Machakos Wattlebark Co-operative Society Ltd v Co-operative Bank of Kenya Ltd & another [2022] KEELC 1807 (KLR)
The bottom line
#Kenya's Environment and Land Court dismissed a co-operative's challenge to a bank auction, confirming that posted statutory notices are legally valid service.
What this practically means
#Executive summary
#Key legal issues
#Whether the dispute raises a proper constitutional question or is governed by the principle of constitutional avoidance
The core dispute is a chargor/chargee matter determinable under statute, but the allegation of unlawful dispossession of land raises an arguable Article 40 question for determination
The court accepted the Supreme Court's articulation of constitutional avoidance in Communications Commission of Kenya, holding that where a dispute can be determined under another area of law it is best so determined. However, because the Petitioner alleged unlawful deprivation of land, an Article 40 constitutional issue was raised and the court proceeded to determine it on the evidence.
Whether the Petitioner was indebted to the 1st Respondent and whether its former officials had authority to borrow
The officials had due authority to take the loan under Rule 34(1) and Rule 45 of the then-applicable Co-operative Societies Rules, which required no resolution of the general membership
The signed loan agreements of 1977 and 1979 were not impugned. Under the 1979 Rules the committee was the governing body empowered to borrow, and receipts of loans from non-members required only the conditions in Rule 45 (Commissioner's approval etc.), not a members' resolution. The Petitioner produced neither its by-laws nor evidence of any breach of them.
Whether a valid charge was created over the suit property
The charge was valid; the certificates of registration of charge issued by the Commissioner under the repealed Act complied with the then requirements
The repealed Act did not require particulars of the charged property in the certificate, only the amount secured, and made the certificate conclusive evidence of compliance. Two certificates dated 1978 and 1979 were produced, and the title showed the charge was registered on 22nd May 1979, the same day the property was registered in the Petitioner's name.
Whether the statutory and redemption notices were duly served, given the address discrepancy
Service was duly effected; the address used originated from the Petitioner itself, and the Petitioner led no evidence of non-receipt
Although the notices went to P.O Box 842 Machakos rather than P.O Box 55, the Petitioner's own 1997 letter, minutes and even its 2012 letter showed use of P.O Box 842 and P.O Box 40. Once the 1st Respondent produced the notices and certificates of posting, the evidential burden shifted to the Petitioner, which adduced none.
Whether the sale and transfer were lawful and whether the property was sold at an undervalue
The sale by public auction was procedural, the price exceeded the forced sale value, and the transfer to the 2nd Respondent was lawful and impeachable only in damages
Under the Transfer of Property Act 1882 as applied by the repealed Registration of Titles Act, no court order was required for sale. The first auction failed to attract bids above the reserve price; the true market value is best determined at public auction; and under section 69B(2) the purchaser's title is not impeachable for irregular exercise of the power, the remedy being damages.
Whether fraud was proved
Fraud was not proved; allegations remained unevidenced and the burden of proof was not discharged
The court applied the trite principle that he who alleges must prove. Beyond the particulars pleaded, the Petitioner adduced no evidence of fraud in the auction or transfer, and consequently failed to demonstrate infringement of its Article 40 right to property.
Legal principles established
#- Where a written law authorises service by post, service is deemed effected by properly addressing, prepaying and posting by registered post to the last known postal address, unless the contrary is proved (section 3(5), Interpretation and General Provisions Act).
- Upon production of proof of posting of a statutory notice, the burden of proving non-receipt shifts to the addressee.
- A repealed law continues to govern rights and obligations acquired or accrued before its commencement (section 162, Land Act savings and transitional provisions).
- A chargor is not at fault for selling at the forced sale value; undervalue alone does not invalidate a sale, absent fraud.
- A certificate of registration of charge issued by the Commissioner is conclusive evidence of compliance with registration requirements of the Co-operative Societies Act.
Court orders
#- 1.The Petition dated 4th October, 2019 is dismissed
- 2.Costs awarded to the 1st Respondent
- Jurisdiction invoked
- Article 22(1) as read with Article 258(1) of the Constitution; Article 162 of the Constitution and Section 13 of the Environment and Land Court Act, 2011
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Machakos Wattlebark Co-operative Society Ltd v Co-operative Bank of Kenya Ltd & another [2022] KEELC 1807 (KLR)", Case Analysis (2022). Petition dated 4th October, 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1807/eng@2022-02-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.