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ELCDismissed· [2017] KEELC 118 (KLR)

Hassan Kiptoo Kemboi v Equity Bank Limited & another [2017] KEELC 118 (KLR)

High Court of Kenya
18 October 2017
JOJ. M Onyango
952 words in judgment
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The bottom line

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A Kenyan court refused to stop a bank auction because the borrower admitted owing the money, showing courts won't block sales when the debt isn't genuinely disputed.

What this practically means

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Executive summary

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The plaintiff/applicant moved the court by Notice of Motion dated 5th April 2017 seeking an interlocutory injunction to restrain the defendants from selling, transferring or otherwise dealing prejudicially with land parcel KERICHO/LONDIANI/JOUBERT/BLOCK 3 (CHEBEWOR/539, charged to the 1st defendant to secure a Kshs. 3 million loan advanced in July 2011. The applicant deponed that he had been repaying the loan but defaulted due to cash flow challenges after being defrauded, that he was ready and willing to service the loan, and that sale of the property would render him and his family homeless. The 1st respondent, through its credit manager Paul Chongo, deponed that the applicant defaulted almost immediately, that the statutory notices preceding exercise of the statutory power of sale were duly issued, and that the 2nd respondent had been instructed to advertise the property for auction; the bank feared the debt would outstrip the property's value if restrained. The court framed the sole issue as whether the applicant had satisfied the Giella v Cassman Brown conditions. The applicant relied on the Alice Awino Okello line of authority on balance of convenience, submitting he had raised Kshs. 450,000 towards the loan. The court distinguished that authority, holding there were no doubtful circumstances since the debt was admitted and service of the statutory notices was not denied, and accepted the respondents' authorities that a defaulting contracting party cannot restrain breach by the other. The application was dismissed with costs to the defendants.

Key legal issues

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Whether the applicant established prima facie case, irreparable harm and balance of convenience for an interlocutory injunction against exercise of the statutory power of sale

Holding

The application failed: the applicant admitted the debt, did not dispute service of statutory notices, and restraining the sale risked the debt outstripping the property's value, so no prima facie case was shown and the balance of convenience favoured the defendants

Reasoning

Applying Giella v Cassman Brown, the court found the applicant admitted indebtedness and did not deny service of the statutory notices, so there was no prima facie case with probability of success nor doubtful circumstances warranting restraint. The 1st respondent's evidence showed arrears accumulating, creating a real risk that the debt would outstrip the property's value, placing the balance of convenience with the defendants as in Andrew Muriuki Wanjohi.

p. 2

Legal principles established

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  • A contracting party who fails to perform his contractual obligations cannot obtain an injunction to restrain the other party's breach of covenant

Court orders

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  1. 1.The Notice of Motion dated 5th April 2017 is dismissed with costs to the defendants

Authorities

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Legislation

  • Civil Procedure RulesOrder 40 rules 1, 2(1) and 9
  • Civil Procedure RulesOrder 51
  • Civil Procedure Act Cap 21Sections 3A and 63(e)
  • Land ActSection 103

Cases cited (4)

  • Giella Vs Cassman Brown
    1973 EA 358
  • Alice Awino Okello V Trust Bank Ltd and Another
    quoted in Kismani Holdings Ltd & Another V Fidelity Bank HCCC No. 744 of 2012 (2013) eKLR
  • John Edward Ouko V National Industrial Credit Bank Ltd
    (2013) eKLR
  • Andrew Muriuki Wanjohi V Equity Building Society Ltd and 2 Others
    (2006) eKLR
Jurisdiction invoked
Order 40 rules 1, 2(1) and 9, Order 51 of the Civil Procedure Rules, sections 3A and 63(e) of the Civil Procedure Act Cap 21 and Section 103 of the Land 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, "Hassan Kiptoo Kemboi v Equity Bank Limited & another [2017] KEELC 118 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/118/eng@2017-10-18

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