Luke Njiru Kagereki v Industrial & Commercial Development Corporation & another [2019] KEELC 2198 (KLR)
The bottom line
#Kenya's Environment and Land Court dismissed a landowner's attempt to reverse a bank auction, ruling the charge was valid, the sale lawful, and the auction buyer's title protected.
What this practically means
#Executive summary
#Key legal issues
#Validity of the charge
A valid charge existed over the suit property securing the loan advanced to the borrower; the charge, guarantee and letter of offer were to be construed holistically and purposively
The Plaintiff claimed the 1988 charge related to a separate, undisbursed loan to himself, but conceded his application was merely oral. The borrower (PW2) conceded he asked the Plaintiff to charge his land as additional security. The Plaintiff's own pleadings and affidavit in Meru CMCC No. 706/2004 admitted charging the land to secure the borrower's loan, undermining his new position.
Whether the statutory power of sale had arisen
The power of sale had accrued: there was default, and the statutory notices were duly served as admitted by the Plaintiff in cross-examination
The borrower admitted default and his own property was auctioned. The Plaintiff admitted in cross-examination being served with a redemption notice and notification of sale dated 20th March 2007. Since service was admitted, no separate proof of service was needed. The Plaintiff took no steps to redeem the property before the auction.
Limitation of the statutory power of sale
The power of sale was not statute-barred despite the passage of time, as the charge remained subsisting and the debt unpaid
The Plaintiff pleaded over 16 years' delay. Counsel did not pursue the point in submissions nor cite authority. The court held a charge is a continuous security; following Rajnikant Khetshi Shah, so long as the charge subsists and the debt remains unpaid, the cause of action to realize the security remains alive.
Bona fide purchaser protection
The 2nd Defendant's title acquired at the public auction was protected and not liable to impeachment
The 2nd Defendant bought at a public auction in exercise of the statutory power of sale and obtained a title deed. Section 99 of the Land Act immunizes an auction purchaser from suit, requiring no inquiry into default, notices or regularity, and the RLA and RTA provided equivalent protection. Any irregularity in the sale is remediable only in damages against the chargee.
Res judicata
The suit was barred by res judicata under section 7 of the Civil Procedure Act because Runyenjes RMCC No. 31/2001, involving the same subject matter, was dismissed for want of prosecution on 19th July 2012
The court perused the file in the earlier suit and found it was dismissed on 19th July 2012 for want of prosecution on ICDC's application, contradicting the Plaintiff's claim that it was dismissed for want of jurisdiction. Following Njue Ngai, such a dismissal is final and effective as a judgment unless set aside. The earlier suits concerned the same property and charge.
Special damages
The claim for Kshs.400,000/- special damages failed for lack of particularity and proof
The Plaintiff pleaded a global figure without valuing the items under each of four heads and produced no expert reports or credible documentary evidence. Applying Ouma v Nairobi City Council and Ratcliffe v Evans, certainty and particularity in both pleading and proof of special damage are required, and the claim failed.
Legal principles established
#- As long as a valid charge remains undischarged and an amount is owing under it, the chargee's statutory power of sale is not statute-barred; a charge is a continuous security
- A party need not tender evidence to prove a fact admitted by the adverse party
- A chargor prejudiced by a defective or irregular exercise of the statutory power of sale has a remedy only in damages, not in setting aside the sale; a bona fide auction purchaser is protected under section 99 of the Land Act
- Conclusive or definitive findings made on an interlocutory injunction application are not binding on the trial court
- A dismissal for want of prosecution is as good as a final judgment and can found a plea of res judicata
- Special damages must be pleaded with sufficient particularity and strictly proved
Court orders
#- 1.The Plaintiff's suit be and is hereby dismissed in its entirety
- 2.The Plaintiff shall pay the 1st and 2nd Defendants costs of the suit to be taxed by the taxing officer of the court
- 3.Any interim orders in place are hereby vacated in their entirety
- Jurisdiction invoked
- Environment and Land Court jurisdiction over disputes relating to land (charge, sale and title to Kagaari/Weru/1544)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Luke Njiru Kagereki v Industrial & Commercial Development Corporation & another [2019] KEELC 2198 (KLR)", Case Analysis (2019). ELC Case No. 67 of 2017 (Formerly Kerugoya ELC No. 174 of 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/2198/eng@2019-07-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.