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ELCAllowedNot stated in the judgment (application dated 2.5.2024; arises from Meru ELC E031 of 2022)· [2024] KEELC 4917 (KLR)

Cooperative Bank of Kenya Ltd v Gituma (Environment and Land Appeal E021 of 2024) [2024] KEELC 4917 (KLR)

Environment and Land Court
19 June 2024
5,713 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 Kenyan court ruled that a signed settlement agreement binds parties even without court approval, and illegal execution of a decree can be reversed with money and title returned.

What this practically means

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Executive summary

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This is a ruling of the Environment and Land Court at Meru (Nzili J) on an application by a bank (appellant in an appeal against the decree in Meru CMCC ELC No. 31 of 2022) seeking stay of execution, restitution and preservation of title pending appeal. On 25.3.2024 the court had granted conditional stay requiring a bank guarantee of Kshs.8,500,000 within 7 days. By a consent dated 27.3.2024, signed by both law firms but never adopted by the court, the parties varied that order, substituting a joint interest-earning account into which the bank deposited Kshs.8,500,000 on 5.4.2024. Despite this, the respondent obtained ex parte attachment orders on 8.4.2024 in a miscellaneous application at the lower court and executed, coercing payment of a further Kshs.8,500,000 plus auctioneer costs, and obtained release of the original title. The respondent filed a preliminary objection arguing the decree was satisfied, no orders were disobeyed, and the court was functus officio. The court rejected the objection, holding that the consent, though unadopted, was valid, self-executing and binding once acted upon, and could only be set aside for fraud, misrepresentation, coercion or mistake - none of which was pleaded or proved. The execution, done without notice and before expiry of the 14-day period and in the face of a subsisting consent, was held illegal, irregular, null and void. The court granted stay pending appeal, vacated the lifting of the charge and substituted a restriction on the title register, ordered surrender of the original title deed and the decretal amount to the Deputy Registrar within 3 days, and issued a notice to show cause to Lifeline Auctioneers.

Key legal issues

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01

Validity of the unadopted consent dated 27.3.2024

Holding

The consent was valid, self-executing and binding though never adopted by the court

Reasoning

The court found the consent signed and stamped by both law firms on record, with no claim of forgery reported to the DCI and no application to set it aside for fraud, mistake, illegality or coercion. The parties opened and funded the joint account with Kshs.8,500,000 by 5.4.2024 within the 14-day compliance window, so the consent was acted upon and actualised, giving it contractual effect regardless of adoption.

p. 8
02

Legality of the execution of 8.4.2024

Holding

The execution was illegal, irregular, null and void

Reasoning

The consent had varied and vacated the orders of 25.3.2024, the 14-day compliance period had not lapsed, and the applicant had already complied by depositing the funds four days before 8.4.2024. The ex parte orders in the miscellaneous application were also obtained without notice to the applicant, contrary to Order 50 Rule 3, and no properly extracted decree was evidenced.

p. 10
03

Preliminary objection - functus officio and satisfaction of decree

Holding

The preliminary objection fails; satisfaction of the decree does not bar stay or restitution orders

Reasoning

The court held that where a consent to settle a suit is made on conditions and breached, the court retains the right to hear the parties. Mere fulfilment of a decree does not stop a court from issuing restitutionary orders under Order 42 Rule 7(1) where sufficient cause is shown, and the decree-holder's unlawful execution required security for restitution.

p. 7
04

Advocate's professional conduct

Holding

Respondent's counsel, an officer of the court, acted in bad faith by instructing auctioneers despite the consent

Reasoning

Counsel did not deny signing the consent, did not swear his signature was forged, and did not report forgery to the DCI. Being aware of the consent and the stayed proclamation, he nonetheless instructed auctioneers to execute. Bad faith includes dishonesty, unfairness and unreasonable conduct amounting to deliberate breach of due process.

p. 9

Legal principles established

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  • A signed consent agreement between parties, even if not adopted by the court, binds the parties once acted upon and can only be set aside for fraud, misrepresentation, collusion or ignorance of suit facts
  • Consent orders are binding and cannot be set aside unless obtained by fraud, misrepresentation, collusion or ignorance of material facts
  • Courts do not rewrite contracts for parties; they hold parties to their bargain
  • An order improperly made without serving a person affected who has a statutory right to be served is a nullity
  • It is the decree, not the judgment, which is executable

Court orders

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  1. 1.Stay of execution of the decree pending appeal granted, the court having found the purported execution illegal
  2. 2.The purported lifting of the charge against the title by the Land Registrar is vacated and replaced with a restriction against the title register until the hearing of the appeal
  3. 3.If the respondent has collected the original title deed, he shall surrender it to the Deputy Registrar of the court within 3 days
  4. 4.The respondent shall surrender the decretal amount to the custody of the court within 3 days
  5. 5.A notice to show cause to issue to M/s Lifeline Auctioneers why disciplinary action should not be taken for proceeding with an irregular execution, to appear before the court on 24.6.2024
  6. 6.The lower court file to be availed for mention on 24.6.2024

Authorities

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Legislation

  • Civil Procedure RulesOrder 42 Rule 6(1) & (2)
  • Civil Procedure RulesOrder 42 Rule 7(1)
  • Civil Procedure RulesOrder 21 Rule 81(2)
  • Civil Procedure RulesOrder 50 Rule 3
  • Civil Procedure ActSection 1 (overriding objective)
  • Civil Procedure ActSections 1A & 3A
  • Civil Procedure ActSection 34(1)
  • Advocates ActSections 55 and 57
  • Law Society of Kenya Digest of Professional Conduct and EtiquetteRule 46

Cases cited (33)

  • Michael Ntoiti Mitheu vs Abraham Kivondo Musau
    (2021) eKLR
  • Vishram Ravji Halai vs Thorton & Turpin
    (1990) KLR 365
  • Butt vs Rent Restrictions Tribunal
    (1982) KLR 417
  • Masisi Mwita vs Damaris Wanjiku Njeri
    (2016) eKLR
  • RWW vs EKW
    (2019) eKLR
  • Pamela Awuor Ochieng & another vs Elisha Odari Ogony
    (2021) eKLR
  • Consolidated Marine vs Nampijja & another
    Civil Application No. 93 of 1989
  • Samvir Trustee Ltd vs Guardian Bank Ltd
    Nairobi Milimani HCC No. 795 of 1999
  • Nduhiu Gitahi vs Warugongo
    (1988) KLR 621
  • Nicholas Arap Korir Salat vs IEBC & others
    (2013) eKLR
  • Republic vs Mohamed & another
    Petition 39 of 2018 (2019) KESC 47 (KLR) (15th March 2019) (ruling)
  • Madhupaper International Ltd vs Kerr
    (1985) KLR
  • Koinange Investments and Developments vs Nairobi City Council and others
    (2009) eKLR
  • Omega Enterprises (K) Ltd vs Kenya Tea Development Authority
    (1998) LLR 2525
  • Ali Bin Khamis vs Salim Bin Khamis
    (1956) 23 EACA 195
  • Jose Estates Ltd vs Muthumu Farm Ltd and others
    C.A No. 228 of 2000
  • Charles Ngare Karanja vs Florence Muthoni & another
    HC Civil Appeal No. 971 of 2005
  • Rubo Kimngetich Arap Cheruiyot vs Peter Kiprop Rotich
    (2006) eKLR
  • Stephen Mwallyo Mbondo vs County Government of Kilifi
    (2021) eKLR
  • National Bank of Kenya Ltd vs Joly Family Stores & another
    (2005) eKLR
  • Flora N. Wasike vs Destimo Wamboko
    (1988) eKLR
  • KCB Ltd vs Specialized Engineering Co. Ltd
    (1982) eKLR
  • Frank Phipps and Pearl Phipps vs Harold Morrison
    SCCA 86 of 2008
  • Cristle vs Cristle
    (1951) 2 All ER 574
  • Munyiri vs Ndunguya
    (1985) eKLR
  • Brooke Bond Leibig vs Mallya
    (1975) E.A 266
  • NBK Ltd vs Otieno Ragot & Co. Advocates
    (2020) eKLR
  • Martin Kirima Baithambu vs Jeremiah Miriti
    (2017) eKLR
  • NBK (K) Ltd vs Pipeplastic Samkolit (K) Ltd & another
    (2002) E.A 503
  • Kenya Shell Ltd vs Kibiru & another
    (1986) KLR 1410
  • NIC Credit Bank Ltd vs Aquinas Francis Wasike & another
    (2006) eKLR
  • Penina Nzisa Ngomo & another vs Transnational Bank Ltd
    (2012) eKLR
  • Speaker of National Assembly vs Njenga Karume
    (2008) 1 KLR 425
On appeal from
Chief Magistrates Court, Meru
Meru CMCC ELC No. 31 of 2022
Jurisdiction invoked
Order 42 Rules 6(1)&(2) and 7(1) Civil Procedure Rules; Sections 1A, 3A and 34(1) Civil Procedure Act - stay of execution pending appeal and restitution

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, "Cooperative Bank of Kenya Ltd v Gituma (Environment and Land Appeal E021 of 2024) [2024] KEELC 4917 (KLR)", Case Analysis (2024). Not stated in the judgment (application dated 2.5.2024; arises from Meru ELC E031 of 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/4917/eng@2024-06-19

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