https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12956

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MERU HCCA NO. E247 OF 2025** **PATRICK MUTHOMI ………………………………..…………. APPELLANT/APPLICANT** **VERSUS** **TIMES U SACCO SOCIETY LTD …………………….………….………….. RESPONDENT** **SARAH KAARI KIBITL...................................................................... INTERESTED PARTY** **RULING** 1. Coming up for determination is the application dated 17/11/2025, which seeks the following orders: - 2. That the application be certified extremely urgent, service thereof be dispensed with and the same be heard *ex-parte* in the first instance. 3. That the Honourable Court be pleased to issue interim orders of stay of proceedings in NKUBU MCELC NO. E034 OF 2025 pending inter-parties hearing of this application. 4. That the Honourable Court be pleased to issue orders staying the proceedings in NKUBU MCELC NO. E034 OF 2025 pending hearing and final determination of the appeal herein. 5. That this Honourable Court be pleased to restrain the Respondent, or any person acting on their behalf, from transferring or otherwise dealing with LR No. Nkuene/U-Mikumbune/1255 pending the hearing and determination of this application, or until further orders of the Court. 6. That this Honourable Court be pleased to restrain the Respondent, or any person acting on their behalf, from transferring LR No. Nkuene/U-Mikumbune/1255 pending the hearing and determination of this appeal. 7. That costs of this application to abide the outcome of the appeal. 8. Before I delve into the application, a brief background to the matter is necessary. 9. The Appellant/Applicant moved the Senior Principal Magistrates Court in ELC case No. E034 of 2025 in which he sued the Respondent, seeking the following orders: - 10. A declaration that the purported auction of LR No. Nkuene/U- Mikumbune/1255 by the Defendant (now Respondent) was illegal. 11. A permanent injunction restraining the Defendant, its employees, agents or any other person setting on its behalf from alienating and/or transferring or in any way dealing with L.R. No. Nkuene/U-Mikumbune/1255 consequent to the purported public auction. 12. Compensatory and exemplary damages. 13. Costs of the suit and interest at court rates. 14. The gist of the Plaintiff’s/Appellant’s suit in the lower court was that he had secured a loan of Kshs. 1,500,000/- from the Respondent and for which he had offered the suit property as security. That he serviced the said loan as required, but along the way, he noted some arithmetical discrepancies in the instalment amounts payable as compared to the amount paid. That he demanded a full loan statement but he continued to service the loan as agreed between the parties. That on 25th May, 2025 the Respondent illegally and unprocedurally sold the security in purported realisation of its statutory power of sale. 15. The particulars of the alleged illegalities and procedural defects were set out in the plaint which included; 16. Failing to secure the Appellant with a redemption notice and notice of sale.2 17. Failing to avail the valuation report to the Appellant. 18. Selling the subject property below the 75% market value. 19. Conducting the auction unprocedurally. 20. Breaching the duplum rule on interest. 21. The Appellant also filed an application dated 30th May 2025, in which he sought the following orders: - 22. A declaration that the purported public action of LR NO. NKUENE/U-MIKUMBUNE/1255 by the Defendant was illegal. 23. A permanent injunction restraining the Defendant, its employees, agents or any other person acting on its behest from alienating and/or transferring or in any way dealing with LR. No. Nkuene/U-Mikumbune/1255 consequent to the purported public auction. 24. Compensatory and/or punitive damages. 25. The costs of the suit and interests at court’s rate. 26. The application was opposed by the Respondent. It raised several issues which included; 27. It issued the statutory notice for payment of the outstanding loan balance and duly served the same as required and was duly acknowledged by the Appellant. 28. That the valuation of the property was undertaken prior to the sale. 29. That as at 28th May 2025, the property had been sold to one Sarah Kendi Kibiti, the Interested Party herein. 30. In a ruling delivered on 9th October 2025, the trial court dismissed the said application, save for an order that the Respondent grants the Appellant a complete loan and current savings account statements and the consequent auction documents. 31. Aggrieved by the said ruling the Appellant filed a Memorandum of Appeal dated 13th October 2025 which he later amended. The grounds are as follows; 32. That the learned trial magistrate erred in law and in fact in upholding the sale of the appellant's land by the respondent despite clear evidence that the statutory power of sale was exercised irregularly and contrary to the mandatory provisions of the Land Act and the Auctioneers Act. 33. That the learned magistrate erred in law and fact in failing to appreciate that the respondent did not serve the mandatory statutory notices as required under section 90 and 96 of the Land Act prior to the purported sale of the appellants property. 34. That the learned magistrate erred in law and fact in upholding a sale that was conducted without a proper and current valuation, contrary to section 97(2) of the Land Act, thereby failing to ensure that the property was sold at the best obtainable market value. 35. That the learned magistrate failed to consider that the appellant had substantially repaid the loan and that the respondents exercise of the power of sale was oppressive and inequitable. 36. That the learned magistrate erred in law and in fact in directing that the suit property be transferred to an alleged purchaser who was not a party to the suit, thereby making orders affecting the proprietary rights of a third party without affording the appellant or the said party a fair hearing. 37. That the learned magistrate erred in law and fact by including and making determinations affecting third parties who were not part of the proceedings, thereby violating principles of fair hearing and due process. 38. That the learned magistrate erred in failing to find that the respondent's actions were procedurally flawed and that the purported auction was conducted without valid notices, valuation, or compliance with statutory requirements. 39. That the learned magistrate misdirected herself in law by disregarding the appellant's evidence and submissions and by failing to appreciate that the sale process was tainted with bad faith and  irregularities. 40. That the learned magistrates ruling and Orders violated the appellants constitutional rights to property, fair administrative action, and a fair hearing under Articles 40, 47 and 50 of the Constitution. 41. That the Ruling was against the weight of evidence on record and the interests of justice. 42. That the learned magistrate erred in law by failing to uphold the appellant's equity of redemption, despite clear evidence that the respondent acted in bad faith and contrary to the Land Act provisions. 43. That in paragraph 4 of the ruling, the learned magistrate erred in law and fact by accepting the respondent's assertion that requisite notices were served without any evidence to prove service contrary to section 90 and 96 of the Land Act, thereby validating an unlawful sale. 44. That in paragraph 4 of the ruling, the learned magistrate erred in law and fact by not finding that the respondent produced a postal receipt (marked CNN 9 on the response) that was not issued on the dates alleged and did not bear the respondents name as the sender, thereby relying on defective and unreliable evidence to uphold an irregular sale. 45. That the learned magistrate erred in law and fact by not finding that the respondent noted that valuation of the suit land was done prior to giving out the loan and that page 7 of the said valuation the valuer notes that there are developments and structures on the land but are ignored for the purpose of the valuation therefore the report couldn't be relied upon to sell the land hence making the sale unlawful. 46. That the learned magistrate erred in law and fact by not finding that between 4th March 2024 the date of the purported 45 days redemption notice and August 2024 the applicant had paid moneys exceeding Kshs 133,341, the amount indicated on the redemption notice on the respondent’s response and therefore the applicant ought to have been served with a fresh notice if the respondent decided to sell the suit land. 47. That in paragraph 12 of the ruling, the learned magistrate erred in law and fact by accepting the respondent's word that notice dated 4th March 2024 was sent via applicant's postal address whereas no postal receipt was attached to that effect therefore upholding an irregular sale. 48. That the trial magistrate erred in law and fact by not finding that the letter marked CNN 13 and attached in the respondent's response as being served to the applicant is in fact a letter by VIEWLINE AUCTIONEERS to JK NTARAGWI AND CO ADVOCATES totally contrary to the respondent's assertions. 49. That the learned magistrate erred in law and fact by not finding that the 45 days redemption notice attached in the respondent’s response was served to a third party and not to the applicant. 50. That the learned magistrate erred in law and fact by failing to clearly determine the issue of costs, merely stating that costs "were provided for" without indicating by whom or on what basis. 51. The gist of the application is that the lower court dismissed the Appellant’s application despite glaring evidences that the 3-month statutory notice under Section 90(2) of the Land Act and the 45 daily notice under Section 96(2) of the Land Act were not served. 52. That likewise, the trial court failed to find that the Auctioneer had failed to issue the redemption notice under Rule 5(d) of the Auctioneers Rules and the notification of sale under Rule 25(e) of the Land Rules. 53. The Appellant therefore sought stay of the proceedings before the lower court pending the determination of the application and the appeal. 54. The Respondent opposed the application through an affidavit sworn by Catherine Ndumba Nkanata, its credit manager. 55. The Respondent’s case is that the application is a mere academic exercise as it has been overtaken by events since the property in dispute has been transferred to the purchaser, one Sarah Kaali Kibiti (The Interested Party). 56. It is further averred that the trial court duly noted this fact and dismissed the application before it. That as such there is no reason to stay the proceedings before the lower court. That despite an order that the applicant be furnished with the loan account information, he has failed to collect the same from the Respondent. 57. The Interested Party opposed the application vide a replying affidavit that was sworn on 23/03/2026. 58. In a nutshell, the Interested Party states that she learnt of the sale of the suit property vide an advertisement. That she successfully bidded for the same at the auction conducted on 27/05/2025 outside Nkubu post office. That she was declared the highest bidder paid the requisite deposit and proceeded to complete payment whereupon the suit property was transferred to her name. That subsequently she gave the Applicant notice to vacate the premises. 59. The Interested Party lamented that the Applicant failed to involve her in the lower court suit despite knowing that she had already purchased the property. 60. Parties filed their respective submissions which I will not rehash. I will refer to them where necessary. 61. The issue for determination is whether the Applicant has met the threshold for a grant of the injunction orders and the stay of the proceedings. 62. As has been currently submitted by all the parties, the trial court dismissed the application for injunction. The Respondent terms this to be a negative order that cannot be stayed. 63. In my view, the Applicant is not seeking a stay of the order in question. He has come before the court of appeal and sought injunction orders. The prayer is quite different from an application for stay of execution of the decree of the lower court. 64. Therefore, where a party has failed to secure an injunction order before the trial court, he is at liberty to seek the same as appeal. 65. Once the application is filed, it is subject to the test set out in **Giella Vs Cassman Brown (1973) EA 358**. In short, this court just like the lower court has to determine whether the Applicant has established a *prima facie* case and those damages would be inadequate. If in doubt the matter is to be determined as a balance of convenience. 66. The Appellant’s case was based on the alleged non-service of the statutory notices prior to the sale of his property. 67. I have perused the lower court record and the pleadings filed therein. Whereas the Applicant stated that he had been servicing the loan as agreed between him and the Respondent, it is clear that he fell into arrears. The loan statement of account shows that he made irregular payments and never paid the full instalments as agreed. 68. Therefore, with persistent breach of the loan agreement, the Respondent was entitled to exercise its statutory power of sale. 69. The documents filed by the Respondent clearly show that the Applicant was duly served with the requisite notices, through the address that he provided at the time he secured the loan and changed his property. The Respondent duly annexed the certificate of postage to their response. 70. Looking at the material before me, I agree with the trial court that the Applicant has failed to show that he was not served with the notices. 71. Looking at the trial court record and the pleadings before me, I am satisfied that the notice under Section 90(2) of the Land Act was duly served. I am also satisfied that the notice under Section 96(2) of the said Act was duly served on the Applicant. 72. As for the auctioneer’s notice, I am also at the view that the same was served. 73. The court is also alive to the fact that the suit property was sold to a 3rd party. 74. The trial court correctly interpreted the decision in **Kamulu Academy Limited and Another Vs British American Insurance (K) Ltd and 2 Other (2018) eKLR** regarding the consequences of a sale by auction. It was held as follows; **Section 99 of the**[***Land Act***](https://kenyalaw.org/akn/ke/act/2012/6)**provides:-"(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."** **The above section protects the purchaser. The Equity of redemption is extinguished at the fall of the hammer. On 17th May 2016, the charged property was sold by public auction to the 3rd defendant being the highest bidder for Kshs.27 million. The sale by public auction extinguishes Equity of redemption at the fall of the hammer whether the property is transferred to the purchaser or not. I find the applicant’s application has been overtaken by the events as the sale which the 1st plaintiff sought to stay has already taken place. The 3rd defendant purchased the property at a public auction and is therefore protected by provisions of section 99 of the**[***Land Act***](https://kenyalaw.org/akn/ke/act/2012/6)**.** 1. Similarly, in the case of **Ze Yu v Yang Nova Industrial Product Ltd [2003] 1 EA 362 (CCK),** Justice Nyamu (as he then was) held as follows: - "**The existence of a valid sale agreement extinguished the equity of redemption and the Applicant had no remedies touching on the property both as against the former mortagee and against the person exercising the power. Mbuthia v Jimba Credit Corporation [1986] LLR 3292 (CAK), Grant v Kenya Commercial Finance Company Limited civil appeal number 227 of 1995 and Central Bank Kenya Limited v Trust Bank and others [1996] LLR 472 (CAK) applied."** 1. There being no irregularity noted in the manner and conduct of the sale, the trial court correctly found that the Applicant had not met the threshold in **Giella Vs Cassman Brown** **(Supra)**. I also reach the same conclusion. 2. The Applicant had also sought a stay of the proceedings in the lower court. 3. The principles guiding the court in regard to this order were set out in **William Odhiambo Zawagi and 2 Others Vs Attorney General and 3 Others (2019) eKLR** where the court held as follows; **“A scan of our decisional law reveals that our Courts have established the following principles for the grant of stay of proceedings pending the hearing and determination of an appeal over an interlocutory application to a higher Court. See: Kenya Shell Limited v Benjamin Karuga Kibiru & anorther [1986] eKLR; Global Tours & Travels Limited (Nairobi HC Winding Up Cause No. 43 of 2000); David Morton Silverstein v Atsango Chesoni [2002] eKLR:** **a. First, there must be an appeal pending before the higher Court;** **b. Second, where such stay is sought in the Court hearing the case as opposed to the higher Court to which the Appeal has been filed and there is no express provision of the law allowing for such an application, the Applicant should explain why the stay has not been sought in the higher Court. This is because, due to the potential of an application for stay of proceedings to inordinately delay trial, there is a policy in favour of applications for stay being handled in the Court to which an appeal is preferred because such a Court is familiar with its docket and is therefore in a position to calibrate any order it gives accordingly;** **c. Third, the Applicant must demonstrate that the appeal raises substantial questions to be determined or is otherwise arguable;** **d. Fourth, the Applicant must demonstrate that the Appeal would be rendered nugatory if the stay of proceedings is not granted; e. Fifth, the Applicant must demonstrate that there are exceptional circumstances which make the stay of proceedings warranted as opposed to having the case concluded and all arising grievances taken up on a single appeal; and £. Sixth, the Applicant must demonstrate that the application for stay was filed expeditiously and without delay.** **All these factors must be considered, in a given case, in the spirit concisely expressed in Halsbury’s Laws of England, 4th Edition, Vol. 37 at p. 330:** **The stay of proceedings is a serious, grave and fundamental interruption in the right that a party has to conduct his litigation towards the trial on the basis of the substantive merits of his case, and therefore the Court’s general practice is that a stay of proceedings should not be imposed unless the proceedings, beyond reasonable doubt, ought not to be allowed to continue... This is a power which, it has been emphasized, ought to be exercised sparingly, and only in exceptional cases...It will be exercised where the proceedings are shown to be frivolous, vexatious or harassing or to be manifestly groundless or in which there is clearly no cause of action in law or in equity. The applicant for a stay on this ground must show not merely that the plaintiff might not, or probably ‘would not, succeed but that he could not possibly succeed on the basis of the pleading and the facts of this case.** **In short, a stay of proceedings is a radical remedy which is only granted in very exceptional circumstances……….”** 1. Looking at the matter, and having found that the applicant has not demonstrated a prima facie case to warrant a grant of injunctive orders, I find no ground to stay the proceedings before the lower court. In fact, a stay thereof would prejudice his prayers in the main suit. 2. I therefore decline to grant the orders sought. 3. In conclusion, I find that the application dated 17/11/2025 lacks merit and it is dismissed with costs. 4. As I pen off, I must comment on the conduct of the Applicant in this matter. He first filed an application in person, then withdrew it and his then advocate filed the present application. Apparently, the Applicant proceeded to instruct the firm of Gatobu Inoti & Associates to take over the conduct of the matter from the firm of L. N. Kithinji & Co. Advocates. The former then filed an application dated 06/03/2025, while the current application was pending determination. 5. The court record demonstrates the level of determination that the applicant has to pursue litigation in this matter. My advice to him is to proceed with the case before the lower court. 6. Having dispensed of the application, I direct that the lower court record be returned to Nkubu Law Courts for the preparation of the record for purposes of appeal, if the applicant wishes to. 7. In conclusion, the application is dismissed with costs. **Dated, signed and delivered at Meru on this 5th day of August, 2026.** **H.M. NYAGA** **JUDGE**