Julius Musili Kyunga v Kenya Commercial Bank Ltd & 2 others [2015] KECA 920 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that disputing your bank's figures or complaining late about a faulty auction notice won't stop your property from being sold.
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 appellant charged the suit property to the 1st respondent
- 2.If so, whether there was any money due and outstanding on the charge
- 3.Whether the appellant was served with appropriate statutory notice
- 4.Whether the 1st respondent's statutory right of sale had accrued
- 5.Whether the appellant's equity of redemption had been extinguished
- 6.Whether the appellant had established a prima facie case for the granting of an injunction
Key legal issues
#Whether the appellant established a prima facie case for an interlocutory injunction
The appellant failed: he conceded the existence of charges, acknowledged a debt in writing, took no redemption proceedings, and did not pay the amount claimed into court, so no prima facie case with probability of success existed.
The court applied the Giella v Cassman Brown principles and the Mrao definition of a prima facie case. On the pleadings the appellant conceded a charge for Kshs.2,400,000 and receipt of Kshs.700,000 by way of overdraft, and in a letter dated 3rd May 2002 acknowledged owing Kshs.1,697,447/60. A dispute over the amount due or the interest rate does not restrain a mortgagee's power of sale unless the amount claimed is paid into court. The appellant did neither, nor did he commence redemption proceedings.
Whether the statutory notice was duly served and whether the power of sale accrued
The notice dated 4th July 2005 was sent to a wrong address (P.O Box 82261 instead of 86261) with no certificate of posting, raising doubt as to service; the learned Judge erred in not addressing this, and the want of service meant the statutory power of sale could not accrue.
Under section 102(2)(d) of the Transfer of Property Act, service by registered post required the notice to be addressed to the mortgagor by name at his last known postal address and not to be returned undelivered. Neither condition was established: the address on the notice was not the appellant's, and no certificate of posting was availed. This non-service was prima facie evidence of a threatened violation of the appellant's rights and would have justified interlocutory orders staying the sale.
Whether the appellant's equity of redemption was extinguished and whether the sale to the interested party could be impeached
The equity of redemption was extinguished by the binding contract of sale following the public auction; the interested party was a bona fide purchaser and, under section 69B(2), the title was not impeachable for irregular exercise of the power; the appellant's remedy was in damages.
Section 60 of the Transfer of Property Act preserved the right of redemption only until the mortgagee entered a binding contract for sale. The appellant sat on his right, filing suit only two days after the auction, by which time the interested party had paid the required 25% and entered a binding contract. Nothing suggested the purchaser was not innocent and without notice. Being guilty of inordinate delay, the appellant could not invoke equitable relief, and any grievance lay in damages against the 1st and 2nd respondents.
Legal principles established
#- A mortgagee will not be restrained from exercising the statutory power of sale merely because the amount due is in dispute, unless the mortgagor pays the amount claimed into court
- Service of the statutory notice requiring payment is a mandatory precondition to the accrual of a mortgagee's statutory power of sale
- Where the statutory notice is addressed to a wrong, unknown address and no certificate of posting is produced, service is doubtful and the statutory power of sale does not accrue
- The statutory three months notice is required only in respect of the principal sum; interest and other breaches may ground sale without it
- The title of a purchaser at a statutory power of sale is not impeachable on the ground that no case arose to authorise the sale, that due notice was not given, or that the power was irregularly exercised; the remedy of the damnified party is in damages
- The burden of proof where an injunction is sought lies on the party seeking it, who must demonstrate a clear and unmistakable right directly threatened
- Equity aids the vigilant, not those who slumber on their rights; a mortgagor who delays until after the auction cannot obtain interlocutory relief
Court orders
#- 1.Dismissal of the appeal
- 2.Costs of the appeal to the respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Malindi
- H.C.C.C. No. 324 of 2008
- Jurisdiction invoked
- First appeal to the Court of Appeal against the ruling of the High Court in an interlocutory application (institutional appellate jurisdiction; no specific article cited in the judgment)
Relief refused
#Interlocutory injunction restraining the respondents from selling, or otherwise realising the mortgage over the suit property
The appellant failed to establish a prima facie case; the statutory power of sale, once the auction created a binding contract of sale with a bona fide purchaser, could not be impeached by injunction; the appellant was guilty of inordinate delay and his remedy lay in damages
Costs
The appeal was dismissed with costs to the respondents ('Accordingly, we dismiss the appeal with costs.')
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.
In light of the unknown address used in serving the appellant, there is a doubt as to whether the appellant was properly served. Without service of the appropriate statutory notice, the 1st respondent's statutory power of sale could not accrue.
"the mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has began a redemption action or because the mortgagor objects to the manner in which the sale is being arranged."
A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the applicant's case upon trial.
"any person damnified by an unauthorized, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power."
For these reasons, we come to the conclusion that the order dismissing the appellant's application for interlocutory injunction must be sustained. Accordingly, we dismiss the appeal with costs.
Issues in the judgment
#The court states the learned Judge 'in his judgment made no mention of it' although the decision below was expressed to be a ruling on an interlocutory application - a terminology inconsistency within the judgment
The appellant's names are given inconsistently in the judgment as 'Julius Musili Kyunga', 'Julius M. Kyunga' and 'James Musili Kyunga' when recording his address of service
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Julius Musili Kyunga v Kenya Commercial Bank Ltd & 2 others [2015] KECA 920 (KLR)", Case Analysis (2015). Civil Appeal No. 3 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/920/eng@2015-02-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.