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Court of AppealPartially AllowedCivil Appeal No. 3 of 1997

IHENYA AGENCIES CO. LTD vs BARCLAYS BANK OF KENYA LTD & 4 OTHERS [1997] KECA 380 (KLR)

Court of Appeal
12 November 1997
JGJ. E. GicheruALA. A. LakhaGPG. S. Pall
1,873 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to block a completed land sale because money damages would suffice, but froze the borrower's two remaining properties until trial.

What this practically means

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Executive summary

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The appellant, Ihenya Agencies Co. Ltd, borrowed from Barclays Bank of Kenya on the security of three Nakuru properties. Unable to repay, it agreed that Nakuru Block 6/38 be sold by public auction, which took place on 15th September 1993. The auctioneer deponed that the highest bid of Shs.8,450,000 and the second highest of Shs.8,400,000 fell through for failure to pay the 25% deposit, and he accepted a third bid of Shs.6 million from the 3rd to 6th respondents, above the reserve price. The appellant's managing director deponed that no one bid Shs.6 million at the auction and alleged collusion and fraud, claiming a loss of Shs.2,450,000. The appellant sought interlocutory injunctions: one restraining the purchasers from dealing with the suit property, and another restraining the Bank from disposing of the two remaining charged properties. Shah J dismissed the application with costs, finding no prima facie case and holding damages adequate. The Court of Appeal agreed that the injunction against the purchasers was rightly refused, since the appellant conceded damages of Shs.2,450,000 would be its maximum recovery and there was no evidence of inability to pay. However, the Court found the Judge had failed to determine the limb of the application directed at the Bank and the two remaining charged properties. Considering that a further sale before trial could irretrievably prejudice the appellant if the sale was proved to be a private treaty at an undervalue, the Court maintained the status quo, restraining the Bank from selling either property until trial. The appeal was allowed to that extent, the superior court's order set aside in part, with each party bearing its own costs of the appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the appellant established a prima facie case with a probability of success justifying an interlocutory injunction against the purchasers restraining them from alienating the suit property
  2. 2.Whether damages would be an adequate remedy for the appellant if the purchasers were restrained or if the sale were impugned
  3. 3.Whether the learned Judge erred by leaving part of the appellant's injunction application (the injunction sought against the Bank in respect of the two remaining charged properties) unattended and undetermined
  4. 4.Whether the status quo in respect of the two remaining charged properties should be maintained pending the trial of the suit

Key legal issues

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01

Injunction against the purchasers of the suit property

Holding

The refusal of an injunction against the purchasers was correct because damages would adequately compensate the appellant.

Reasoning

Counsel for the appellant conceded that if the suit succeeded the appellant would at most recover damages of Shs.2,450,000, being the difference between the highest bid and the sale price. There was no evidence that the Bank or the purchasers would be unable to pay such damages, so restraining the registered proprietors from dealing with the suit property was unjustified. To that extent the appeal was dismissed.

p. 2
02

Undetermined part of the injunction application against the Bank

Holding

The learned Judge erred in law by failing to consider the limb of the application seeking to restrain the Bank from disposing of the two remaining charged properties.

Reasoning

One of the grounds of appeal complained that parts of the application were left unattended. The Court agreed that the Judge never adverted to the prayer restraining the Bank from disposing of L.R.453/3/11/11 and L.R.453/3/1/4. A judge should dispose of every part of an application before dismissing it wholesale, so the Court took that limb up and determined it itself.

p. 3
03

Preservation of the two remaining charged properties pending trial

Holding

The status quo should be maintained: the Bank was restrained from selling either remaining property by public auction or private treaty until final determination of the suit.

Reasoning

The debt was Shs.6,566,698.85 and the Bank had recovered about Shs.6 million from the sale, leaving the two substantial charged properties as security for the balance. If the Bank sold them now and at trial the sale was proved to be a private treaty at an undervalue, the Bank would have had no justification for the further sale yet the properties would be beyond the appellant's reach. Any damages awarded could be set off against the loan, or the Bank could exercise its statutory chargee rights later if the appellant failed.

p. 3

Legal principles established

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  • A superior court must determine every limb of an interlocutory application before dismissing it; leaving part of an application unattended and undetermined is an error that justifies appellate intervention.
  • An interlocutory injunction will be refused where damages would be an adequate remedy and there is no evidence of the defendant's inability to pay.
  • Where a chargee's sale is under challenge and selling further charged properties before trial could render the chargor's claim nugatory, the court may preserve the status quo over those properties pending trial.

Court orders

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  1. 1.Appeal dismissed to the extent that it sought an interlocutory injunction restraining the purchasers from selling, transferring or charging the suit property
  2. 2.Status quo maintained in respect of L.R.453/3/11/11 and L.R.453/3/1/4 Nakuru; the Bank restrained from selling either property by public auction or private treaty until the final determination of the suit
  3. 3.Appeal allowed to that extent and the order of the superior court set aside
  4. 4.Each party to bear its own costs of the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

JG
majority

Wrote the judgment

AL
majority

Wrote the judgment

GP
majority

Wrote the judgment

On appeal from
High Court of Kenya at Nairobi
High Court Civil Case No. 5313 of 1993
Jurisdiction invoked
First appeal to the Court of Appeal from the High Court under the Constitution and the Appellate Jurisdiction Act (ruling and order of the High Court appealed against)

Relief refused

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Interlocutory injunction restraining the purchasers from selling, transferring, charging or dealing with the suit property (Nakuru Block 6/38)

Damages would be an adequate remedy; the appellant conceded that on success at trial it would at most be entitled to Shs.2,450,000 and there was no evidence the Bank or purchasers could not pay

p. 2

Costs

Each party shall bear its own costs of the appeal

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

the learned Judge quite rightly dismissed the appellant's application for an interlocutory injunction to restrain the Purchasers from selling or alienating the suit property of which they are now the registered proprietors. To that extent the appellant's appeal is hereby dismissed.
p. 2Refusal of injunction against purchasers - adequacy of damages
The learned Judge should have dealt with that part of the application before totally dismissing the application, as he did. We will now deal with it.
p. 3Duty to determine all limbs of an application
we are of the view that the present status quo in respect of the said two properties should be maintained and the Bank is accordingly hereby restrained from selling by public auction or private treaty either of the said two properties, namely; L.R.453/3/11/11 and L.R.453/3/1/4 Nakuru until the final determination of the suit.
p. 3Final orders - preservation of remaining charged properties
To that extent we therefore allow the appeal and set aside the order of the superior court. We order that each party shall bear its own costs of the appeal
p. 3Final orders - disposition and costs

Issues in the judgment

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minor

The names of the 2nd to 6th respondents are garbled in the heading of the judgment (apparently a printing/OCR corruption of Watts Enterprises, the investment company and the individual purchasers), making exact party identification uncertain.

minor

The judgment contains a corrupted passage describing the suit and the summons date, obscuring the precise pleading.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "IHENYA AGENCIES CO. LTD vs BARCLAYS BANK OF KENYA LTD & 4 OTHERS [1997] KECA 380 (KLR)", Case Analysis (1997). Civil Appeal No. 3 of 1997. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/380/eng@1997-11-12

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.