Simon Pasua ole Kaanto & another v Family Bank Limited [2018] KEELC 3481 (KLR)
The bottom line
#A Kenyan court stopped a bank auction because the bank failed to serve the landowner's spouse and undervalued the property.
What this practically means
#Executive summary
#Key legal issues
#Whether statutory notices under sections 90 and 96 of the Land Act were properly served
The Plaintiffs (Chargor and Borrower) were served with the statutory notices, but the Chargor was not properly served with the Auctioneer's Notification of Sale and the spouse who gave consent was not served with the Notice to Sell.
The Defendant annexed Certificates of Posting showing the notices were sent to the address in the Charge Document. However, section 96(3)(c) requires service of the notice to sell on the consenting spouse; the evidence showed service on Mrs. Anne Naiserian Otuma Kaanto, who was wrongly indicated as owner, not on Nantei Ene Pasua Kaanto, the spouse who actually granted spousal consent. The notices are mandatory and the Defendant cannot skirt around them.
Whether the Defendant complied with the duty to obtain the best price reasonably obtainable (section 97 of the Land Act)
The glaring discrepancies between the two valuation reports commissioned by the Defendant raise triable issues; the forced sale valuation was too low and the best price was not obtained.
The Afriland Valuers report of 27th October 2015 gave an open market value of Kshs. 60 million and forced sale value of Kshs. 45 million, while Hallmark Valuers' report of 19th May 2017 gave Kshs. 48 million market value and Kshs. 36 million forced sale value. Both were commissioned by the Defendant, yet values fell over two years despite judicial notice that property markets in Kenya, including Kajiado, appreciate steadily. The Defendant did not controvert the Plaintiffs' allegations on valuation.
Whether the Plaintiffs established a prima facie case with a probability of success
Despite admitted indebtedness and due service of statutory notices, the discrepancies in valuation and defects in service of the Notice to Sell established a prima facie case with probability of success.
Applying the Giella v Cassman Brown principles and Mrao Ltd v First American Bank's definition of a prima facie case, the court found infringement of the Plaintiffs' rights through failure to properly value the land and failure to serve the consenting spouse. These raise triable issues determinable only after a full hearing, warranting explanation or rebuttal from the Defendant.
Irreparable harm and balance of convenience
The Plaintiffs demonstrated actual harm in losing family land worth far above the debt, not compensable by damages, and the balance of convenience tilts in their favour.
Applying Nguruman Ltd v Jan Bonde Nielsen, the court found the alleged injuries were not speculative: the suit land, valued by the Plaintiffs at Kshs. 98 million and housing the 1st Plaintiff's family home, faced sale for a debt of about Kshs. 3.7 million based on an undervalued forced sale price. The Defendant had infringed the Plaintiffs' rights by improper valuation and defective service of notices.
Legal principles established
#- Section 96(3)(c) of the Land Act mandatorily requires a copy of the notice to sell to be served on the spouse of the chargor who gave consent to the charge.
- A chargee must obtain the best price reasonably obtainable and undertake a forced sale valuation before exercising the right of sale; glaring discrepancies in valuations betray a failure of this duty.
- A notice addressed to a wrong address is no notice at all.
Court orders
#- 1.The Plaintiffs' Notice of Motion dated 30th August, 2017 is found merited and allowed (temporary injunction pending the outcome of the suit granted).
- 2.Costs will be in the cause.
- Jurisdiction invoked
- Order 40 rules 1 & 2 of the Civil Procedure Rules and Sections 90(1), 90(2)(b), 96(2), 96(3)(c), 97(2), 103 & 104 of the Land Act 2012
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Simon Pasua ole Kaanto & another v Family Bank Limited [2018] KEELC 3481 (KLR)", Case Analysis (2018). Not stated in judgment (Notice of Motion dated 30th August, 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/3481/eng@2018-04-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.