Waithira Kimondo &another; v Vigilant Auctioneers & 2 others [2019] KEELC 114 (KLR)
The bottom line
#A Kenyan court upheld a family land charge to KCB but blocked the bank's sale because it never proved it served the required statutory notices.
What this practically means
#Executive summary
#Key legal issues
#Validity of the charge
The charge was valid; the 1st Plaintiff was aware of the amount charged and executed the charge by thumbprint.
The loan agreement, Land Control Board consent and charge all disclosed the sum of Kshs 1,249,600/-. The 1st Plaintiff obtained the Land Control Board consent and thumbprinted the charge before an advocate. The allegation of forgery was unsupported by evidence, and he who alleges must prove to the standard of balance of probabilities. In the absence of contrary evidence, the thumbprint was taken as genuine.
Lawfulness of the exercise of the statutory power of sale
The statutory power of sale was not lawfully exercised because statutory notices were not proved to have been served on the 1st Plaintiff.
Although demand letters were allegedly sent to the Nyeri address, DW1 failed to demonstrate service and produced no affidavit of service for the demand letters, auctioneers' letter and notification of sale. The guarantor and registered proprietor therefore was not duly served, though the bank retains liberty to exercise the power strictly in accordance with the law.
Proof of fraud
Fraud was pleaded but not proved to the required standard.
Applying R. G. Patel v. Lalji Makanji, allegations of fraud require strict proof beyond a mere balance of probabilities. No evidence of misrepresentation was found; the amounts were disclosed in all executed documents, and the valuation argument failed as the property was valued in 2005 at Kshs 1.8 million market value.
Account of monies owing
An account of monies owing to the 2nd Defendant by the 3rd Defendant was granted.
The outstanding loan was stated to be Kshs 5.5 million after the induplum rule, reduced from Kshs 59 million, but the Court was not furnished with evidence of full repayment or of how proceeds from the auctioned assets were factored in. The bank must account to the borrower and guarantors.
Legal principles established
#- Allegations of fraud must be strictly proved; something more than a mere balance of probabilities is required.
- A bank exercising statutory power of sale must serve statutory notices on the chargor/guarantor, failing which the exercise is unlawful.
- Service of statutory notices must be proved by evidence such as an affidavit of service.
- The lender is obliged to account to the borrower and guarantors for auctioned assets' proceeds in computing the outstanding loan.
Court orders
#- 1.Prayer a (permanent injunction) is declined
- 2.Prayer b (declaration that the charge is void ab initio and order to discharge the charge) is declined
- 3.Prayer c (an account of the monies owing to the 2nd Defendant by the 3rd Defendant) is allowed
- 4.The 2nd Defendant retains its liberty to exercise its statutory power of sale but with strict adherence to the law
- 5.No orders as to costs
- Jurisdiction invoked
- Original civil suit under the Environment and Land Court's jurisdiction over land charges and dealings (specific provision not cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Waithira Kimondo &another; v Vigilant Auctioneers & 2 others [2019] KEELC 114 (KLR)", Case Analysis (2019). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/114/eng@2019-12-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.