Kaab Investments Limited & another v Kenya Commercial Bank Ltd [2017] KEELC 1365 (KLR)
The bottom line
#A Kenyan court allowed Chase Bank to proceed with selling defaulted borrowers' land because the borrowers admitted the debt and failed to prove their claims.
What this practically means
#Executive summary
#Key legal issues
#Whether a prima facie case was established for an injunction against exercise of statutory power of sale
No prima facie case with chances of success was established; the Plaintiffs admitted the debt and the charge, so the equitable remedy of injunction was unavailable
The court applied the Mrao Ltd v First American Bank test. The 1st Plaintiff conceded obtaining the money, the charge and further charge were exhibited, and the 1st Plaintiff's own letter of 12th July, 2014 admitted indebtedness of USD 2,328,377 and Kshs. 29,000,000. Having offered the properties as security, the Plaintiffs knew default could lead to sale and could not plead irreparable damage.
Whether the statutory notices under the Land Act were properly issued and served
The court was satisfied the 90 days' statutory notices dated 12th June, 2015, the 40 days' notices dated 16th September, 2015 and the 45 days' Notification of Sale were all issued and served, complying with Section 90(2) of the Land Act
Certificates of posting showed service by registered post on both Plaintiffs at their addresses, which the Plaintiffs did not deny. The 45 days' Notification of Sale dated 5th November, 2015 by Garam Investments Auctioneers was served on the registered proprietor per the certificate issued under Section 15(c) of the Auctioneers Rules. The claim that a guarantor was not served did not defeat the application.
Whether the Defendant's valuation infringed Section 97(1) of the Land Act
Possession of rival higher valuation reports by the Plaintiffs does not amount to an infringement of Section 97(1); the remedy is damages if the sale price is not the best reasonably obtainable
The Defendant exhibited two valuation reports by Nile Real Appraisers (EA) Ltd giving market and forced sale values for both portions. The mere existence of the Plaintiffs' higher valuations did not show the statutory duty to obtain the best price reasonably obtainable had been breached; that question could be determined at the hearing with a damages remedy.
Whether the Bank reneged on a promise to restructure the loan
No; the Bank only rescheduled the USD Term Loans Facility, and the Plaintiffs produced no evidence of paying the rescheduled instalments
The letter of 15th July, 2015 rescheduled the outstanding USD Terms Loans Facility at USD 35,000 monthly for 96 consecutive months, and only that facility. The burden lay on the Plaintiffs to show payment of the suggested amounts after signing; no such evidence was placed before the court, so the allegation of reneging failed.
Legal principles established
#- A borrower who admits obtaining credit facilities and offering land as security, and who has not repaid the debt, cannot claim an injunction to restrain the chargee's statutory power of sale
- A plaintiff holding higher valuation reports does not thereby establish an infringement of Section 97(1) of the Land Act; the remedy for an undervalue sale lies in damages at the hearing
- A party alleging that a lender reneged on a rescheduling agreement must adduce evidence that it paid the rescheduled instalments
Court orders
#- 1.Dismissal of the Plaintiffs' application dated 11th January, 2016
- 2.Costs of the application awarded to the Defendant
- Jurisdiction invoked
- Not expressly stated; first-instance civil application before the Environment and Land Court concerning land charged as security
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kaab Investments Limited & another v Kenya Commercial Bank Ltd [2017] KEELC 1365 (KLR)", Case Analysis (2017). Not stated in the judgment as provided (application dated 11th January, 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1365/eng@2017-05-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.