LALCHAND FULCHAND SHAH & ANOTHER v INVESTMENTS & MORTGAGES BANK LIMITED [2000] KECA 15 (KLR)
The bottom line
#Kenya's Court of Appeal refused to stop a bank from selling charged land because the borrowers gave vague reasons and weren't fully honest with the court.
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, if successful, would be rendered nugatory if the threatened sale of the suit property is not stayed
- 2.Whether the intended appeal is arguable
- 3.Whether the Applicants are entitled to the equitable relief of an injunction/stay notwithstanding their conduct in relation to the charge
Key legal issues
#Whether the nugatory test was satisfied
The applicants' sworn averment that the appeal would become nugatory if the suit property was sold was feeble and insubstantial and did not demonstrate that the appeal would be rendered nugatory, since pecuniary compensation could be awarded.
The court held that a party seeking to deny a judgment creditor the fruits of its success must give just reasons on oath. A conclusory belief that the appeal will be rendered nugatory, without facts showing the property cannot be retrieved or compensated, is insufficient. The respondent being a bank did not alter this, as satisfactory pecuniary compensation could be awarded, land no longer being a 'sacred cow'.
Whether the applicants were entitled to equitable relief
The applicants, having certified that statutory provisions governing the charge had been explained to them when in fact they had not, approached the court with dirty hands and were barred from the equitable relief of injunction.
The applicants had certified that sections 69(1) and 100A of the Indian Transfer of Property Act 1882 as amended had been explained to them, yet asserted the contrary on the basis of the advocate who drew the charge. The learned judge was right to find them less than candid. Equity bars relief to those with unclean hands, and they carried the same dirty hands to the Court of Appeal.
Whether the charge was properly executed
The court agreed with the High Court judge's exposition of the law on the effect of section 73 of the Evidence Act and the authorities to the effect that the charge was properly executed by the applicants.
Akiwumi JA, while careful not to usurp the role of the bench that would hear the intended appeal, stated that he agreed with the superior court's exposition of the law concerning the effect of section 73 of the Evidence Act and its conclusion that the charge was properly executed. This weighed against finding the intended appeal arguable on that point.
Legal principles established
#- A bare, formulaic assertion that an appeal will be rendered nugatory, without justifying facts on oath, does not satisfy the test for a stay or injunction pending appeal.
- Land is no longer a 'sacred cow'; where satisfactory pecuniary compensation can be awarded, an intended appeal will not be rendered nugatory by the sale of charged land.
- A litigant who has been less than candid in obtaining equitable relief below comes to court with dirty hands and is barred from the equitable relief of an injunction on appeal.
- A mortgagee will not be restrained from exercising the power of sale merely because the amount due is in dispute or the mortgagor has begun a redemption action; restraint is warranted only if the mortgagor pays the amount claimed into court.
Court orders
#- 1.The applicants' application is dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 2533 of 1997
- Jurisdiction invoked
- Inherent jurisdiction of the Court of Appeal over applications for relief in an intended appeal (Rule UR. 73/2000)
Relief refused
#Stay of the threatened sale of the suit property / injunction pending intended appeal
The applicants failed to demonstrate that the appeal would be rendered nugatory, as satisfactory pecuniary compensation could be awarded, and they came to court with unclean hands having been less than candid about execution of the charge
Costs
The application is dismissed with costs (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.
I am afraid that this sort of feeble and insubstantial averment on oath is not good enough.
But satisfactory pecuniary compensation can be awarded and as this court has had occasion to observe, land is no longer a "sacred cow".
The Applicants went to the superior court seeking as they did, an equitable relief with dirty hands.
In the result, since Shah, JA agrees that the Applicants' application be dismissed, it is hereby dismissed with costs. It is so ordered.
Issues in the judgment
#The judgment refers to a separate Ruling of Shah JA which is not reproduced in the text provided; only Akiwumi JA's ruling is available, so Shah JA's reasoning cannot be quoted.
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 15 (KLR)", Case Analysis (2000). Civil Appli 165 of 2000 (UR. 73/2000). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2000/15/eng@2000-07-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.