Mohammed N. H. Moghe & anothert v National Bank of Kenya Limited [2016] KEELC 807 (KLR)
The bottom line
#The High Court stopped National Bank of Kenya from selling an Eldoret property because the security was created before the estate's grant was confirmed.
What this practically means
#Executive summary
#Key legal issues
#Whether the plaintiffs established a prima facie case with a probability of success
The court found an arguable point that the guarantee executed before confirmation of the grant was invalid and amounted to inter-meddling, though the applicants were the authors of that illegality; the point was to be addressed at trial, but was sufficient to ground the injunction.
The charge was registered on 22.07.1997 while confirmation of grant issued on 6.9.1999. Section 55 of the Law of Succession Act prohibits distribution of capital assets before confirmation of the grant under section 71. The court found the certificate of confirmation of grant incomplete and noted the plaintiffs had not disclosed how the property was distributed. Although the applicants authored the illegality, the prematurity of the security raised an arguable point fit for trial, supporting a prima facie case.
Validity of the statutory notices and the amount claimed
The court rejected the argument that the notices were improperly served, holding the applicants bound by the P.O. Box 1380 Eldoret address in the charge document, and agreed that a mere dispute over the loan balance does not justify restraining a mortgagee's power of sale.
The charge document gave P.O. Box 1380, Eldoret as the address, not the plaintiffs' P.O. Box 7323, and no change of address had been notified. The first plaintiff admitted receiving the statutory notice. The court declined to take accounts of the loan balance, holding that a disputed debt figure alone cannot ground an injunction against a mortgagee exercising statutory power of sale.
Irreparable loss and balance of convenience
The court found the applicants demonstrated the property belonged to a deceased person and was charged before confirmation of grant, so beneficiaries' rights were likely to be affected, and the balance of convenience tilted towards granting the injunction.
Because neither party came out clearly on how the property was distributed, the sale risked prejudicing the beneficiaries' inheritance. Weighing the equities, the balance of convenience favoured preserving the suit property pending trial. Allegations of forum shopping and abuse of process could not be resolved on the interlocutory application and required a separate Order 2 Rule 16 application.
Legal principles established
#- A court cannot grant an injunction to restrain a mortgagee from exercising its statutory power of sale solely on the ground that there is a dispute on the amount due under the mortgage.
- A chargor is bound by the address supplied in the charge and guarantee documents for purposes of service of statutory notices, and must notify the chargee of any change of address.
- Under sections 55 and 71 of the Law of Succession Act, no capital assets of a deceased's estate may be distributed or dealt with before the grant is confirmed; the succession process is concluded by confirmation of grant and distribution.
- Allegations that a suit is an abuse of process or constitutes forum shopping cannot be determined on an interlocutory injunction application but require an application under Order 2 Rule 16 of the Civil Procedure Rules.
Court orders
#- 1.An injunctive order restraining the defendant/respondent from selling, transferring, disposing off, auctioning and/or in any other manner dealing and/or interfering with all that parcel of land known as Eldoret Municipality Block 2/68/1 until the hearing and determination of this suit.
- 2.Costs in the cause.
- Jurisdiction invoked
- Not expressly stated; the court determined an interlocutory application for injunction under inherent civil jurisdiction
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mohammed N. H. Moghe & anothert v National Bank of Kenya Limited [2016] KEELC 807 (KLR)", Case Analysis (2016). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/807/eng@2016-05-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.