Ceasar Njagi Kunguru v Kenya Commercial Bank Ltd [2001] KECA 145 (KLR)
The bottom line
#Kenya's Court of Appeal stopped a bank from selling a borrower's land because the legally required notice came only after he filed suit.
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 frivolous or discloses arguable points - in particular, whether a statutory notice under section 74 of the Registered Land Act served on the chargor after he had filed suit is a proper notice.
- 2.Whether the success of the intended appeal would be rendered nugatory if the injunction pending appeal is not granted.
Key legal issues
#Whether the intended appeal is frivolous - the validity of a statutory notice served after suit is filed
The intended appeal is not frivolous because it is at least arguable that a statutory notice served upon the chargor after he has filed suit is not such notice as would entitle the chargee to proceed to advertise the property for sale.
Section 74 of the Registered Land Act obliges a chargee to serve three months' notice on a defaulting chargor, a requirement the court identified as designed to enable the chargor to redeem the property. The only notice served on the applicant was served after he had filed suit, and then pursuant to an order made by the Commissioner of Assize. The bank's replying affidavit in the superior court did not traverse the applicant's assertion that he was never served with the requisite notice. Ringera J's contrary observation that the applicant admitted service was, in the Court of Appeal's view, made hastily. The point was therefore arguable and the intended appeal not frivolous.
Whether success in the intended appeal would be rendered nugatory without an injunction
The nugatory limb was satisfied: if the charged property were sold it would go out of the applicant's reach, so success in the intended appeal would be rendered nugatory, justifying an injunction pending appeal.
The court applied the second limb of the test for an injunction pending appeal. It reasoned that if the charged property were sold, it would go out of the applicant's reach, so that success in the intended appeal would be rendered nugatory. The bank, though served with the application, filed no replying affidavit and did not appear at the hearing, leaving the applicant's account uncontroverted. On that state of the record the court was satisfied that the balance favoured preserving the property until the intended appeal was heard and determined.
Whether a dispute over the amount due is a ground to stop the auction sale
No arguable point arises on the indebtedness; a dispute as to the amount due, or when it fell due, is no ground to stop the auction sale.
The applicant admitted borrowing Shs.1,380,000 in 1996, charging L.R. BARAGWE/RAIMU/1164 as security, and failing to service the loan; the sums demanded rose from Shs.1,710,726.40 to Shs.1,769,694.40 between January and May 2000. The court discerned no arguable point on the indebtedness and stated the principle that a mere dispute as to the amount due, or as to when it fell due, does not ground an injunction to stop an auction sale. Arguability was found only in the statutory notice point.
Legal principles established
#- A dispute as to the amount due under a charge is not, by itself, a ground to stop an auction sale under the chargee's statutory power of sale.
- A statutory notice served on a chargor after he has filed suit may not be a proper notice entitling the chargee to advertise and sell the charged property; the point is at least arguable.
- The three-month statutory notice to a defaulting chargor is a mandatory requirement whose purpose is to enable the chargor to redeem the property.
- Where a charged property, if sold, would go out of an applicant's reach, success in the intended appeal would be rendered nugatory and an injunction pending appeal may issue.
Court orders
#- 1.Application allowed; the respondent be and is hereby restrained from selling, disposing off, or in other manner dealing with property known as L.R. No. BARAGWE/RAIMU/1164 pending the hearing and determination of the intended appeal or until further orders.
- 2.The costs of the application to be costs in the intended appeal.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- Jurisdiction invoked
- Not stated in the ruling. The application is a civil miscellaneous application to the Court of Appeal at Nairobi for an injunction pending an intended appeal; no constitutional or statutory provision or rule is cited as the source of jurisdiction.
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.
We allow this application and order that the respondent be and is hereby restrained from selling, disposing off, or in other manner dealing with property known as L.R. No. BARAGWE/RAIMU/1164 pending the hearing and determination of the intended appeal or until further orders.
The costs of this application will be costs in the intended appeal.
It is at least arguable that a statutory notice served upon the chargor after he has filed suit may not be such notice as would entitle the chargee to say that he has served a proper notice before proceeding to advertise the property for sale.
Any dispute as regards the amount due, when amount due, is no ground to stop the auction sale.
If the property is sold it would go out of the applicant's reach and the success in the intended appeal would be rendered nugatory.
The learned Judge (Ringera, J) in his ruling says that the applicant admits having been served with the statutory notice. It appears that the learned Judge made that observation rather hastily in view of what was before him.
Issues in the judgment
#The applicant's name is spelled inconsistently within the ruling: the heading reads 'CEASAR NJAGI KUNGURU' while the body of the ruling uses 'Ceaser Njagi Kunguru'.
The passage reproducing the prayers in the plaint is garbled, apparently a scanning or transcription artifact, which may impede verbatim matching of that passage.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kenya African National Traders & Farmers Union (Kantafu) v Koma Rock Ranching & Farming Co-Operative Limited [2017] KEELC 3669 (KLR)[2017] KEELC 3669 (KLR)27 Jan 2017applied
- Kiliswa v The Independent Elections And Boundaries Commission & 2 others (Civil Appeal 201 of 2013) [2014] KECA 807 (KLR)[2014] KECA 807 (KLR)28 Feb 2014applied
Cite this brief
#Cite this brief
Caselaw, "Ceasar Njagi Kunguru v Kenya Commercial Bank Ltd [2001] KECA 145 (KLR)", Case Analysis (2001). Civil Miscellaneous Application No. 101 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2001/145/eng@2001-04-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.