KAAB Investments Limited & another v Kenya Commercial Bank Ltd [2017] KEELC 2943 (KLR)
The bottom line
#A Kenyan court refused to stop KCB from selling charged land, ruling that a borrower who admits owing money cannot get an injunction.
What this practically means
#Executive summary
#Key legal issues
#Prima facie case for interlocutory injunction
The Plaintiffs failed to establish a prima facie case with chances of success
The court applied the Mrao Ltd v First American Bank test. The 1st Plaintiff admitted in its letter of 12th July 2014 that it owed USD 2,328,377 and Kshs. 29,000,000. The charge and further charge were exhibited. Although the Bank agreed to reschedule the USD facility, there was no evidence the Plaintiffs paid the rescheduled instalments, and the Bank never agreed to reschedule the Kenya Shilling facility. The Plaintiffs therefore could not allege bad faith.
Service and adequacy of statutory notices under the Land Act
The 90 days' statutory notices dated 12th June 2015 and the 40 days' notices dated 16th September 2015 were served and complied with Section 90(2) of the Land Act, as evidenced by certificates of posting
The court perused the certificates of posting and statutory notices and was satisfied both Plaintiffs were served by registered post at their own addresses. The 45 days' Notification of Sale by Garam Investments Auctioneers was also exhibited with the statutory certificate under Section 15(c) of the Auctioneers Rules. The Plaintiffs did not deny the addresses used.
Valuation and Section 97(1) of the Land Act
Holding competing valuation reports does not infringe Section 97(1); the Defendant obtained a forced sale valuation and the remedy for an undervalue sale is damages
The Defendant exhibited two valuation reports by Nile Real Appraisers (EA) Ltd dated 20th January 2016 giving market and forced sale values for both properties. The fact that the Plaintiffs held reports indicating higher values did not establish an infringement of Section 97(1). If at trial the sale price is shown not to be the best reasonably obtainable, damages would lie.
Irreparable harm
Having offered the suit properties as security with knowledge of the consequences of default, the Plaintiffs cannot plead irreparable damage
The court held that the Plaintiffs, having charged the properties, were well aware that default would expose the properties to sale to offset the debt. Consequently, the second Giella condition was not satisfied, and the balance of convenience did not favour restraining the Bank's statutory power of sale.
Legal principles established
#- A borrower who has conceded obtaining money from a chargee and has offered property as security, which money remains unpaid, is not entitled to the equitable remedy of an injunction to restrain the chargee's statutory power of sale
- Possession of rival valuation reports showing a higher value does not, by itself, amount to an infringement of Section 97(1) of the Land Act; the remedy is damages if an undervalue sale is proved at trial
- A party alleging that a lender reneged on an agreement to restructure a loan must adduce evidence that it honoured its own repayment obligations under the rescheduled terms
Court orders
#- 1.Dismissal of the Plaintiffs' Application dated 11th January, 2016
- 2.Costs of the application awarded to the Defendant
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over land and charges (specific provision not stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "KAAB Investments Limited & another v Kenya Commercial Bank Ltd [2017] KEELC 2943 (KLR)", Case Analysis (2017). Application dated 11th January, 2016 (Malindi Environment and Land Court suit; file number not stated in the excerpt). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2943/eng@2017-05-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.