Asis Hotel Ltd v I & M Bank Ltd [2017] KEELC 2844 (KLR)
The bottom line
#A Kenyan court stopped a bank's property auction only because the bank skipped the required forced sale valuation—not because the borrower disputed the debt.
What this practically means
#Executive summary
#Key legal issues
#Validity of statutory notices under sections 90 and 96 of the Land Act and service of auctioneer's notification
The notices complied with the law; service on directors who signed and by registered post was valid
The court found the section 90 demand notice particularised the default and advised of the right to apply to court under section 90(2)(e) and 103. The section 96 notice to sell was signed for by Director Hassan K. Koskei on 3rd September 2016 and sent by registered post. Misplaced post office keys did not invalidate notice since hand-delivered copies were signed for. The 45-day auctioneer's notification was also not denied.
Whether a dispute on accounts justifies an injunction
No - the plaintiff admitted the debt and never disputed the amounts owed
The plaintiff admitted indebtedness and by its letter of 17th January 2017 acknowledged the demand notice and sought time to pay, without raising any issue on the amounts. An interlocutory mandatory order for accounts was unsupported by any complaint in the grounds or supporting affidavit. Injunctions are equitable remedies and the plaintiff's conduct disentitled it from an unconditional restraint of the power of sale.
Compliance with section 97(2) of the Land Act on forced sale valuation
The defendant did not comply - no forced sale valuation was undertaken before exercising the power of sale
Section 97 imposes a statutory duty on the chargee to ensure a forced sale valuation by a valuer and to obtain the best price reasonably obtainable. The defendant produced no valuation report; only market and forced sale figures as at 12th October 2015 appeared on the notification of sale, and the defendant did not address the issue in its replying affidavit or submissions. The court found non-compliance, warranting a conditional injunction.
Legal principles established
#- Before exercising the right of sale, a chargee must ensure a forced sale valuation is undertaken by a valuer
- A dispute on accounts per se is not a basis for granting an injunction unless the amounts claimed are excessive or tainted with illegal charges
Court orders
#- 1.Conditional temporary injunction restraining the defendant from selling the charged property subject to undertaking a forced sale valuation under section 97 of the Land Act within 30 days from the date of the ruling
- 2.Liberty for the defendant to exercise its statutory power of sale thereafter
- 3.All other prayers denied
- 4.Each party to bear its own costs
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court (unspecified in judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Asis Hotel Ltd v I & M Bank Ltd [2017] KEELC 2844 (KLR)", Case Analysis (2017). Notice of Motion dated 7th February 2017 (main suit filed 8th February 2017) - ELC Eldoret. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2844/eng@2017-04-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.