Makatiat Limited v Liquidaton Agent Trade Bank Ltd (In Liquidation) & 2 others [2019] KEELC 2684 (KLR)
The bottom line
#A Kenyan court cancelled a fraudulent land auction but ruled the bank could still sell the property properly once the actual debt is settled.
What this practically means
#Executive summary
#Key legal issues
#Whether the statutory power of sale had arisen
The statutory notice dated 5 May 2000 under Section 74 of the Registered Land Act was validly issued and served; no fresh notice under the Land Act 2012 was needed, and the 45-day notification of sale and advertisements complied with the Auctioneers' Rules, so the right of sale had arisen
The 5 May 2000 letter expressly purported to be a statutory notice under Section 74 of the Registered Land Act and gave three months' notice. Mr Kiplagat acknowledged receipt in cross-examination, which settled the question of issuance and service. The court held a statutory notice is issued only once, relying on the Executive Curtains decision, and found the 45-day redemption notice and the two newspaper advertisements of 17 and 31 October 2017 satisfied the rules. The claim of a 3-day notice failed because there were two advertisements.
Whether the amount claimed by the chargee (Kshs. 418,666,702.20) is justified
The court was unable to determine with finality what the plaintiff owes because the 1st defendant did not produce statements of accounts; the parties were directed to negotiate, arbitrate, or file a suit to settle the amount
The correspondence showed a history of contested figures: the plaintiff offered Kshs. 20 million, the chargee countered with Kshs. 34,288,087.50 subject to conditions, and later threatened to rescind and claim Kshs. 418 million. DW-1 conceded bank statements were not available. Without statements of account the court could not affirm the demand. The claim that the negotiated figure excluded interest from 2005 remained unsubstantiated.
Whether the auction of 3 November 2017 was properly conducted
The sale was fraudulent and set aside: the 3rd defendant did not meet the conditions of sale (deposit of Kshs. 2 million by cash or banker's cheque), the auctioneer topped up the 25% deposit from his own funds, and the auction was adjourned to an afternoon session not notified to the public
The auctioneer conceded the 3rd defendant deposited neither cash nor a banker's cheque but instead advocate's personal cheques, an exception never advertised, so the 3rd defendant did not qualify to bid. Accepting Mr Muyundo's personal cheques while PW-1 was denied bidding showed unequal treatment suggesting collusion. The auctioneer drew his own cheques for Kshs. 1,725,000 to make up the 25% deposit, which the court found irregular and indicative of collusion. The adjournment to a publicised-afternoon session violated the integrity of the auction as condemned in Maina Wanjigi.
Legal principles established
#- A statutory notice under the repealed Registered Land Act does not require reissuance under the Land Act 2012 after repeal; a statutory notice is issued only once
- There is no legal requirement that a public auction be held where the property is located or that it cannot be held in an office, so long as the public is invited and allowed access
- Conditions of sale at a public auction must apply equally to all bidders; preferential treatment of a bidder may found a presumption of collusion between the auctioneer and the bidder and vitiates the sale
- Once an auction has commenced it must continue without interruption until finalised, or abort; it cannot be adjourned to an unannounced afternoon session to await higher bids
- A condition in auction advertisements reserving to the auctioneer the right to refuse the highest bid without reason is inconsistent with Rule 17(4) of the Auctioneers' Rules and is illegal
- A chargee claiming a specific amount owed must provide statements of account to justify the claim; absent accounts the court cannot affirm the sum claimed
Court orders
#- 1.The sale of the suit land conducted on 3 November 2017 is set aside
- 2.Cancellation of the sale of all that parcel of land known as Nakuru/Githiriga/124-Kuresoi conducted on 3/11/2017
- 3.The parties to revert to the position they were in before the auction sale
- 4.The plaintiff and 1st defendant directed to negotiate on the amount owing, and failing agreement, to appoint an arbitrator or file a suit so that what is owed may be resolved
- 5.Costs of the suit awarded to the plaintiff jointly and/or severally against the 1st and 2nd defendants; no orders for or against the 3rd defendant on costs
- Jurisdiction invoked
- Original civil suit before the Environment and Land Court; no specific constitutional provision invoked in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Makatiat Limited v Liquidaton Agent Trade Bank Ltd (In Liquidation) & 2 others [2019] KEELC 2684 (KLR)", Case Analysis (2019). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/2684/eng@2019-06-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.