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ELCDismissedNotice of Motion dated 14th December 2021 (ELC suit, Nairobi)· [2022] KEELC 423 (KLR)

Abdulaziz v Monarch Developers Limited & 2 others (Environment and Land Case 426 of 2021) [2022] KEELC 423 (KLR)

Environment and Land Court
24 February 2022
OMOguttu Mboya
5,653 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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A Nairobi buyer who purchased charged land without the bank's consent lost his bid to stop the property's sale.

What this practically means

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Executive summary

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The Plaintiff/Applicant moved the Court by Notice of Motion dated 14th December 2021 seeking temporary injunctions restraining the Defendants from selling, transferring, alienating or interfering with office premises on the 3rd floor, Office Space A3, Doctors Plaza, L.R No. 209/21739, and a mandatory injunction compelling the 2nd Defendant to withdraw statutory notices of sale. The Plaintiff alleged he purchased the property from the 1st Defendant under an Agreement to Lease dated 16th December 2013, paid the full consideration, and was unaware the property was charged to the 2nd Defendant, who had issued statutory notices under Sections 90(2) and 96(2) of the Land Act after the 1st Defendant defaulted on a Kshs. 450,000,000 facility. The 2nd Defendant asserted its chargee rights had ripened and that the transaction with the Plaintiff lacked its consent, invoking privity of contract. The 3rd Defendant, an advocate, denied owing any duty to the Plaintiff. Framing three issues (prima facie case, irreparable loss, balance of convenience), the court applied Mrao, Nguruman and Afraha Education Society. It held no prima facie case existed against the chargee: consent to dealings with charged land is mandatory under Section 88 of the Land Act, and privity barred the Plaintiff's claim. Loss was compensable in money, and the balance of convenience favoured the chargee. The application was dismissed with costs to the 2nd and 3rd Defendants, the ruling to apply in the same terms as in ELC No. E432 of 2021 as the parties had agreed. Judgment delivered by Oguttu Mboya, J, on 24th February 2022 at Nairobi.

Key legal issues

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01

Prima facie case

Holding

The Plaintiff failed to establish a prima facie case against the 2nd Defendant chargee because the transaction between the Plaintiff and the 1st Defendant was conducted without the chargee's consent, and privity of contract bars the Plaintiff from suing on the charge.

Reasoning

The court adopted the Mrao and Nguruman definitions of a prima facie case. It held the 2nd Defendant's chargee rights superseded the 1st Defendant's rights, requiring consent for dealings under Section 88 of the Land Act. The Agreement to Lease lacked such consent, and privity of contract precluded the Plaintiff from enforcing rights under the charge instrument.

p. 10
02

Irreparable loss

Holding

The Applicant would not suffer irreparable loss; any loss is measurable in monetary terms (recovery of purchase price, special damages, damages for breach of contract).

Reasoning

Applying Nguruman and Kenya Commercial Finance Co. Ltd v Afraha Education Society, the court held that loss compensable by damages is not irreparable. Without irreparable harm, a temporary injunction cannot issue regardless of the strength of the prima facie case.

p. 11
03

Balance of convenience

Holding

The balance of convenience tilts in favour of the 2nd Defendant, the legitimate chargee whose statutory rights have ripened.

Reasoning

The loan arrears continue to attract interest and penalties and may outstrip the property's value. The 1st Defendant did not dispute the arrears or the statutory notices, and no evidence showed the loan was being serviced. The Plaintiff failed to exercise due diligence before contracting, leaving the chargee exposed.

p. 11

Legal principles established

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  • A chargor cannot deal with or transact over charged land without the consent of the chargee; such consent is mandatory and statutorily circumscribed under Section 88 of the Land Act, 2012
  • A party not party to a contract cannot maintain proceedings to enforce rights accruing under it (privity of contract)
  • Where damages are an adequate remedy, no temporary injunction should issue

Court orders

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  1. 1.The Notice of Motion Application dated the 14th December 2021 is dismissed
  2. 2.Costs awarded to the 2nd and 3rd Defendants/Respondents only
  3. 3.Ruling to apply in the same terms as in ELC No. E432 of 2021, as agreed by the parties

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 40
  • Land Act, 2012Section 88
  • Land Act, 2012 (2016)Sections 90(2) and 96(2)

Cases cited (12)

  • Mrao Ltd v First American Bank of Kenya Ltd & 2 others
    [2003] eKLR
  • Nguruman Ltd v Jan Bonde Nielsen & 2 others
    [2014] eKLR
  • American Cyanamid Co. v Ethicon Ltd
    [1975] AC 396
  • Ramanlal Trambaklal Hatt v Republic
    [1957] E.A. 332
  • Savings & Loans (K) Limited v Kanyenje Karangaita Gakombe & Another
    [2015] eKLR
  • Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd
    [1915] AC 847
  • Agricultural Finance Corporation v Lengetia Ltd
  • Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & Another
  • William Muthee Muthami v Bank of Baroda
  • Shanklin Pier v Detel Products Ltd
    [1951] 2 KB 854
  • Darlington Bourough Council v Witshire Northern Ltd
    [1995] 1 WLR 68
  • Kenya Commercial Finance Co. Ltd v Afraha Education Society
    [2001] Vol. 1 EA 86
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court; constitutional protection of property rights under Article 40 of the Constitution, 2010 invoked by the Applicant

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, "Abdulaziz v Monarch Developers Limited & 2 others (Environment and Land Case 426 of 2021) [2022] KEELC 423 (KLR)", Case Analysis (2022). Notice of Motion dated 14th December 2021 (ELC suit, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/423/eng@2022-02-24

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