LALCHAND FULCHAND SHAH & another v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 4 (KLR)
The bottom line
#Kenya's Court of Appeal allowed a bank to proceed toward auctioning charged property, ruling the owners failed to prove the charge was improperly attested.
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 intended appeal is arguable (not frivolous)
- 2.Whether the success of the intended appeal would be rendered nugatory if the relief sought is not granted
- 3.Whether the erroneous amount stated in the notification of sale was material
- 4.Whether non-attestation of the charge by an advocate in the chargors' presence raised a serious issue
- 5.Whether the burden of proving non-attestation shifted to the Bank
- 6.Whether the charge being created for past consideration was fatal
Key legal issues
#Arguability of the intended appeal
The intended appeal had no arguable issues; the alleged defects in the notification of sale and the charge did not go to the root of the dispute.
The court examined the three grounds urged: the erroneous figure in the notification of sale was an irregularity of no consequence since the property was worth far less than the figure stated and rule 16(1)(f) dispenses with stating the amount; the 45-day notice defect was moot as no auction occurred; and the charge expressly covered further advances or forbearance, making past consideration good consideration. The Judge's discretion was faultlessly exercised.
Attestation of the charge and burden of proof
The allegation of non-attestation against the advocate was not a ground for restraining the sale; the burden lay on the Shahs to prove it, and the Bank was not obliged to inquire into attestation.
The Shahs' own signature to the attestation clause confirming explanation of the statutory sections undermined their credibility. The fact of attestation was peculiarly within their knowledge, so they bore the burden of proving non-attestation at least to a prima-facie case. The proper course was a declaratory suit joining the advocate and borrower, or adding them as co-defendants. The Bank, receiving an ex-facie valid charge, was not put on inquiry.
Nugatory limb of Rule 5(2)(b)
Having found no arguable appeal, the court did not need to consider whether the appeal would be rendered nugatory; damages from the Bank would be an adequate remedy.
The court noted the Githunguri v Jimba Credit principle but declined to engage the nugatory-ness limb once arguability failed. It observed no impediment to the Shahs claiming damages if they ultimately succeeded, and no suggestion the Bank could not pay, making an injunction unnecessary.
Legal principles established
#- A party to an ex-facie valid and properly attested charge cannot escape it merely by asserting that the advocate did not attest it in his presence; such an allegation must be properly pleaded and litigated with the advocate joined.
- A bank presented with an ex-facie valid charge is not put on inquiry into whether the advocate attested in the chargors' presence.
- Where a negative averment rests peculiarly within the knowledge of the party asserting it, that party bears the burden of proving the affirmative.
- Under rule 16(1)(f) of the Auctioneers Rules, the amount to be recovered need not be stated in a notification of sale.
Court orders
#- 1.The application under Rule 5(2)(b) is dismissed
- 2.Costs of the application awarded to the respondent Bank
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 2533 of 1997
- Jurisdiction invoked
- Rule 5(2)(b), Court of Appeal Rules (application for stay/restraint in an intended appeal)
Relief refused
#Injunction restraining the Bank from auctioning or alienating the suit property L.R. No.209/66/41 pending the intended appeal
No arguable appeal; the alleged defects (erroneous figure in notification, non-attestation, past consideration) were immaterial or unproven; damages would be an adequate remedy
Costs
Application dismissed with costs to the respondent Bank.
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.
I am of the view that the learned Judge exercised his discretion faultlessly in declining to grant the injunction sought and I would not interfere with what he found, so as to enable me to say that there is an arguable intended appeal.
I would dismiss this application with costs.
If a banker is presented with a charge ex-facie valid he is not put on any inquiry to ascertain if the advocate had signed in the presence or in the absence of the chargor.
General rule of evidence is that if a negative averment is made by one party, which is peculiarly within the knowledge of the other, the party within whose knowledge it lies and who asserts the affirmative, is to prove it, and not he who avers the negative.
Issues in the judgment
#The judgment refers to a demand letter of 11th June 1997 in one passage and 11th June 1999 in another, an internal inconsistency in dates.
The judgment inconsistently renders the case name as 'Githunquri vs Jimba Credit' (apparent typographical error for Githunguri).
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "LALCHAND FULCHAND SHAH & another v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 4 (KLR)", Case Analysis (2000). Civil Appli. Nai 165 of 2000 (73/2000 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2000/4/eng@2000-07-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.