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Court of AppealDismissedCivil Appeal 244 of 2002

Dimken Kenya Limited & 4 others v Barclays Bank of Kenya & another [2007] KECA 319 (KLR)

Court of Appeal of Kenya
8 June 2007
SBS.E.O. BosirePWP.N. WakiWDW.S. Deverell
2,476 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled that a lender could validly sell charged land by private treaty once a conditional court injunction lapsed, even without returning to court first.

What this practically means

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Executive summary

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The Court of Appeal dismissed an appeal by Dimken Kenya Limited and four others against the ruling of Ringera J dated 12th April 2002 in H.C.C.C. No. 186 of 2000, which had refused to declare null and void the sale by private treaty of L.R. No. 4953/22/IV by Barclays Bank of Kenya to Moses Kamatu, and had refused an injunction against the 2nd respondent. The appeal turned on a narrow concession by Mr Amuga: whether the ruling of Onyango Otieno J of 19th January 2001, granting the bank liberty to proceed with a threatened sale subject to compliance with the Auctioneers Act, restricted the bank's statutory power of sale by private treaty. The Court held the remarks must be read in conjunction with the prayers in the application then before the judge, which concerned a threatened public auction, and doubted whether a court could restrict a statutory right of sale except where it had not arisen or was not properly exercised. The Court distinguished Commercial Bank of Africa v Isaac Kamau Ndirangu, since the conditional injunction granted in March 2001 lapsed on the appellants' failure to deposit Kshs.3 million and no liberty to apply was reserved, so the bank's sale without further leave was not contempt of court. Alleged mala fides were rejected, as the sale followed the failure of a buyer nominated by the appellants. The appeal was dismissed with costs to the 1st respondent and no order as to costs against the 2nd respondent.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the remarks of Onyango Otieno J. of 19th January 2001 restricting the 1st respondent to comply with the Auctioneers Act curtailed its statutory right of sale by private treaty
  2. 2.Whether the sale of L.R. No. 4953/22/IV by private treaty to the 2nd respondent was in contempt of a court order and therefore null and void
  3. 3.Whether the sale to the 2nd respondent was vitiated by mala fides on the part of the 1st respondent

Key legal issues

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01

Whether the trial judge's reference to the Auctioneers Act curtailed the statutory right of sale by private treaty

Holding

It did not. The remarks must be read in conjunction with the prayers in the application the judge was seised of, which concerned a threatened sale by public auction.

Reasoning

The 1st respondent had given notice of sale by public auction; the judge granted liberty to proceed with the threatened sale. Under section 69(1) of the Transfer of Property Act and the charge instrument, the chargee had both statutory and contractual rights to sell by private treaty as well as by public auction. The judge's reference to the Auctioneers Act was a direction to be followed if the sale were conducted by public auction.

p. 4
02

Whether the private treaty sale to the 2nd respondent was in breach of a court order and void

Holding

It was not. The conditional injunction lapsed on the appellants' failure to deposit Kshs.3 million and no liberty to apply was reserved, so court leave was unnecessary and no order was breached.

Reasoning

Distinguishing Commercial Bank of Africa v Isaac Kamau Ndirangu, where a consent order with liberty to apply meant the court retained control and leave was essential. Here the injunction was 'subject to compliance with this order'; the condition lapsed; the private arrangement to find a buyer did not involve the court; hence the sale was not contempt of a court order.

p. 4
03

Whether the sale was vitiated by mala fides

Holding

No mala fides established. The sale occurred about a year after the appellants' default and their own nominee buyer had failed to complete.

Reasoning

Although the sale and transfer were concluded within 48 hours, the transaction followed the lapse of the conditional injunction and the failure of a buyer nominated by the appellants themselves, whose deposit was forfeited. The appellants knew the injunction had lapsed and should consider themselves to blame for their predicament.

p. 5

Legal principles established

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  • A court cannot properly restrict a statutory right of sale except where the right is not being properly exercised or has not arisen
  • Where a conditional injunction lapses for failure to comply with the condition, and no liberty to apply is reserved, the chargee may exercise its statutory power of sale without further leave of the court and such sale is not contempt of court
  • A declaration is a final order and cannot be granted at the interlocutory stage

Court orders

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  1. 1.The appeal is dismissed with costs to the 1st respondent
  2. 2.No order as to costs regarding the appeal against the 2nd respondent, neither he nor his advocate having attended the hearing

The bench

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One judgment of the whole court — no separate or dissenting opinions.

SB
majority
PW
majority
WD
majority
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No.186 of 2000
Jurisdiction invoked
First appeal to the Court of Appeal under the Civil Procedure Act (appeal against a ruling/order of the High Court)

Relief refused

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Declaration that the private treaty sale and registration of transfer of L.R. No. 4953/22/IV to the 2nd respondent be declared null and void

The learned Judge's remarks on the Auctioneers Act were read in context of an application against a threatened sale by public auction and did not curtail the statutory right of sale; the conditional injunction had lapsed so there was no order breached

p. 5

Injunction restraining the 2nd respondent from disposing of the property pending hearing and determination of the suit

No prima facie case established and the sale could not be faulted

p. 5

Costs

Appeal dismissed with costs to the 1st respondent; no order as to costs regarding the appeal against the 2nd respondent as neither he nor his advocate attended the hearing of the appeal.

Quotable passages

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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 doubt whether the learned Judge could properly restrict a statutory right of sale except where it is not being properly exercised or where it has not arisen.
p. 4statutory power of sale
Consequently, the respondent’s action cannot be said to have been in contempt of a Court Order.
p. 4contempt and lapsed conditional injunction
A declaration is a final order and cannot be granted at the interlocutory stage.
p. 3declaratory relief at interlocutory stage
In the result we order that this appeal be and is hereby dismissed with costs to the 1st respondent, but make no order as to costs regarding the appeal against the 2nd respondent as neither him nor his advocate attended the hearing of the appeal.
p. 5final orders and costs

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Dimken Kenya Limited & 4 others v Barclays Bank of Kenya & another [2007] KECA 319 (KLR)", Case Analysis (2007). Civil Appeal 244 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/319/eng@2007-06-08

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.