St Elizabeth Academy-Karen Limited v National Bank of Kenya Limited & another [2018] KECA 708 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that disputing a bank's loan figures does not stop it from selling mortgaged property, and dismissed the school's appeal with costs.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether Ochieng J had sufficient evidence before him to enable him review Kamau J's decision dismissing the appellant's first application
- 2.Whether the injunctive prayers sought against the 1st and 2nd respondents met the threshold for granting injunctions
Key legal issues
#First appeal duty
The Court's duty on first appeal is to re-evaluate the evidence presented to the High Court with a fresh mind and reach its own independent conclusion.
The Court invoked Rule 29(1)(a) of the Court of Appeal Rules and framed its task as re-evaluating the evidence before Ochieng J. It acknowledged that although no appeal lay directly against Kamau J's ruling, that ruling was necessarily examined as the subject of the dismissed review application.
Injunction against exercise of statutory power of sale
A dispute over computation of interest or amounts owed is not sufficient to warrant restraining a chargee from exercising its statutory power of sale; absent such restraint the Giella v Cassman Brown test cannot be satisfied.
Kamau J, citing Ichatha v Housing Finance Company of Kenya, held that a dispute in computation of the sums owed does not justify restraining sale. The Court of Appeal endorsed this, adopting the reasoning in John Nduati Kariuki and Lavuna v Civil Servants Housing, and held the remaining application lacked the necessary Giella requirements.
Review on grounds of new evidence
Matter cannot found a review under Order 45 Rule 1(a) where it was within the applicant's knowledge or could have been produced when the original order was made.
The appellant relied on the sale to Cheneta Limited on 22nd July 2013 as new evidence. The Court held the sale had already occurred before the application was filed on 30th July 2013 and the appellant was a party to the transaction, so the evidence was available and could not constitute new and important matter discovered after the ruling.
Res judicata on the injunction prayer
An injunction prayer already determined after an inter-partes hearing cannot be relitigated.
The Court agreed with the 1st respondent that the prayer for injunction against the 1st respondent had been disposed of by Kamau J after an inter-partes hearing; relitigating it would offend the res judicata rule. The lis pendens argument was also misplaced, being a matter for the main suit.
Interlocutory nature of the appeal
The issues in the plaint remain to be determined at the full hearing of the main suit; findings on this interlocutory appeal do not finally determine them.
The Court emphasised that this was an interlocutory appeal; the substantive issues raised in the plaint could only be canvassed and determined with finality after a full hearing of the main suit, which tempered the scope of its findings.
Legal principles established
#- A court should not grant an injunction restraining a mortgagee or chargee from exercising its statutory power of sale solely on the ground that there is a dispute as to the amount due under the mortgage
- A prayer for injunction already disposed of after an inter-partes hearing cannot be relitigated, as it is barred by res judicata
- Mere assertion of new facts does not ground review under Order 45 Rule 1(a) where the applicant was possessed of the evidence at the time the original application was made; once a purchaser acquires property without notice of alleged impropriety in the sale, recourse lies in damages
Court orders
#- 1.Appeal dismissed
- 2.Costs of the appeal awarded to the respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No. 333 of 2013
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (Rule 29(1)(a) invoked by the Court); appeal from an interlocutory Ruling of the High Court
Relief refused
#Injunctive orders restraining the 1st and 2nd respondents from dealing with the suit properties
The injunction prayer had already been disposed of by Kamau J and could not be relitigated without offending res judicata; and a dispute on the amount due does not restrain a chargee's statutory power of sale
Review of the Ruling of Kamau J of 16th December 2014
The alleged new evidence (the sale to Cheneta Limited on 22nd July 2013) was not new; the appellant was party to the transaction and possessed of the evidence when the first application was filed
Lis pendens argument under Section 98(1)(d), 90(2) and 96(3) of the Land Act
Raised at the wrong forum; an issue to be canvassed at the hearing of the main suit
Costs
Appeal dismissed with costs to the respondents.
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 have always understood the law to be that a court should not grant an injunction restraining a mortgagee from exercising its statutory power of sale solely on the ground that there is a dispute as to the amount due under the mortgage.
We have to look at the evidence presented to the High Court with a fresh mind, re-evaluate it and come to our own independent conclusion.
The issue of the sale was not therefore new as the appellant was a party in the transaction and was therefore possessed of the evidence in question.
It could not therefore be relitigated without running afoul of the res judicata Rule.
We think we have said enough to demonstrate that this appeal is without merit. It is hereby dismissed with costs to the respondents.
Issues in the judgment
#The judgment refers to the impugned sale as having been by private treaty while also noting the property was advertised for sale by public auction; the record does not further reconcile this apparent tension between the parties' accounts.
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.
- Abdulmajid Ramadhan & 3 others v Kenya Urban Roads Authority & 4 others [2017] KEELC 2732 (KLR)[2017] KEELC 2732 (KLR)28 Apr 2017
- Samuel Muga Olale & 3 others (all suing as Chairman, Secretary General, Treasurer and Organising Secretary of Universities Academic Staff Union (UASU) v Registrar of Trade Unions & 6 others [2016] KEELRC 51 (KLR)[2016] KEELRC 51 (KLR)6 Oct 2016
Cite this brief
#Cite this brief
Caselaw, "St Elizabeth Academy-Karen Limited v National Bank of Kenya Limited & another [2018] KECA 708 (KLR)", Case Analysis (2018). Civil Appeal No. 228 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/708/eng@2018-02-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.