S O Arama v Family Bank Ltd (Environment & Land Case 229 of 2016) [2017] KEELC 1971 (KLR)
The bottom line
#The High Court in Nakuru dismissed a borrower's attempt to block a property sale, ruling that disputing the debt amount alone cannot stop a lender from auctioning charged land.
What this practically means
#Executive summary
#Key legal issues
#Service of statutory notices
The court found that the statutory notice under section 90 of the Land Act 2012 was served on the chargor by registered post to the address used in the letter of offer and charge document, and that the plaintiff and the chargor were served with notices.
The plaintiff alleged non-service or invalid service, but the defendant's replying affidavit exhibited statutory notices dated 30th June 2014 and 30th September 2014 sent by registered post with certificates of postage, plus a 45-day redemption notice served on 10th June 2016 and notice of sale on 12th August 2016. The court was persuaded service was effected.
Whether escalation of the debt from KShs 3,000,000 to KShs 9,131,052.22 supports an injunction
A mere dispute over the amount owing does not justify restraining a mortgagee/chargee from exercising the power of sale.
The plaintiff admitted default due to hard economic times yet challenged the escalation of the debt. Relying on St Elizabeth Academy v Housing Finance and Halsbury's Laws, the court reiterated that a mortgagee will not be restrained because the amount is in dispute, unless the mortgagor pays the claimed amount into court.
Prima facie case under Giella v Cassman Brown
The plaintiff failed to establish a prima facie case with probability of success, so the other limbs of the Giella test need not be considered.
Applying the first limb of the Giella test, the court found the notices were served and the debt dispute could not found an injunction. Having failed at the first limb, the court expressly declined to assess the other limbs, which disposes of the application.
Legal principles established
#- A dispute on the amount owing alone cannot be a basis for granting an injunction to restrain a chargee from exercising power of sale.
Court orders
#- 1.Notice of Motion dated 27th June 2016 is dismissed with costs
- Jurisdiction invoked
- Not expressly stated; application brought under Order 40 rules 1 and 2 of the Civil Procedure Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "S O Arama v Family Bank Ltd (Environment & Land Case 229 of 2016) [2017] KEELC 1971 (KLR)", Case Analysis (2017). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1971/eng@2017-07-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.