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ELCAllowedNot stated in the judgment (Notice of Motion dated 19th April 2017)· [2019] KEELC 4914 (KLR)

Juja Coffee Exporters v National Bank of Kenya [2019] KEELC 4914 (KLR)

High Court of Kenya (Environment and Land Division)
31 January 2019
JOJ.O. Olola
3,050 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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A Kenyan court blocked a bank from selling disputed land because the bank could not produce a valid, properly executed charge document.

What this practically means

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Executive summary

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Juja Coffee Exporters Ltd moved the court by Notice of Motion dated 19th April 2017 seeking a temporary injunction to restrain National Bank of Kenya from exercising a statutory power of sale over Title No. Lamu/Block IV/2, said to be charged to secure outstanding sums of USD 36,095,495.41 and Kshs 12,295,739.50, pending hearing of the suit. The Plaintiff, through the affidavit of its Director Tauhida Tahir Said, contended that no statutory notice under Section 90 of the Land Act, 2012 was issued, that its Principal Director, Ahmed Tahir Sheikh Said, had died on 10th January 2017, and that the surviving directors were willing to negotiate a structured settlement but needed documentation from the Bank. The Bank, in a replying affidavit by Fatuma Mohamed, asserted that the suit property is registered in the name of Lamu Ginners Company Ltd, which offered it as security, and that statutory notices dated 28th April 2015 and 8th April 2016 were duly served. Applying the Giella v Cassman Brown principles and the definition of a prima facie case in Mrao Ltd v First American Bank, the court found that neither party could independently verify the facilities or the authority under which they were obtained, and that the existence, execution and authenticity of the Charge itself remained in doubt. Holding that a statutory power of sale can only be founded on a valid charge instrument, and invoking Section 3(3)(a) of the Law of Contract Act, the court found merit in the application, allowed it with costs on 31st January 2019, preserving the suit property pending production, authentication and verification of the charge and amounts due.

Key legal issues

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01

Whether the Plaintiff established a prima facie case for interlocutory injunction

Holding

The existence and authenticity of the Charge were in doubt; pending its production and authentication the suit property ought to be preserved, so a prima facie case was established.

Reasoning

The Bank asserted the suit property was charged to secure facilities advanced to the Plaintiff, but the Charge document itself was not produced until filing of the defence and its existence and authenticity remained questionable. The surviving directors, whose Principal Director had died, had no knowledge of the Charge's execution and it was incumbent on the Bank to demonstrate proper execution by authorised signatories. A statutory power of sale rests on a valid charge; where the charge's validity is unresolved, preservation is warranted.

p. 4
02

Whether the Charge complied with Section 3(3)(a) of the Law of Contract Act

Holding

A charge over land must be in writing, signed by all parties and attested; absent the charge documents there was no demonstrated intention to create legal relations binding the parties.

Reasoning

The court invoked Section 3(3)(a) of the Law of Contract Act requiring written, signed and attested contracts for dispositions of interests in land. Since the Charge instrument was not placed before the court, there was no clear demonstration of the instrument creating the chargee/chargor relationship or of an intention to be bound, undermining the basis of the statutory power of sale.

p. 4

Legal principles established

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  • A statutory power of sale can only be founded on a valid charge instrument, and the chargee must demonstrate the existence and proper execution of the charge.
  • No suit may be brought on a contract for the disposition of an interest in land unless the contract is in writing, signed by all parties, and the signatures attested by a witness.

Court orders

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  1. 1.The Plaintiff's Notice of Motion application dated 19th April 2017 is allowed
  2. 2.Costs of the application are awarded to the Plaintiff

Authorities

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Legislation

  • Land ActSection 90(1)(2)(b)
  • Law of Contract ActSection 3(3)(a)

Cases cited (3)

  • Giella –vs- Cassman Brown & Company Ltd
    (1973) EA 358
  • Mrao Limited –vs- First American Bank Ltd & 2 others
    (2003) KLR 125
  • Nguruman Limited –vs- Jan Bonde Nielsen & 2 Others
    (2014) eKLR
Jurisdiction invoked
Inherent jurisdiction of the High Court to grant interlocutory injunctive relief (application under Notice of Motion; statutory framework of the Land Act, 2012 and the Law of Contract Act invoked)

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, "Juja Coffee Exporters v National Bank of Kenya [2019] KEELC 4914 (KLR)", Case Analysis (2019). Not stated in the judgment (Notice of Motion dated 19th April 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4914/eng@2019-01-31

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