David Karanja Kamau v Harrison Wambugu Gaita & another [2020] eKLR Case Summary

Court
High Court of Kenya at Kajiado
Category
Civil
Judge(s)
E.C. Mwita
Judgment Date
October 09, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Discover the key insights and rulings from the David Karanja Kamau v Harrison Wambugu Gaita & another [2020] eKLR case. Explore the implications and significance of this legal decision in our comprehensive summary.

Case Brief: David Karanja Kamau v Harrison Wambugu Gaita & another [2020] eKLR

1. Case Information:
- Name of the Case: David Karanja Kamau v. Harrison Wambugu Gaita & Kenya Commercial Bank Limited
- Case Number: Civil Case No. 25 of 2018
- Court: High Court of Kenya at Kajiado
- Date Delivered: October 9, 2020
- Category of Law: Civil
- Judge(s): E.C. Mwita
- Country: Kenya

2. Questions Presented:
The court was tasked with resolving the following central legal issues:
1. Whether the suit is res judicata.
2. Whether the 2nd defendant had the statutory power of sale to sell the plaintiff's property.
3. Whether the 1st defendant is a bona fide purchaser for value without notice of any defects in the title.

3. Facts of the Case:
The plaintiff, David Karanja Kamau, was a director of Rupa (K) Limited and the owner of parcel number Kajiado/Ntashart/258, approximately 100 acres. In 1999, he charged this land to secure an overdraft facility extended to Rupa (K) Limited by the 2nd defendant, Kenya Commercial Bank Limited. Following defaults on the loan, the bank initiated legal proceedings (HCCC No. 53 of 2004) against the company and its guarantors, including the plaintiff. The court ruled in favor of the bank in June 2014, leading to a judgment against the plaintiff for Kshs. 450,000.

While an appeal against this judgment was pending, the plaintiff alleged that the bank unlawfully sold his property to the 1st defendant, Harrison Wambugu Gaita, without following proper legal procedures. The plaintiff claimed that the bank acted fraudulently and failed to comply with statutory requirements for the sale of charged property.

4. Procedural History:
The case progressed through various stages:
- The plaintiff filed a suit against the 1st and 2nd defendants, seeking to declare the sale of his property illegal and to claim damages for fraud.
- The 1st defendant denied the allegations, asserting his status as a bona fide purchaser.
- The 2nd defendant argued that it had the statutory power of sale and had complied with the law in selling the property.
- The court ultimately had to consider the validity of the sale, the existence of statutory power, and whether the suit was barred by res judicata due to the ongoing appeal.

5. Analysis:
- Rules: The court examined the provisions of the Land Act, particularly Section 90, which outlines the chargee's rights upon default, emphasizing that the chargee must choose one remedy, either suing for the debt or exercising the power of sale.
- Case Law: The court referenced previous decisions, including *Dinesh Kumar Zaverchand Jetha v Guaranty Trust Bank (Kenya) Limited*, which established that a chargee cannot pursue both remedies simultaneously. It also considered the definitions of bona fide purchasers from cases like *Katende v Haridar & Company Limited*.
- Application: The court determined that the 2nd defendant lost its right to exercise statutory power of sale once it opted to sue for the outstanding loan. It ruled that the sale was invalid since it was conducted while the appeal was pending. The 1st defendant was found to be a bona fide purchaser for value without notice, having participated in a public auction without knowledge of any legal defects.

6. Conclusion:
The court ruled in favor of the plaintiff in part, declaring the sale of the property by the 2nd defendant to the 1st defendant as invalid due to the lack of statutory power of sale. The plaintiff was awarded general damages of Kshs. 3,000,000 for the wrongful sale.

7. Dissent:
There were no dissenting opinions noted in this case as it was a singular judgment by Justice E.C. Mwita.

8. Summary:
The High Court of Kenya ruled that the sale of the plaintiff's property was illegal due to the 2nd defendant's lack of statutory power of sale, as it had already obtained a judgment against the plaintiff. The 1st defendant was recognized as a bona fide purchaser for value without notice. The plaintiff was awarded damages for the wrongful sale, highlighting the importance of adhering to statutory requirements in property transactions. This case emphasizes the legal principles surrounding the rights of chargees and the protection of bona fide purchasers in the context of property sales.

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