NABRO PROPERTIES LIMITED vs SKY STRUCTURES LIMITED ) Z.R. SHAH ) SOUTHFORK INVESTMENTS LIMITED ) [1986] KECA 92 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that threatening court action to recover a just debt does not invalidate a mortgage signed to secure it.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the execution of the mortgage was procured by duress or coercion so as to render it void
- 2.Whether the pressure amounted to the equitable doctrine of undue influence
- 3.Whether the consideration stated in the mortgage was fictitious and illusory
- 4.Whether a recital of consideration in a document is conclusive, and whether parol evidence that money did not pass infringes the statutory exclusion of extrinsic evidence
Key legal issues
#Duress at common law
The pressure on the third appellant did not amount to legal duress, which requires violence or threats of violence to the person; a threat to take civil action or execute a decree is lawful.
The court adopted Cheshire & Fifoot's definition of legal duress as actual violence or threats of violence to the person. Nothing in the case involved violence or threats thereof. Following Flower v Sadler, a threat to prosecute does not vitiate an agreement to secure a just debt; a fortiori a threat of civil action or execution on a decree is not unlawful. The trial judge's finding that pressure fell short of duress was therefore upheld.
Undue influence
There was no undue influence; the documentary and oral evidence did not support a finding of compulsion.
Applying the two groups of undue influence cases from Allcard v Skinner - improper conduct or coercion, and confidential relationships triggering a presumption - the court found neither established. The third appellant signed after advice from the advocate and to avoid attachment of rents; the advocate saw no reluctance. The appeal court was not prepared to differ from the trial judge's finding of no undue influence.
Fictitious or illusory consideration
The appellants failed to prove the consideration was fictitious or illusory.
The trial judge had placed the burden of proof on the appellants and no appeal lay against that. Although a recital of consideration is not conclusive and parol evidence that money did not pass does not infringe section 98 of the Evidence Act, multiple heads of consideration existed: the guarantee, thirty months' forbearance, the best-endeavour undertaking, and the lifting of warrants of attachment. In any event, consideration is not essential to a document under seal.
Consideration under seal
Consideration is not essential to support a document under seal, though the point was neither pleaded nor argued.
Relying on Chitty on Contracts (25th Edition), the court observed obiter that a sealed instrument does not require consideration. This was raised sua sponte by the court as an additional answer to the fictitious-consideration argument.
Legal principles established
#- A threat to prosecute, or to take civil action or execute on a decree, does not of itself vitiate a subsequent agreement to give security for a justly owed debt.
- Common law duress is confined to actual violence or threats of violence to the person.
- Consideration is not essential to support a document which is under seal.
- A recital of consideration in a document is not conclusive evidence that consideration has actually passed; it is open to a party to prove that no consideration was paid.
Court orders
#- 1.Dismissal of the appeal with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Joint judgment of the court analysing duress, undue influence and consideration under seal; affirmed the trial judge's findings and dismissed the appeal.
JUDGMENT OF HANCOX, KNELLER AND GACHUHI JJ Ap. 2
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya at Nairobi
- Civil Case No 379 of 1972
- Jurisdiction invoked
- First appeal to the Court of Appeal from the High Court (court's appellate jurisdiction)
Relief refused
#Declaration that the mortgage was null and void
The appellants failed to prove duress, coercion or undue influence
Declaration that the property was free of encumbrance and delivery up of the title deed
Dependent on the mortgage being vitiated, which was not established
Costs
The appeal was dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
It follows that the respondent's contention in his reply as regards duress was correct, as it was never alleged that there was any violence or threat thereof.
For these reasons, I consider the judge's finding on both issues should be upheld and I would dismiss the appeal with costs.
though this was not argued or pleaded, consideration is not essential to support a document which is under seal
notwithstanding such a recital it is open to party to prove that no consideration was actually paid
Issues in the judgment
#Judgment refers inconsistently to the third appellant and to the parties' numbering (e.g. 'third appellant (therein described as the second surety)' although only two appellants appear in the title).
Case name rendered inconsistently in the judgment (Lal Chand Kohil, Lal Chand Kohl, Shahlal Chand/Sarlal Chand v Indarjit).
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "NABRO PROPERTIES LIMITED vs SKY STRUCTURES LIMITED ) Z.R. SHAH ) SOUTHFORK INVESTMENTS LIMITED ) [1986] KECA 92 (KLR)", Case Analysis (1986). Civil Appeal No 42 of 1975. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1986/92/eng@1986-03-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.