William Kanyi Hezekiah v Equity Bank Ltd & another [2017] KEELC 24 (KLR)
The bottom line
#The court allowed a Kenyan bank to proceed with selling a borrower's land because the bank followed every required legal notice step.
What this practically means
#Executive summary
#Key legal issues
#Whether there was gross undervaluation of the suit property
No gross undervaluation established; the Applicant produced only a 2015 counter-valuation and did not impugn the competence of the Respondent's valuer or the valuation parameters
Section 97(1) and (2) of the Land Act imposes on the chargee a duty to obtain the best price reasonably obtainable and to procure a forced sale valuation before sale. The court, adopting Zum Zum Investment and Palmy Company, held that the Applicant must demonstrate why the Respondent's valuation does not give the best price obtainable. The Applicant offered no evidence attacking the valuer's competence, the factors considered, or the timing; the valuation of 7th February 2017 preceded the 13th June 2017 auction within a reasonable time.
Whether the Respondent's statutory power of sale had accrued
Yes; the chargee complied with sections 90 and 96 of the Land Act, serving a statutory notice, a further notice and a redemption notice, so the power of sale had accrued
The court traced the sequence of notices: a section 90 statutory notice dated 12th February 2016, a further notice of 1st July 2016, a redemption notice of 24th October 2016 for Ksh 15,624,005.15, and a 45-day notification of sale dated 23rd January 2017. It held the notices were mandatory requirements and were duly served, informing the chargor of the default, the amount due, and his right to seek relief. Compliance with sections 90(2) and 96(2) rendered the intended exercise of the statutory power of sale lawful.
Whether the Giella v Cassman Brown conditions for an injunction were met
No prima facie case, no irreparable harm and no balance of convenience in favour of the Applicant; injunction refused
Applying Giella v Cassman Brown, the court found the accounts showed the loan of Ksh 12,702,300/= was due and the Applicant was in admitted default. Having complied with the statutory notices, the chargee's rights were lawful. Relying on Mrao, the court held a party to a commercial charge must understand his obligations, and sale of security is within the parties' contemplation, so damages cannot be said to be inadequate. The balance of convenience lay in enforcing the contractual obligations.
Legal principles established
#- The statutory notices under the Land Act are mandatory and the chargee's power of sale accrues only upon full compliance
- A chargor alleging undervaluation must do more than produce a counter-valuation report; the onus lies on the Applicant to show prima facie breach of section 97 of the Land Act
- Sale of charged property by a mortgagee is within the contemplation of the parties and cannot of itself amount to irreparable loss where the borrower is in default and statutory power of sale has arisen
Court orders
#- 1.Dismissal of the Notice of Motion dated 9th June 2017
- 2.Vacation of the interim orders
- 3.Costs to the Respondent
- Jurisdiction invoked
- Original civil jurisdiction; application under Sections 1A, 1B and 3A of the Civil Procedure Act, Order 40 Rules 1 and 3 and Order 51 Rule 1 of the Civil Procedure Rules
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Gulf African Bank Limited & another v Sawa Allied Investments Limited[2022] KEELC 12573 (KLR)27 Sept 2022
Cite this brief
#Cite this brief
Caselaw, "William Kanyi Hezekiah v Equity Bank Ltd & another [2017] KEELC 24 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/24/eng@2017-12-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.