Northwest (K) Limited v Kenya Deposit Insurance Corporation (Official Receiver for Chase Bank Ltd) & another [2018] KEELC 4123 (KLR)
The bottom line
#A Kenyan court confirmed that people suing the Kenya Deposit Insurance Corporation over bank property sales don't need prior court permission, protecting landowners facing auctions after bank receivership.
What this practically means
#Executive summary
#Key legal issues
#Whether leave under section 56(2) of the Kenya Deposit Insurance Act was required before instituting the suit and injunction application.
Leave was not required because the suit was brought against the Kenya Deposit Insurance Corporation, not the institution in receivership, and the suit property was not an asset of the institution.
The court noted section 2 defines an 'institution' as a bank, financial institution, mortgage finance company or deposit-taking entity licensed by the Central Bank, while the Corporation is established under section 4 of the Act. Section 56(2) bars actions against the institution or in respect of its assets. The plaintiff sued the Corporation, and the suit land L.R No. Nyandarua/Ndemi/7183 is not an asset of Chase Bank. Accordingly, the sanction of the court was not a precondition.
Whether the Preliminary Objection was sustainable in law.
The Preliminary Objection was unsustainable and was dismissed with costs.
Applying the Mukisa Biscuits definition of a preliminary objection as a pure point of law, the court found that the defendants' objection was founded on a misapprehension of section 56(2) and the authorities cited, which concerned liquidation rather than receivership and suits against the institution rather than the Corporation. The suit was therefore properly instituted and could not be struck out.
Legal principles established
#- Section 56(2) of the Kenya Deposit Insurance Act restricts actions against an institution under receivership and in respect of its assets, not suits against the Kenya Deposit Insurance Corporation or property not belonging to the institution.
- A preliminary objection raises a pure point of law on the assumption that all facts pleaded by the other side are correct.
Court orders
#- 1.The Preliminary Objection dated 27th June 2017 is dismissed with costs to the Plaintiff/Applicant.
- 2.Leave granted to the Defendant/Respondents to file and serve their response to the application dated 29th March 2017 within 21 days of delivery of the ruling.
- 3.The application dated 29th March 2017 fixed for hearing on 24th May 2017.
- Jurisdiction invoked
- Order 30 Rules 1, Order 41 and Order 51 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Northwest (K) Limited v Kenya Deposit Insurance Corporation (Official Receiver for Chase Bank Ltd) & another [2018] KEELC 4123 (KLR)", Case Analysis (2018). Not stated in the judgment (Notice of Motion dated 29th March 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4123/eng@2018-03-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.