Shalom Agencies Limited & another v Family Bank Limited [2019] KEELC 4822 (KLR)
The bottom line
#Kenya's Environment and Land Court ruled borrowers who admit default cannot stop a bank from selling their land unless they pay the disputed amount into court.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the applicants established a prima facie case with a probability of success justifying a temporary restraining order against exercise of the statutory power of sale
- 2.Whether the applicants demonstrated irreparable loss not compensable by damages, and where the balance of convenience lies
- 3.Whether the court can compel the respondent to reschedule or vary the payment terms
- 4.Whether the defendant should be ordered to furnish a statement of account or accounts be taken
Key legal issues
#Whether a temporary injunction should issue where default is admitted
No; where default is admitted or demonstrated, a restraining order cannot issue unless the amount owing is paid into court or is prima facie excessive
The court applied the Halsbury's Laws of England Vol. 32(4th Edn) para 725 principles, noting the applicants conceded default, did not pay the amount claimed into court, and did not demonstrate that the amount claimed was excessive. The statutory power of sale had arisen and all requisite notices had been served.
Whether the matrimonial home/livelihood argument amounts to irreparable loss
No; property offered as security, even a matrimonial home, is offered on the undertaking that it may be sold on default, and its loss is calculable and compensable in damages
Relying on Wycliffe Mutali Okwaro v Kenya Women Micro Finance Bank (citing Maltex Commercial Supplies v Euro Bank) and Andrew Muriuki Wanjohi v Equity Building Society, the court held that chargors who evaluated the property in monetary terms and offered it as security cannot complain that loss is incapable of compensation; sympathy cannot displace the law.
Whether the court can compel the lender to reschedule repayment
No; rescheduling requires voluntary negotiation, and the court will not intervene absent contractual provision for negotiation or other dispute-resolution modes
The applicants asserted a statutory duty on the lender to allow rescheduling where a borrower shows commitment to pay, but cited no specific statutory provision or decided case law. The court held that in the absence of any contractual basis, the applicable law must simply be followed and applied.
Legal principles established
#- A mortgagee/chargee will not be restrained from exercising the power of sale merely because the amount due is in dispute or the mortgagor objects to the manner of sale; restraint lies only where the mortgagor pays the amount claimed into court or the claim is prima facie excessive
- Property offered as security, including a matrimonial home, stands the risk of sale upon default and its loss is compensable in damages
Court orders
#- 1.The application dated 9.11.2016 is dismissed entirely
- 2.Costs of the application awarded to the defendant/respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Section 1A, 1B, 3, 3A and 63(e) of the Civil Procedure Act (Cap 21) and Order 40 Rules 1(a), 2, 3 and 9
Relief refused
#Prayer 3 - temporary restraining order against sale of SIAYA/PAP ORIANG/1242 and EAST ALEGO/PAP ORIANG/1391
The applicants admitted default, did not pay the amount claimed into court, and the amount claimed was not shown to be excessive
Prayer 4 - order that the defendant furnish a true statement of payments received and outstanding balance, or in the alternative taking of accounts
The application was found to be entirely without merit
Prayer 5 - costs of the application
Costs were awarded to the respondent instead
Costs
The application is dismissed with costs to the defendant/respondent
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Where default is admitted or demonstrated, it becomes difficult to issue a restraining order.
He will be restrained however if the mortgagor pays the amount claimed in court, that is, the amount the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.
Any property whether it is a matrimonial or spiritual house, which is offered as security for loan/overdraft, is made on the undertaking that the same stands the risk of being sold by the lender if default is made on the payment of the debt secured.
It is therefore the courts finding, in light of the foregoing, that the application herein entirely is without merit. The same is hereby dismissed with costs.
Issues in the judgment
#The judgment does not state the suit number or case number of the main suit or the motion, only the date of the application
Respondent's name misspelt as 'FAMILY BANK LIMTED' on the face of the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Shalom Agencies Limited & another v Family Bank Limited [2019] KEELC 4822 (KLR)", Case Analysis (2019). Notice of Motion dated 9.11.2016, filed 10.11.2016 (suit number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4822/eng@2019-01-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.