Njoru & another v Equity Bank Limited & another (Civil Appeal 317 of 2018) [2025] KECA 86 (KLR)
The bottom line
#Kenya's Court of Appeal upheld a Kshs. 3 million award against Equity Bank for auctioning land too cheaply, because the appellant's valuation omitted the forced sale value.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether this Court should interfere with the award of general damages of Kshs. 3,000,000 made by the ELC for sale of the suit property at an undervalue
Key legal issues
#Interference with the trial court's award of general damages for sale at an undervalue
The appeal was dismissed; the award of Kshs. 3,000,000 was not shown to be inordinately low or an entirely erroneous estimate
The court applied the Butt v Khan standard, under which an appellate court does not disturb damages unless the figure is inordinately high or low or the judge misapprehended the evidence or principles. The interested party's proposed figure of Kshs. 5,350,000 depended on a valuation that fixed market price but not forced sale value, so it did not show what the best price obtainable at the auction would have been. Without that, there was no basis to find the award manifestly low.
Duty of a chargee exercising statutory power of sale and the role of forced sale valuation
Section 77(1) of the repealed Registered Land Act required the chargee to act in good faith and have regard to the chargor's interests; section 97 of the Land Act codified the duty to obtain the best price reasonably obtainable and requires a forced sale valuation before sale
The court traced the chargee's duties through section 77(1) of the repealed Registered Land Act and Marteve Guest House, summarizing the mortgagee's duties to act in good faith, obtain the best price, avoid fraud and impropriety. Section 97 of the Land Act codified this, requiring a forced sale valuation and deeming sales at twenty-five per centum or below market value presumptively in breach. But the claimant's valuation gave only market value, not forced sale value.
Legal principles established
#- An appellate court will not disturb an award of damages unless it is so inordinately high or low as to represent an entirely erroneous estimate, or the judge proceeded on wrong principles or misapprehended the evidence in some material respect
- A chargee exercising a statutory power of sale owes a duty to obtain the best price reasonably obtainable at the time of sale, and a sale at twenty-five per centum or below market value raises a rebuttable presumption of breach
- A valuation that does not state the forced sale value cannot assist a court assessing whether an award for sale at an undervalue is manifestly low
Court orders
#- 1.Appeal dismissed
- 2.No order as to costs (respondents did not participate in the appeal)
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Environment and Land Court, Machakos
- Machakos High Court Civil Suit No. 167 of 2008 (later Machakos ELC No. 167 of 2008)
- Jurisdiction invoked
- First appeal to the Court of Appeal (the judgment does not expressly cite the constitutional/statutory provision; it is a first appeal under the Court of Appeal's appellate jurisdiction, Article 164 of the Constitution not being quoted in the judgment)
Relief refused
#Increase of general damages from Kshs. 3,000,000 to Kshs. 5,350,000 (difference between the chargor's valuation and the sale price)
The valuation relied on did not state a forced sale value, so it could not show the best price reasonably obtainable on the date of auction or that the award was manifestly low
Costs
No order as to costs, as the respondents did not participate in the appeal
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.
An appellate court will not disturb an award of damages unless it is so inordinately high or low as to represent an entirely erroneous estimate. It must be shown that the judge proceeded on wrong principles, or that he misapprehended the evidence in some material respect, and so arrived at a figure which was either inordinately high or low.
The reserve price need not be the market price but must be the best price obtainable at date of the auction.
A chargee is expected to obtain the best price reasonably obtainable at the time of sale and it being expressly provided that a price of below 75 per centum of the market price is not acceptable.
Ultimately, the appeal has no merit and is for dismissal. It is hereby dismissed but with no order as to costs as the respondents did not participate in the appeal.
Issues in the judgment
#The judgment records the auction as occurring on 6th July 2007 in paragraph 2 but later refers to the sale as happening on 24th April 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Njoru & another v Equity Bank Limited & another (Civil Appeal 317 of 2018) [2025] KECA 86 (KLR)", Case Analysis (2025). Court of Appeal at Nairobi Civil Appeal (not stated in judgment text; first appeal from Machakos ELC No. 167 of 2008). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/86/eng@2025-01-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.