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ELCPartially AllowedE.L.C. Case No. 328 of 2013· [2018] KEELC 1958 (KLR)

Daniel Muiruri Njenga v Standard Chartered Bank of Kenya Ltd & 2 others [2018] KEELC 1958 (KLR)

Environment and Land Court
12 September 2018
KBK. Bor
2,220 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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A Kenyan court cancelled a property title bought at auction because the bank sold a deceased person's land before her estate's grant was confirmed.

What this practically means

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Executive summary

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The Plaintiffs, administrators of the estate of the late Jane Wanjiru Kagunda (who died on 27/7/2009), sued Standard Chartered Bank of Kenya Ltd (1st Defendant), Joseph Wachira Njuguna (2nd Defendant) and Mateve Guest House Limited (3rd Defendant). The late Kagunda had charged the Suit Property, L.R. No. Ndumberi/Ndumberi/1234, to the bank in 2005 and by further charge in 2006 to secure facilities of Kshs. 1.5 million and Kshs. 2.52 million advanced to the 2nd Defendant. The Plaintiffs alleged the bank fraudulently increased the facility to Kshs. 5.6 million, forged the chargor's guarantee, issued a statutory notice on 6/5/2011 knowing the chargor was deceased without a confirmed grant, and sold the property at a gross undervalue at an auction on 14/9/2011 to the 3rd Defendant for Kshs. 15.3 million. The bank maintained the sale was lawful, arguing estoppel arising from the Plaintiffs' obtaining a waiver of interest and deferment of the auction. The 3rd Defendant asserted it was the highest bidder and completed the purchase, obtaining title in February 2012. The court framed the main issue as whether a valid sale took place. Relying on Sections 45, 82 and 66 of the Law of Succession Act, it held the auction contravened the Act because the chargor had died and the letters of administration, issued 2/8/2011, were only confirmed on 31/7/2012, after the sale. The court ordered cancellation of the 3rd Defendant's title and awarded the Plaintiffs costs against the 1st and 2nd Defendants jointly and severally.

Key legal issues

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Whether the auction and sale of the Suit Property on 14/9/2011 was valid given that the chargor had died before the grant of letters of administration was confirmed

Holding

The sale was invalid; it contravened Sections 45 and 82 of the Law of Succession Act which prohibit intermeddling with a deceased's property and restrict sale of immovable property before confirmation of the grant.

Reasoning

The chargor died on 27/7/2009. Letters of administration were issued on 2/8/2011 but only confirmed on 31/7/2012, after the auction. Under Section 45 of the Law of Succession Act no person may take possession of or dispose of a deceased's property, and the proviso to Section 82(b) bars sale of immovable property before confirmation of the grant. A creditor such as the bank could have sought letters of administration as a creditor ranking under Section 66. The bank's statutory power of sale therefore could not lawfully be exercised when it was.

p. 3

Legal principles established

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  • A chargee may not lawfully exercise its statutory power of sale over immovable property of a deceased chargor before the grant of letters of administration over the estate is confirmed; the personal representatives alone may deal with the property.

Court orders

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  1. 1.An order cancelling the 3rd Defendant's title over L.R. No. Ndumberi/Ndumberi/1234
  2. 2.Costs of the suit awarded to the Plaintiffs, to be borne by the 1st and 2nd Defendants jointly and severally
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over the suit property (Environment and Land Court Act)

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, "Daniel Muiruri Njenga v Standard Chartered Bank of Kenya Ltd & 2 others [2018] KEELC 1958 (KLR)", Case Analysis (2018). E.L.C. Case No. 328 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/1958/eng@2018-09-12

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