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ELCDismissedCase No. 363 of 2015 (formerly Eldoret ELC Case No. 229 of 2015) and Case No. 364 of 2015 (formerly Eldoret ELC Case No. 230 of 2015)· [2016] KEELC 1088 (KLR)

Turbo Highway Eldoret Limited & 2 others v Bank of Africa Kenya Limited [2016] KEELC 1088 (KLR)

Environment and Land Court
18 February 2016
MSMunyao Sila
2,118 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Environment and Land Court ruled that admitting loan default dooms an injunction to stop a bank from selling charged land, even if you dispute the interest charged.

What this practically means

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Executive summary

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Turbo Highway Eldoret Limited, with Mr. Chauhan in one suit and Mr. Aggarwal in the other, applied to the Environment and Land Court for injunctions restraining Bank of Africa Limited from advertising, selling, auctioning or transferring charged properties (Eldoret Municipality Block 12/131 and Block 2/87, 88, 89, 90, 91 and subdivisions) following facilities of about Kshs. 540,000,000 granted around 2011. The plaintiffs admitted default but attributed it to irregular, unnotified interest rate increases, and alleged that the statutory notices under Sections 90 and 96 of the Land Act were never served, that incorrect amounts were tendered, and that charges offended Section 44A of the Banking Act. They sought declarations that the notice to sell was null and void, proper statements of account, and notices of interest fluctuations. The Bank, through its Senior Recoveries Manager Ben Mwaura, exhibited the 90-day statutory notice of 22 December 2014, the 40-day notice of 24 April 2015, certificates of posting, demand letters, and correspondence showing promises to pay and attempted takeovers by other banks. Munyao Sila J, applying Giella v Cassman Brown, held that default was not seriously denied, that default alone triggers the statutory power of sale irrespective of claims of illegal charges, and that the requisite notices were properly issued. The applications in both suits were dismissed with costs and the interim orders were lifted, leaving the Bank free to sell the suit properties.

Key legal issues

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01

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

Holding

No prima facie case established; default admitted and statutory power of sale had arisen

Reasoning

The court found default was not seriously denied, evidenced by the plaintiffs' own admission in the plaint and repeated promises to pay. Allegations of illegal interest rates and charges were an afterthought, no complaint having been made to the Bank. The statutory power of sale had arisen on default, and a dispute over amounts does not warrant an injunction.

p. 4
02

Compliance with statutory notice requirements under the Land Act

Holding

The Bank demonstrated issuance of all requisite notices, defeating the plaintiffs' only viable ground for relief

Reasoning

The court examined the letters of 22 December 2014 (3-month statutory notice under Section 90(3)(e) and 96(1)) and 24 April 2015 (40-day notice under Section 90(3)(e), 96(1) and 96(2)), sent by Registered Post with Certificates of Postage annexed, preceded by three demand letters which were duly received.

p. 4

Legal principles established

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  • Default on a charged debt alone triggers the Bank's statutory power of sale, irrespective of disputed illegal charges or interest
  • The applicant for an injunction must demonstrate a prima facie case with probability of success and irreparable loss, failing which balance of convenience applies

Court orders

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  1. 1.The applications for injunction in Case No. 363 of 2015 and Case No. 364 of 2015 are dismissed with costs
  2. 2.The interim orders issued in the matters are lifted
  3. 3.The Bank is at liberty to sell the suit properties

Authorities

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Legislation

  • Land ActSection 90
  • Land ActSection 96(3), 96(3)(c), 96(1), 96(2), 90(3)(e)
  • Banking Act, Cap 488Section 44A

Cases cited (1)

  • Giella vs Cassman Brown
    (1973) EA 358
Jurisdiction invoked
Environment and Land Court jurisdiction (Land Act, Act No. 6 of 2012); original first-instance matter

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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

Cite this brief

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Cite this brief

Caselaw, "Turbo Highway Eldoret Limited & 2 others v Bank of Africa Kenya Limited [2016] KEELC 1088 (KLR)", Case Analysis (2016). Case No. 363 of 2015 (formerly Eldoret ELC Case No. 229 of 2015) and Case No. 364 of 2015 (formerly Eldoret ELC Case No. 230 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/1088/eng@2016-02-18

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