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ELCPartially Allowed· [2017] KEELC 2171 (KLR)

Amos Kipkorir Buttit & 2 others v Bank of Africa Kenya Ltd [2017] KEELC 2171 (KLR)

Environment and Land Court
28 July 2017
AOA. Ombwayo
5,321 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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An Eldoret court stopped a bank from selling charged land because it couldn't prove it served the borrower proper statutory notices.

What this practically means

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Executive summary

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This first-instance ruling of the Environment and Land Court at Eldoret (Ombwayo J) determined the plaintiffs' Notice of Motion dated 27th January 2016 seeking an interlocutory injunction to restrain the defendant bank from advertising, selling by private treaty or auction, transferring or otherwise interfering with two charged parcels, SERGON/KOIWOPTAOI BLOCK 3(SMAMTREK) 269 and UASIN GISHU/KIMUMU/1510. The plaintiffs alleged unlawful variation of interest rates, improper merger of three credit facilities, breach of section 44A of the Banking Act, and invalid statutory, redemption and 40 days' notices. The defendant relied on the contract's variable interest clause, asserted compliance with the Land Act and Auctioneers legislation, and objected that the court lacked jurisdiction. The court framed two issues: its jurisdiction, and whether the injunction should issue. On jurisdiction, the court declined to follow Kisimani Holdings and Esther Nyanganyi Onyango, which treat loan recovery over charged land as purely commercial, and instead followed Jane Wambui Ngeru, holding that a charge is an 'instrument granting any enforceable interests in land' under section 13(2)(d) of the Environment and Land Court Act, giving the ELC jurisdiction. On the merits, applying Giella v Cassman Brown, the court found the defendant had not proved service of the statutory notices under sections 90 and 96(2) of the Land Act (no affidavit of service or evidence of postage), establishing procedural impropriety and hence a prima facie case; held the defendant could not benefit from that impropriety; and found the balance of convenience favoured the plaintiffs in occupation. The application dated 27th January 2016 was allowed and the status quo maintained pending the hearing and determination of the suit. No costs order was recorded.

Key legal issues

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01

Jurisdiction of the Environment and Land Court over banking/charge disputes relating to land

Holding

The court held that it has jurisdiction because the dispute relates to a charge, which is an instrument granting an enforceable interest in land under section 13(2)(d) of the Environment and Land Court Act, notwithstanding the commercial character of the underlying transaction.

Reasoning

The court acknowledged divergent High Court authorities (Kisimani Holdings, Esther Nyanganyi Onyango) treating loan recovery over charged land as purely commercial matters for the High Court, and Nyamweya J's contrary view in Jane Wambui Ngeru. Preferring the latter approach, the court read section 13(2)(d) of the Environment and Land Court Act literally: contracts, choses in action or instruments granting enforceable interests in land fall within its jurisdiction. A charge over land is such an instrument, so the ELC is rightfully seized of the matter.

p. 8
02

Whether an interlocutory injunction should issue to restrain sale of the charged properties

Holding

The application was allowed: no affidavit of service or evidence of postage proved service of the statutory notices under sections 90 and 96(2) of the Land Act, establishing a prima facie case of procedural impropriety; damages would not be an adequate substitute because the defendant should not profit from its own procedural breach; and the balance of convenience favoured the plaintiffs in occupation.

Reasoning

Applying the Giella v Cassman Brown principles, the court found procedural impropriety in the absence of proof of service of the statutory notice, demand notice and 40 days' notice. It declined to allow the defendant to benefit from that impropriety, found the balance of convenience favoured the plaintiffs in occupation, and directed maintenance of the status quo pending the hearing and determination of the suit.

p. 9

Legal principles established

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  • The Environment and Land Court has jurisdiction over disputes concerning charges and instruments granting enforceable interests in land, even where the underlying dispute is commercial or contractual in nature
  • A chargee must demonstrate service of the statutory notice under section 90 of the Land Act; absent an affidavit of service or evidence of postage, procedural impropriety is established and supports a prima facie case for injunction
  • A chargee cannot benefit from its own procedural impropriety; the balance of convenience favours the chargors in occupation

Court orders

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  1. 1.The application dated 27th January 2016 is allowed
  2. 2.Status quo to be maintained pending the hearing and determination of the instant suit
Jurisdiction invoked
Article 162(2)(b) of the Constitution; section 13 of the Environment and Land Court Act; section 150 of the Land Act, 2012

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, "Amos Kipkorir Buttit & 2 others v Bank of Africa Kenya Ltd [2017] KEELC 2171 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2171/eng@2017-07-28

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