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ELCDismissedApplication dated 28th August 2013 (suit re LR No. 13424 & 13430 Kaoyeni Malindi Municipality)· [2014] KEELC 388 (KLR)

Kesrec Agency Limited v Valley Auctioneers & another [2014] KEELC 388 (KLR)

Environment and Land Court
16 May 2014
1,291 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court allowed a lender to proceed with auctioning charged land because the borrower admitted the debt and did not pay the disputed amount into court.

What this practically means

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Executive summary

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The Plaintiff, operator of Royal Fountain High School, moved the court by application dated 28th August 2013 seeking an interlocutory injunction to restrain the 1st and 2nd Defendants from auctioning or otherwise interfering with LR No. 13424 & 13430 Kaoyeni Malindi Municipality, approximately two acres charged as collateral for a loan of Kshs. 5,000,000. The Plaintiff alleged the 2nd Defendant reneged on an understanding to await repayment once the school admitted sufficient students, and that a notice of sale through the 1st Defendant auctioneer had issued. The 2nd Defendant filed a preliminary objection seeking expungement of the Plaintiff's supporting affidavit because the jurat appears on its own page, and a replying affidavit asserting the accounts were in arrears, statutory and proclamation notices had issued, and the debt was admitted. The court disallowed the preliminary objection, holding that no prejudice was demonstrated and that under Article 159 of the Constitution and Sections 1A and 1B of the Civil Procedure Act, procedural lapses not going to the root of the dispute or causing injustice should not attract striking out, following Salat and Welcome Properties. On the injunction, the court found the Plaintiff had admitted the debt and arrears when the statutory notice issued, and applying Mrao Ltd v First American Bank, held no prima facie case with chances of success was established; a mortgagee will not be restrained from exercising its statutory power of sale where the amount claimed is not paid into court. The application was dismissed with costs.

Key legal issues

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01

Whether an affidavit whose jurat appears on its own page should be struck out

Holding

No. The preliminary objection fails because no prejudice was demonstrated and the overriding objective counsels against striking out pleadings for want of form.

Reasoning

The court held there was no evidence that the 2nd Defendant was prejudiced by the form of the jurat; indeed it responded to the depositions. Under Article 159 and Sections 1A and 1B of the Civil Procedure Act, courts should not strike out pleadings for form where no injustice or miscarriage would result, following Salat and Welcome Properties.

p. 2
02

Whether an injunction should issue to restrain exercise of the statutory power of sale

Holding

No. The Plaintiff admitted indebtedness and arrears when the statutory notice issued, so no prima facie case with chances of success was established.

Reasoning

The Plaintiff did not deny the loan, the arrears, or the lawful issue of the statutory notice. Applying Mrao Ltd v First American Bank, a mortgagee will not be restrained where the amount claimed is not paid into court. An injunction cannot issue to protect charged land in the face of admitted non-payment.

p. 3

Legal principles established

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  • A procedural defect such as a jurat appearing on its own page does not vitiate proceedings unless prejudice or injustice is shown
  • A mortgagee will not be restrained from exercising its power of sale merely because the amount due is in dispute, unless the mortgagor pays the amount claimed into court

Court orders

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  1. 1.The 2nd Defendant's Preliminary Objection is disallowed
  2. 2.The Application dated 28th August 2013 is dismissed with costs

Authorities

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Legislation

  • Constitution of KenyaArticle 159
  • Civil Procedure ActSections 1A and 1B
  • Halsbury's Laws of England Vol. 32 (4th edition)paragraph 725

Cases cited (4)

  • Saki Holdings Ltd-vs-Diamond Trust Bank of Kenya
    HCCC No.1098 of 1998
  • NICHOLAS KINTO ARAP KORIR SALAT VS I.E.B.C & OTHERS
    (2013) EKLR
  • Welcome Properties Vs Karuga
    (2001) KLR 402
  • Mrao Limited-vs-First American Bank of Kenya Ltd & 20 Others
    (2003) KLR 127
Jurisdiction invoked
Article 159 of the Constitution and Sections 1A and 1B of the Civil Procedure Act (overriding objective)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kesrec Agency Limited v Valley Auctioneers & another [2014] KEELC 388 (KLR)", Case Analysis (2014). Application dated 28th August 2013 (suit re LR No. 13424 & 13430 Kaoyeni Malindi Municipality). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2014/388/eng@2014-05-16

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