Jan & Josh Company Limited v Equity Bank Limited [2021] KEELC 4487 (KLR)
The bottom line
#A Kenyan court ordered a bank to pay Kshs 3.72 million in damages for unlawfully cancelling a property sale after the buyer had already paid in full.
What this practically means
#Executive summary
#Key legal issues
#Validity of the agreement of sale notwithstanding alleged want of service of statutory notice
The agreement was valid; notice was duly served under clause 30.3 of the charge which deemed service effected by registered post seven working days after posting even if returned undelivered
Clause 30.3 of the charge expressly deemed notices served by registered post duly served after seven working days notwithstanding non-delivery, and required only proof of proper addressing and posting. Section 69(3) of the ITPA allowed the parties to vary the statutory service mode. Having varied section 102(2), the defendant could not invoke section 102(2)(d). The power of sale had therefore arisen when the agreement was made.
Whether the defendant breached the agreement
Yes; the purported rescission was illegal. The loan had not been fully repaid at the date of rescission and the equity of redemption was already extinguished
The borrower's loan account statement showed the loan was not completed by 18th November 2010, so the claimed redemption was untrue. In any event the equity of redemption had been extinguished upon the valid sale, so allowing redemption was at the defendant's own risk. The rescission therefore had no basis in law and constituted breach.
Assessment of damages for loss of bargain
General damages of Kshs. 3,500,000/= assessed on an open market value of Kshs. 18,000,000/= (Acumen Valuers), less purchase price of Kshs. 14,500,000/=; special damages of Kshs. 220,000/= proved and awarded
The plaintiff's reliance on a post-rescission offer of Kshs. 26,500,000/= and a valuation prepared in contemplation of suit was unpersuasive, especially given an earlier valuation of Kshs. 18,000,000/= six months prior with no explanation for the steep rise. The court did the best it could for the plaintiff using the earlier valuation. Special damages for legal and valuation fees were proved.
Legal principles established
#- Where a charge varies the statutory mode of service of notices (permitted under section 69(3) of the ITPA), the chargee cannot rely on the unvaried statutory service provision when it suits it
- Upon a valid agreement of sale by a mortgagee in exercise of statutory power of sale, the chargor's equity of redemption is extinguished and the mortgagee cannot thereafter allow redemption
Court orders
#- 1.Judgment for the plaintiff against the defendant for Kshs.3,500,000/= general damages for breach of contract with interest at court rates from the date of judgment until payment in full
- 2.Kshs.220,000/= special damages with interest at court rates from the date of filing suit until payment in full
- 3.Costs of the suit to the plaintiff
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a contract for sale of land (suit property L.R No. 15065/54, Title No. I.R 79073)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Jan & Josh Company Limited v Equity Bank Limited [2021] KEELC 4487 (KLR)", Case Analysis (2021). Not stated in the excerpt (Nairobi ELC suit filed 1st February 2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/4487/eng@2021-01-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.