Joseph Kipngeno Kirui & Another v Faulu Microfinance Bank Limited & Another
The bottom line
#If a bank's charge on your family home is flawed—especially regarding spousal consent or proper notice—the bank cannot legally sell it.
What this practically means
#Executive summary
#Key legal issues
#Compliance with s.56(1) Land Registration Act - chargor's acknowledgement
On a prima facie basis the charge contains the required acknowledgement, but whether FAULU's advocate could be sufficiently independent to advise Joseph must be determined at trial.
The charge instrument shows an acknowledgement that the chargor's rights and obligations were explained with a signature next to it, witnessed by FAULU's advocate Charles Murigi Ngugi, who swore that Joseph and Jane Kaptich appeared before him. However, the court found it necessary to determine at trial whether an advocate acting for the chargee could be sufficiently independent to advise the chargor.
Spousal consent under s.79(3) Land Act
Whether Liza's spousal consent was validly obtained is a triable issue; the two affidavits of Jane Kaptich appear to bear two different signatures, which if so would render the charge invalid.
The court examined two affidavits sworn by Jane Kaptich on different dates for different charges, both commissioned by FAULU's advocate, which appear to bear different signatures. The court held it difficult to see how FAULU's advocate could give independent legal advice to the chargor's wife, and that if the signatures differ the charge would be invalid and no lawful sale could proceed under it.
Statutory notice under s.90(1) Land Act
FAULU's three months' demand was addressed to the borrower firm and merely copied to Joseph; whether copying amounts to service on the chargor is a triable issue, and on a prima facie basis Joseph was not served as required.
Section 90(1) of the Land Act specifically requires the demand to be made to the chargor on default. FAULU's demand of 11th April 2016 was addressed to Khanuli Information Technology and copied to Joseph. Relying on Trust Bank Ltd v Eros Chemist, the court held statutory notices must warn the chargor of the intended sale and protect the right to redeem, and FAULU must prove copying equalled service.
Giella v Cassman Brown injunction principles
The appellants satisfied the first principle (prima facie case with probability of success); on the second, a sale under a possibly invalid charge for lack of spousal consent would cause harm not remediable by fresh notices, justifying an injunction.
The court found a prima facie case because the statutory notice was arguably not served and spousal consent was doubtful. While defective notices could be remedied by fresh notices, doubt over spousal consent could lead to nullification of the charge, so FAULU could not be permitted to sell under what may turn out to be an invalid charge.
Interference with trial court's discretion
The appeal was merited and the trial court's discretion was interfered with because the dismissal of the injunction was wrong on the above findings.
Having found a prima facie case and that a sale under a potentially invalid charge would cause irreparable harm, the court held it should interfere with the trial magistrate's exercise of judicial discretion dismissing the interlocutory injunction, and set the ruling aside.
Legal principles established
#- A charge of a matrimonial home is valid only if executed by the chargor and any spouse living in the matrimonial home, or with evidence of assent by all such persons (s.79(3) Land Act).
- A charge instrument must contain a special acknowledgement that the chargor understands the effect of the charge and the chargee's remedies, signed by the chargor (s.56(1) Land Registration Act).
- Statutory notices to a chargor must be addressed to the chargor personally, not merely copied to him, and are intended to protect the chargor's right to redeem.
- An appellate court will not interfere with a trial court's discretion unless it is clearly wrong, misdirected itself, or acted on/failured to consider relevant matters.
Court orders
#- 1.The Ruling delivered on 11th September 2017 is hereby set aside
- 2.Pending the hearing and determination of Milimani CMCC No. 3074 of 2017 an interlocutory injunction is issued restraining FAULU MICROFINANCE LTD from selling, transferring, alienating, disposing or interfering with the appellants' ownership or possession of TITLE NUMBER NAIROBI/BLOCK 111/666
- 3.The costs of the appeal and the costs of the Notice of Motion dated 4th May 2017 in Milimani CMCC No. 3074 of 2017 are awarded to the appellants to be paid by FAULU MICROFINANCE BANK LTD
- 4.The case shall be heard by any other magistrate other than Senior Resident Magistrate Hon. D. A. Ocharo
- On appeal from
- Chief Magistrate's Court at Milimani
- Civil Suit No. 3074 of 2017
- Jurisdiction invoked
- First appeal from the Chief Magistrate's Court against an interlocutory Ruling dismissing an application for interlocutory injunction
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Joseph Kipngeno Kirui & Another v Faulu Microfinance Bank Limited & Another", Case Analysis (2020). Appeal from Milimani CMCC No. 3074 of 2017. Source:
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.