Diamond Trust Bank Kenya Limited v Kaminara Agencies Limited & 2 others (Civil Appeal E144 of 2023) [2025] KECA 48 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that tenants cannot block a lender's sale of a charged property once their lease has expired.
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 1st respondent, a lessee with no registered interest in the charged property, had locus standi to challenge the chargee's exercise of its statutory power of sale
- 2.Whether the 1st respondent demonstrated a prima facie case with a probability of success
- 3.Whether the 1st respondent would suffer irreparable loss not compensable in damages
- 4.Where the balance of convenience lay, given the expiry of the lease and the continuing accrual of interest on the debt
- 5.Whether the learned Judge properly exercised her discretion in granting the temporary injunction after the lease had expired
Key legal issues
#Locus standi of a lessee to challenge a chargee's statutory power of sale
A lessee of a chargor has no locus standi to challenge the chargee's exercise of its statutory power of sale; section 103(1)(d) of the Land Act, which had extended relief to lessees, was deleted by the Land Laws (Amendment) Act, 2016
The 1st respondent was neither the registered owner nor a party to the charge; it had no contractual or legal right under the charge and no interest recognised under section 24 of the Land Registration Act. The judicially restricted locus was briefly expanded by section 103(1) of the Land Act, but the 2016 amendment deleted the provision entitling lessees to relief. Consequently, the lessee could not be heard even on the merits of its complaint.
Effect of expiry of the lease before the injunction ruling
Granting an injunction after the lease had expired effectively extended the lease and rewrote the parties' contract, an error of law rendering the discretion plainly wrong
The lease was to lapse on 15th November 2022, yet the ruling was delivered on 28th July 2023. By preserving the 1st respondent's occupation, the judge bound parties to a lease that no longer existed. Under National Bank of Kenya Ltd v Pipe Plastic Samkolit, courts cannot rewrite contracts; this misdirection, together with failure to consider the expiry, satisfied the criteria in United India Insurance v East African Underwriters for interfering with discretion.
Adequacy of damages and balance of convenience
Damages were an adequate remedy for a commercial lessee of non-unique premises, and the balance of convenience favoured the chargee because interest on the debt continued to accrue
The premises were used for commercial purposes with nothing unique about them; the 1st respondent's complaint was only the length of notice, not the unavailability of alternative premises. The chargee faced escalating interest with the risk that the debt would outstrip the property's value, so a sale was prudent in the interest of the chargee and chargors.
Duty of a court to determine all issues raised
The learned Judge erred by failing to address the locus standi issue expressly raised by the appellant, a serious omission warranting appellate interference
Following Mohammed Eltafi v Dream Camp Kenya Limited, Agnes Nzali Muthoka v Insurance Company of East Africa and Kukal Properties Development Ltd v Tafazzal H. Maloo, a judge must crystallise and answer every issue raised. Locus standi went to the heart of whether a prima facie case existed; the judge's silence on it was a substantial objection to the ruling.
Legal principles established
#- Only the chargor (and persons specified in section 103(1) of the Land Act, 2012) has locus standi to challenge a chargee's exercise of its statutory power of sale; a lessee or licensee of the chargor has none
- Once a statutory notice of sale is issued and served on the chargor, the chargee is under no obligation to issue notice to any third party claiming under a tenancy with the chargor
- A party with no registered interest in land cannot demonstrate a prima facie case with probability of success for the grant of an injunction
- An applicant for an interlocutory injunction must first establish a pre-existing cause of action; a right to an interlocutory injunction is not itself a cause of action
- On interlocutory appeals, the appellate court must not make conclusive findings of fact that would tie the hands of the trial judge
- A court cannot rewrite a contract between parties, nor may an injunction effectively extend a lease that has already expired
- A court commits a serious omission if it fails to dispose of all issues raised by the parties
- In an injunction application the court should address the conditions sequentially, since without a prima facie case the other conditions need not be considered
Court orders
#- 1.Appeal allowed
- 2.Setting aside of the decision of the learned Judge made on 28th July 2023 in Mombasa High Court Civil Case No. E030 of 2022 allowing the application dated 9th May 2022 and granting the temporary order of injunction
- 3.Substitution of an order dismissing the application dated 9th May 2022 with costs
- 4.Costs of the appeal awarded to the appellant, to be borne by the 1st respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya, Mombasa
- Mombasa High Court Civil Case No. E030 of 2022
- Jurisdiction invoked
- First appeal to the Court of Appeal against an interlocutory ruling of the High Court (inherent appellate jurisdiction under the Constitution and the Appellate Jurisdiction Act, as invoked in the judgment)
Relief refused
#Maintenance of the temporary injunction preserving the 1st respondent's occupation of the suit property
The 1st respondent lacked locus standi; its lease had expired before the ruling; damages were an adequate remedy; and the balance of convenience favoured the chargee
Costs
Costs of the appeal awarded to the appellant, to be borne by the 1st respondent; the application dated 9th May 2022 in the High Court dismissed 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.
It is clear that the 1st respondent had no locus to challenge the appellant’s exercise of its statutory power of sale. Without establishing its locus in the matter, the 1st respondent could not be said to have demonstrated a prima facie case with probability of success.
We set aside the decision of the learned Judge made on 28th July 2023 in Mombasa High Court Civil Case No. E030 of 2022 allowing the application dated 9th May 2022 and granting the temporary order of injunction pending the hearing and determination of the suit and substitute therefor an order dismissing the said application with costs.
We award the costs of this appeal to the appellant to be borne by the 1st respondent.
This being an interlocutory appeal, care must be taken to obviate expressing a conclusive view of the matter as the main suit is still pending before the trial court.
once the appellant issued its statutory notice of sale to the 2nd and 3rd respondent, it was under no statutory or other legal obligation thereafter to issue such notice to any third party claiming under a tenancy or other contractual relationship with the 2nd and 3rd respondent to which the charge was not subject.
By granting the injunction, the learned Judge, in effect, extended the alleged lease and bound the parties to a lease that no longer existed.
Issues in the judgment
#The names of the actual parties are not stated in the extracted judgment text; parties are identified only by their roles (appellant, 1st/2nd/3rd respondents) and by indirect references (e.g., Maryanne Mbugu for the appellant, Quantum Petroleum Limited as borrower). The case title above is therefore a role-based placeholder, not a title from the judgment.
Counsel name inconsistency: the advocate for the 1st respondent is recorded as 'Mr Bunde' in the hearing record but as 'Mr Bundi' when stating he did not address the Court.
Inconsistent section reference in the appeal grounds: ground 2 refers to section 88(1)(f) of the Land Act, while the judgment elsewhere refers to section 88(1)(g) as the provision barring leases over charged property without consent.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Diamond Trust Bank Kenya Limited v Kaminara Agencies Limited & 2 others (Civil Appeal E144 of 2023) [2025] KECA 48 (KLR)", Case Analysis (2025). Mombasa Civil Appeal No. E144 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/48/eng@2025-01-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.