Background:
1. The plaintiff registered a charge dated 19/6/2018 and a further charge dated 9/3/2022 over his property. The same is known as L.R NO UNIT D17 situated on Precinct IB, forming part of L.R NO.28867/1 [L.R NO.199562] within Kijani Ridge, Tatu City Estate, Kiambu County (the suit property) to Stanbic Bank for the purpose of obtaining a home loan construction facility.
2. The plaintiff acknowledges that he was unable to service the said loan and his loan account fell into arrears of Kshs.23,089,207.19. As a result, the Bank exercised its statutory power of sale over the suit property by instructing the defendant to sell it through a public auction.
3. The defendant advertised the property in the Daily Nation newspaper on 7/8/2023 which indicated that the public auction would take place on 24/8/2023.
4. The plaintiff instituted this suit vide a plaint dated 9/11/2023 whereby he contends that the aforementioned advertisement was irregular and did not to adhere to the Auctioneer Rules on advertisement. He averred further that the public auction allegedly carried out on 24/8/2024 was irregular and illegal.
5. The plaintiff contends particularly that there was no list of bidders, no auction register and that no Memorandum of Sale was executed by the alleged highest bidder. The plaintiff confirms having sent a representative at the auction who was released after 5pm, by which time there had been no bidder.
6. Accordingly, the plaintiff contends that the auction was staged. That the alleged purchaser had already been pre-selected and only an amount of Kshs.3,700,000/= was deposited to his loan account on 26/8/2023, 2 days after the alleged public caution. This amount was less than 25% of the forced sale value as per the valuation report hence the defendant is liable for undervaluation.
7. Based on the foregoing, the plaintiff prays for an order to have the public auction conducted on 24/8/2023 nullified and an order to have the defendant freshly advertise and auction the suit property. The plaintiff further seeks general damages and costs of the suit.
8. The plaintiff did not file a witness statement although he did file a bundle of documents dated 9/11/2023 and submissions dated 18/3/2024. The defendant did not enter appearance or file any pleadings in its defence despite service of the plaint and summons which were evidenced by the Affidavit of Service sworn on 28/11/2023.
Analysis and determination:
9. Having analysed the pleadings in this matter, I believe that the issue for determination is whether the defendant carried out a lawful public auction of the suit property on 24/8/2023.
10. I have perused the list of documents and I note as stated by the plaintiff, that it is not clear from the advertisement carried in the dailies, to say with certainty the date and time of the alleged auction. There appears to be 2 photographs of houses. The first house is not fully described but has a date and time of the auction, for 24/8/2023. The house appearing after that, which is the suit property, does not indicate the specific date and time but carries the description of the suit property herein.
11. The advertisement required the interested buyers to view the suit property to verify its details and to carry a deposit of 10% in form of a banker’s cheque to the auction. It stated further that the highest bidder would be required to pay the balance within 90 days to the chargees (the Bank).
12. Section 112 of the Evidence Act is very clear and provides that:
“In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.”
13. The fact by the bank that the defendant was instructed to carry out the auction has not been controverted. This means that all the details regarding the auction were within the defendant’s knowledge. It was up to the defendant to provide evidence that would ordinarily be in its possession that the auction did actually take place and that the same was regular and lawful. In the absence of any such evidence, I align myself with the finding of this court in similar circumstances.
14. In SBM Bank Kenya Limited V Geoffrey Ndungu Joseph T/A Venture Auctioneers & 2 Others, KEHC 3316 (KLR), the court held thus:
“Save for the advertisement attached to the 1st respondents replying affidavit, there is no evidence that the sale took place. There is no notification of sale, no evidence of any bidders, no memorandum of sale and more significantly no evidence of payments by the final bidder. These is crucial evidence which the respondents ought to have exhibited in support of their claim. In the absence of these, this court takes it that there was no auction on the said date and if there was then the same was against the express orders of the court.”
15. Missing prominently from the advertisement is the sale or reserve price of the suit property making it difficult to tell the actual amount represented by the 10%. It is also not clear from the advertisement whether the 10% is part of the purchase price or not. There was no requirement to deposit 25% of the value of the property. The plaintiff attached a screenshot as exhibit 5 in its bundle of documents indicating certain amounts of money that were deposited into its loan account at Stanbic Bank on 25/8/2023.
16. There is otherwise no memorandum of sale of the suit property to the successful bidder, no details of the buyer, no proof of further payment to the loan account and no proof that the auction took place. The auction, if any, seems to be shrouded in secrecy and lacks transparency. It is unfortunate that the defendant did not enter any appearance nor file a statement of defence to rebut the plaintiff’s assertions despite being fully aware of these proceedings.
Disposition
17. In the absence of any defence on record the court enters judgment in favour of the plaintiff. I hereby grant prayer a) and b) as stated in the plaint and order that the public auction conducted on 24/8/2023 be and is hereby nullified.
18. I further direct the defendant to advertise the auction a fresh and conduct a transparent auction of the suit property, within the next 60 days, at its own costs. Additionally, I award the plaintiff general damages for the inconvenience caused, assessed at Kshs. 500,000/=. The plaintiff shall have also the costs of this suit.