Auscar Odhaimbo Wambiya v Tigoni Acceptance Limited [2017] KEELC 2854 (KLR)
The bottom line
#A Kenyan court stopped a lender's auction because it skipped mandatory notice periods, even though the borrower genuinely owed the money.
What this practically means
#Executive summary
#Key legal issues
#Prima facie case for interlocutory injunction
The Plaintiff established a prima facie case because the Defendant's exercise of the power of sale was procedurally defective - the auctioneer's/redemption notice was issued before the 90-day statutory notice period lapsed and there was no evidence of service of the 40-day notice under s.96(2) Land Act.
The court found the demand notice was received by the Plaintiff and the statutory notice was served on the Plaintiff and spouse from 16th January 2016, running 90 days to about 16th April 2016. Yet the auctioneer's notice of 25th February 2016 was issued before that period lapsed, and no evidence showed how it was served. Exercising the power of sale on that footing was illegal, justifying an injunction pending trial.
Effect of non-registration or late registration of the charge
The parties' rights and obligations are governed by the executed charge document; failure or lateness in registering the charge does not affect them.
The charge document executed on 8th October 2015 contains the contractual terms between lender (chargee) and chargor. The Plaintiff's complaint about the registration date of the charge (shown as 5th January 2015) was a matter to be resolved at the hearing of the main suit, possibly with the Land Registrar as a witness, and did not establish a triable defence sufficient to defeat the injunction analysis.
Dispute over interest charged
A dispute on the interest charged is not enough to stop the chargee from exercising the power of sale where it has arisen.
The court held the charge document was clear on interest, and invoked the settled position from superior courts that a mere dispute about interest does not justify restraining a chargee's power of sale once it has properly arisen. The Plaintiff did not dispute being in arrears of repayment.
Combination of accounts under the charge
Paragraph 10.3.4 of the charge allowed the lender to combine accounts and set off sums, so the further facility of Kshs.200,000 was secured by the charge.
The Plaintiff argued the additional October 2015 facility of Kshs.200,000 was not to be secured by the charge over the suit land. The court agreed with the Defendant that clause 10.3.4, duly executed by both parties, permitted the lender to combine or consolidate accounts and set off sums towards satisfaction of the chargor's liabilities, whatever their nature.
Legal principles established
#- A chargee may not advertise charged property for auction before the 90-day statutory notice period lapses and before serving the chargor and spouse who consented to the charge with at least 40 days' notice under Section 96(2) of the Land Act.
- Failure or lateness in registering a charge document does not affect the rights and obligations of the parties as captured in the executed charge.
Court orders
#- 1.Temporary injunction granted in terms of prayer 2 of the notice of motion dated 25th May 2016, restraining the Defendant from selling, disposing of or interfering with the Plaintiff's ownership of land title No. Siaya/Mulalia/1747 pending hearing and determination of the suit
- 2.Defendant at liberty to issue and serve fresh statutory notices should there still be default in repayment, in accordance with the charge document and the law
- 3.Costs of the application to the Plaintiff
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court over land matters; interim injunctive relief in a pending suit
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Auscar Odhaimbo Wambiya v Tigoni Acceptance Limited [2017] KEELC 2854 (KLR)", Case Analysis (2017). Notice of motion dated 25th May 2016 (suit over land title No. Siaya/Mulalia/1747). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2854/eng@2017-05-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.