Esther Kemuma Mogaka v Diamond Trust Bank of Kenya Ltd & 2 others [2020] eKLR Case Summary

Court
Environment and Land Court at Kisii
Category
Civil
Judge(s)
J.M. Onyango
Judgment Date
September 25, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Explore the key details of the case Esther Kemuma Mogaka v Diamond Trust Bank of Kenya Ltd & 2 others [2020] eKLR. Understand the legal implications and outcomes in this significant judgment. Perfect for legal professionals and students alike.

Case Brief: Esther Kemuma Mogaka v Diamond Trust Bank of Kenya Ltd & 2 others [2020] eKLR

1. Case Information:
- Name of the Case: Esther Kemuma Mogaka v. Diamond Trust Bank of Kenya Ltd, Stephen Karanja Kangethe T/A Dalai Traders Auctioneers, Alyssa Limited
- Case Number: ELC Case No. 29 of 2019
- Court: Environment and Land Court at Kisii
- Date Delivered: 25th September 2020
- Category of Law: Civil
- Judge(s): J.M. Onyango
- Country: Kenya

2. Questions Presented:
The central legal issues before the court included:
1. Whether the 2nd Defendant issued and served the requisite Notification of Sale as required by the Auctioneers Rules.
2. Whether the sale of the suit property was advertised properly.
3. Whether the sale and/or alienation of the suit property without compliance with the Auctioneers Act renders the sale null and void.
4. Whether the Plaintiff established a prima facie case to warrant the grant of a temporary injunction.

3. Facts of the Case:
The Plaintiff, Esther Kemuma Mogaka, is a co-director of Ouru Power Limited, which secured a loan of Kshs. 115,000,000 from the 1st Defendant, Diamond Trust Bank of Kenya Ltd, with the suit property (L.R No. KISII MUNICIPALITY/BLOCK 111/334) as collateral. Following the company's default on the loan, the bank initiated the process to exercise its statutory power of sale. The property was sold at public auction on 20th December 2017. The Plaintiff contested this sale, claiming it was unlawful due to the lack of proper notification and advertising, and sought an injunction against the 3rd Defendant, Alyssa Limited, who purchased the property.

4. Procedural History:
The Plaintiff filed a Notice of Motion on 24th September 2019 seeking temporary injunction orders against the 3rd Defendant. The application was supported by an affidavit detailing the background of the case. The 1st Defendant opposed the application, asserting that the statutory power of sale had crystallized due to the Plaintiff's admission of the debt and that the requisite statutory notices were served. The court reviewed the submissions from both parties, considering various legal precedents and statutory provisions.

5. Analysis:
Rules:
The court considered the Auctioneers Rules 1997, particularly Rule 15, which outlines the procedures for issuing a Notification of Sale. The relevant legal principles for granting an injunction were derived from Giella v. Cassman Brown & Company Ltd (1973) E.A 358.

Case Law:
The court referenced several precedents, including:
- Lakeland Motors Limited v. Harbhjan Singh Sembi (1998) eKLR: Failure to comply with the Auctioneers Rules amounted to an irregularity.
- Giro Commercial Bank Limited v. Mutesi Civil Appeal No.342 of 2000 (U.R): A mortgagee cannot be restrained from exercising their power of sale based on disputes over the amount due.
- Franklin Gambo Mwagambo v. Equity Bank Limited (2015) eKLR: Non-compliance with procedural rules does not necessarily invalidate a sale.

Application:
The court found that the 1st Defendant's statutory power of sale had crystallized and that the Plaintiff failed to demonstrate a prima facie case. It ruled that the absence of a Notification of Sale did not invalidate the auction, as the sale was properly advertised in two newspapers. The Plaintiff's application for an injunction was dismissed on the grounds that she had not satisfied the necessary legal criteria.

6. Conclusion:
The court ultimately dismissed the Plaintiff's application for a temporary injunction against the 3rd Defendant, ruling that the Plaintiff had not established a prima facie case with a probability of success. The decision underscored the principle that procedural irregularities do not automatically render a sale invalid.

7. Dissent:
There were no dissenting opinions noted in the ruling.

8. Summary:
The court ruled against Esther Kemuma Mogaka, dismissing her application for an injunction to stop the 3rd Defendant from taking possession of the property. The ruling emphasized the importance of adherence to statutory procedures while also clarifying that failure to comply with such procedures does not necessarily invalidate a sale. This case highlights the balance between protecting the rights of property owners and the statutory powers of lenders in enforcing security interests.

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