Mwambeja Ranching Company Ltd & another v Kenya National Capital Corporation (Civil Appeal 30 of 2018) [2019] KECA 436 (KLR)

Limitation under section 4 of the Limitation of Actions Act bars contract actions after 6 years; time ran against the personal and corporate guarantors from expiry of the 1994 demand notices. The court has no discretion to extend limitation or grant relief on a time-barred remedy. However, a debt secured by a charge is a continuing security that never lapses until the debt is paid and the security discharged, so the charge-bound 1st appellant was not protected.

Clause 1 of the deed of guarantee capped total liability at Shillings 30 million together with interest at the maximum rate allowed by law, and clause 1(c) of the charge obligated payment of all moneys owing with interest, capped at Kshs.30 million plus interest. The appellants voluntarily signed the security documents and must be taken to have known their conditions. The court therefore justified limiting liability only in the manner the trial judge had directed.

The consent was recorded in an interlocutory injunction application and was not unequivocal in terms sufficient to settle the whole suit with finality. A decree conclusively determines rights only as regards matters in controversy; this consent was premised on payment of the drawdown sum to halt the auction and did not preclude interest or statutory sale upon default, which in fact occurred.

The rule protects borrowers from exploitation and protects the equity of redemption, but it applies to the sum due as at the date the section came into effect. Here the loan was contracted in 1992 and interest had accrued before the rule's commencement. Here ironically the creditor was the party subjected to exploitation through repeated injunctive suits and delays; the trial judge rightly found no proof of breach of the section.

Section 97(1) of the Land Act imposes a duty to obtain the best price reasonably obtainable, and section 97(2) requires a current forced sale valuation. The respondent relied on a stale valuation. The appellants' valuation of Kshs.550 million was unrebutted, though reduced pro rata for 13,000 acres occupied by squatters to Kshs.461,938,000. The shortfall triggered the rebuttable presumption of breach, remediable in damages under section 99(4) rather than by voiding the sale.