HFC Limited v Kampala International University & 11 others (Environment & Land Case E204 of 2020) [2022] KEELC 3183 (KLR)
The bottom line
#Kenya's Environment and Land Court struck out a bank's claims against ten third parties, confirming lenders can only sue those who actually signed the charge.
What this practically means
#Executive summary
#Key legal issues
#Cause of action against 2nd–12th Defendants
Suit against them struck out — no cause of action disclosed.
A chargee's remedies are statutorily circumscribed under Section 90 of the Land Act and lie only against the chargor and guarantors. The doctrine of privity of contract binds only parties to the charge instrument. The Plaintiff had no contractual relationship with the 2nd–12th Defendants, and cannot expand statutory remedies beyond what is provided.
Prima facie case against 1st Defendant
Established — issues of fact (assignment, restructuring) to await plenary hearing.
The disbursement of the loan facility and the default in repayment are not contested by the 1st Defendant. The disputed questions of whether Housing Finance Company of Kenya was restructured into the Plaintiff and whether the charge was assigned are issues of mixed fact and law unsuitable for summary determination at interlocutory stage.
Irreparable loss
Not established — the loss is quantifiable in monetary terms.
The Plaintiff quantified the arrears at Kshs 38,247,182.28 as at 31st March 2020 and seeks recovery of the same in the Plaint. Where damages are an adequate remedy and the respondent is capable of paying, an interlocutory injunction should not issue, however strong the claim appears.
Legal principles established
#- A chargee's statutory remedies under Section 90 of the Land Act lie only against the chargor and guarantors; privity of contract bars claims against third parties.
- A court cannot re-write a contract between the parties.
Court orders
#- 1.The Notice of Preliminary Objection dated 13th April 2021 and the Notice of Motion Application dated 14th April 2021 be and are hereby allowed.
- 2.The Plaintiff's suit as against the 2nd to the 12th Defendants be and is hereby struck out.
- 3.The Notice of Motion Application dated 8th October 2020 be and is hereby Dismissed.
- 4.Costs of the Preliminary objection, the Application dated 14th April 2021 as well as the suit be and are hereby awarded to the 5th Defendant only.
- 5.Costs of the Application dated 8th October 2020 shall abide the outcome of the suit between the Plaintiff and the 1st Defendant.
- Jurisdiction invoked
- Original civil jurisdiction over land disputes (Environment and Land Court), Art 162(2)(b) Constitution
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "HFC Limited v Kampala International University & 11 others (Environment & Land Case E204 of 2020) [2022] KEELC 3183 (KLR)", Case Analysis (2022). Not stated in the excerpt ( suit involving L.R No. 7785/97). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/3183/eng@2022-05-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.