Micah Terer & another v Letshego Kenya Limited [2017] KEELC 595 (KLR)

Environment and Land Court

2 November 2017

AOA. Ombwayo

1,688 words in judgment

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The bottom line

Kenyan lenders cannot auction your land without proving they served the required statutory notices under the Land Act, 2012.

What this practically means

Executive summary

The plaintiffs, Micah Terer and Wilson Kipterer Rono, moved the Environment and Land Court at Eldoret for a temporary and permanent injunction restraining Letshego Kenya Limited from advertising and offering for sale by public auction or private treaty land parcel Moiben/Moiben Block 2 (Segero)/184, charged to secure facilities totalling Kshs.4,500,000 granted to the first plaintiff and guaranteed by the second plaintiff. The plaintiffs alleged variation of interest rates contrary to the letter of offer, clogging of the equity of redemption, and non-issue of the statutory notices under sections 90 and 96 of the Land Act, 2012. The defendant asserted that the loan was in arrears, spousal consent was duly obtained, and the statutory and redemption notices were served. Applying the Giella v Cassman Brown principles as elaborated in Mrao v First American Bank, the court found that while the loan and arrears were undisputed, the central dispute was whether the statutory notices were served. There being no evidence of service or postage of the statutory or redemption notices, the defendant, which bore the duty of proving service, had not discharged it, establishing a prima facie case with a likelihood of success. The court held, however, that irreparable harm was not demonstrated since the property was valued and the defendant, a financial institution, could compensate in damages. On balance of convenience, the scale tipped in favour of the plaintiffs as the defendant could not realize the security unprocedurally, and the second plaintiff's family occupied the land. The court granted a temporary injunction restraining the defendant from alienating, advertising, selling, taking possession of, leasing, transferring, charging or otherwise interfering with the suit property, directed the defendant to commence recovery strictly within the confines of the Land Act, 2012, and ordered each party to bear its own costs.

Key legal issues

Prima facie case

Holding

A prima facie case was established because there was no evidence of service of the statutory notice under section 90 and the redemption notice under section 96 of the Land Act

Reasoning

The court accepted that the loan and arrears were not disputed, but the bone of contention was whether the statutory notices were served. The defendant, as the party asserting service, had the duty to furnish evidence of service. Absent proof of postage or service, the plaintiffs' right to notification and redemption was apparently infringed, calling for explanation from the defendant. The Mrao definition of prima facie case was applied.

p. 3

Irreparable harm

Holding

Irreparable harm was not established as damages would be an adequate remedy

Reasoning

The suit property had been valued and the valuation report filed, so any loss was quantifiable. Further, the defendant being a financial institution had the capacity to compensate the plaintiffs in damages if the suit ultimately succeeded. This limb of the Giella test therefore failed.

p. 3

Balance of convenience

Holding

The balance of convenience tilted in favour of the plaintiffs because the defendant had not followed the proper procedure for realization of the security

Reasoning

Since the statutory power of sale had not properly accrued, the defendant could not be allowed to realize the security unprocedurally. The second plaintiff, whose home and family occupy the suit land, would be more inconvenienced if the injunction was withheld. The court therefore granted the injunction despite failing on the irreparable harm limb.

p. 3

Legal principles established

Where a plaintiff alleges non-service of statutory notices, the party asserting service bears the duty to produce evidence of it; failure to do so establishes infringement of the right to notice and redemption
A chargee cannot exercise its statutory power of sale without compliance with the statutory notice requirements of the Land Act, 2012

Court orders

1.Temporary injunction restraining the defendant from alienating, advertising, selling, taking possession, leasing, transferring, charging or otherwise interfering with land parcel number Moiben/Moiben Block 2 (Segero)/184
2.Order that the defendant commences the process of recovery of the suit property within the confines of the Land Act, 2012
3.Each party to bear its own costs

Authorities

Legislation

Land Actsection 90(1), 90(2)(b)
Land Actsection 96(2)
Land Act2012

Cases cited (2)

Mrao Vs First American Bank of Kenya and 2 Others
2003 eKLR
Giella v Cassman Brown

Jurisdiction invoked: Not expressly stated; the court exercised its discretion to grant a temporary injunction under interlocutory civil procedure in a land dispute concerning the Land Act, 2012

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Micah Terer & another v Letshego Kenya Limited [2017] KEELC 595 (KLR)", Case Analysis (2017). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/595/eng@2017-11-02

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