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ELCDismissedNot stated in judgment (plaint dated 12th May 2014)· [2019] KEELC 1549 (KLR)

Daniel Gachoki Muchira v Agricultural Finance Corporation & 2 others [2019] KEELC 1549 (KLR)

Environment and Land Court
20 September 2019
ECE.C. Cherono
2,557 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The plaintiff, a guarantor/chargor who had offered title to parcel KIRINYAGA/GATHIGIRIRI/217 as collateral for a group loan of Ksh. 1.9 million from the 1st defendant, sued to annul the public auction of the property scheduled for 15th May 2014, sought accounts, discharge of the property and a permanent injunction, alleging failure of statutory notice and fraud. He had earlier and contemporaneously pursued other suits to stop the sale. The 1st and 2nd defendants defended, asserting valid statutory notices and a lawful auction. The 3rd defendant, joined later, counter-claimed, having bought the property at the auction for Ksh. 1.3 million and obtained a certificate of sale. The court framed five issues and held that: statutory notices under Section 90 of the Land Act were duly served and admitted in cross-examination; the injunction order issued on 15th May 2014 was never served on the defendants, so the auction was lawful; the plaintiff was indebted as shown by the demand and statutory notices, having adduced no evidence of repayment; the 3rd defendant was a purchaser protected under Section 99 of the Land Act whose title was good and in respect of whom the plaintiff's equity of redemption was extinguished on the fall of the hammer, his remedy lying only in damages; and no fraud, illegality or irregularity was pleaded or proved to the strict standard required by R.G. Patel v Lalji Makanji. The suit was dismissed with costs and the 3rd defendant's counter-claim was allowed as prayed, with costs. Judgment delivered at Kerugoya on 20th September 2019 by E.C. Cherono, Judge.

Key legal issues

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01

Legality of the public auction of 15th May 2014

Holding

The auction was lawful; statutory notices were served and the court order issued on the auction date was never served on the defendants

Reasoning

The court found the Section 90 Land Act notice dated 10th September 2008 and the 45-day redemption notice of 11th December 2012 were served and admitted by the plaintiff. The injunction order issued by Ombwayo J on 15th May 2014 was not served on the defendants during the auction, so the sale proceeded lawfully.

p. 3
02

Indebtedness of the plaintiff to the 1st defendant

Holding

The plaintiff was indebted as evidenced by the demand and statutory notices

Reasoning

The plaint admitted non-repayment as agreed, and although the plaintiff claimed the loan was subsequently repaid from realisation of other securities and contributions, he adduced no evidence of payments or of amounts realised from other securities and did not contest the outstanding figures in the notices.

p. 3
03

Whether the 3rd defendant was an innocent purchaser for value with good title

Holding

Yes; a purchaser at an auction in exercise of statutory power of sale is immunized from suit under Section 99 of the Land Act and obtains good title

Reasoning

Relying on Joyce Wairimu Karanja and Simon Njoroge Mburu, the court held that once the statutory power of sale was legally activated, the purchaser is protected, the equity of redemption was extinguished on the fall of the hammer, and the plaintiff's remedy, if any, lay in damages. The 3rd defendant paid Ksh. 1.3 million in full and received a certificate of sale.

p. 4
04

Fraud, irregularity or illegality in the exercise of statutory power of sale

Holding

None pleaded or proved to the required standard

Reasoning

The plaintiff neither pleaded nor proved fraud, illegality or irregularity. Citing R.G. Patel v Lalji Makanji, the court held that allegations of fraud must be strictly proved to a standard above a mere balance of probabilities, which the plaintiff failed to meet.

p. 4

Legal principles established

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  • Once a statutory power of sale is legally activated, irregularity in the sale is remediable only in damages, and the purchaser is immunized under Section 99 of the Land Act
  • A mortgagor's equity of redemption is extinguished upon the fall of the hammer in a public auction
  • Allegations of fraud must be strictly proved to a standard above a mere balance of probabilities

Court orders

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  1. 1.The plaintiff's suit is dismissed with costs
  2. 2.The 3rd defendant's counter-claim is allowed as prayed with costs

Authorities

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Legislation

  • Land ActSection 90
  • Land ActSection 99
  • Land Act, 2012Section 104

Cases cited (3)

  • Joyce Wairimu Karanja Vs James Mburu Ngure & 3 others
    (2018) e K.L.R
  • Simon Njoroge Mburu Vs Consolidated Bank of Kenya Ltd
    (2014) e K.L.R
  • R.G. Patel Vs Lalji Makanji
    (1957) E.A 314
Jurisdiction invoked
Original civil suit by plaint (land dispute); no specific constitutional provision stated

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 Gachoki Muchira v Agricultural Finance Corporation & 2 others [2019] KEELC 1549 (KLR)", Case Analysis (2019). Not stated in judgment (plaint dated 12th May 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/1549/eng@2019-09-20

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