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ELCPartially AllowedNot stated in judgment· [2017] KEELC 3745 (KLR)

Billy Amugune Amendi v Family Bank of Kenya Ltd [2017] KEELC 3745 (KLR)

High Court of Kenya
11 May 2017
NMN.A. Matheka
1,839 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's High Court blocked a bank from selling charged land because its statutory notice under section 90 of the Land Act was invalid — though a fresh notice can restart the sale.

What this practically means

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Executive summary

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The plaintiff/applicant, registered proprietor of L.R. Nos. N.MARAGOLI/CHAVAKALI 1140 and KAKAMEGA/CHAVAKALI 11084 in Vihiga County, charged the two properties by an instrument dated 10th August 2015 in favour of the defendant/respondent bank to secure credit facilities obtained by one Jennifer Gasare Miheso (the borrower). After the borrower allegedly left for the USA and defaulted, the bank instructed Pavement Auctioneers to issue a Notification for Sale dated 13/3/2017 over one of the parcels, demanding Ksh. 1,211,845.73. The applicant claimed the notification was found on the floor of his house, apparently pushed under the door, and that despite letters and verbal inquiries to the bank's Credit Manager he was never served with a statutory notice nor informed of the extent of his liability. By a notice of motion dated 3rd May 2017 under Order 40 Rules 1, 2 and 4 of the Civil Procedure Rules and Section 63(c) and (e) of the Civil Procedure Act, he sought a temporary injunction restraining realization of the security, plus an order for disclosure of the borrower's loan account particulars. The defendant was served but did not attend; the application proceeded unopposed. Applying Giella v Cassman Brown, the court found that although the debt was not disputed, there was no valid statutory notice compliant with section 90(1) and (2) of the Land Act, 2012. A prima facie case with probability of success was established. The court granted a limited injunction restraining the bank from realizing the security, but left it free to serve a fresh, lawful statutory notice and thereafter exercise its statutory power of sale. No order was made on costs.

Key legal issues

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01

Whether an interlocutory injunction should issue to restrain realization of charged property for want of a valid statutory notice

Holding

Yes. The court found no valid statutory notice under section 90 of the Land Act, 2012, and held that the applicant established a prima facie case with probability of success, warranting a limited injunction.

Reasoning

Applying the Giella v Cassman Brown principles, the court noted the applicant did not dispute the charge or the debt. However, perusal of the pleadings disclosed no valid statutory notice complying with section 90(1) and (2) of the Land Act, 2012, which requires the notice to advise the chargor of the nature and extent of default and the consequences. Recovery of the debt must follow due legal process; absent a valid notice, the applicant established a prima facie case and a limited injunction issued.

p. 3

Legal principles established

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  • For a statutory notice of sale to be valid it must conform to section 90(1) and (2) of the Land Act, 2012, informing the chargor of their rights and the extent of the default.
  • A chargee may not exercise its statutory power of sale without a valid statutory notice, but may do so after serving a fresh, lawful notice.

Court orders

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  1. 1.A limited injunction restraining the defendant/respondent from realizing its security over parcels N.MARAGOLI/CHAVAKALI 1140 and KAKAMEGA/CHAVAKALI 11084
  2. 2.Liberty to the defendant/respondent to serve a fresh statutory notice of sale complying with the law, after which it may exercise its statutory power of sale
  3. 3.No order as to costs in respect of the application

Authorities

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Legislation

  • Civil Procedure RulesOrder 40 Rules 1, 2 and 4
  • Civil Procedure Act, Cap 21 Laws of KenyaSection 63(c) and (e)
  • Land Act, 2012Section 90(1) and (2)

Cases cited (3)

  • Giella vs Cassman Brown & Co. Ltd
    1973 E.A 358
  • Patrick Maguta Mwangi & Another v Consolidated Bank Ltd
    (2012) eKLR
  • Zumzum Investments Ltd v Altam Group International (K) Ltd and another
    Civil Case No 130 of 2012
Jurisdiction invoked
Order 40 Rules 1, 2 and 4 of the Civil Procedure Rules and Section 63(c) and (e) of the Civil Procedure Act, Cap 21 Laws of Kenya

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, "Billy Amugune Amendi v Family Bank of Kenya Ltd [2017] KEELC 3745 (KLR)", Case Analysis (2017). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3745/eng@2017-05-11

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