the parties or order of a court.
- Section 69 of the Transfer of Property Act cannot be construed in isolation; the statutory scheme of the Act, including sections 54 and 60, distinguishes Kenyan law from English law on the effect of a mortgagee's contract of sale.
Court orders
#- 1.Appeal dismissed
- 2.Costs of the appeal awarded to the respondent
- 3.Order for costs in the High Court left undisturbed
- 4.No certificate for two advocates
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Delivered a short judgment fully agreeing with Mustafa JA, while differing respectfully on the trial judge's finding of bad faith against the appellant.
I agree in every respect with the judgment prepared by Mustafa JA and cannot usefully add anything to it.p. 4
Concurred with the judgment of Mustafa JA and the proposed order.
I agree with the judgment of Mustafa JA and concur in the proposed order.p. 4
- On appeal from
- High Court of Kenya
- Not stated in the judgment
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal against the decision of Chanan Singh J in the High Court (provision not stated in the judgment)
Relief refused
#Discharge of the injunction / reversal of the High Court finding that the contract of sale did not bar the equity of redemption
Section 69 of the Transfer of Property Act must be read with sections 54 and 60, under which a mere contract of sale creates no interest in land and the equity of redemption persists until registration and completion of the sale or extinction by act of the parties or court order
Certificate for two advocates
The court declined to certify for two advocates
Costs
Appeal dismissed with costs; the order for costs in the High Court left undisturbed; no certificate for two advocates.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In Kenya conditional contracts of sale are common.
I do not think that section 69 of the transfer of Property Act can be construed in isolation without reference to other relevant sections.
The contract of sale was only a personal contract between the mortgagee and the purchaser and did not create any interest in the property in the purchaser.
I would leave the order for costs in the High Court undisturbed. I would dismiss the appeal with costs. I would not certify for two advocates.
Appeal dismissed with costs.
Issues in the judgment
#The opening narrative states the appellant's application to discharge the injunction was dismissed and describes the decree 'freed from' the mortgage, but the sentence is incomplete in the text as supplied, breaking off mid-sentence: 'freed from that decision that the appellant appeals.' The exact terms of the High Court decree being appealed are partly garbled.
The case title, appeal number and neutral citation are not stated in the judgment text supplied; parties are identified only as 'the appellant' and 'the respondent'.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Wasike & another v Eldoret Express Limited & 13 others (Enviromental and Land Originating Summons E001 of 2025) [2025] KEELC 5948 (KLR)[2025] KEELC 5948 (KLR)17 Jun 2025applied
Cite this brief
#Cite this brief
Caselaw, "Industrial & Commercial Development Corporation v Kariuki & Gatheca Resources Ltd [1977] KECA 21 (KLR)", Case Analysis (1977). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1977/21/eng@1977-03-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.