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ELCAllowedNot stated in the excerpt (Eldoret ELC application dated 29.1.2016)· [2017] KEELC 3295 (KLR)

Muhia Daniel Kimeu & another v Equity Bank (Kenya) Limited & another [2017] KEELC 3295 (KLR)

Environment and Land Court
31 March 2017
AOA. Ombwayo
1,873 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court blocked a bank from selling a borrower's land because the bank couldn't prove it properly served the required notices.

What this practically means

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Executive summary

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The plaintiffs applied for an interlocutory injunction restraining the defendants from selling, advertising, transferring or dealing with land parcel Eldoret Municipality Block 5/763 pending hearing of the suit. The 1st plaintiff deponed that he obtained a loan facility of Kshs. 1,500,000 in April 2010 and a further facility (of which Kshs. 3,100,000 was disbursed), secured by the suit property, and that after a road traffic accident affected his finances, he was served with a redemption notice and notification of sale demanding Kshs. 1,971,302.62. The plaintiffs contended that the notices were irregular, that varied interest was imposed without agreement, and that the amount claimed violated the in duplum principle under section 44A of the Banking Act. The defendants replied that the loans were disbursed under letters of offer of 15th March 2010 and 15th June 2011, the outstanding balance was Kshs. 1,931,203.62 as at 12th October 2015, and that statutory notices were duly served with proof of posting. Applying the established principles on interlocutory injunctions, the court found the plaintiffs indebted but held that there was no evidence of postage of the demand notice, statutory notice or redemption notice, and no certificate of postage, so a prima facie case with probability of success was demonstrated, the burden of proving service having shifted to the defendants. The court also found irreparable harm, the property's value of Kshs. 30,000,000 far exceeding the debt, and the balance of convenience favouring an injunction. The court granted the injunction but ordered the defendants to commence the realization process afresh with proper notices, with costs to the plaintiffs.

Key legal issues

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01

Prima facie case for interlocutory injunction

Holding

A prima facie case was established because there was no evidence of postage of the demand, statutory and redemption notices.

Reasoning

The court accepted the plaintiffs were indebted in Kshs. 1,931,203.62 as at 12.10.2015. However, on the demand notice dated 14.5.2015, the statutory notice and the redemption notice, there was no evidence of postage and no certificate of registration of mail. Failure to serve the requisite notices is a serious breach of the law, and once non-service is alleged the burden of proving service shifts to the defendant.

p. 3
02

Irreparable harm

Holding

Irreparable harm established because the market value of the suit property (Kshs. 30,000,000) far exceeds the debt claimed.

Reasoning

The court found the market value of the property to be sold was Kshs. 30,000,000, so the plaintiffs were likely to suffer irreparable harm if it was sold. The balance of convenience also favoured an injunction since the value of the property far exceeded the money owed.

p. 3

Legal principles established

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  • Where a plaintiff alleges non-service of statutory notices, the burden shifts to the defendant to prove service.

Court orders

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  1. 1.Interlocutory injunction restraining the defendants from selling, advertising, transferring or dealing with Eldoret Municipality Block 5/763 pending hearing and determination of the suit
  2. 2.The defendants to undertake the realization process afresh by serving a demand notice and issuing a fresh statutory notice following due process according to law
  3. 3.Costs of the application to be borne by the defendant

Authorities

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Legislation

  • Banking Act, Cap. 488section 44A
Jurisdiction invoked
Original civil jurisdiction over land dispute; specific provision not stated in the judgment

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, "Muhia Daniel Kimeu & another v Equity Bank (Kenya) Limited & another [2017] KEELC 3295 (KLR)", Case Analysis (2017). Not stated in the excerpt (Eldoret ELC application dated 29.1.2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3295/eng@2017-03-31

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