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Court of AppealDismissedCivil Appeal No. 66 of 2018· [2019] KECA 91 (KLR)

TSS Investments Limited & another v NIC Bank Limited [2019] KECA 91 (KLR)

Court of Appeal
28 November 2019
DMD.K. MusingaSKS. Gatembu KairuAMA.K. Murgor
2,610 words in judgment
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The bottom line

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Kenya's Court of Appeal upheld a bank's right to auction charged land, ruling that statutory notices were valid and disputes over the exact amount owed cannot stop a sale.

What this practically means

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Executive summary

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The appellants, whose banking facilities from NIC Bank Limited were secured by charges over two properties, sued in the Environment and Land Court at Mombasa challenging the bank's advertised auction of the charged properties, alleging non-compliance with the statutory notice regime. On transfer to the High Court, the parties consented to proceed by way of case stated on a single issue: whether the bank had complied with the statutory provisions in seeking to realise the security. The High Court (Otieno, J.) found the statutory notices compliant and dismissed the suit with costs. On appeal, the Court of Appeal (Musinga, Gatembu Kairu and Murgor, JJ.A) first held that the High Court had jurisdiction: relying on its earlier decision in Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna, it reaffirmed that charging land does not constitute land use under Article 162(2) of the Constitution, so the Environment and Land Court lacked jurisdiction and the transfer was proper. It accepted that a jurisdictional point may be raised for the first time on appeal, but declined to entertain the section 96(3)(b) argument and the alleged inconsistency of amounts in the statutory notices, since neither was pleaded or canvassed before the trial court. On the merits, the Court found the notices of 11th January 2016 and 12th May 2016 substantially complied with sections 90 and 96(2) of the Land Act; the omission of the borrower's right to apply for relief caused no prejudice because the appellants had themselves obtained interim orders. Citing Trans-Western Cane Harvesters v Barclays Bank, it held that a dispute over the exact amount repayable cannot ground an injunction against a chargee served with a valid notice. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Jurisdiction of the Environment and Land Court over challenges to the realisation of charged land

Holding

The suit was rightly transferred to the High Court because charging land is not land use under Article 162(2) of the Constitution

Reasoning

Relying on its prior decision in Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna, the Court held that land use entails employment of the surface, air above or ground below for the purpose for which the land is adapted. Creating security by charging land is not such use, so the Environment and Land Court lacked jurisdiction and the transfer to the High Court's Commercial Division was proper.

p. 3
02

Raising new issues for the first time on appeal

Holding

Issues not pleaded, canvassed or raised before the trial court cannot be raised for the first time on appeal, save for issues going to jurisdiction

Reasoning

The Court accepted that jurisdiction may be raised at any stage even if not raised below, but declined to entertain the section 96(3)(b) argument and the alleged inconsistency of amounts in the statutory notices because the case stated was confined to the consent issue and these matters were never canvassed before the trial judge.

p. 3
03

Validity and service of the statutory notices under sections 90 and 96 of the Land Act

Holding

The statutory notices dated 11th January 2016 and 12th May 2016 were served and substantially complied with sections 90 and 96(2) of the Land Act

Reasoning

The first notice demanded payment within three months as required by section 90, and the second gave 40 days' notice of intended sale under section 96(2). Although the first notice omitted to inform the appellants of their right to apply to court for relief, the omission caused no prejudice since the appellants themselves moved to court and obtained interim restraining orders.

p. 3

Legal principles established

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  • The creation of a security over land (a charge) does not constitute land use under Article 162(2) of the Constitution and does not fall within the jurisdiction of the Environment and Land Court; such disputes are properly before the High Court
  • A point going to jurisdiction may be raised for the first time on appeal, since jurisdiction cannot be conferred by acquiescence or waiver
  • A dispute as to the exact amount repayable is not a ground for a borrower served with a valid statutory notice to restrain a bank from exercising its statutory power of sale

Court orders

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  1. 1.Dismissal of the appeal with costs to the respondent

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)
  • Constitution of Kenya, 2010Article 165(5)
  • Constitution of Kenya, 2010Article 260
  • Land Actsection 90
  • Land Actsection 96
  • Land Actsection 98(2)
  • Land Actsection 150
  • Land Registration Actsection 101
  • Auctioneers Rules, 1997rules 11(1)(b) and 15

Cases cited (5)

  • CO-OPERATIVE BANK OF KENYA LIMITED v PATRICK KANGETHE NJUGUNA & 5 OTHERS
    [2017] eKLR
  • FLORICULTURE INTERNATIONAL LIMITED v CENTRAL KENYA LIMITED & 3 OTHERS
    [1995] eKLR
  • KENYA PORTS AUTHORITY v MODERN HOLDINGS [E.A.] LIMITED
    [2017] eKLR
  • OPENDA v AHN
    [1983] KLR 165
  • TRANS-WESTERN CANE HARVESTERS LIMITED & ANOTHER v BARCLAYS BANK OF KENYA LIMITED
    [2009] eKLR
On appeal from
High Court of Kenya at Mombasa
ELC No. 142 of 2017
Jurisdiction invoked
First appeal to the Court of Appeal under Article 164 of the Constitution from the High Court's judgment in a case stated on the exercise of a chargee's statutory power of sale under the Land Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "TSS Investments Limited & another v NIC Bank Limited [2019] KECA 91 (KLR)", Case Analysis (2019). Civil Appeal No. 66 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/91/eng@2019-11-28

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