Esther Kemuma Mogaka v Diamond Trust Bank of Kenya Ltd & 2 others [2020] KEELC 1184 (KLR)
The bottom line
#A Kenyan court ruled that a missed auction notice doesn't cancel a bank's property sale, especially when the borrower admits owing the debt.
What this practically means
#Executive summary
#Key legal issues
#Effect of non-compliance with Rule 15 of the Auctioneers Rules 1997 on a completed public auction
Non-compliance with Rule 15 is a mere irregularity that does not invalidate the auction; the remedy of a damnified party is damages against the auctioneer under section 26 of the Auctioneers Act
The court reviewed authority including Eric Odindo v National Bank of Kenya, Franklin Gambo Mwagambo v Equity Bank and Jacob Ochieng Muganda v Housing Finance, which treat Rule 15 requirements as procedural precedents whose breach does not clog the chargee's statutory power of sale or invalidate the sale. It expressly concurred with that reasoning and applied it to the Applicant's complaint of non-service of the Notification of Sale.
Whether the Applicant established a prima facie case for a temporary injunction
No prima facie case was established because the Applicant admitted the debt, the crystallization of the statutory power of sale, service of statutory notices and the advertisement of the sale; the only complaint was non-service of the Notification of Sale, which does not invalidate the sale
Applying Giella v Cassman Brown and Mrao v First American Bank, the court found that the admitted debt and crystallized power of sale, coupled with the finding that Rule 15 non-compliance is a mere irregularity, meant no right apparently infringed was demonstrated. Giro Commercial Bank v Mutesi was applied: a mortgagee cannot be restrained from exercising the power of sale merely because the debt is disputed or the mortgagor objects to the manner of sale.
Whether the alternative status quo order could be granted
No; granting status quo would amount to granting an injunction without the Plaintiff satisfying the injunction conditions, and the Plaintiff had not come to equity with clean hands
The court noted that although the Plaintiff offered an undertaking as to damages, she had made no effort to settle the outstanding loan despite admitting indebtedness. Invoking the clean hands maxim, the court declined the alternative relief as it would produce the same effect as an injunction without the requisite showing.
Legal principles established
#- Failure to comply with Rule 15 of the Auctioneers Rules 1997 alone does not render a sale by public auction null and void; it is a mere irregularity with the remedy lying in damages under section 26 of the Auctioneers Act
- Where the first Giella condition (prima facie case) is not satisfied, the court need not consider the remaining conditions
Court orders
#- 1.Dismissal of the Plaintiff's Notice of Motion dated 24th September 2019 seeking an injunction or maintenance of status quo
- 2.Costs of the application to the 1st Defendant/Respondent
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court over the suit property L.R No. KISII MUNICIPALITY/BLOCK 111/334
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Esther Kemuma Mogaka v Diamond Trust Bank of Kenya Ltd & 2 others [2020] KEELC 1184 (KLR)", Case Analysis (2020). Kisii ELC Case (suit number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1184/eng@2020-09-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.