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ELCDismissedMombasa ELC (suit filed 23 January 2020; application dated 23 January 2020)· [2020] KEELC 2312 (KLR)

Margaret Muthoni Njoroge v Housing Finance Company Limited & another [2020] KEELC 2312 (KLR)

Environment and Land Court
20 May 2020
MSMunyao Sila
5,562 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~22 min to read original · ~4 min brief

The bottom line

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A Mombasa court allowed a bank to proceed with selling a family home because the wife could not prove she had a legal right to block the sale.

What this practically means

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Executive summary

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The plaintiff, wife of the 2nd defendant, sought an interlocutory injunction to restrain the 1st defendant bank from selling LR No. MN/I/5976, Nyali, under a charge dated 11 November 2011 securing KShs. 23,400,000/=. She argued she never consented to the charge, was unaware of it, and that the chargee failed to issue the requisite statutory and auctioneers' notices and to carry out a valuation. She also invoked trust, beneficial interest, Article 45(3) of the Constitution and the best interests of her children. The 1st defendant contested the court's jurisdiction, contending the dispute was purely commercial, and asserted the suit property was charged before the Land Act, 2012, when spousal consent was not required; that the loan was taken to purchase the property itself, which the plaintiff witnessed in the Letter of Offer; and that all notices (statutory notice, 40-day notice to sell, auctioneer's 45-day redemption notice) and a valuation dated 14 November 2019 were in place. The court held it has jurisdiction under Article 162(2)(b) and Section 13(2)(d) of the ELC Act over the legality of charges and auction sales, distinguishing the Co-operative Bank v Kangethe authority. It found no prima facie case: spousal consent was not required pre-2012, the plaintiff knew of the charge, all notices were duly issued and valuation undertaken. It advised that auctioneers' advertisements should disclose valuation details, valuer and reserve price for transparency. The application was dismissed with costs, leaving the 1st defendant free to exercise its statutory power of sale while the suit proceeds.

Key legal issues

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01

Jurisdiction of the ELC over charge and chargee's sale disputes

Holding

The court has jurisdiction under Article 162(2)(b) and Section 13(2)(d) of the ELC Act, since a charge is a contract over land and an instrument granting an enforceable interest in land

Reasoning

Counsel for the 1st defendant relied on Co-operative Bank v Patrick Kangethe to argue lack of jurisdiction, but the court distinguished it as principally about accounts. Section 13(2)(d) of the ELC Act covers contracts, choses in action and instruments granting enforceable interests in land; a charge falls within this. The manner of exercise of a chargee's power of sale is governed by the Land Act and Land Registration Act, both of which vest jurisdiction in the ELC.

p. 4
02

Spousal consent for a charge created before the Land Act, 2012

Holding

Spousal consent was not required before the Land Act, 2012; the charge of 2011 is not invalid for lack of it, and the plaintiff knew of the charge having witnessed the Letter of Offer

Reasoning

The Land Act, 2012, effective 2 May 2012, first introduced spousal consent requirements. Earlier authorities (Matara and Waweru) declined injunctions on charges predating it. Further, the loan in default was the very loan used to purchase the suit property, so no trust existed in the plaintiff's favour before the charge; the plaintiff signed the Letter of Offer as a witness and cannot claim ignorance.

p. 4
03

Compliance with statutory and auctioneers' notices and valuation

Holding

The chargee prima facie issued the Section 90 statutory notice, the Section 96(2) 40-day notice to sell, the auctioneer's 45-day redemption notice/notification of sale, and obtained a valuation within 12 months of sale

Reasoning

The statutory notice dated 18 February 2019 was copied to the plaintiff with proof of postage; the 40-day notice dated 28 May 2019 was also copied to her; the auctioneer combined the notification of sale with the 45-day redemption notice, which the court saw nothing wrong in; the valuation of 14 November 2019 by Joe Musyoki Consultants was within 12 months of the intended sale, satisfying Rule 11(b)(x).

p. 5
04

Best interests of children as a basis for injunction

Holding

The best-interests-of-children argument cannot support an injunction where the property was purchased through the defaulted loan

Reasoning

The court held that one cannot purchase an item through a loan then claim entitlement to default because a child benefits from the property, describing the argument as clutching at straws, while leaving the plaintiff liberty to persuade the court at trial.

p. 6

Legal principles established

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  • The Environment and Land Court has jurisdiction to determine the legality of a charge and the manner of a chargee's exercise of its statutory power of sale
  • Spousal consent to the creation of a charge was not a requirement before the Land Act, 2012 came into effect
  • A plaintiff who witnessed the Letter of Offer for a loan used to purchase the charged property cannot claim ignorance of the charge

Court orders

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  1. 1.The application dated 23 January 2020 seeking an injunction was dismissed
  2. 2.Costs of the application awarded to the 1st defendant
  3. 3.The interim injunction lapses; nothing stops the 1st defendant from proceeding to sell the suit property if it so wishes

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 45(3)
  • Constitution of Kenya, 2010Article 53
  • Constitution of Kenya, 2010Article 162(2)(b)
  • Constitution of Kenya, 2010Article 165(5)
  • Land Act, 2012Sections 90, 96(2), 96(3), 97(2)
  • Environment and Land Court Act, 2011Section 13(2)
  • Land Registration Act, 2012jurisdiction provisions
  • Auctioneers Rules, 1997Rules 11(b)(x), 15(b), (c), (d)

Cases cited (5)

  • Co-operative Bank of Kenya Limited vs Patrick Kangethe Njuguna & 5 Others
    (2017) eKLR
  • Mugo Muiru Investment Limited vs EWB & 2 Others
    (2017) eKLR
  • Lydia Nyambura Mbugua vs Diamond Trust Kenya Limited
    Nakuru ELC No. 296 of 2013 (ruling of 20 September 2018) (2018) eKLR
  • Stella Mokeira Matara vs Thaddeus Mose Mangenya & Another
    Civil Appeal No. 63 of 2014 (2016) eKLR
  • Elizabeth Wanjiru Waweru vs John Waweru Chege & 3 Others
    (2016) eKLR
Jurisdiction invoked
Article 162(2)(b) of the Constitution and Section 13 of the Environment and Land Court Act, 2011

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Margaret Muthoni Njoroge v Housing Finance Company Limited & another [2020] KEELC 2312 (KLR)", Case Analysis (2020). Mombasa ELC (suit filed 23 January 2020; application dated 23 January 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2312/eng@2020-05-20

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