James Omwoyo Nyang’au v Heritage Insurance Co. Ltd, Mary Siamanda Siameto & Michael W. Kingara Trading in the Name and Style of Trade Point Auctioneers [2018] KEELC 1791 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT AT KAJIADO

ELC CASE NO. 405 OF 2017(FORMERLY MACHAKOS ELC CASE NO. 265 OF 2009)

JAMES OMWOYO NYANG’AU.............................................PLAINTIFF

VERSUS

THE HERITAGE INSURANCE CO. LTD....................1ST DEFENDANT

MARY SIAMANDA SIAMETO....................................2ND DEFENDANT

MICHAEL W. KINGARA TRADING IN THE NAME AND STYLE OF TRADE POINT AUCTIONEERS.................................3RD DEFENDANT

JUDGEMENT

By a Plaint dated the 2nd September, 2009, amended on 23rd November, 2010; further amended on 19th August, 2013 and 18th November, 2016 respectively, the Plaintiff prays for the following orders:

1. A permanent injunction restraining the Defendants and in particular the 2nd Defendant from interfering with the Plaintiff’s property Ngong/ Ngong/ 31290 by selling, charging, disposing or in any way whatsoever pending the hearing of this suit.

2. A permanent order from the Honourable Court restraining the Defendant and in particular the 2nd Defendant from evicting or in any way interfering with the Plaintiff from his property Ngong/ Ngong/ 31290.

3(a) A permanent order from the Honourable Court to restrain the Defendant and in particular the intended 4th Defendant from selling, charging, disposing or in any way whatsoever pending the hearing and determination of this suit without interfering with the Plaintiff’s property Ngong/ Ngong/ 31290.

(b) A declaration that the sale and transfer of the Plaintiff property Ngong/ Ngong/ 31290 was unlawful, irregular and illegal and the transfer be cancelled and the property to revert to the Plaintiff.

4. General damages for illegal Sale and transfer of property Ngong/ Ngong/ 31290

5. Cost of the suit

6. Interest at court rate in (d) and (e) above.

7. A Court order to the 1st Defendant to give the 50% rebate and/or discount

The 1st and 3rd Defendants filed a re amended Statement of Defence on 22nd December, 2016 where they averred that the sum of Kshs. 2,000,000/= was to be repaid together with interest at the rate of 8% (variable) as per the agreement between the Plaintiff and the 1st Defendant signed on 22nd October, 2007. They contended that land parcel number Ngong /Ngong / 31290 was charged in favour of the 1st Defendant and insisted the Plaintiff was to benefit from the deposit administration scheme once eligible and upon meeting the set conditions. They stated that the sum due from the Plaintiff as at 16th June, 2008 was Kshs. 2, 738, 613/=, compelling the 1st Defendant to exercise its Statutory Power of Sale. The 1st Defendant denied that it illegally, unlawfully, maliciously, fraudulently and without any reasonable or justifiable excuse sold the suit property to the 2nd Defendant. The 1st Defendant confirmed that the suit property was sold by the 3rd Defendant on its behalf, to the 2nd Defendant, through a public auction in exercising its statutory power of sale, after the Plaintiff failed to service the aforementioned loan and redeem his property. The 1st Defendant averred that prior to the Sale of the suit property, a valuation was conducted and a reserve price determined. The 1st and 3rd Defendants further confirmed that the Plaintiff was duly served with the requisite notice under Cap. 300 and after failing to redeem the suit property, it was duly advertised for sale and indeed sold to the 2nd Defendant on 23rd June, 2009. Further, that the Plaintiff after receiving notice of the intended sale of the suit land, requested for more time to organize himself, which was indulged by the 1st Defendant, but he never redeemed the said property. The 1st and 3rd Defendants denied the particulars of retirement benefits and contend that the same are not relevant to the suit herein. The 1st and 3rd Defendants stated that Milimani CMCC No. 5084 of 2009 was dismissed for want of prosecution. The 1st Defendant admitted that the Plaintiff is claiming terminal/retirement benefits from it, in another suit which has since been determined and the Plaintiff paid his benefits as ordered by the Court. The 1st and 3rd Defendants reiterated that the prayers sought by the Plaintiff are not available since the suit land was already sold and transferred to the 2nd Defendant. Further, that the 2nd  Defendant is entitled to vacant possession of the suit property and that no general damages can be awarded since the property was sold in exercise of the 1st Defendant’s statutory power of sale. Further, that the orders the Plaintiff is seeking are against a person not a party to this suit. The 1st and 3rd Defendants reaffirmed that the re amended Plaint was filed out of time without leave of the Court and the amendments contained therein are null and void. They pray that the suit be dismissed with costs.

The 2nd Defendant filed her amended statement of Defence dated the 22nd December, 2016 and stated that she is a stranger to various allegations made in the re amended Plaint which is misconceived. She averred that she purchased the suit land at a public auction conducted by the 3rd Defendant after emerging the highest bidder thereof. She denied the allegations of conspiracy and puts the Plaintiff to strict proof. She contended that the suit land was advertised for sale by public auction in a local daily hence her attendance at the auction. Further, that she paid the purchase price after which the title to the suit land was transferred to her and she has since sold as well as transferred the same to a third party. She insisted she was under no obligation to carry out a valuation of her property before selling or transferring the same to another party. She denied the allegations of fraud, malice, false pretences, illegality or conspiracy as contained in the re- amended Plaint and averred that the same are false and alarmist. She further denied that no demand as well as notice of intention to sue was served upon her. She reiterated that the prayers sought in the re amended Plaint are not available as against her or at all. She stated that the re amended Plaint was filed out of time without leave and the amendments contained therein are of no effect. Further, that the re – amended Plaint contained allegations and prayers against a person who is not a party to the suit, which are intended to circumvent the ruling of 8th May, 2015 and must be struck off. She prayed that the Plaintiff’s suit be dismissed with costs.

Evidence of the Plaintiff

PW1 James Omwoyo who is the Plaintiff herein adopted his witness statement and produced his list of documents filed on 7th March, 2017 as exhibits. He testified that he worked for the 1st Defendant from 2002, as per his contract dated the 2nd May, 2002, in various ranks, upto 26th November, 2007, when he was wrongfully retired. He stated that in March, 2004, he purchased land parcel number Ngong/ Ngong/ 31290, hereinafter referred to as the ‘suit land’ from one Richard Ntoipa Kipaa, which purchase price of kshs. 500, 000 was paid by the 1st Defendant, upon his request. He confirmed applying for a development loan of Kshs. 490, 613 from the 1st Defendant on 24th March, 2004. Further, that the 1st Defendant confirmed vide a letter dated the 19th April, 2004 that they were able to give him a loan of Kshs. 989, 294 to develop the suit land, and he paid Kshs. 15,000 as commitment payment on staff mortgage loan. He testified that he took occupation of the suit land from March, 2004 and lived in a semi permanent house comprising of two bedrooms, kitchen and sitting room, while he commenced constructing a main house. He contends that he lived on the suit land peacefully from March 2004 upto 26th November, 2007 when the 1st Defendant retired him from employment and sold the suit land to the 2nd Defendant on 23rd June, 2009. He insists that he serviced the loan from March 2004 upto 30th November, 2007, through a check off system and repaid a total of Kshs. 735, 714. He explains that he sought to have his personal pension used to offset part of the mortgage, as well as his wife service part of the loan, vide his letter dated the 22nd November, 2007 but the 1st Defendant did not respond to his proposals. He denies receiving any retirement package after termination of his employment in November, 2007 but he was later paid on 9th July, 2012, after complaining to the Retirement Benefits Authority. He reiterates that in October, 2010 the 1st and 2nd Defendants used an illegal order and threw him including his family out of the suit land. Further, that during the eviction, he lost household goods, and the semi permanent house was destroyed. He claims he challenged his retirement at the Industrial Court vide case No. 299 of 2012, where he was awarded Kshs. 700,000 as general damages. He avers that he did a search in January, 2014 and realized the 2nd Defendant had sold and transferred the suit land to one Jane Alice Mutuota on 7th March, 2011, with the title deed issued on 3rd August, 2011. He was hence seeking for cancellation of sale and transfer of suit land and the same to revert back to him; special damages of Kshs. 51, 007, 270; costs of the suit and interest. He produced his list of documents dated the 7th March, 2017 as his exhibits P ‘1 – 20’.

In cross examination he confirmed taking a loan that was secured with a legal charge over the suit land. He stated that he stopped working for the 1st Defendant on 23rd November, 2007 and by that time he had not fully paid up the loan. He explained that as per his exhibit No. 4 which was the charge document, it stated that in default of repayment of the loan, the suit land was to be repossessed and sold off, for purposes of recovering the outstanding loan. He denied knowledge of whether the suit land was sold and that he sued the 2nd Defendant as he did not know how and why the suit land was disposed off. He confirmed that from the Plaint, he pleaded that the 2nd Defendant had bought the suit land from a public auction. He further confirmed annexing a copy of the newspaper advert as exhibit ‘14’ but denied attending the auction. He was aware the 2nd Defendant sold the suit land to a third party Jane Mutuota who is now in  occupation of the same and has developed it. He disputes the entire auction and contends that when he left employment, the 1st Defendant held his terminal benefits amounting to Kshs. 900,000 as well as his personal contribution of Kshs. 397,000. He insists that for all the staff retiring, they were being given a discount of 50% of the outstanding mortgage at the date of retirement. Further, that he had requested his terminal dues to be applied to service the loan but the 1st Defendant did not respond to his request. He denied receiving a letter dated the 19th December, 2007 from the 1st Defendant. He averred that in November, 2007, he requested to stay on the suit land as he made arrangements to relocate and the said request was accepted and he stayed thereon upto October, 2010. He filed a suit in the Industrial Court to challenge the unlawful retirement and a claim for his dues with the Retirement Benefits Authority, which he has also included as a claim in this suit as they form a basis for disputing the sale. He contends that the 3rd Defendant was not licensed to practice at the time of conducting the auction. Further, that he filed an application at the Machakos High Court challenging the 3rd Defendant’s right to practice but it was dismissed and he later realized that the 3rd Defendant was indeed licensed to practice.

In reexamination, he claims he was told to move out of the suit land in December, 2007 or make payment of the outstanding loan and it was his intention to use the terminal benefits to repay the loan. He opined that if the terminal benefits were used to offset the loan, he could have remained with only one (1) million to repay and if he was given a 50% discount on the loan, he could not have had any amount due to be repaid. He confirmed that the suit land was sold on 23rd June, 2009 and that the proceeds of the sale were not applied to his account. He reiterates that he sought for his personal contributions from the Retirement Benefits Authority and that the 3rd Defendant was initially not allowed to practice but was later given his license to do so.

The Plaintiff thereafter closed his case.

Evidence of the Defendants’

DW1 Jackson Mbuthia Kiboi stated that he was employed by the 1st Defendant as a Legal Manager, Risk and Compliance. He adopted his witness statement dated the 23rd November, 2017 and filed in Court on 29th November, 2017. He produced the bundle of documents (except for No. 16), that was filed in Court on 24th July, 2017 as exhibits  D’1 – 15’. He testified that the Plaintiff was a former employee of the 1st Defendant, and during the currency of his employment, he secured a charge over the suit land to secure a loan of Kshs. 2, 593, 367/=  including interest, which was to be repaid in full. Further, that it was a term of the charge that if there was default, the suit land would be sold once the Plaintiff was notified. He confirmed that the Plaintiff defaulted in repaying the loan but pleaded with the 1st Defendant not to sell the suit land and vide a letter dated the 19th December, 2007, the 1st Defendant indulged him but notified him that the suit land would be sold as from 30th April, 2008 to recover the outstanding debt. He contends that due to the Plaintiff’s failure to repay the loan, the suit land was sold through a public auction on 23rd June, 2009, with the 2nd Defendant emerging the highest bidder by bidding Kshs. 2, 400,000/=. He insists the Plaintiff was served with all the  requisite notices before the 1st Defendant exercised its statutory power of sale. He relied on the Defendants’ exhibits and contended that the Sale was not unlawful, irregular or illegal as alleged by the Plaintiff. Further, that the Plaintiff has since been evicted from the suit land and the 2nd Defendant sold the said land to a third party. He prayed that the suit be dismissed with costs.

During cross examination he confirmed seeing the Plaintiff’s letter dated the 22nd November, 2007 which the 1st Defendant replied to on 19th December, 2007. He stated that in the said letter by the 1st Defendant, it did not address the Plaintiff’s request to offset the outstanding loan using his retirement benefits. Further, that the suit land was advertised and sold by public auction on 23rd June, 2009. He averred that the 1st Defendant received the full payment in three cheques dated as follows: 12th September, 2011 for Kshs. 727, 133; 12th September, 2011 for Kshs. 727, 134 and 12th September, 2011 for Kshs. 727, 133. He explained that the sale was conducted in 2009 but they received the cheques in 2011 since the firm of messrs B. Mbai & Associates who were handling the transactions wrote to the 1st Defendant on 8th September, 2011 stating that they were reluctant to release the entire purchase price until the occupant vacated the suit land. Further, that the advocate did not remit the funds to the 1st Defendant within the 30 days after the auction and as at October, 2010, the Plaintiff’s account had not been credited with the proceeds from the sale, with the loan statement only reflecting the amount once the cash was realized. He was aware the Plaintiff wanted a portion of his pension amounting to Kshs. 479, 162 to be committed towards offsetting the loan. Further, that as at 31st December, 2009, the loan account stood at Kshs. 3,169,078 while at the time the Plaintiff left employment in November, 2007, the outstanding loan was Kshs. 2, 493, 701. He further explained that the proceeds from the sale was computed together with Kshs. 479, 162 and the Plaintiff was still left with a deficit of Kshs. 508, 516. He testified that the cheque for Kshs. 479, 162 was credited in September, 2011 but backdated to the date of sale. He referred to exhibit ‘D5’ which was a letter dated the 16th June, 2008 and explained that the outstanding amount was Kshs. 2, 738, 613 and the sale proceeds amounted to kshs. 2,400,000, with the balance remaining at Kshs. 338, 613. He reiterated that the Plaintiff was following up on his terminal dues but the 1st Defendant could not take the same as it would leave him a pauper. Further, that the 1st Defendant was governed by the contract which stipulated that in case of default, it would exercise its rights by repossessing the suit land and sell it to recover the loan including the interest accrued. He stated that the Plaintiff was paid his terminal dues in 2012 and the option to take the benefits to repay the loan was not taken up by the 1st Defendant. Further, that the 1st Defendant had the discretion to grant 50 % rebate, as it had done to some of the employees, but this was not part of the contract, and the 50% rebate only applied where the Employee had continued to service the loan, which in this instance was not the position.

In re examination he clarified that in November, 2007 the Plaintiff had promised to repay the loan but failed to do so, culminating in the suit land being sold. Further that as per the Charge documents, if the loan remained outstanding, it attracted an interest rate of 13%  and the loan had escalated at the time of the auction. He reiterated that even though the Plaintiff had requested the 1st Defendant to utilize his terminal dues to repay the loan, it was the 1st Defendant’s discretion to do so or not. He explained that the 1st Defendant was not receiving the sale proceeds directly from the auction but through its lawyers messrs B. M. Mbai & Associates. He stated that the Transfer was signed on 17th July, 2009 by the 1st Defendant.

The Defendants thereafter closed their case.

The parties then filed their respective submissions that I have considered.

Analysis and Determination

Upon perusal of the pleadings filed herein including evidence of PW1 and DW1, the main issues for determination are the following:

Whether the Plaintiff freely charged land parcel number NGONG/ NGONG/ 31290 to secure a loan with the 1st Defendant.

Whether the Plaintiff defaulted in repaying its loan with the 1st Defendant

Whether the 1st Defendant lawfully exercised its statutory power of sale in accordance with the Law.

Whether the 2nd Defendant legally acquired the suit land

Whether the Plaintiff is entitled to damages

Whether the Plaintiff is entitled to any remedy against the 2nd and 3rd Defendants respectively

Who will pay the costs of the suit.

As per the Plaint, it the Plaintiff’s contention that the suit land was illegally sold and transferred by the 1st Defendant to the 2nd Defendant. He denies being served with the requisite statutory notices before the said land was sold through public auction.  He wants the sale cancelled and the suit land to revert to him. I note in the instant suit the Plaintiff has included the issues concerning his terminal benefits herein but I will not make a determination on the same due to lack of jurisdiction and the fact that the said issues has already been heard as well as determined by the Industrial Court. I will only focus my decision on the sale of the suit land.

As to whether the Plaintiff freely charged land parcel number NGONG/ NGONG/ 31290 to secure a loan with the 1st Defendant. I note as per the Charge document dated the 22nd October, 2007, clause (1) states as follows:’ I, JAMES OMWOYO NYANGAU whose address appears in the schedule hereto (hereinafter called the ‘ Chargor’) HEREBY CHARGE my interest in the abovementioned title to secure the payment to THE HERITAGE AII INSURANCE COMPANY LIMITED a limited liability Company having its registered office at Nairobi and its postal address at Post Office Box Number 30390 Nairobi (hereinafter called ‘Chargee’) of the Principal Sum mentioned in the Schedule hereto lent by the Chargee to the Chargor ( the receipt whereof the Chargor hereby acknowledges) with interest as hereinafter….’

From a reading of the said excerpt, it is evident that the Plaintiff willfully charged the suit land as there is no evidence presented to the contrary. As per the Charge document the loan secured was Kshs. 2, 000, 000/=plus interest.

On the issue as to whether the Plaintiff defaulted in repaying its loan with the 1st Defendant culminating in the 1st Defendant exercising its statutory power of sale, I wish to delve into the pleadings including documents filed and the evidence presented. It was the Plaintiff’s evidence that after his unlawful retirement in November 2007, he had instructed the 1st Defendant to utilize his terminal benefits to offset the loan and that the wife was also ready to repay the outstanding loan. However, PW1 did not present any evidence from the wife to demonstrate she was indeed ready to repay the loan and the amount she would pay. DW1 contended that the terminal dues if utilized would render the Plaintiff a pauper and according to the Charge document the Plaintiff was expected to repay the loan. As per the letter dated the 22nd November, 2007, the Plaintiff wrote to the 1st Defendant admitting his indebtedness and giving proposals on how to repay the loan. Further, in a letter dated the 21st November, 2007, the Plaintiff wrote to the 1st Defendant requesting for permission to reside on the suit land for four months as he organizes himself. The 1st Defendant in its letter dated the 19th December, 2007 accepted the Plaintiff’s request to reside on the suit land for four months and advised him to continue to repay his loan. The 1st Defendant further informed the Plaintiff of its intention to sell the suit land to recover the outstanding debt from 30th April, 2008. The Plaintiff in his evidence did not inform Court on whether he repaid any debt as at 30th April, 2008 and I would infer that it seems he failed to pay the outstanding debt despite being given a brief reprieve by the 1st Defendant. This culminated in the 3rd Defendant through instructions from the 1st Defendant, issuing the Plaintiff a 45 Days Redemption Notice which was served upon him on 3rd April, 2009 in the presence of his advocate L. Nyangito. I note the suit land was advertised for sale through public auction vide the Kenya times newspaper dated 6th June, 2009. Further, that the Plaintiff had initially filed an application seeking injunctive orders against the sale of the suit land, but the application was dismissed but he never appealed against the said ruling and this paved the way for the 1st Defendant to exercise its statutory power of sale. It was the Plaintiff’s contention that he was entitled to 50% rebate off his mortgage account since the 1st Defendant accorded the same to other employees who had retired. The Plaintiff even produced a list of the persons who were granted the said 50% rebate. DW1 however insisted that rebate was discretionary and only applied to persons who paid their loan. In the instant suit, he stated that the Plaintiff did not qualify for it since he had failed to repay the debt. From the Charge Document which was the contract governing the loan arrangement between the Plaintiff and the 1st Defendant in relation to the suit land, there was no indication that they would be a 50% rebate, and it is my finding that this was discretionary and not binding. From the evidence presented, I further find that the Plaintiff indeed defaulted in repaying the loan as per the Charge Document and this culminated in the 1st Defendant’s exercising its statutory power of sale, after issuing him with the requisite notices.

As to whether the 2nd Defendant legally acquired the suit land, it was the 1st Defendant’s contention that the suit land was sold through public auction and the 2nd Defendant emerged the highest bidder after having quoted Kshs. 2. 4 million. Further, she paid the requisite 25%, on 23rd June, 2009, at the time of the auction, amounting to Kshs. 600,000 and was to pay the balance in thirty (30) days. I note  that there was a Valuation Report by Kenya Valuers & Estate Agents dated the 8th March, 2007 which valued the suit land at Kshs. 1,500, 000 prior to the sale. After the auction, a Memorandum of Sale dated the 23rd June, 2009 between the 2nd and 3rd Defendants was duly executed. An application for consent to transfer the suit land was signed between the 1st and 2nd Defendants on the 23rd June, 2009; a transfer by Chargee in exercise of Power of Sale was executed on 17th July, 2009 and registered on 30th July, 2009 with title deed issued to the 2nd Defendant on 12th August, 2009. It was the Plaintiff’s contention that the sale was unlawfully done and that the Auctioneer was not duly licensed to undertake it. However during re examination, he confirmed that the Auctioneer was duly licensed to undertake the auction. DW1 in cross examination confirmed that the proceeds from the auction were received much later as it had been held by the lawyer before they credited the plaintiff’s account.  DW1 explained that the lawyer messrs B.M Mbai & Associates withheld the proceeds of the auction as it was awaiting the 2nd Defendant to be granted vacant possession of the suit land but that once the 1st Defendant received the same, it was backdated in the loan account to the date of the auction.

Section 99 of the Land Act provides as follows:

(1) This section applies to—

(a) a person who purchases charged land from the chargee or receiver, except where the chargee is the purchaser; or

(b) a person claiming the charged land through the person who purchases charged land from the chargee or receiver, including a person claiming through the chargee if the chargee and the person so claiming obtained the charged land in good faith and for value.

(2)  A person to whom this section applies—

(a)  is not answerable for the loss, misapplication or non-application of the purchase money paid for the charged land;

(b) is not obliged to see to the application of the purchase price;

(c) is not obliged to inquire whether there has been a default by the chargor or whether any notice required to be given in connection with the exercise of the power of sale has been duly given or whether the sale is otherwise necessary, proper or regular.

(3) A person to whom this section applies is protected even if at any time before the completion of the sale, the person has actual notice that there has not been a default by the chargor, or that a notice has been duly served or that the sale is in some way, unnecessary, improper or irregular, except in the case of fraud, misrepresentation or other dishonest conduct on the part of the chargee, of which that person has actual or constructive notice. (4) A person prejudiced by an unauthorised, improper or irregular exercise of the power of sale shall have a remedy in damages against the person exercising that power.

Further section 77 of the Repealed Registered Land Act which was in force at the time of the sale of the suit land provides as follows:’(1) A chargee exercising his power of sale shall act in good faith and have regard to the interests of the chargor, and may sell or concur with any person in selling the charged land, lease or charge, or any part thereof, together or in lots, by public auction through a licensed auctioneer for a sum payable in one amount or by instalments, subject to such reserve price and conditions of sale as the chargee thinks fit, with power to buy in at the auction and to resell by public auction without being answerable for any loss occasioned thereby, and may himself bid at any auction.

(1A) In subsection (1), the expression “licensed auctioneer” has the meaning assigned to it in section 2 of the Auctioneers Act, 1996.

(2) Where the chargor is in possession of the charged land or the land comprised in the charged lease, the chargee shall become entitled to recover possession of the land upon a bid being accepted at the auction sale. (3) A transfer by a chargee in exercise of his power of sale shall be made in the prescribed form, and the Registrar may accept it as sufficient evidence that the power has been duly exercised, and any person suffering damage by an irregular exercise of the power shall have his remedy in damages only against the person exercising the power. (4) Upon registration of the transfer, the interest of the chargor as described therein shall pass to and vest in the transferee freed and discharged from all liability on account of the charge, or on account of any other encumbrance to which the charge has priority (other than a lease, easement or profit to which the chargee has consented in writing).’

In the case of Bomet Beer Distributors Ltd & Anor. v Kenya Commercial Bank Ltd & 4 Ors (2005) eKLR Kimaru J held as follows: “What is clear is that once a property has been knocked down and sold in a public auction by a chargee in exercise of its statutory power of sale, the equity of redemption of the chargor is extinguished. The only remedy for the chargor who is dissatisfied with the conduct of the sale is to file suit for general or special damages.”.

It is against the foregoing and in relying on the legal provisions above, I find that the Plaintiff cannot hold a claim against the 2nd Defendant as she purchased the suit land from an auction and is protected by law. Even if the 1st Defendant’s advocate failed to forward the proceeds of the auction to the 1st Defendant, immediately after the auction, so long as the 2nd Defendant has paid the said purchase price, the sale was indeed valid and she is the rightful owner of the suit land. I note from the pleadings and evidence presented that the 2nd Defendant has even sold the suit land to a third party who is already in occupation, I find that the Plaintiff’s only remedy lie against the 1st Defendant to compensate him in damages  if indeed the auction was not properly undertaken.  I will proceed to exonerate the 2nd Defendant from the suit herein.

As to whether the Plaintiff is entitled to damages against the 1st Defendant, I find that by the Plaintiff charging his property, he had made it a commercial commodity which could be sold in the instance of default in loan repayment. Section 90 (1) of the Land Act stipulates that' If a chargor is in default of any obligations, fails to pay interest or any other periodic payment or any part thereof due under any charge or in the performance or observation of any covenant, express or implied, in any charge, and continues to be in default for one month, the chargee may serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be. '

Section 90 (3) stipulates that ' if the chargor does not comply within two months after the date of the service of the notice under, subsection (1), the chargee may -

(a) sue the chargor for any money due and owing under the charge;

(b) appoint a receiver of the income of the charge land;

(c) lease the charged land, or if the charge is of a lease, sublease the land;

(d) enter into possession of the charged land; or

(e) sell the charged land.

The Court notes that the Plaintiff severally admitted his indebtedness to the 1st Defendant and requested for time to repay the loan. The Plaintiff however did not inform Court on how much he repaid after he had been granted time and before the said auction. In the case of LABELLE INTERNATIONAL LTD. AND ANOTHER – VS – FIDELITY COMMERCIAL BANK & ANOTHER, CIVIL CASE NO. 786 OF 2002it was established that “. . . when part of amount claimed is admitted or proved to be due, a Chargee cannot be restrained by an injunction.”  I find that the 1st Defendant legally auctioned the suit land and could not be restrained from realizing the security since the Plaintiff already admitted his indebtedness, to it.  On the question of damages, the Plaintiff submitted that he is entitled to Kshs. 200,000 being the value of the house; rent of Kshs. 20,000 monthly from 28th October, 2008 until payment in full and punitive including aggravated damages for illegal eviction. From the evidence presented, the Plaintiff did not furnish court with proof of the cost of the building he had been residing on nor the receipts to show that he was paying Kshs. 20, 000 per month. I further note that the Plaintiff had already been paid his terminal dues as a result of the order of the Industrial Court. I note that the Plaintiff continued to reside on the suit land after the same had been sold in June, 2009 and transferred to the 2nd Defendant in August, 2009. I find that based on the extenuating circumstances surrounding the sale of the suit land and the Plaintiff’s refusal to move culminating in his eviction in October, 2010, he does not have any rights capable of being enforced as the 1st Defendant lawfully exercised its statutory power of sale. The Plaintiff seems to be crying foul, because of the mode of his dismissal by the 1st Defendant, yet the 1st Defendant was quite courteous in giving him more time to repay the loan and redeem his property which was not to be.

In the case of Elijah Kipng’eno Arap Bii v Kenya Commercial Bank Limited [2001] eKLR, the learned Judge held that:’ In my opinion, justice must always be dispensed in accordance with well-established legal principles and not in accordance with judicial idiosyncrasy or whim. And of course it is trite learning that equity follows the law. Being of that persuasion I cannot see that a lender who happens to be the employer of the borrower cannot be restrained from exercising his contractual or statutory powers merely because the borrower has brought into question the lawfulness of his dismissal from the lender’s service. And even if it may be the case that in common parlance the dismissal of an employee and the recalling of his loans thereafter may be called double jeopardy, such action cannot be conceived to be double jeopardy within the meaning of the law……………………………. The applicant has known all along that the securities he offered for his charge debt would be realized if default was made in the repayment. As I have said severally, once property is offered as security it by that very fact becomes a commodity for sale. And there is no commodity for sale whose loss cannot be compensated adequately in damages.’

Similarly in the caseof Priscillah Krobought Grant …Vs…Kenya commercial Bank,the Court of Appeal Court held that:-

“Where a chargee had exercised its statutory power of sale and caused the property to be sold by public auction, the remedy of the chargor was a claim for damages if she would prove that there was improper or irregular exercise of the statutory power of sale”.

Being persuaded with the Bii Case and bound by the Priscilla Case as cited above, and in relying on the facts as presented, I find that the Plaintiff is not deserving of the damages sought as he has failed to prove that auction was conducted irregularly as well as improperly.

As to whether the Plaintiff is entitled to any remedy against the 2nd and 3rd Defendants respectively, from my findings above, I find that the 2nd and 3rd Defendants had no malice against the Plaintiff. The 2nd Defendant duly purchased the suit land at an auction while the 3rd Defendant, was duly instructed vide a letter dated the  4th February, 2009 from messrs B. Mbai & Associates and undertook the auction on 23rd June, 2009 as per the contents of their letter dated the 25th June, 2009 to messrs B. Mbai & Associates. From the documents presented in Court, the 3rd Defendant issued the 45 Days Redemption Notice to the Plaintiff, advertised the suit land in the newspaper and also issued a Notification of Sale, in accordance with the law. The Plaintiff cannot deny knowledge of the Sale as he was duly informed by the 1st Defendant vide their letter dated the 19th December, 2007 of their intention to sell the suit land on 30th April, 2008 if he failed to repay the outstanding loan. I note the Plaintiff only moved to Court in August 2009 after the sale of the suit land, and did not seek an injunction much earlier before the same was sold. As I alluded to earlier, the Plaintiff was mixing issues of terminal benefits and the sale of the suit land which he was already paid in 2012.

It is against the foregoing that I find that the Plaintiff has failed to prove his case on a balance of probability and proceed to dismiss the suit with costs.

Dated signed and delivered in open court at Kajiado this 27th day of September, 2018.

CHRISTINE OCHIENG

JUDGE