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ELCDismissedNotice of motion dated 22nd February 2016 (in the suit filed 21st May 2013)· [2016] KEELC 696 (KLR)

Caneland Limited v Africa Banking Corporation Limited [2016] KEELC 696 (KLR)

Environment and Land Court
13 July 2016
3,677 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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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

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Executive summary

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Caneland Limited, the Plaintiff, moved the Environment and Land Court at Kisumu by notice of motion dated 22nd February 2016 under Order 42 Rule 6(2) of the Civil Procedure Rules seeking a temporary stay of the ruling of 8th February 2016, which had dismissed its application for a temporary injunction restraining African Banking Corporation, the Defendant, from selling two charged properties, Kisumu/Municipality Block 7/171 and 181, pending an intended appeal. The Defendant opposed, arguing the application was frivolous, that no positive order capable of stay had been made, that the Plaintiff owed Kshs.42,234,450/03 with no payments since May 2013, and that the Plaintiff, not being the registered owner of the charged properties, lacked locus standi. The Defendant also attacked the supporting affidavit for lacking the advocate's endorsement required by Sections 34 and 35(1) of the Advocates Act. The court found the notice of appeal was filed and no delay occurred, but held that the ruling of 8th February 2016 made no positive order capable of being stayed, following Venture Capital and Credit Ltd v Consolidated Bank of Kenya Ltd. Relying on Nairobi Mamba Village, it held the Plaintiff, as principal debtor without proprietary interest in the properties registered in the names of its directors, could not suffer substantial loss nor question the power of sale, and that damages would suffice if the appeal succeeded. The supporting affidavit was struck out as incurably defective, leaving the motion without evidence. The notice of motion was dismissed with costs and the interim stay granted by the Deputy Registrar on 24th March 2016 was vacated.

Key legal issues

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01

Whether there was a positive order capable of stay

Holding

There was none; the ruling of 8th February 2016 merely dismissed the injunction application, so a stay of execution is misconceived

Reasoning

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.

p. 5
02

Whether the Plaintiff stands to suffer substantial loss

Holding

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

Reasoning

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.

p. 6
03

Whether the supporting affidavit was defective

Holding

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

Reasoning

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.

p. 7
04

Whether the chargors were served with statutory notices

Holding

The chargors (guarantors) were duly served with the notification of sale and have not challenged the exercise of the power of sale

Reasoning

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.

p. 6

Legal principles established

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  • 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

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  1. 1.The supporting affidavit sworn by Surjit Singh on 22nd February 2016 is struck out as incurably defective
  2. 2.The Plaintiff's notice of motion dated 22nd February 2016 is dismissed with costs
  3. 3.The interim orders of stay granted by the Deputy Registrar on 24th March 2016 and severally extended are vacated

Authorities

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Legislation

  • Civil Procedure RulesOrder 42 Rule 6(2) and 6(4)
  • Court of Appeal RulesRule 74
  • Advocates Act, Chapter 16 of the Laws of KenyaSections 34 and 35(1)

Cases cited (9)

  • Antoine Ndiaye v African Virtual University
    [2015] eKLR
  • Nairobi Mamba Village v National Bank of Kenya Limited
    Nairobi HCCC No.1838 of 2001; [2002] J.I EA 197
  • Venture Capital and Credit Ltd v Consolidated Bank of Kenya Ltd
    Nairobi Case No.349 of 2003
  • Jeremiah Ogola Dunga v Coopers Motors Corporation (K) Ltd
    Nairobi HCCA No.41 of 1998; [2005] eKLR
  • Abdi Ali Nur v Transami (Kenya) Ltd
    [2005] eKLR
  • Samwel Owino, Denis Ochieng and Twelve others v Municipal Council of Kisumu
    HCCA No.106 of 2005
  • Anne Mothoni Mwangi v Vijay Morjaria
    [2005] eKLR
  • I.T. Inamdar, Subodh Inamdar, Samir Inamdar v Postal Corporation of Kenya
    Nairobi H.C.C.C No.1629 of 2000
  • Caneland Ltd, Malkit Singh Pandhal, Surjit Singh Pandhal v Delphine Bank Ltd
    Kisumu C.A. No. NAI 344 of 1999 (139/99 UR)
Jurisdiction invoked
Order 42 Rule 6(2) of the Civil Procedure Rules, 2010

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, "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.