Surekha Hasmukhlal Virchand Shah & 2 others v Investments & Mortgages Bank Ltd
The bottom line
#The Court of Appeal allowed a bank to proceed with selling charged land, ruling that valuable property can always be compensated with money, so no injunction was warranted.
What this practically means
#Executive summary
#Key legal issues
#Interference with the trial court's discretion
The Court would be slow to interfere with the exercise of discretion by the trial court even if it would have reached a different conclusion; a presumption of correctness attaches to discretionary decisions, reversible only on a showing of clear abuse of discretion.
Relying on Mbogo v Shah and United India Insurance Co. Ltd v East African Underwriters, the Court restated that an appellate court intervenes only where the judge misdirected himself in law, misapprehended the facts, considered irrelevant or failed to consider relevant matters, or where the discretionary decision is plainly wrong. It framed the sole issue as whether the Judge exercised his discretion improperly in declining the injunction, and it confined itself to that interlocutory question without prejudging the main suit.
Prima facie case - limitation clause in the charge
The appellants satisfied the first pillar: since the respondent did not dispute the existence of the limitation clause(s) in the contract, the applicability of those clauses needed to be determined before the respondent could proceed to realize the security to its finality.
Applying the Mrao definition of a prima facie case as one with a right apparently infringed calling for rebuttal, and relying on Paul Odhiambo Edward Gondi v National Bank of Kenya, the Court found the contractual limitation clause raised a bona fide question requiring judicial determination. However, this alone did not secure an injunction because the second pillar failed and the conditions are sequential.
Irreparable injury and balance of convenience
The appellants failed the second pillar because the suit property was capable of valuation and the respondent was able to compensate; consequently the balance of convenience did not need consideration.
The Court adopted the respondent's authorities holding that where secured property is capable of valuation and has an ascertainable market value, loss from its sale is compensable in damages and cannot be irreparable. There was no doubt about the respondent's ability to pay compensation, and no contention that it could not. Under the Nguruman sequential approach, failure of the second pillar rendered the third unnecessary.
Applicability of the Land Act 2012 to a process initiated under the RLA
The Land Act 2012 had no retrospective application to a security-realisation process initiated under the Registered Land Act before the Land Act came into force.
The respondent conceded the process was initiated under the RLA but argued the Act was repealed before the process was completed, and the Land Act 2012, not being retrospective, did not apply. The Court noted the learned Judge had found the notices of 19 December 2011 and 8 February 2012 were properly issued under the RLA and unaffected by the Land Act, which came into effect in May 2012, and that the notification of sale under Rule 15(c) of the Auctioneers Rules 1997 was regular.
Legal principles established
#- An appellate court will not interfere with a discretionary decision of a judge unless it is established that the judge misdirected himself in law, misapprehended the facts, took into account irrelevant considerations, failed to take into account relevant considerations, or that the decision is plainly wrong
- The three conditions for an interlocutory injunction - prima facie case, irreparable injury and balance of convenience - are sequential and must be surmounted in order, without leap-frogging
- Where a party has offered property as security which is capable of valuation and has a market value, that party cannot contend that loss from the sale of the property would be irreparable
Court orders
#- 1.The appeal be and is hereby dismissed with costs
- On appeal from
- High Court of Kenya at Nairobi, Commercial & Admiralty Division (Milimani)
- Civil Suit No. 27 of 2013
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Act over an interlocutory appeal from the High Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Surekha Hasmukhlal Virchand Shah & 2 others v Investments & Mortgages Bank Ltd", Case Analysis (2018). Civil Appeal No. 243 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/66/eng@2018-11-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.