https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3958

Oganga v Equity Bank of Kenya Ltd & another (Land Case Appeal E050 of 2025) [2026] KEELC 3958 (KLR) (22 June 2026) (Judgment) Neutral citation: [2026] KEELC 3958 (KLR) Republic of Kenya In the Environment and Land Court at Kisii Land Case Appeal E050 of 2025 AA Omollo, J June 22, 2026 Between Edward Makori Oganga Appellant and Equity Bank Of Kenya Limited 1st Respondent Jeoffrey N Muinde t/a Kimu Auctioneers 2nd Respondent (Appeal from the Ruling and Order of Hon. B. O. Omwansa (SPM) dated 16th December, 2025, in the KISII MCELCC No. E021 of 2025-Edward Makori Oganga versus Equity Bank of Kenya Limited & another) Judgment 1.The Appellant sued the Respondents in the subordinate court and alongside the plaint filed the application dated 10th March, 2025 seeking orders of temporary injunction under the provisions of Order 40 restraining the Respondents from disposing of and/or interfering with his land parcel no. South West Kitutu/Bogeka/2344 2.The application was heard, and a determination was rendered on 16th December, 2025, dismissing the application. The Appellant was unhappy with this finding and lodged the present appeal, where he pleads thus:a.That the Learned Magistrate erred in Law and fact by holding that the Appellant failed to demonstrate the extent of default, yet the Respondent expressly admitted on oath in its replying affidavit that the arrears as at the time of issuance of the statutory notices were Kenya Shillings One Hundred Thousand, Three Hundred and ThirtyFive and Sixty-Four Cents (Kshs. 100, 335.64/=) only, an admission which required no further proof.b.That the Learned Magistrate misdirected himself in Law by equating the mere existence and attachment of statutory notices with proof of service, contrary to binding jurisprudence which requires strict proof of service of statutory notices before the exercise of the statutory power of sale.c.That the Learned Magistrate erred in Law by finding that the Respondent had discharged the burden of proving service of statutory notices without evidence of postage, personal service, or compliance with mandatory statutory and regulatory requirements, thereby sanctioning an irregular exercise of the statutory power of sale.d.That the Learned Magistrate failed to apply or improperly applied binding authorities, which distinguish between the issuance of statutory notices and proof of their service, leading to an erroneous conclusion.e.That the Learned Magistrate erred in Law by holding that an admission of default, without more, disentitled the Appellant to equitable relief, notwithstanding noncompliance with mandatory statutory safeguards governing the exercise of the statutory power of sale.f.That the Learned Magistrate erred in Law by failing to consider and determine the Appellant’s alternative statutory prayer for extension of time to redeem the charged property pursuant to Section 104 (2) of the Land Act, thereby failing to exercise a jurisdiction expressly conferred by statute.g.That the Learned Magistrate misapprehended the applicable legal principles on irreparable harm by failing to appreciate that a sale conducted pursuant to an irregular exercise of statutory power would permanently extinguish the Appellant’s equity of redemption and render the suit and any appeal nugatory.h.That the Learned Magistrate failed to properly weigh the balance of convenience, particularly in light of the admitted minimal arrears relative to the value of the charged property, thereby exercising discretion on wrong principles.i.That the Learned Magistrate erred in law and principle by failing to preserve the substratum of the suit, contrary to established equitable principles governing interlocutory relief in Land matters. 3.The Appellant urges this court to allow his appeal and set aside and/or vary the Ruling and Order of the Hon. B.O. Omwansa (SPM) dated 16th December, 2025, in the Original Kisii MCELC No. E021 of 2025. 4.Consequent to prayer (a) above being granted, the Honourable Court be pleased to make a finding that the Appellant had established the test for granting an interim relief of injunction sought in his subject application or the court to make such orders as it deems fit. 5.Directions were taken for hearing of the appeal by way of written submissions, and both parties complied. The Appellant’s submissions are dated 8th March 2026 while the 1st Respondent’s submissions are dated 4th March, 2026. 6.The Appellant submits that the Respondents failed to prove proper service of the mandatory statutory notices required before a chargee can exercise the statutory power of sale, namely the 90-day notice under Section 90 of the Land Act, the 40-day notice to sell under Section 96, and the 45-day redemption notice issued by the auctioneer. 7.Although the bank produced copies of the notices and postal dispatch lists, the appellant contends that no certificate of posting, postal receipt, or evidence from the Postal Corporation of Kenya was produced to prove that the notices were actually posted and served. Reliance is placed on authorities such as Nyagilo Ochieng v Fanuel Ochieng and Michael Kagume Gatura v Equity Bank, which require strict proof of posting where service is denied. 8.The appellant further argues that the redemption notice issued by the auctioneer was defective because it indicated that the appellant refused to sign. Yet it lacked the mandatory certificate confirming the refusal required under Rule 15(d) of the Auctioneers Rules. The auctioneer did not file a replying affidavit to rebut the appellant’s challenge to service, and the appellant maintains that this uncontroverted evidence should have been accepted. 9.He also contended that the trial magistrate erred by shifting the burden of proof to the appellant. According to the appellant, the respondents, having alleged service of the notices, bore the legal burden under Sections 107 and 109 of the Evidence Act to prove proper service, and mere production of the notices did not amount to proof of service. 10.On the issue of injunction, the appellant submits that although there were loan arrears, the existence of a debt did not excuse non-compliance with the statutory procedure for the realisation of charged property. The appellant states that the loan had been serviced for a considerable period, that the arrears were relatively small compared to the overall loan, and that there was a willingness to regularise the account. That the alleged failure to serve valid notices and the defective redemption notice are said to have raised serious questions regarding the legality of the intended sale, thereby establishing a prima facie case with a probability of success under the principles in Giella v Cassman Brown & Co. (1973) EA 358 and Mrao Ltd v First American Bank Ltd & 2 others (Civil Appeal 39 of 2002) [2003] KECA 175 (KLR) (7 March 2003) (Judgment) 11.Consequently, the appellant urges the court to allow the appeal, set aside the ruling delivered on 16th December 2025, and grant an order of injunction restraining the respondents from selling the suit property. He also prays that he be awarded the costs of the appeal. 12.The 1st Respondent opposed the appeal and urged the court to uphold the trial court’s decision dismissing the appellant’s application for an injunction. The bank argued that the appellant had admitted to obtaining a loan of Kshs. 4.4 million and was in substantial default, with an outstanding balance exceeding Kshs. 3.6 million. It contended that the appellant’s assertion that the arrears were minimal was misleading, as the overall debt remained significant. No meaningful effort had been made to clear the arrears or regularise the account. 13.The 1st respondent submitted that the appellant was not entitled to an extension of time under Section 104(2) of the Land Act because he had failed to take adequate steps to remedy the default. It maintained that the statutory notices were properly served through registered post to the address provided by the appellant and that the statutory power of sale had therefore crystallised. 14.On the merits of the application, the respondents argued that the appellant had failed to establish a prima facie case, irreparable harm, or that the balance of convenience favoured him. The bank emphasised that the charged property had been voluntarily offered as security and was liable to sale upon default. It maintained that courts should not rewrite contracts or shield borrowers from the consequences of their own default. Consequently, the respondents urged the court to dismiss the appeal with costs. Analysis and determination: 15.As this is a first appeal, the law permits me to re-evaluate the pleadings presented before the trial court in determining whether a wrong decision was reached. Consequently, I have read and considered the grounds upon which the application dated 10th March, 2025 was premised, together with the replying affidavit filed in opposition thereto. 16.The trial court, in its ruling, placed reliance on the cases, inter alia, Maithya Vs Housing Finance Company of Kenya & another (2003)1EA 133, for the proposition that a charged property is presumed to have commercial value and the possibility of sale is contemplated by both parties from the outset. An injunction will generally not issue to retain a mortgage’s statutory power of sale where the borrower is in admitted default. After the sale, the borrower’s remedy lies in damages, not recovery of the property. 17.The learned trial magistrate held that the Appellant did not merit the orders sought because he admitted default in the payments as agreed. The learned magistrate also noted that the Appellant had not demonstrated how much he had been paying and how much the default is. Additionally, the trial court found that the 1st Respondent had discharged the burden on the allegation of non-service of the statutory notice. 18.The appellant faults the learned magistrate for emphasising his admission that the loan account was in arrears. He argues that the mere existence of arrears does not entitle a chargee to exercise its statutory power of sale while disregarding the procedures. In support, he cited the case of David Gitome Kuhiguka versus Equity Bank Ltd (2013)eKLR on the requirement for compliance with statutory procedure. 19.The Appellant had approached the trial court seeking injunctive relief, which is an equitable remedy. One of the doctrines of equity states that he who comes to equity must come with clean hands (and good faith). The Appellant does not deny being in arrears as at the time the suit property was put up for sale. He deposes at paragraph 6 of the affidavit in support of the application that “of his own knowledge, the default was less than Kshs 500000. In paragraph 5, he gave the total outstanding balance at 3,590,755.64.” 20.Thus, the only reason the Appellant challenged the intended sale was the 1st Respondent’s failure to serve the statutory notice upon him. The 1st Respondent deposed that it served the statutory notice on 5th May 2023 by registered post to the Appellant’s last known address, as recorded in the letter of offer. It subsequently served the statutory 40-day notice after the 90-day period had elapsed. Copies of the notices and proof of service were annexed to the replying affidavit. 21.I have noted from the record appeal that the Appellant did not file a further/supplementary affidavit to counter the deposition of the address used to serve the statutory notices. In his submissions, the appellant cites the Court of Appeal in the case of Nyagilo Ochieng & another vs Fanuel B Ochieng & 2 others CA No. 148 of 1995, holding that where the chargor denies receipt of statutory notice, the burden lies on the charge to prove the notice was duly served. 22.In this instance, the trial court was dealing with an interlocutory application where the taking of evidence was not required. The 1st Respondent produced a copy of the notice issued, stated the address used and went further to produce evidence of postage bearing the postal stamp of the Postal Corporation of Kenya, City Square and stamped date of 10.05.2023. 23.The burden does not shift to the 1st Respondent as it was the duty of the Appellant to demonstrate that he had a prima facie case. How could the trial magistrate hold in his favour in the absence of a response contesting the facts set out by the 1st Respondent? 24.The appellant further blamed the learned magistrate for placing too much weight on his admission of default. He did not show evidence that the contract provided that where there was minimal default, the Chargee was prohibited from exercising the right to sell. 25.Having reviewed the pleadings before the learned magistrate, I find no fault with his reasoning for dismissing the application dated 10th March, 2025. The learned magistrate correctly applied the decision in Kihara vs Barclays Bank (K) Ltd (2001) 2EA 420, which held that the risk of loss arising through a sale is inherent in the charging process and that courts would not ordinarily grant an injunction to stop a lawful sale. 26.In light of the foregoing analysis, I conclude that the present appeal has no merit. It is dismissed with costs to the 1st Respondent. JUDGMENT DATED, SIGNED & DELIVERED BY UPLOAD ON CTS THIS 22ND JUNE, 2026A. OMOLLOJUDGE