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ELCDismissedNot stated in judgment· [2017] KEELC 3870 (KLR)

Skeme Advertising Group Limited & another v Prime Bank Ltd & another (Environment & Land Case 710 of 2017) [2017] KEELC 3870 (KLR)

Environment and Land Court
30 November 2017
KBK. BOR
1,164 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Nairobi court allowed a bank to auction charged land because the bank had obtained a proper valuation and served the required notices.

What this practically means

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Executive summary

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By a notice of motion dated 15 November 2017, the Plaintiffs sought an interlocutory injunction to restrain the Defendants from selling, auctioning, transferring or interfering with the Suit Property, Nairobi Block 140/288/103 in Nyayo Embakasi Estate, pending trial. They argued that no valuation preceded the intended sale at Kshs 5,625,000/-, which they claimed grossly undervalued property worth over Kshs 10 million, and that no notification of sale was served. The 1st Defendant showed that the charged debt stood at Kshs 8,490,930/- as at 31 October 2017, that the Plaintiffs admitted the debt and last paid on 30 March 2016, and that it had obtained a valuation on 7 August 2017 giving an open market value of Kshs 7.5 million and a forced sale value of Kshs 5,625,000/-. Relying on Section 97 of the Land Act and the Kenduiywa v Sidian Bank decision, the Defendant submitted that obtaining a professional forced sale valuation discharged its statutory obligation. The court found the Plaintiffs produced no evidence of the alleged Kshs 10 million value - their own valuer had assessed Kshs 6.8 million - and held that a chargee who appoints a professional valuer satisfies Section 97(2), with the price thereafter left to market forces. Postal receipts established service of the notices of intention to sell at the address in the title, charge and affidavit. Finding no prima facie case, the court dismissed the application with costs to the 1st Defendant.

Key legal issues

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01

Compliance with Section 97 of the Land Act on valuation and best price

Holding

The chargee complied: a valuation dated 7/8/2017 gave market value of Kshs 7.5 million and forced sale value of Kshs 5,625,000/=. Obtaining a professional valuation discharges the Section 97(2) obligation, and the obligation under Section 97(1) is to obtain the best price reasonably available, not necessarily the market price.

Reasoning

The court adopted the reasoning in Kenduiywa v Sidian Bank: a bank is not in control of the professional valuer and, once a valuation is obtained, price is left to market forces. The Plaintiffs produced no evidence that market value exceeded Kshs 10 million; their own 2015 valuation gave open market value of Kshs 6.8 million.

p. 3
02

Service of statutory notices of sale

Holding

Notices dated 13/2/2017 and 14/6/2017 were sent by post to the 2nd Plaintiff's address as given in the title deed, charge document and supporting affidavit, and postal receipts were produced.

Reasoning

The court found service established on the face of the postal receipts issued by the Postal Corporation of Kenya. Counsel's objections about endorsements on the receipts were disregarded as immaterial to whether an auction should be stopped.

p. 3
03

Requirements for grant of interlocutory injunction

Holding

The Plaintiffs failed to demonstrate a prima facie case, the debt being admitted and last payment made on 30/3/2016.

Reasoning

With no prima facie case shown - the charge, admitted debt and compliant valuation and notices - the court declined to exercise its discretion in the Plaintiffs' favour ahead of the auction scheduled for 1/12/2017.

p. 3

Legal principles established

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  • A chargee discharges its obligation under Section 97(2) of the Land Act where it obtains a forced sale valuation from a professional valuer before exercising its statutory power of sale

Court orders

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  1. 1.The application dated 15/11/2017 is dismissed
  2. 2.Costs to the 1st Defendant

Authorities

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Legislation

  • Land ActSection 96
  • Land ActSection 97(1)
  • Land ActSection 97(2)

Cases cited (1)

  • Stephen Kipkatam Kenduiywa t/a Farm V Sidian Bank Limited & Another
    [2017] eKLR
Jurisdiction invoked
Original civil jurisdiction (injunction application under the Land Act, No. 70 of 2012)

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, "Skeme Advertising Group Limited & another v Prime Bank Ltd & another (Environment & Land Case 710 of 2017) [2017] KEELC 3870 (KLR)", Case Analysis (2017). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3870/eng@2017-11-30

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