Owen Ng'ang'a Gitau v Standard Chartered Bank Limited
The bottom line
#Kenya's Court of Appeal refused to stop a bank auction because the borrower hid key facts when asking for an injunction.
What this practically means
#Executive summary
#Key legal issues
#Whether an applicant for an interlocutory injunction, particularly where the application is first made ex parte, must make full and frank disclosure of material facts.
Yes. The Court upheld the trial Judge's finding that the applicant was not candid: he failed to disclose that the earlier auction had been postponed on his promise of payment from a private sale, and that the lendings to Combined Enterprises Limited were to be secured by a legal charge over the suit property, interavailable with the debt of Trading Trucks Limited. Non-disclosure disentitled him to the equitable remedy.
The Court endorsed the superior court's assessment that the applicant withheld material facts: he said nothing about the earlier auction of 26th January 2001 postponed on his promise of payment from a private sale, the legal charge securing Combined Enterprises Limited's facilities, the interavailability of the security for Trading Trucks Limited's debt, his own letter of 29th June 1999 acknowledging the takeover of liabilities, and the board resolution borrowing on the strength of the charge. Because an injunction is an equitable remedy, candour is a precondition; a party economising on truth cannot obtain it. That failure of disclosure disentitled the applicant to the injunction pending appeal.
Whether the High Court Judge erred in ascribing bad faith to the applicant and refusing the interim injunction.
No. At the interlocutory stage the Court was not persuaded that the learned Judge was wrong in ascribing bad faith to the applicant, given his non-disclosure and his conduct in seeking the bank's indulgence only after the statutory sale had been set in motion.
The High Court Judge had found the applicant less than candid in his ex parte application, omitting the postponed auction, the charge over the suit property for Combined Enterprises Limited's facilities and the interavailability of the securities. The Court of Appeal reviewed that assessment on the material before it and declined to disturb it, expressly holding itself unpersuaded that the Judge was wrong in ascribing bad faith. That endorsement, together with the disclosure principle, formed the core of the Court's refusal to grant an injunction pending the lodging and hearing of the intended appeal.
Whether the statutory power of sale can arise where the mortgagor agreed that the security would stand good for the debts of two related companies and the debts were combined.
The Court indicated preliminarily that counsel's argument was 'not quite the position here' because the applicant, as alter ego of both companies, expressly agreed the security would stand for both debts; but it expressly deferred fuller articulation of the arguments to the hearing of the appeal, if lodged.
Mr Gatonye argued that a statutory power of sale arises only from a duly registered mortgage in respect of a particular debt of a particular mortgagor and cannot arise from a contract assigning the debt to another person, and that the unregistered assignment absolved the applicant vis-à-vis Combined Enterprises Limited. The Court responded that the applicant, as alter ego of both companies, had expressly agreed that the security would stand good for the debts of both, and noted his concession that combining the debts did not extinguish the bank's rights. The Court nevertheless declined to say more, reserving the arguments for the appeal itself if lodged.
Whether refusal of the injunction would render the intended appeal nugatory because the suit property is the family residence.
No. The nugatory argument was rejected because the applicant had himself agreed to sell the very same property to one Geoffrey M. Mwangi, undermining the claim that its sale would deprive the family of its roof.
Counsel emphasized that success in the intended appeal would be rendered nugatory if the injunction were refused, since the suit property was the family residence whose sale would deprive the family of its roof. The Court accepted that this might be so but held it fatal that the applicant had himself agreed to sell the very same property to one Geoffrey M. Mwangi. The nugatory argument therefore did not appeal to the Court and could not support the grant of an injunction pending the intended appeal.
Legal principles established
#- A party seeking an equitable remedy, and especially one whose application is first made on an ex-parte basis, must make full and frank disclosure of all material facts; a party who economises on truth cannot obtain injunctive relief.
Court orders
#- 1.The applicant's application for an injunction pending the lodging and hearing of the intended appeal is dismissed.
- 2.Costs of the application awarded to the respondent, Standard Chartered Bank Limited.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1582 of 2001
- Jurisdiction invoked
- Not expressly stated in the ruling; the Court entertained an application for an injunction pending the lodging and hearing of an intended appeal from the High Court, citing no constitutional or statutory provision in the judgment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Owen Ng'ang'a Gitau v Standard Chartered Bank Limited", Case Analysis (2002). Civil Application No. Nai. 9 of 2002 (UR. 7/2002). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2002/105/eng@2002-02-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.