Karinge & another v Sidian Bank Limited(Formerly K-rep Limited); Kiama (Interested Party) (Environment & Land Case 209 of 2021) [2022] KEELC 2356 (KLR)
The bottom line
#A Mombasa court refused to stop a completed bank auction, ruling that a borrower's right to reclaim property ends the moment the auction hammer falls.
What this practically means
#Executive summary
#Key legal issues
#Whether the Applicants established a prima facie case with probability of success
They did not; the equity of redemption was extinguished at the fall of the hammer on 27th August 2021 and the chargor had been given years of opportunities to redeem
The court applied Giella v Cassman Brown and Mrao v First American Bank. The Plaintiffs bought an auctioned property, charged it, and persistently defaulted despite restructurings and a settlement offer of Kshs 7,000,000/= which they failed to honour. The bank made at least seven auction attempts between 2015 and 2021. The court held the charge was a contract in which time was of essence, and the Applicants were granted reasonable chances to redeem but failed, leaving no prima facie case at all.
Whether the Applicants would suffer irreparable injury not compensable by damages
No; the property was charged security, quantifiable in value, and the bank was capable of paying damages
Relying on Ringera J in Martha Khayanga Simiyu v Housing Finance Co. of Kenya and Nguruman Limited v Jan Bonde Nielsen, the court held that a charged property becomes a commodity of sale whose value can be measured. The property had been valued at Kshs 24,700,000/= with a forced sale value of Kshs 18,525,000/=. The undervalue claim itself showed the loss was quantifiable, and the bank was a reputable institution able to pay damages if the Plaintiffs succeeded at trial.
Whether the statutory and auctioneers' notices preceding the 27th August 2021 sale were validly issued
Yes; Sections 90 and 96 notices once issued remained valid during continued default, and failure by Kinyua & Co Auctioneers to issue a fresh 45-day redemption notice did not invalidate the sale
The court held the statutory notices under Sections 90(1) and 96(2) of the Land Act were mandatory but needed to be issued only once where default persisted, following George Gikubu Mbuthia v Jimba Credit Finance Corporation and Joseph Kiarie Mbugua v Garam Investment Limited. Suspension of earlier sales accommodated the chargor did not revive the need for fresh notices. Although no proof existed that Kinyua & Co issued a 45-day notice, the Applicants' continued default meant the omission could not invalidate the sale to a bona fide purchaser for value.
Whether the Defendant wrote off the debt
No; the Kshs 7,000,000/= Supplementary Letter of Offer of 7th May 2018 was conditional on payment within 60 days, which the Plaintiffs breached
The court found that the Supplementary Letter of Offer of 7th May 2018 offered settlement of Kshs 21,318,239.15/= for Kshs 7,000,000/= only if paid within 60 days from 8th May 2018; breach would render the offer null and void and revive the full debt. The Plaintiffs failed to pay, so the alleged write-off never took effect and the bank lawfully resorted to its statutory power of sale.
Legal principles established
#- A chargor's equity of redemption is extinguished at the fall of the hammer at a public auction, whether or not the property has been transferred to the purchaser
- The statutory notices under Sections 90(1) and 96(2) of the Land Act are mandatory but need only be issued once where the chargor remains in continuous default; fresh notices are not required each time a sale does not proceed
- Rule 15(d) of the Auctioneers Rules does not impose an obligation to issue a fresh 45-day redemption notice every time charged property is put up for sale
- Once a property is charged to secure financial accommodation it becomes a commodity for sale whose loss can be compensated in damages; where damages are adequate, an interlocutory injunction should not issue
Court orders
#- 1.Notice of Preliminary Objection dated 5th January 2022 by the Interested Party dismissed with no order as to costs for erroneously stating the suit property as Land Reference Plot No. LR No. 277/VI/MN instead of LR/2627/VI/MN
- 2.Notice of Motion application dated 15th October 2021 by the 1st and 2nd Plaintiffs/Applicants dismissed with costs to the Defendant and Interested Party
- 3.Case to be heard and disposed of within 180 days, with mention on 4th October 2022 for pre-conference under Order 11 of the Civil Procedure Rules, 2010
- 4.1st and 2nd Plaintiffs/Applicants to bear the costs of the application
- Jurisdiction invoked
- Sections 13, 14 and 19 of the Environment and Land Court Act, No. 19 of 2011; Sections 28(h), 68, 69 and 101 of the Land Registration Act, No. 3 of 2012; Section 7(i) of the Land Act, No. 6 of 2012
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Karinge & another v Sidian Bank Limited(Formerly K-rep Limited); Kiama (Interested Party) (Environment & Land Case 209 of 2021) [2022] KEELC 2356 (KLR)", Case Analysis (2022). Not stated in judgment (Notice of Motion dated 15th October 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/2356/eng@2022-07-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.