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ELCPartially AllowedNotice of Motion dated 7th July, 2017 (suit over land parcel NGONG/NGONG/23311)· [2017] KEELC 11 (KLR)

Robert Mwangi v Springboard Capital Limited [2017] KEELC 11 (KLR)

Environment and Land Court
5 October 2017
COCHRISTINE OCHIENG
2,389 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court stopped a land auction because the bank's statutory notices were defective, but the bank can still sell if it issues proper notices.

What this practically means

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Executive summary

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This was a ruling on the Plaintiff's Notice of Motion dated 7th July 2017, brought under Order 51 Rule 1 and Order 40 of the Civil Procedure Rules and Sections 1A, 1B, 3A and 63(c) of the Civil Procedure Act, seeking to restrain the Defendant, Springboard Capital Limited, from selling by public auction land parcel NGONG/NGONG/23311 charged to secure a Kshs. 2 million loan advanced to Tropical Reclaim Limited. The Plaintiff, a guarantor, argued that the statutory notices under section 90 of the Land Act were defective: the notice dated 22nd August 2016 allowed only 14 days to pay instead of the prescribed minimum period, later notices demanded the entire debt contrary to section 90(2), and no valid 40-day notice to sell under section 96(2) was issued. He also contended the property was undervalued, citing conflicting valuation reports. The Defendant maintained that the statutory notices and notification of sale were duly served, that default had persisted for over a year, and that the recent valuation reflected the vandalised, vacant state of the property. The court, applying the Giella v Cassman Brown principles and following Cieni Plains v Ecobank, found the statutory notices defective for giving only 14 days and non-compliant with sections 90(2) and (3) of the Land Act, which established a prima facie case. The valuation disputes were reserved for trial. The court set aside the intended auction of 11th July 2017, maintained the interim injunction until proper statutory notices are issued, but expressly preserved the Defendant's right to realise the security upon compliant notices if default persists. Costs were ordered to be in the cause.

Key legal issues

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01

Validity of the statutory notices issued before exercise of the statutory power of sale

Holding

The statutory notices were defective: one gave only 14 days contrary to section 90(2)(b) requiring not less than three months, and subsequent notices demanded the entire debt contrary to section 90(2).

Reasoning

The court examined the notice dated 22nd August 2016 issued by Koceyo & Company and found it allowed only 14 days to pay, whereas section 90(2)(b) of the Land Act prescribes a minimum of three months. Later notices of 19th and 29th September 2016 demanded the entire outstanding debt, which the plaintiff argued offended section 90(2). Relying on Cieni Plains v Ecobank, the court held the notices did not comply with sections 90(2) and (3) and nullified them.

p. 3
02

Whether the plaintiff established a prima facie case for an interlocutory injunction under Giella v Cassman Brown

Holding

The plaintiff established a prima facie case based on the defective statutory notices, warranting partial grant of the injunction, but the chargee may still realise the security upon proper notices.

Reasoning

Applying the Giella v Cassman Brown principles, the court found it undisputed that the plaintiff charged the land and was in default; the dispute was over the notices and valuation. The defective notices gave rise to a prima facie case with probability of success. The valuation disputes were reserved for trial. The court therefore set aside the intended auction and maintained the interim injunction only until compliant statutory notices are issued.

p. 3

Legal principles established

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  • A statutory notice under section 90(2) of the Land Act that fails to meet the statutory requirements (including the notice period and contents) is defective and gives the chargor a prima facie case for injunctive relief.
  • Non-compliance with statutory provisions governing exercise of a chargee's statutory power of sale constitutes a prima facie case with probability of success for purposes of an interlocutory injunction.

Court orders

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  1. 1.The intended Sale by public auction on 11th July, 2017 by the Defendant of land parcel number NGONG/NGONG/23111 be and is hereby set aside
  2. 2.the interim injunction granted on 11th July, 2017 will remain in force until the defendant issues proper statutory notices in accordance with Section 90 (1) (2) and (3) of the Land Act.
  3. 3.Costs will be in the cause.

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 51 Rule 1; Order 40 Rules 1, 2, 3 and 4
  • Civil Procedure ActSections 1A, 1B, 3A and 63(c)
  • Land ActSections 90(1), 90(2), 90(2)(b), 90(2)(e), 90(3), 90(5), 96(2), 97

Cases cited (2)

  • Giella Vs. Cassman Brown & Co. Ltd
    (1973) EA 358
  • Cieni Plains Company Limited & 2 others v Ecobank Kenya Limited
    [2017] eKLR
Jurisdiction invoked
Order 51 Rule 1 and Order 40 Rules 1, 2, 3 and 4 of the Civil Procedure Rules 2010, Sections 1A, 1B, 3A and 63(c) of the Civil Procedure Act

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, "Robert Mwangi v Springboard Capital Limited [2017] KEELC 11 (KLR)", Case Analysis (2017). Notice of Motion dated 7th July, 2017 (suit over land parcel NGONG/NGONG/23311). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/11/eng@2017-10-05

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