Elijah Kipngeno Arap Bii v Samwel Mwehia Gitau & another [2009] KECA 1 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that fraud claims against a bank's property sale need a full trial with evidence, not a shortcut judgment.
What this practically means
#Executive summary
#Key legal issues
#Whether fraud is a ground for impeaching a sale in exercise of a mortgagee's statutory power of sale notwithstanding section 69B(2) of the TPA
The issue is a complex legal question that cannot be resolved on summary judgment; the trial Judge erred in deciding it in abstraction without full arguments, authorities or evidence.
The court surveyed English and Kenyan authorities (Mbuthia v Jimba, Corbett v Hatifax, Tse Kwong Lam, Russel Co. Ltd v Commercial Bank of Africa) showing that the mortgagee owes equitable duties to obtain the best price and act in good faith, that section 69B(2) protects only bona fide purchasers, and that section 75 of the RTA preserves the court's jurisdiction over actual fraud. Whether the sale was tainted with impropriety amounting to fraud requires evidence at trial.
The proper scope of summary judgment where the defence is a point of law
Summary judgment may be granted on a point of law only where the point is plainly misconceived or plainly unsustainable on short argument; it must not become a means of an immediate trial of the action.
Adopting Parker L.J. in Home and Overseas Insurance Co. Ltd v Mentor Insurance Co., the court held that where a point of law requires lengthy argument and citation of many authorities, it should not be determined on a summary judgment application. The trial Judge's determination of the complex fraud issue in such an application amounted to prematurely holding an immediate trial.
Whether special damages and all prayers in the plaint could be granted summarily without proof
The learned Judge erred in granting all prayers, including damages for trespass and special damages of Shs.2,890,000/= without proof, and in failing to dispose of the counter-claim.
Special damages must be specifically pleaded and proved. Granting unquantified, unproved damages on a summary judgment application was erroneous, as was leaving the counter-claim undisposed of. The appeal against the award of Shs.2,890,000/= was conceded. These errors independently justified setting aside the summary judgment in its entirety.
Legal principles established
#- The question whether a sale by a mortgagee in exercise of statutory power of sale can be set aside on the ground of fraud is a complex legal issue that cannot be determined on a summary judgment application and must be resolved at trial upon consideration of evidence.
- Section 69B(2) of the Transfer of Property Act protects a purchaser, but a purchaser who becomes aware of facts showing the power of sale was not exercisable or that there was impropriety in the sale gets no good title; actual fraud remains a ground on which the court's jurisdiction is preserved under section 75 of the Registration of Titles Act.
Court orders
#- 1.Appeal allowed
- 2.Ruling and order of the superior court dated 22nd September, 2004 set aside with costs to the appellant
- 3.Notice of motion for summary judgment dated 11th February, 2004 dismissed with costs to the appellant
- 4.Suit to be tried on priority basis by another Judge
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 882 of 2003
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over the ruling and decree of the High Court (appeal as of right from the superior court's ruling and decree)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Elijah Kipngeno Arap Bii v Samwel Mwehia Gitau & another [2009] KECA 1 (KLR)", Case Analysis (2009). Civil Appeal 155 of 2006. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/1/eng@2009-07-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.