A charged development is not necessarily the same asset throughout a loan’s life. Units may have been released or sold with the lender’s agreement. In Palmy, the court examined not only whether the borrower was in default, but whether the advertised property and the steps towards sale matched the legal position.
Case identity and stage
- Case: Palmy Company Limited v Consolidated Bank of Kenya Limited
- Court: High Court at Nairobi, Commercial and Admiralty Division
- Decision date: 6 June 2014
- Citation: Civil Suit 527 of 2013; [2014] KEHC 4811 (KLR)
- Primary source: Kenya Law ruling
- Stage: Application concerning valuation and an injunction against a proposed sale.
Twenty-three apartments did not mean twenty-three available units
The development comprised 23 apartments. Two had been sold to another company with the bank’s express consent, and a consent judgment in separate proceedings addressed their transfer. The judge treated those two apartments as outside the property available for the sale under consideration. (Primary ruling, paragraphs 3 and 23, preliminary treatment of the excluded apartments.)
Palmy admitted arrears but disputed the balance, interest calculations, valuation and notices. The bank relied on facilities totalling KSh35 million, the charges and correspondence acknowledging default. These points created several distinct questions; success on one would not automatically answer the others. (Paragraphs 5–14.)
The valuation disagreement was substantial. The bank produced a report showing KSh80 million open-market value and KSh68 million forced-sale value. Palmy relied on a much higher report. The court also checked an earlier joint valuation and found it did not support the completion figure Palmy attributed to it. It declined to find a prima facie breach of the valuation duty on the evidence presented. (“Duty to Value Property”, repeated paragraphs 24–26.)
The notices were a separate problem
The court accepted the underlying default notice, but did not find a distinct notice to sell under section 96(2) of the Land Act in the bank’s exhibited documents. It rejected treating the auctioneer’s redemption notice as an interchangeable substitute. The ruling discussed these as different procedural opportunities, rather than one notice obligation with several names. (Paragraphs 27–31.)
The advertisement also described the entire development, including the two excluded apartments. The judge considered that inaccurate and misleading to prospective bidders. A person reading it would not receive an accurate account of what was available to buy. (Paragraph 32.)
These defects justified relief notwithstanding admitted default. But the relief was carefully bounded:
- The two excluded apartments could not be advertised or sold as part of the security being realised.
- The bank and auctioneer could not proceed using the defective notification of sale.
- The bank could issue a proper notice and subsequently realise its security in accordance with the law and charge.
- The other prayers, including appointment of an independent valuer, were refused; each party bore its own application costs.
These are the final orders under the ruling’s repeated paragraph 34, not a permanent prohibition on recovery. (“Orders”, items (a)–(d).)
Later proceedings change how the story should be told
An individual later-history search located a 6 November 2020 Court of Appeal ruling arising from a subsequent 2019 ruling in the same High Court suit, not a merits appeal deciding the 2014 ruling. The court considered the intended appeal arguable, but Palmy had not shown that it would be rendered nugatory without an injunction: it had not alleged that the bank could not pay damages if the appeal succeeded. The unopposed application was dismissed with no order as to costs. The court also lacked jurisdiction to grant the requested declarations in that interim application. 2020 ruling, paragraphs 1 and 4–7.
Neither interim ruling alone establishes the eventual sale or final suit outcome. Those later outcomes were not established in this review.
Questions for borrowers, lenders and bidders
Which units remain in the security pool? Can releases, sale consents and transfer arrangements be reconciled with the advertisement? Does each notice serve its own legal purpose? If valuations differ, what supporting methodology explains the gap?
An advocate should examine the operative instruments and current notice requirements; a qualified valuer should address value. An official search remains necessary for registered entries but does not itself reconcile every apartment release or advertisement.
ArdhiScore helps organise parcel identifiers, dated evidence, citations, confidence and unresolved questions. It does not provide guaranteed notice auditing, complete record coverage or valuation certification. Explore ArdhiScore screening and its limits. This historical account does not determine present ownership or enforceability and is educational, not legal advice.