Shalom Agencies Limited & another v Family Bank Limited [2019] KEELC 4822 (KLR)
The bottom line
#Kenya's Environment and Land Court ruled borrowers who admit default cannot stop a bank from selling their land unless they pay the disputed amount into court.
What this practically means
#Executive summary
#Key legal issues
#Whether a temporary injunction should issue where default is admitted
No; where default is admitted or demonstrated, a restraining order cannot issue unless the amount owing is paid into court or is prima facie excessive
The court applied the Halsbury's Laws of England Vol. 32(4th Edn) para 725 principles, noting the applicants conceded default, did not pay the amount claimed into court, and did not demonstrate that the amount claimed was excessive. The statutory power of sale had arisen and all requisite notices had been served.
Whether the matrimonial home/livelihood argument amounts to irreparable loss
No; property offered as security, even a matrimonial home, is offered on the undertaking that it may be sold on default, and its loss is calculable and compensable in damages
Relying on Wycliffe Mutali Okwaro v Kenya Women Micro Finance Bank (citing Maltex Commercial Supplies v Euro Bank) and Andrew Muriuki Wanjohi v Equity Building Society, the court held that chargors who evaluated the property in monetary terms and offered it as security cannot complain that loss is incapable of compensation; sympathy cannot displace the law.
Whether the court can compel the lender to reschedule repayment
No; rescheduling requires voluntary negotiation, and the court will not intervene absent contractual provision for negotiation or other dispute-resolution modes
The applicants asserted a statutory duty on the lender to allow rescheduling where a borrower shows commitment to pay, but cited no specific statutory provision or decided case law. The court held that in the absence of any contractual basis, the applicable law must simply be followed and applied.
Legal principles established
#- A mortgagee/chargee will not be restrained from exercising the power of sale merely because the amount due is in dispute or the mortgagor objects to the manner of sale; restraint lies only where the mortgagor pays the amount claimed into court or the claim is prima facie excessive
- Property offered as security, including a matrimonial home, stands the risk of sale upon default and its loss is compensable in damages
Court orders
#- 1.The application dated 9.11.2016 is dismissed entirely
- 2.Costs of the application awarded to the defendant/respondent
- Jurisdiction invoked
- Section 1A, 1B, 3, 3A and 63(e) of the Civil Procedure Act (Cap 21) and Order 40 Rules 1(a), 2, 3 and 9
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Shalom Agencies Limited & another v Family Bank Limited [2019] KEELC 4822 (KLR)", Case Analysis (2019). Notice of Motion dated 9.11.2016, filed 10.11.2016 (suit number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4822/eng@2019-01-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.