Augustine L Okechi & another v Letshego Kenya Limited [2019] KEELC 5060 (KLR)
The bottom line
#Kenyan borrowers in arrears cannot block a lender's sale of charged land by merely disputing the loan amount without solid contract documents.
What this practically means
#Executive summary
#Key legal issues
#Whether the Applicants established a prima facie case based on an alleged Kshs.10,000,000 loan
No. The contract documents (loan application and letter of offer) showed Kshs.5,000,000; the 10,000,000 figure rested only on a search certificate, which is not a contract document
The court examined the loan application and letter of offer, both showing Kshs.5,000,000. The only evidence for the higher figure was a land registry search certificate showing the amount charged, which is not a contract document. Ironically, the Applicants' own annexture A.L.O-2, meant to be the charge documents, turned out to be a repayment schedule summary also showing 5,000,000. The court concluded the higher figure was a creation of the Applicants and that the application's foundational aspects were wrong or misleading.
Whether an injunction could issue to restrain exercise of the mortgagee's power of sale where the amount due is disputed and the borrowers are in arrears
No. Dispute over the amount owed is not a ground to restrain sale; the Applicants were in arrears and did not deposit the amount claimed into court
Relying on Halsbury's Laws of England Vol. 32 (paragraph 725) and the Euro Bank decision, the court held that a mortgagee is not restrained from selling merely because the debt is disputed. The repayment schedule summary showed substantial monthly shortfalls, establishing default. Since default was demonstrated, an injunction could not issue, and the Applicants had not paid the amount claimed into court as the exception requires.
Whether damages were an inadequate remedy
Damages were adequate; the Applicants knowingly offered the property as security and any loss is quantifiable in monetary terms
The court found the Applicants had offered the property as security and knew or ought to have known it would be sold upon default. Any loss flowing from a sale could readily be quantified and compensated in damages, following Wilfred Oanda Kirochi v David Pius Mugamba. Having failed on prima facie case, irreparable harm and (as found) the balance of convenience, the Applicants could not meet the threshold for an interlocutory injunction.
Legal principles established
#- A search certificate from the land registry is not a contract document and cannot authoritatively indicate the amount agreed between lender and borrower
- Where default in repayment is demonstrated or admitted, an injunction should not be granted to the mortgagor
- If damages can suffice, an injunction should not be granted
- A mortgagee will not be restrained from exercising the power of sale merely because the amount due is in dispute, unless the mortgagor pays the amount claimed into court
Court orders
#- 1.Prayers 1 and 2 of the Notice of Motion deemed spent
- 2.The application dated 3/10/2017 dismissed
- 3.Costs of the application awarded to the Respondent
- Jurisdiction invoked
- Sections 1, 1B, 3, 3A and 63e of the Civil Procedure Act (Cap 21); Order 40 Rules 1, 2, 3 of the Civil Procedure Rules; Article 159 of the Constitution of Kenya
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Augustine L Okechi & another v Letshego Kenya Limited [2019] KEELC 5060 (KLR)", Case Analysis (2019). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/5060/eng@2019-05-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.