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Court of AppealDismissedCivil Appeal No. 43 of 2011· [2014] KECA 892 (KLR)

David Katana Ngombe v Shafi Grewal Kaka

Court of Appeal of Kenya
10 October 2014
WKW. KaranjaWilliam OukoW. OukoPKP.O. Kiage
3,573 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Court of Appeal (Karanja, Ouko and Kiage, JJ.A) dismissed this first appeal against the High Court at Malindi (Omondi, J) judgment of 14th December 2010, which declared the respondent the registered owner of KILIFI/ROKA/1098 and ordered the appellant to vacate. The respondent had purchased the property at a public auction conducted on behalf of ICDC, the chargee exercising its statutory power of sale under Section 74 of the repealed Registered Land Act (Cap 300) following default on a loan to Tototo Maize Millers, in which the appellant was a director. The appellant contended the loan was repaid, that statutory notices were never issued, that the sale was fraudulent and improperly held in Nairobi rather than at the Coast. The Court held that the obligation to issue statutory notices rests with the chargee, not the purchaser; that an intending purchaser at a properly advertised auction has no duty to inquire into the chargee's right to sell; and that upon sale, transfer and registration the appellant's equity of redemption was extinguished. Because the appellant never joined ICDC or the auctioneer - despite intimating an intention to do so - his complaints about notice and fraud could not be sustained, and even an irregular exercise of the power of sale would yield only damages against the chargee under Section 77(3). Fraud was neither particularised nor proved, the burden under Sections 108 and 109 of the Evidence Act not being discharged, and no counterclaim sought cancellation of the sale. The Court affirmed the judgment below and dismissed the appeal with costs.

Key legal issues

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01

Exercise of statutory power of sale under Section 74 RLA

Holding

The chargee alone bears the statutory notice obligation; compliance with Section 74 could not be assumed either way since ICDC was not joined, but even irregularity would leave the appellant only a damages remedy under Section 77(3).

Reasoning

Section 74 required default for one month, written notice, and three months' non-compliance before sale. The court could not determine compliance without ICDC. Section 77(3) makes damages the sole remedy for irregular exercise, and Section 77(4) vests the land in the transferee on registration, freeing it from the charge.

p. 4
02

Duty of an auction purchaser to investigate

Holding

An intending purchaser at a properly advertised auction has no duty to inquire into the chargee's right to sell.

Reasoning

Relying on Mbuthia v Jimba and Kanyagia, the court held the equity of redemption is extinguished on completion of sale and registration. The advertisement stated date, time and place as required by the Auctioneers Act, and the sale occurred as advertised.

p. 5
03

Non-joinder of ICDC and the auctioneer

Holding

Non-joinder was fatal to the appellant's defences of irregular notice and fraud; the appellant's remedies lay against ICDC, not the purchaser.

Reasoning

The appellant had intimated an intention to enjoin ICDC as third party but never did. By directing his claims at the respondent rather than the chargee, he targeted a party insulated by statute. The court drew an adverse inference from the failure to join ICDC.

p. 5
04

Fraud and rectification

Holding

Fraud was not particularised or proved; Section 143(2) RLA protects a proprietor in possession who acquired land for value without knowledge of fraud.

Reasoning

Particulars of fraud were never pleaded, so allegations remained 'from the bar'. Under Sections 108 and 109 of the Evidence Act the burden lay on the appellant, who failed to discharge it. No defence or counterclaim sought cancellation of title or nullification of the sale.

p. 5
05

First appeal - re-evaluation of evidence

Holding

The Court re-analysed the evidence afresh and found the trial Judge's determination that the sale was regular was proper.

Reasoning

Applying Selle v Associated Motor Boat Co, the Court reconsidered the documentary evidence (advertisement, certificate of sale, transfer, title deed) and, absent contradictory evidence from the appellant, deferred to the trial Judge's first-hand evaluation of authenticity.

p. 3

Legal principles established

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  • The obligation to issue statutory notices before exercising a statutory power of sale rests with the chargee, not the purchaser.
  • An intending purchaser at a properly advertised auction sale has no duty to inquire into the rights of the chargee to sell.
  • Under the Registered Land Act, the chargor's equity of redemption is extinguished upon sale by public auction, transfer and registration of the transferee.
  • A person suffering damage by an irregular exercise of a chargee's power of sale has a remedy in damages only against the person exercising the power.
  • Judgment and remedies must flow from pleadings; a court determines only pleaded issues and cannot venture into the arena on behalf of parties.
  • Where a party fails to call a critical witness, the court may draw an adverse inference.

Court orders

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  1. 1.The appeal is dismissed with costs to the respondent.

Authorities

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Legislation

  • Registered Land Act (Cap 300) (repealed)Section 74
  • Registered Land Act (Cap 300) (repealed)Section 77(3) and (4)
  • Registered Land Act (Cap 300) (repealed)Section 72
  • Registered Land Act (Cap 300) (repealed)Section 143(1) and (2)
  • Evidence Act (Cap 80)Sections 108 and 109
  • Auctioneers Act (No. 5 of 1996)Sections 20 and 21

Cases cited (6)

  • Selle and Another vs. Associated Motors Boat Company Ltd and Others
    (1968) EA 123

    Duty of a first appellate court to reconsider and evaluate evidence afresh and draw its own conclusions.

  • Abdul Hemeed Seif vs. Ali Mohamed Sholan
    (1955) 22 E.A.C.A. 270

    First appellate court not bound by trial judge's findings of fact where he failed to account for material circumstances.

  • Mbuthia vs. Jimba Credit Finance Corporation & Another
    [1988] KLR 1

    Equity of redemption lost on completion of a valid sale and registration; treatment of registered versus unregistered purchasers.

  • Captain Patrick Kanyagia and Another vs. Damaris Wangechi and others
    1995 eKLR, Civil Appeal No. 140 of 1993

    Extinguishment of equity of redemption upon execution of a valid contract of sale under statutory power of sale under the RLA.

  • Galaxy Paints Company Ltd V. Falcon Guards Ltd
    Civil Appeal No. 219 of 1998

    Issues for determination flow from the pleadings; a court can only pronounce judgment on pleaded issues.

  • Elizabeth Wambui Njuguna v. Housing Finance of Kenya Limited
    HCCC 293 of 2006

    Validity of a chargee's sale revolves around the statutory notice; distinguished because there the chargee was a defendant.

On appeal from
High Court of Kenya at Malindi
H.C.C.C. No. 66 of 2006
Jurisdiction invoked
First appeal to the Court of Appeal under the appellate jurisdiction over the High Court (the judgment invokes the court's duty on a first appeal to re-evaluate the evidence afresh)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "David Katana Ngombe v Shafi Grewal Kaka", Case Analysis (2014). Civil Appeal No. 43 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/892/eng@2014-10-10

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