Hellen Karinthoni Njau v Remu Dtm Limited & another [2017] KEELC 2642 (KLR)
The bottom line
#A Kenyan lender cannot auction charged land without issuing a formal notice to sell under section 96(2) of the Land Act — an auctioneer's notice alone is not enough.
What this practically means
#Executive summary
#Key legal issues
#Whether the chargee followed the statutory procedure for realizing security over charged land
The chargee did not follow the prescribed procedure: although a statutory notice under section 90 was duly served, the mandatory notice to sell under section 96(2) of the Land Act was never issued, and the auctioneer's notice cannot substitute for it; the proposed sale was therefore procedurally defective
The court traced the statutory scheme: a section 90(1) notice in writing alerts the chargor to the default and gives at least three months (or two months for covenant breaches) to rectify; only after ninety days may the chargee sell. Where the chargee elects to sell, section 96(2) requires a notice to sell in the prescribed form, with at least forty days before completing any sale contract. On the record only the statutory notice, the notification of sale and a newspaper advertisement existed; the section 96(2) notice to sell was missing, so the sale was irregular, though the defect was curable.
Whether the applicant was served with the statutory notice under section 90
The court found, on the affidavit of the licensed process server, that the applicant was duly served with the statutory notice dated 26th January, 2016
The applicant denied receipt of the statutory notice, but the 1st defendant produced the notice dated 26th January, 2016 together with an affidavit of service by Joseph Kithinji M'Kiambati, a licensed process server, showing personal service at the applicant's shop at Gatimbi market on 2nd February, 2016. The court perused the record and had no doubt that service was effected, hence the applicant's assertion of non-service was rejected as dishonest.
Whether the applicant, an admitted defaulter, is entitled to inhibit realization of the security
Injunction granted only for a limited period of three months to enable compliance with the statutory procedure; inhibition refused because the applicant remains in default
The applicant admitted taking the Kshs. 700,000/= facility secured by a charge and admitted default, with arrears of about Kshs. 701,328.41/=. She did not demonstrate how she intends to pay. Permanent sheltering of a defaulting chargor would defeat the chargee's statutory rights; but because a mandatory statutory step (the notice to sell) was omitted, the court granted a temporary, time-bound injunction of three months after which the chargee may regularize the process.
Legal principles established
#- Before exercising the statutory power of sale, a chargee must serve a notice to sell under section 96(2) of the Land Act, and an auctioneer's/public auction notice does not suffice in its place
- In the absence of a notice to sell under section 96(2) of the Land Act, the statutory power of sale cannot be exercised even where a statutory notice, notification of sale and redemption notice have been issued, and that omission is a strong ground for an injunction
Court orders
#- 1.Temporary order of injunction restraining the defendants by themselves, their servants and/or agents from alienating, selling and/or interfering with the plaintiff's title, user and occupation of parcel No. KIAMURI 'A' 756 for a period of 3 months only from the date of delivery of the ruling
- 2.The defendant is at liberty to proceed with the process of realization of the security after 3 months from the date of delivery of the ruling, by issuing the notice to sell under section 96(2) of the Land Act
- 3.Applicant (who is still a defaulter) to pay costs of the application
- Jurisdiction invoked
- Original civil jurisdiction over land charge matters; Land Act, sections 90 and 96 (specific provision not stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Hellen Karinthoni Njau v Remu Dtm Limited & another [2017] KEELC 2642 (KLR)", Case Analysis (2017). Notice of Motion dated 2nd August, 2016 (ruling delivered at Meru). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2642/eng@2017-04-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.