Simon Ngigi Kariuki & another v Barclays Bank of Kenya Limited [2017] KEELC 42 (KLR)
The bottom line
#A Kenyan court allowed a bank to proceed toward selling defaulted borrowers' land because its statutory notice was validly served.
What this practically means
#Executive summary
#Key legal issues
#Validity of the statutory notice under section 90 of the Land Act
The statutory notice dated 23rd August 2016 complied with section 90(2), giving three months' notice, stating the default and amounts due, so the statutory power of sale lawfully arose
Section 90(2) read with 90(3) obliges the chargee to state the nature and extent of default, the amount required to rectify it within not less than three months, the consequences of failure to rectify, and the chargor's right to apply to court for relief. The notice dated 23rd August 2016 addressed to the 2nd plaintiff and copied to the 1st plaintiff listed the status of the two accounts, demanded a stated sum, and gave three months' notice, satisfying all requirements.
Proper service of the statutory notice
Service was properly effected; the registered postal receipt showed the letter was addressed to both plaintiffs at the address they had given in the facility documents
The court examined the computer-generated receipt from the Postal Corporation of Kenya showing the registered letter was addressed to both plaintiffs, and the notice was copied to the 1st plaintiff at the address appearing in all facility documents. It was also not in dispute that the 2nd plaintiff received the notice. The contention that the certificate of posting did not show the post office therefore did not invalidate service.
Whether liability beyond the guarantee limit was wrongfully imposed
The debt claimed (Ksh.4,357,772.40 on the loan account and Ksh.1,429,153.05 on the current account) fell within the guarantee limited to Ksh.6,000,000 plus interest, fees and charges
The 1st plaintiff executed a guarantee limited to Ksh.6,000,000 together with interest, fees, commission, costs, charges and expenses. The amounts claimed per the annexed statements totalled less than the guaranteed sum, so no liability outside the guarantee was imposed.
Whether conditions for an interlocutory injunction were met
No prima facie case, no irreparable injury and the balance of convenience favoured the defendant; the Giella v Cassman Brown tests were not satisfied
The 1st plaintiff acknowledged the arrears in his letter of 21st April 2017 and sought restructuring, showing no apparent infringement of a right. Sale of pledged security is within the parties' contemplation and does not cause irreparable loss where the borrower is in default. Since the statutory power of sale had arisen, enforcing the contractual obligations was where the balance of convenience lay.
Legal principles established
#- A chargee's statutory power of sale may be exercised only after valid statutory notice under section 90 of the Land Act, and a notice compliant with section 90(2) renders the exercise of the power lawful
- Sale of charged property pursuant to the loan agreement does not constitute irreparable loss since it is within the contemplation of the parties
- A dispute as to the amount due is not a ground to restrain a mortgagee/chargee from exercising its power of sale
Court orders
#- 1.The application dated 12th May 2017 is dismissed
- 2.Costs of the application awarded to the Respondent
- Jurisdiction invoked
- Original civil jurisdiction; application brought under Order 40 Rules 1 and 2 of the Civil Procedure Rules and sections 3A and 63(c) and (e) of the Civil Procedure Act
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.
- Hannah Wairimu Mutura v Gulf African Bank[2019] KEHC 10192 (KLR)8 Feb 2019followed
Cite this brief
#Cite this brief
Caselaw, "Simon Ngigi Kariuki & another v Barclays Bank of Kenya Limited [2017] KEELC 42 (KLR)", Case Analysis (2017). Notice of Motion dated 12th May 2017 (suit number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/42/eng@2017-10-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.