INDUSTRIAL HARDWARE (KENYA) LTD & 5 OTHERS vs STANDARD CHARTERED BANK KENYA LTD [1999] KECA 174 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that 'liberty to apply' clauses cannot reopen a consent order, and defaulting borrowers cannot block mortgage sales.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the 'liberty to apply' clause in the consent order entitled the plaintiffs to apply to set aside or vary the consent order
- 2.Whether there was any legal basis for an injunction restraining the mortgagee from exercising its statutory power of sale
Key legal issues
#Effect of a 'liberty to apply' clause in a consent order
The clause does not entitle a party to apply to set aside or vary the consent order.
Adopting the English Court of Appeal decision in Cristel v Cristel, the court held that 'liberty to apply' means only that, when the order is drawn up, its working out may involve matters on which a decision of the court may be necessary. It confers no right to reopen or vary the order itself. Counsel's contrary submission was rejected as legally incorrect.
Availability of an injunction to restrain exercise of a mortgagee's statutory power of sale
No injunction lies where default and indebtedness are not denied and the necessary notices have been served.
The court, referring to Halsbury's Laws of England, Volume 32 (4th Edition), paragraph 725, found no legal basis for restraining the mortgagee. The plaintiffs had defaulted on the loan secured by the charge and guarantees, had not complied with the consent order, and had pursued a strategy of filing frivolous injunction applications to frustrate the sale.
Legal principles established
#- A 'liberty to apply' clause in an order does not confer any right to ask the court to vary or set aside the order; it applies only to matters arising in the working out of the order.
- A mortgagor cannot obtain an injunction restraining a mortgagee from exercising its statutory power of sale where default and indebtedness are not denied and the necessary notices have been served.
Court orders
#- 1.Appeal dismissed
- 2.Costs of the appeal to the defendant (Standard Chartered Bank Kenya Ltd)
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 577 of 1997
- Jurisdiction invoked
- First appeal to the Court of Appeal from the High Court (not expressly stated in the judgment)
Relief refused
#Setting aside or varying the consent order of 22nd May 1997
The liberty to apply clause did not confer a right to vary the order
Injunction restraining the defendant from selling the property or enforcing the guarantees
Default and indebtedness were not denied and the necessary notices had been served; no legal basis for an injunction
Costs
Appeal dismissed with costs to the defendant.
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.
That is the correct position in law and the liberty to apply clause in the consent order did not entitle the plaintiffs to apply to set aside or vary the consent order.
all they were trying to do was to restrain a mortgagee from exercising its statutory power of sale in a case where default and indebtedness were not denied and the necessary notices had been served
we are firmly of the opinion that there is no substance in this appeal and it is hereby dismissed with costs to the defendant.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "INDUSTRIAL HARDWARE (KENYA) LTD & 5 OTHERS vs STANDARD CHARTERED BANK KENYA LTD [1999] KECA 174 (KLR)", Case Analysis (1999). Civil Appeal No. 194 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1999/174/eng@1999-03-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.