Euro Bank Limited (In Liquidation) v Twictor Investments Limited & 2 others [2020] KECA 516 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a borrower who loses property through a flawed bank sale must claim damages, not cancellation of the new owner's title.
What this practically means
#Executive summary
#Key legal issues
#Validity of the statutory notice preceding exercise of the statutory power of sale
The notice served on the 1st respondent was valid; there was compliance with section 69A(1)(a) of the ITPA because default continued for more than three months after notice, and the mortgagor was in substance given adequate time to redeem
The purpose of a statutory notice is to protect the mortgagor from ambush, not to be an end in itself. The court must ask whether the mortgagor had at least 90 days before sale, not whether the notice literally stated 90 days. Here the mortgagor's advocates engaged with the Bank after the notice, sought time to liquidate the loan, never complained of invalidity, and default continued for over three months, satisfying section 69A(1)(a).
Whether fraud was proved against the appellant and the purchasers
Although the sale transactions were fraught with irregularities, fraud was not proved to the required standard
Fraud must be specifically pleaded, particularised and proved to a standard above balance of probabilities. While irregularities such as absence of evidence of stamp duty, consideration and transfer instruments were reminiscent of fraud, registration lies with an independent office and the appellant did not complain of non-payment of the balance. Mere irregularity falls short of proof of fraud.
Whether the trial court's reliefs (cancellation of title and restoration of possession) were available
The 1st respondent was not entitled to cancellation of title; the remedy for irregular exercise of the statutory power of sale lies in damages under section 69B of the ITPA
Under section 69B, a purchaser's title is not impeachable on grounds of irregular exercise of the power of sale, and the damnified party's remedy is damages. The sale by private treaty was not sinister since public auction bids failed to meet the reserve price. Further, if title were cancelled, the property should revert to the position before the sale, not to the 1st respondent who had not cleared the loan.
Duty of the first appellate court
This Court is obliged to reconsider and re-evaluate the evidence and draw its own conclusions, giving due allowance to the trial court's advantage of seeing and hearing witnesses
Rule 29(1)(a) of the Court of Appeal Rules prescribes the duty on a first appeal. The court does not review findings merely because it would have reached a different outcome at first instance, as set out in Selle v Associated Motor Boat Co. and Peters v Sunday Post.
Legal principles established
#- There are no circumstances exempting service of a statutory notice before exercise of a mortgagee's statutory power of sale under section 69A ITPA, but validity of a notice is assessed holistically by whether the mortgagor in fact had at least 90 days from notice to redeem, not merely the number of days stated on its face
- Fraud must be specifically pleaded and particularised and proved to a standard higher than a balance of probabilities; it cannot be inferred from the facts
- A person damnified by an unauthorized, improper or irregular exercise of a mortgagee's statutory power of sale has a remedy in damages, not cancellation of the purchaser's title, under section 69B ITPA
Court orders
#- 1.Appeal allowed as consolidated
- 2.Impugned judgment of the High Court set aside
- 3.Title Deed issued to the 1st respondent cancelled
- 4.Property to revert to the 3rd Respondent
- 5.1st respondent at liberty to sue for damages
- 6.Each party to bear its own costs of the appeal and before the High Court
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No. 932 of 2002
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (Rule 29(1)(a)); consolidation under Rule 120 of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Euro Bank Limited (In Liquidation) v Twictor Investments Limited & 2 others [2020] KECA 516 (KLR)", Case Analysis (2020). Civil Appeal No. 160 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/516/eng@2020-07-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.