KCB Bank Kenya Limited v La'Paz Holding Limited (Civil Cause E004 of 2023) [2024] KEELC 6827 (KLR)
The bottom line
#A Kenyan court ruled that banks cannot get permission to sell repossessed land below the forced sale value, striking down a bank's bid and its poorly prepared court documents.
What this practically means
#Executive summary
#Key legal issues
#Compliance of affidavit annexures with Rule 9 of the Oaths and Statutory Declaration Rules
The annexures were neither serialized nor sealed on the annexures themselves; the seal appeared on a loose separate sheet; they are invalid, inadmissible and were expunged, with corresponding paragraphs struck out
Rule 9 requires exhibits to be securely sealed under the commissioner's seal and marked with serial letters of identification. The court found the seal and serialization were affixed on a loose piece of paper preceding the annexures, rendering them non-compliant with a mandatory provision. Citing Solomon Omwega Omache and Zaheer Jhanda, the court held such exhibits inadmissible, expunged them, and struck out the supporting affidavit paragraphs dependent on them, leaving only skeleton averments.
Whether the court has jurisdiction to grant liberty to sell charged property at an undervalue
No. Section 97(1) and (2) of the Land Act fixes the forced sale valuation as the floor; sale below it is an illegality and breach of duty, and the court cannot create a window to facilitate it
The court read Sections 97(1) and (2) of the Land Act as requiring the chargee to obtain the best price reasonably obtainable, discerned from a forced sale valuation which constitutes the floor price. The provision was enacted to curb chargees selling at throwaway prices and then pursuing chargors for balances. Granting leave to sell at an undervalue would amount to legislating from the bench and defeating a clear statutory provision, contrary to the Supreme Court's guidance in Republic v Mwangi (ISLA). The originating summons was dismissed.
Legal principles established
#- A chargee exercising statutory power of sale owes a duty to obtain the best price reasonably obtainable at the time of sale, discerned from the forced sale valuation, and may not sell below the forced sale value
- A court of law has no jurisdiction to grant a chargee liberty to sell charged property at an undervalue, as this would facilitate an illegality
- Annexures to affidavits not sealed and serialized in accordance with Rule 9 of the Oaths and Statutory Declaration Rules are inadmissible and must be expunged, together with the paragraphs underpinned by them
- Courts must interpret statutes in a manner that does not defeat a clear legislative provision that has not been repealed
Court orders
#- 1.The annexures attached to the affidavit in support of the originating sums be and are hereby expunged from the record of the court
- 2.The originating summons dated 25th January 2023 is devoid of merits and is hereby dismissed
- 3.Each party shall bear own costs of the suit
- Jurisdiction invoked
- Sections 90, 96, 97, 98 and 104 of the Land Act, 2012; Order 37 Rule 4 of the Civil Procedure Rules; Sections 1A, 1B and 3A of the Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "KCB Bank Kenya Limited v La'Paz Holding Limited (Civil Cause E004 of 2023) [2024] KEELC 6827 (KLR)", Case Analysis (2024). Originating Summons dated 25th January 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/6827/eng@2024-10-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.