Bench Bulletin - Issue 12 - Kenya Law Reports

KENYA LAW REPORTS
BENCH BULLETIN
FROM THE COURTS — COURT OF APPEAL
Civil Practice and Procedure - damages - mesne profits-where the second respondent sought the appellant be condemned
to pay mesne profits to him for the occupation of the suit property-where the suit property was registered under the second
respondent’s name-whether the second was entitled to the rent for the period of occupation
The appellant had applied for two loans consecutively from the Rural Urban Credit Finance. The first advance of Kshs.
200,000/= was secured by a charge upon the appellant’s property (Number Nairobi/Block 74/91), while the second
advance of Kshs. 60,000/= was secured through a chattels mortgage of the appellant’s motor vehicle. However in the
course of events, Rural Urban Credit Finance was placed under receivership and confusion took charge of the events such
that some members of staff and loan defaulters accessed the securities and several of them were stolen. Nonetheless,
after complying with the legal requirements, the first respondent proceeded to sell the suit property to the second
respondent through a public auction at a price of Kshs. 420,000/=, which amount was paid to the auctioneers four
days after the auction and the second respondent had the property registered in his name. The appellant filed a suit
against both the first and the second respondent for the recovery of the suit property which as a matter of fact had
already exchanged hands. The appellant continued to live in the property despite demands by the second respondent
that he vacates the property.
During the hearing of the suit, the appellant claimed that the entire outstanding loan was fully repaid. He produced the
title deed to which it was charged to secure the loan as evidence of repayment and that it was released to him through
an authorization letter purportedly signed by him acknowledging the receipt of the title deed. The first respondent
dismissed the allegations contending that not a single cent of the entire loan was repaid, and that the appellant had
acquired the title deed through dubious means. The second respondent urged the court to dismiss the suit and sought
orders against the appellant for eviction from the suit property and for the payment of mesne profits. After a full hearing
the trial court dismissed the suit with costs, and further ordered the appellant to pay mesne profits to the second
respondent by way of interest at 12% per annum on the sum of Kshs. 420,000/= until such time the appellant would
vacate the suit property. The appellant was dissatisfied with the judgment and filed an appeal on several grounds that
the trial court erred in holding that there was clear evidence of the amount of money advanced to the appellant and
which had not been fully repaid; that the first respondent was not entitled to sell the suit property by public auction;
that the suit property was lawfully and properly registered in the name of the second respondent and that the discretion
exercised was unjudicial and based on wrong mathematical principle when dealing with the issue of mesne profits.
Held:
1. The authorization letter issued to the appellant to acknowledge receipt of the Land Certificate was not a proper
legal document since the person who purported to have signed it, as a witness denied having appended his signature
to it and therefore this would support the contention that the title deed did not get into the appellant’s hands through
proper legal channels.
2. The first respondent was entitled to take the necessary procedures to sell the securities since there was no evidence
of the loans having been fully repaid by the appellant. Statutory notice was issued to the appellant of the intention to
sell the securities.
3. Regarding whether the statutory notice was valid or not, it was clear from the High Court’s record that the issues
relating to the validity of the statutory notice was neither pleaded nor canvassed, and the courts would normally base
their decisions only on the issues pleaded.
4. Even if the Court of Appeal decided to entertain the issue of validity of the statutory notice and found that the
notice was not valid, still nothing would turn on that because, by the time the matter went for hearing in the superior
court, the suit property had long been registered in the name of the second respondent pursuant to a public auction
properly carried out by the auctioneers as found by the trial court. As at the time the auction proceeded, there was no
injunction order existing against the sale. That meant that as far as the suit land was concerned, the appellant’s equity
of redemption had long been extinguished.
5. Although the appellant’s equity of redemption was extinguished, all he could possibly pursue was a remedy in
damages. However, although in the amended plaint there was a prayer for general damages, there was no attempt made
to canvass that aspect as an alternative issue at the trial of the suit.
6. Regarding whether the public auction was proper, the auctioneer in exercising his discretion acted on the interest
of all the parties involved by accepting full payment of the purchase price in lateness of four days instead of insisting
on 25% down payment at the fall of the hammer and the balance to be paid within sixty (60) days.
7. The second respondent was entitled to compensation in respect of the period the appellant remained on the suit
property after it was transferred to the second respondent. There was no evidence that the appellant paid him any
rent and during the said period.
Appeal dismissed with costs to both respondents.
Issue 12: April-June 2010
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