Caneland Limited v Africa Banking Corporation Limited [2016] KEELC 696 (KLR)
The bottom line
#A Kenyan company lost its bid to stop a bank selling charged land because it didn't own the land and filed a defective affidavit.
What this practically means
#Executive summary
#Key legal issues
#Whether there was a positive order capable of stay
There was none; the ruling of 8th February 2016 merely dismissed the injunction application, so a stay of execution is misconceived
The court aligned itself with the Court of Appeal in Venture Capital and Credit Ltd v Consolidated Bank of Kenya Ltd, holding that a dismissal of an interlocutory injunction application accords no relief to either party and does not restore or confer any right on the defendant that could be stayed. Consequently there is nothing capable of execution against which a stay could issue.
Whether the Plaintiff stands to suffer substantial loss
No; the Plaintiff has no proprietary interest in the charged properties, which are registered in the names of Surjit Singh and Malkiat Singh, so any loss would not be substantial and the appeal would not be rendered nugatory
The court found from the Plaintiff's own pleadings and affidavit that the charged properties belong to the directors, not the Plaintiff. Citing Nairobi Mamba Village, a principal debtor's interest in the security does not confer standing to challenge the chargee's power of sale. Damages would adequately compensate the Plaintiff if the appeal succeeds, since the Defendant is capable of paying.
Whether the supporting affidavit was defective
Yes; lacking the advocate's endorsement it offends Sections 34 and 35(1) of the Advocates Act, is incurably defective and was struck out, leaving the motion without evidence
Following Jeremiah Ogola Dunga v Cooper Motors Corporation and Abdi Ali Nur v Transami (Kenya) Ltd, the court upheld the Defendant's submission that the affidavit sworn by Surjit Singh bore no endorsement of the advocate or firm who drew and filed it. The statutory provisions are mandatory, and striking it out removed the evidentiary foundation of the application.
Whether the chargors were served with statutory notices
The chargors (guarantors) were duly served with the notification of sale and have not challenged the exercise of the power of sale
The court relied on Surjit Singh's own deposition that he was served with a notification of sale on 10th April 2013 by Nyaluoyo Auctioneers. Since the chargors, who own the properties, have not challenged the sale, and the Plaintiff lacks locus standi to do so, the ground that statutory notice was not served could not sustain the application.
Legal principles established
#- A mere dismissal of an application for interlocutory injunction makes no positive order capable of being stayed under Order 42 Rule 6
- A borrower/principal debtor without proprietary interest in the charged property lacks locus standi to obtain an injunction against the chargee's exercise of power of sale
- Substantial loss must be demonstrated in detail, not merely asserted
- An affidavit drawn and filed without the advocate's endorsement offends Sections 34 and 35(1) of the Advocates Act and is incurably defective
Court orders
#- 1.The supporting affidavit sworn by Surjit Singh on 22nd February 2016 is struck out as incurably defective
- 2.The Plaintiff's notice of motion dated 22nd February 2016 is dismissed with costs
- 3.The interim orders of stay granted by the Deputy Registrar on 24th March 2016 and severally extended are vacated
- Jurisdiction invoked
- Order 42 Rule 6(2) of the Civil Procedure Rules, 2010
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Caneland Limited v Africa Banking Corporation Limited [2016] KEELC 696 (KLR)", Case Analysis (2016). Notice of motion dated 22nd February 2016 (in the suit filed 21st May 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/696/eng@2016-07-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.