Automated Summary
Key Facts
Equity Bank (Kenya) Limited sought to sell property in Malindi secured by legal charges after multiple failed auctions. The Respondent, Souring & Construction Industries Company Limited, defaulted on loans totaling Kes 7,242,785.09 as of July 2024. The Environment and Land Court ruled it lacked jurisdiction to handle the statutory power of sale dispute, citing precedents requiring such matters to be resolved in the High Court's Commercial Division. Three auctions (August 2020, February 2022, February 2024) failed to meet reserve prices (Kes 16,950,000, 12,800,000, and 8,250,000 respectively). The suit was struck out due to jurisdictional issues.
Transaction Type
Loan secured by legal charges over land in Malindi
Issues
- Who shall bear the costs of this suit?
- Whether the Applicant in this suit can seek the Court's leave to sell the suit property known as volume LT 36 folio 140 file 4583 Portion Number 2334 (Original No. 1935/206) Malindi, in exercise of the said Applicant's Statutory Right of Sale at the best reasonable obtainable price but not necessarily one above forced sale value as the Applicant has conducted several auctions which have all failed due to low bids.
- Whether the sale of the suit property at the best obtainable price, but not necessarily above the forced sale value, is the only viable solution to reduce a greater part of the balance owed by the Respondent to the Applicant.
- Whether the Applicant has exercised reasonable care to ensure that the subject property obtains the best market price during its sale.
- Whether this court has jurisdiction to issue the orders as enumerated below.
Holdings
- The court determined that it lacks jurisdiction to hear the case, as the primary issue is a commercial transaction related to a legal charge, which falls under the High Court Commercial Division. The suit was struck out, and the applicant was directed to the appropriate forum.
- The court ruled that since the matter was not defended, there will be no order regarding costs.
Remedies
- Since the matter was not defended, there will be no order as to costs.
- The court struck out the current suit because it determined that it did not have jurisdiction to hear the matter, directing the applicant to approach the appropriate forum.
Legal Principles
The court applied the principle of judicial review to assess its jurisdiction, concluding that disputes involving legal charges and statutory powers of sale fall under the High Court's Commercial Division. This aligns with precedents such as Thomas Mutuku Kasue v Housing Finance Company Ltd [2021] eKLR, where the Court of Appeal affirmed the High Court's exclusive jurisdiction over commercial matters like mortgages and charges. The court emphasized adherence to statutory frameworks and forum rules, striking out the suit for being improperly filed in the Environment and Land Court.
Precedent Name
- NCBA Bank Kenya PLC v Angran Limited
- Thomas Mutuku Kasue v Housing Finance Company Ltd (HFC) & Another
Cited Statute
- Civil Procedure Rules of the Laws of Kenya
- Civil Procedure Act
- Land Act No.6 of 2012
Judge Name
E. K. Makori
Passage Text
- The third auction was conducted on 21st February 2024. Unfortunately, the auction received zero (0) bids and thus failed to reach the forced sale value or reserve price of Kes. 8,250,000/-
- "The substratum of the suit relates to the legal charges and the subsequent statutory power of sale. The High Court has jurisdiction to deal with a dispute in which the predominant issue is the exercise of the statutory power of sale by the charge. [...] it is my finding that this court does not have jurisdiction to hear and determine this suit."
Damages / Relief Type
Specific Performance to sell the suit property as per statutory right of sale