MAIMME MANAGEMENT LIMITED & ANOTHER vs HERITAGE BANK LIMITED (In Liquidation) [1998] KECA 252 (KLR)
- Court
- Court of Appeal
- Case number
- 252
- Citation
- [1998] KECA 252 (KLR)
- Decided
- 9 October 1998
We allow the applicants' Notice of Motion and grant the orders sought in prayer A and B of the said Motion, subject to the applicant depositing within 30 days the sum of KShs. 486,555/- into an interest earning account with a branch of Barclays Bank of Kenya in the joint names of counsel of both sides.
Facts
Maimme Management Limited applied for an off-shore loan facility from National Bank of Detroit U.S.A. Heritage Bank Limited provided a Letter of Credit subject to Maimme Management Limited providing a suitable security. Maimme Management Limited failed to provide the Letter of Credit, leading to the property being charged and Heritage Bank Limited seeking recovery of expenses.
Issues
- Whether failure to provide the Letter of Credit rendered the charge unenforceable
- Whether the statutory power of sale can be exercised over a defective or un-enforceable charge
Reasoning
The failure to provide the Letter of Credit amounted to the whole objective of the transaction being frustrated, leading to total failure of consideration and rendering the charge unenforceable. Consequently, the statutory power of sale cannot be exercised over a defective or un-enforceable charge.
Outcome
Appeal granted
Orders
- Stay of execution of the orders of the superior court
- Restrain the respondent from dealing with the said property in any manner that would be detrimental to the 2nd applicant's interest
Remedies
- Deposit of KShs. 486,555/- into an interest earning account with a branch of Barclays Bank of Kenya in the joint names of counsel of both sides
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