Tropicana Hotels Limited v Fidelity Commercial Bank Ltd [2016] KEELC 932 (KLR)
The bottom line
#A Kenyan court stopped a bank from selling a borrower's land and blacklisting them with the CRB because the bank skipped required notices and interest was disputed.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction of the Environment and Land Court over a bank/chargor dispute
The court held it has jurisdiction because the dispute arises from a charge and further charge, which are governed by the Land Act and the Land Registration Act, both of which define 'court' as the Environment and Land Court.
The contractual relationship was grounded on a charge registered on 11th January 2011 and a further charge registered on 4th September 2012. Charges are governed by Part VII of the Land Act and Part V of the Land Registration Act, and disputes under those statutes can only be resolved by this court and not the High Court. The alleged breach of the charge terms and the threatened CRB listing flow from that relationship.
Whether Regulation 19(1) of the Credit Reference Bureau Regulations bars the suit
The Regulation does not bar this suit; it only protects institutions from claims for loss or damage caused by acts done in good faith, and the Plaintiff seeks injunctive relief, not damages.
Regulation 19(1) shields the Central Bank, Bureau or an institution from suits or prosecutions for loss or damage caused by anything done in good faith. The Plaintiff is not seeking damages but an injunction restraining premature listing. Whether any listing was done in good faith is a question of fact triable only after evidence, so the objection cannot succeed as a preliminary point.
Whether to restrain the Defendant from listing the Plaintiff with the Credit Reference Bureau
An injunction was granted because there is a genuine dispute on excessive interest that must be resolved at trial, and a listing is retained for seven years and would jeopardise the Plaintiff's access to credit.
The Plaintiff produced an auditor's report showing overcharge of Kshs.4,948,148.69 which the Defendant did not counter with any report. The court cannot at this stage verify the report but, absent contrary evidence, the issue must proceed to full trial. Listing before resolution of that dispute would be premature given the seven-year retention of negative information.
Whether to restrain sale of the suit property
An injunction against sale was granted because the Defendant had not issued the statutory notices required to exercise its statutory power of sale.
The Plaintiff's director deponed that no statutory notice was served. The court found as a fact, and it was not disputed, that the required notices had not been issued, so the Defendant could not purport to exercise its statutory power of sale over the suit property.
Legal principles established
#- The Environment and Land Court has jurisdiction over disputes arising from charges and further charges, which are governed by the Land Act and the Land Registration Act
- Regulation 19(1) of the Credit Reference Bureau Regulations does not bar a suit seeking to restrain an institution from submitting information to a Credit Reference Bureau; it only protects good-faith actions from claims for loss or damage
- A chargee cannot exercise its statutory power of sale without issuing the required statutory notices
Court orders
#- 1.The Plaintiff's application dated 2nd December 2015 allowed as prayed (injunctions restraining sale of the suit premises and reporting the Plaintiff to any Credit Reference Bureau), save for prayer number 3
- 2.The Defendant's Notice of Preliminary Objection dated 9th December 2015 dismissed with costs
- 3.The Defendant's Notice of Motion dated 4th February 2016 dismissed with costs, save for prayer number 3
- 4.Costs to the Plaintiff
- Jurisdiction invoked
- Article 162(2)(b) of the Constitution and Section 4(1) of the Environment and Land Court Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Tropicana Hotels Limited v Fidelity Commercial Bank Ltd [2016] KEELC 932 (KLR)", Case Analysis (2016). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/932/eng@2016-05-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.