Francis Gitau Wamuhiu v Rafiki Micro Finance Bank & another [2017] KEELC 1471 (KLR)
The bottom line
#A Kenyan court temporarily stopped a land auction only because the lender skipped the legally required forced sale valuation before selling.
What this practically means
#Executive summary
#Key legal issues
#Validity of the statutory notice under sections 90 and 96(2) of the Land Act
The statutory notices were validly issued and copied to the guarantor; the forty-day period under section 96(2) had lapsed before the auctioneer was instructed
The statutory notice was issued to the principal debtor on 6th June 2016 specifying the amounts, and was copied to the applicant at the same postal box as in the charge document. The notification of sale was posted on 7th April 2017, within the 45 days stated, showing the auctioneer was instructed after the forty days had lapsed.
Whether a forced sale valuation was carried out under section 97(2) of the Land Act
No forced sale valuation was carried out; the chargee breached its statutory duty, but this does not invalidate the statutory notices
Counsel for the defendant's submission that section 97(2) does not prescribe a time for the valuation amounted to an admission that no valuation was done. The court held the chargee owes a duty of care to obtain the best price reasonably obtainable, found the valuation requirement unfulfilled, but held this alone does not invalidate the notices; it only tilted the balance of convenience in the plaintiff's favour.
Whether the chargee was required to exhaust alternative remedies before sale
No; section 90(3) of the Land Act offers options the chargee may choose, and the chargee was under no obligation to exhaust alternatives
The court listed the statutory options: suing the chargor, appointing a receiver, leasing, entering possession, or selling. The chargee opted to exercise its statutory power of sale, so the applicant's argument that alternatives should have been exhausted failed. The spousal consent complaint was also rejected as it should have been raised at the onset when taking the loan.
Legal principles established
#- A statutory notice under section 90 of the Land Act must be copied to the guarantor because the guarantor's liability arises upon default by the principal borrower
- Section 96(2) of the Land Act is mandatory: the chargee must not complete any contract for sale until at least forty days have elapsed from service of the notice to sell
- A chargee who fails to undertake a forced sale valuation under section 97(2) of the Land Act breaches its statutory duty, though this does not by itself invalidate the statutory notices
- A chargee is under no obligation to exhaust alternative remedies before exercising the statutory power of sale
Court orders
#- 1.A conditional temporary injunction restraining the defendant from selling the charged property, subject to the defendant undertaking a forced sale valuation as required under section 97 of the Land Act within 30 days from the date of the ruling
- 2.After compliance, the defendant is at liberty to exercise its statutory power of sale
- 3.Costs in the cause
- Jurisdiction invoked
- Original civil jurisdiction over land charges and applications for temporary injunction under the Land Act, 2012 and Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Francis Gitau Wamuhiu v Rafiki Micro Finance Bank & another [2017] KEELC 1471 (KLR)", Case Analysis (2017). Not stated in judgment (Notice of Motion dated 19th May 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1471/eng@2017-09-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.