Micheal Kagume Gatura v Equity Bank (K) Ltd & another [2019] KEELC 38 (KLR)
The bottom line
#A Kenyan bank couldn't prove it mailed required notices before auctioning a borrower's property, so the court stopped the sale.
What this practically means
#Executive summary
#Key legal issues
#Service of statutory notices before exercise of chargee's power of sale
The chargee failed to prove that the statutory notices were paid for and posted; non-compliance with mandatory notice requirements clogged the chargor's right of redemption and established a prima facie case
The 1st Defendant annexed only a Postal Corporation list of registered packets and a certificate of postage by the auctioneer dated 15 March 2018, without a receipt evidencing payment and posting of the notices to the Plaintiff. Relying on Nyagilo Ochieng, posting of statutory notice must be proved unless receipt is admitted. Failure to prove service meant the power of sale had not validly crystallised.
Irreparable harm and adequacy of damages
Damages cannot compensate the infringement of the chargor's rights occasioned by failure to follow the mandatory statutory steps; the home standing on the suit property weighs in favour of an injunction
Although land offered as security is a commodity for sale, the chargee did not carry out all the requisite steps before exercising its statutory power of sale. Damages is not an automatic remedy and cannot substitute a crystallised right protectable by injunction; payment of damages cannot compensate infringement of rights.
Balance of convenience
The balance of convenience tilts toward preserving the status quo, being non-sale of the suit properties by public auction until the suit is determined
The Court found the balance of convenience, even if in doubt, favours maintaining the status quo that existed before the wrongful act, namely restraint of the scheduled public auction pending the hearing of the suit.
Legal principles established
#- Once land is given as security for a loan it becomes a commodity for sale
- A court cannot rewrite a contract between parties unless coercion, fraud or undue influence are pleaded and proved
- Posting of statutory notice must be proved unless receipt is admitted; a mere list of postal packets without a receipt does not prove service
Court orders
#- 1.Temporary injunction restraining the Defendants, their agents and servants from selling by public auction or private treaty or otherwise interfering with the Plaintiff's ownership, possession and interest in LR Kiambu/Municipality Block 5 (Kiamumbi) 3126, Ruiru/Kiu Block 2/7688 and Ruiru/Kiu 7689 pending hearing and determination of the suit
- 2.Costs of the application to the Plaintiff/Applicant
- Jurisdiction invoked
- Inherent jurisdiction to grant interlocutory relief pending hearing of the suit (Land Act statutory power of sale dispute)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Micheal Kagume Gatura v Equity Bank (K) Ltd & another [2019] KEELC 38 (KLR)", Case Analysis (2019). Notice of Motion dated 8th May 2018 (suit filed at Thika). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/38/eng@2019-07-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.