Gaman Ali Mohamed Gaman v Monarch Developers Limited & 2 others [2022] KEELC 925 (KLR)
The bottom line
#A Nairobi court refused to stop a bank from selling Doctors Plaza because the buyer's lease deal was made without the bank's consent, and any loss could be repaid in money.
What this practically means
#Executive summary
#Key legal issues
#Whether the Plaintiff established a prima facie case against the 2nd Defendant (chargee)
No prima facie case; the Plaintiff's rights derive from an agreement to lease with the chargor made without the chargee's consent, and no privity of contract exists between the Plaintiff and the chargee
The court applied the Mrao definition of a prima facie case. It found the suit property was duly charged to the 2nd Defendant following a take-over of the facility from Diamond Trust Bank. The chargee's rights superseded the chargor's, and section 88 of the Land Act required the chargee's written consent for any transfer. The Plaintiff transacted only with the 1st Defendant without such consent; the doctrine of privity bars the Plaintiff from enforcing rights under the charge against the 2nd Defendant.
Whether the Plaintiff would suffer irreparable loss if the injunction were denied
No; any loss is measurable in monetary terms (recovery of purchase price, special damages, damages for breach of contract)
Applying Nguruman, the court held irreparable loss must be actual, substantial and not compensable in damages. The Plaintiff's contemplated loss - the purchase price and proven damages - is quantifiable. Citing Kenya Commercial Finance Co. Ltd v Afraha Education Society, where damages are adequate, no interlocutory injunction should issue however strong the claim appears.
Where the balance of convenience lies
It tilts in favour of the 2nd Defendant, the legitimate chargee whose statutory rights have ripened
The debt continues to accrue interest and penalties and may outstrip the property's value. The 1st Defendant did not dispute the arrears or service of the statutory notices, and no evidence showed the arrears were being serviced. The Plaintiff failed to exercise due diligence before transacting. The chargee remains exposed to non-recovery of the disbursed facility.
Legal principles established
#- A prima facie case in civil matters is one in which, on the material presented, a court concludes there exists a right apparently infringed so as to call for an explanation or rebuttal
- Under the doctrine of privity of contract, a contract cannot confer rights or impose obligations on any person other than the parties to it
- A chargor cannot deal with or transfer charged land without the written consent of the chargee (implied covenant under section 88 of the Land Act)
- Where damages are an adequate remedy, no interlocutory injunction should normally be granted
- Irreparable loss is injury that cannot adequately be compensated by an award of damages; speculative injury will not do
Court orders
#- 1.The Notice of Motion Application dated the 14th December 2021 by the Plaintiff/Applicant is dismissed
- 2.Costs awarded to the 2nd and 3rd Defendants/Respondents only, in the same terms as in ELC No. E432 of 2021
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over land and charges (interlocutory application in an ELC suit)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Gaman Ali Mohamed Gaman v Monarch Developers Limited & 2 others [2022] KEELC 925 (KLR)", Case Analysis (2022). ELC E432 of 2021 (companion matter referenced; subject application dated 14th December 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/925/eng@2022-02-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.