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ELCDismissedNot stated in judgment (former Molo CM ELC 45 of 2020 referenced)· [2021] KEELC 3929 (KLR)

Danson Mwangi v Afya Cooperative Savings and Credit Society Limited & George Njoroge Muiruri t/a Leakey Auctioneers [2021] KEELC 3929 (KLR)

Environment and Land Court
18 March 2021
DOD. O. Ohungo
1,700 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Environment and Land Court in Nakuru refused to stop a bank from selling charged land, holding that valuation objections come too early when no sale has been scheduled.

What this practically means

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Executive summary

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This ruling disposed of the plaintiff's Notice of Motion dated 10th November 2020 seeking a temporary injunction restraining the defendants from advertising for sale, selling or otherwise interfering with land parcel LR No. Elburgon/Turi Block 5/196(Turi), charged to secure a loan of KShs 4,500,000 from the 1st defendant. The plaintiff admitted default but attributed it to ill health, a harsh economy and later the COVID-19 pandemic, and argued that the defendants' proposed sale breached Section 97 of the Land Act, Rule 11(1)(b)(x) of the Auctioneers Rules 1997 (12-month valuation currency) and the Valuers Act, since the valuers were allegedly not registered. The 1st defendant contended that the plaintiff had defaulted, statutory notices were served, and a dispute over the amount due is no ground to restrain a statutory power of sale. Applying the Nguruman sequential test, the court held that the plaintiff admitted default and receipt of statutory notices, and that ill health and COVID-19 did not excuse him since both defaults predated the pandemic. Because the sale scheduled for 11th September 2020 did not proceed (having been halted by Molo CM ELC 45 of 2020) and no new sale was scheduled, the valuation provisions were not engaged and the report dated 20th November 2020 could not be interrogated. No prima facie case was established, so the other limbs fell away. The application was dismissed with costs to the defendants.

Key legal issues

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01

Prima facie case for interlocutory injunction

Holding

The plaintiff failed to establish a prima facie case; he admitted default and receipt of statutory notices, and his valuation objections were premature as no sale was scheduled

Reasoning

The court applied the Nguruman sequential test. The plaintiff acknowledged default and receipt of notices. Ill health and COVID-19 did not excuse default, both defaults predating the pandemic. The valuation report of 20th November 2020 was not shown to be intended for use in any scheduled sale, so interrogating it was futile and a blanket injunction could not issue.

p. 2
02

Compliance with statutory valuation requirements

Holding

The combined effect of Section 97 of the Land Act and Rule 11(1)(b)(x) of the Auctioneers Rules 1997 is that a reserve price must be set on a valuation not more than 12 months old, but only where a sale is scheduled

Reasoning

Since the 11th September 2020 sale did not proceed and no new sale was scheduled as at filing, the valuation provisions were not engaged. The defendants remain under a duty to ensure a valid valuation when a new sale is scheduled, but the existing report could not be challenged in a vacuum.

p. 2
03

Excuse for default (ill health, COVID-19)

Holding

Ill health and the pandemic did not excuse the default; no evidence of illness was produced and both defaults occurred before the pandemic

Reasoning

The court held that the pandemic was a recent development occurring after the applicant had defaulted, and no particularised effect on the applicant beyond global effects was demonstrated. The explanation was therefore 'neither here nor there' in justifying non-payment under the charge.

p. 2

Legal principles established

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  • A chargee's obligations under Section 97 of the Land Act and Rule 11(1)(b)(x) of the Auctioneers Rules 1997 to obtain a fresh valuation arise only once a sale is scheduled; without a scheduled sale, a valuation objection cannot ground an injunction
  • The three limbs of the interlocutory injunction test must be considered sequentially, and failure at the first limb ends the inquiry

Court orders

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  1. 1.The Notice of Motion dated 10th November 2020 is dismissed
  2. 2.Costs of the application to the defendants

Authorities

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Legislation

  • Land ActSection 97
  • Auctioneers Rules 1997Rule 11(1)(b)(x)
  • Valuers Act Cap 532Section 8(2) and (9)

Cases cited (6)

  • Nguruman Limited v Jan Bonde Nielsen & 2 Others
    [2014] eKLR
  • Mrao Ltd v First American Bank of Kenya Ltd & 2 others
    [2003] eKLR
  • Samuel Mwehia Gitau vs. Elijah Kipng'eno Arap Bii & another
    [2017] eKLR
  • David Mburu Githere v Jamii Bora Bank Limited
    [2017] eKLR
  • Alghussein Establishment vs Eton College
    [1991] 1 ALL ER 267
  • Imperial Health Sciences Kenya Limited v Wiseway Freighters Limited
    [2019] eKLR
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court (ELC Nakuru); prior interim orders by Molo subordinate court vacated for lack of jurisdiction

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, "Danson Mwangi v Afya Cooperative Savings and Credit Society Limited & George Njoroge Muiruri t/a Leakey Auctioneers [2021] KEELC 3929 (KLR)", Case Analysis (2021). Not stated in judgment (former Molo CM ELC 45 of 2020 referenced). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/3929/eng@2021-03-18

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