Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELCDismissedCivil Case No 5 of 2013· [2014] KEELC 418 (KLR)

Webwaka Trade Ltd v Diamond Trust Bank Ltd [2014] KEELC 418 (KLR)

High Court of Kenya
11 April 2014
OAO. A. Angote
1,525 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~6 min to read original · ~4 min brief

The bottom line

#

Kenya's High Court refused to stop a bank auction where a hotel borrower was in clear default, saying the borrower's remedy is compensation after sale, not an injunction.

What this practically means

#

Executive summary

#
The Plaintiff, proprietor of subdivisions of Section IV Mainland North, sought a temporary injunction under Order 40 and 51 Rule 1 of the Civil Procedure Rules to restrain the Defendant bank from completing a public auction of the charged properties scheduled for 18th February, pending determination of the suit. The Plaintiff admitted borrowing facilities secured by the charge, having an overdraft of Kshs.65,000,000 repayable over 4 years and 9 months, and acknowledged arrears. It argued that a prospective private treaty sale was scuttled by the auction advertisement, alleged collusion by bank officers to sell at a throwaway price, and claimed estoppel from the bank's alleged approval of the private sale. The Defendant, through its Head of Debt Recovery Unit, deponed to arrears of Kshs.21,172,055.90 as at 2nd July 2012, non-response to the statutory 90-day notice, and the absence of any binding sale agreement. Applying the prima facie case, irreparable loss and balance of convenience test, and relying on Mrao Ltd v First American Bank of Kenya Ltd and Halsbury's Laws, the court held that a mortgagee is not restrained from exercising the power of sale merely because the debt or sale arrangements are disputed. No unequivocal agreement to a private treaty sale existed, defeating estoppel, and the chargor's loss was ascertainable, with a statutory remedy under section 97(1)(b) of the Land Act. The court could not re-write the parties' contract in the face of clear default. The application was dismissed with costs.

Key legal issues

#
01

Prima facie case and injunction against exercise of statutory power of sale

Holding

No prima facie case established; the charge was undisputed and the Defendant's sale was grounded in statute

Reasoning

The court applied the Giella/Mrao principles for interim injunctions. The Plaintiff did not dispute the charge or default. Relying on Halsbury's Laws as quoted in Mrao, a mortgagee will not be restrained from exercising the power of sale merely because the debt or manner of sale is disputed, absent payment of the amount claimed. The alleged estoppel failed because the Defendant never unequivocally agreed to a private treaty sale.

p. 3
02

Irreparable loss and adequacy of damages

Holding

Loss is ascertainable; the chargor has post-sale remedies

Reasoning

The court held that once a property is offered as security it becomes a commodity of ascertainable value, so any loss from an improper or irregular sale is quantifiable in damages. Further, section 97(1) of the Land Act obliges a chargee to obtain the best price reasonably obtainable and gives the chargor a statutory recourse to seek a declaration that an undervalue sale is void, making an injunction unnecessary at this stage.

p. 3

Legal principles established

#
  • Where a chargor is in clear default, an injunction will not be granted to prevent the chargee from exercising its statutory power of sale, as that would re-write the parties' contract

Court orders

#
  1. 1.Dismissal of the Plaintiff's Application dated 14th February, 2013
  2. 2.Costs of the application to the Defendant

Authorities

#

Legislation

  • Civil Procedure Rules, 2010Order 40; Order 51 Rule 1
  • Land ActSection 97(1) and 97(1)(b)

Cases cited (1)

  • Mrao Ltd. -vs- First American Bank of Kenya Ltd. & 2 others
    (2003) KLR 125
Jurisdiction invoked
Order 40 and 51 Rule 1 of the Civil Procedure Rules, 2010

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (2)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Webwaka Trade Ltd v Diamond Trust Bank Ltd [2014] KEELC 418 (KLR)", Case Analysis (2014). Civil Case No 5 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2014/418/eng@2014-04-11

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