We would like to bring to your attention the attached Supreme Court of Kenya’s (“SCK”) judgment delivered yesterday 2nd December, 2015 in respect of National Bank of Kenya Limited v Anaj Warehousing Limited  eKLR, Petition Number 36 of 2014. The petition was premised upon, inter alia, the following issues:
- the validity of legal documents prepared by an unqualified person; and
- the governing law between a mortgagor and mortgagee.
The Respondent who had obtained a loan facility from National Bank of Kenya Limited urged the court, in response to the petition, that legal documents prepared by an unqualified person are of no legal effect and/or are void.
The SCK made a groundbreaking finding to the effect that no instrument or document of conveyance shall become invalid under section 34(1)(a) of the Advocates Act for reason that it had been prepared by an advocate who at the time was not holding a current practicing certificate. This decision overrules the earlier standard applied that rendered all such instruments of conveyance null and void for all intents and purposes if drawn by an unqualified advocate.
However, documents prepared by other categories of unqualified persons such as non-advocates or advocates whose names have been struck off the roll of advocates remain void for all purposes.
The salient features of the judgment are:
- a financial institution that calls upon an advocate from amongst its established panel to execute a conveyance, commits no offence if it turns out that the advocate did not possess a current practicing certificate at the time he or she prepared the conveyance documents. The spectre of illegality lies squarely upon the advocate, and ought not to be apportioned to the client [see note 58 of the judgment]; and
- to hold that monies lent in conformity with the provisions of the law, save that the relevant conveyancing instruments were drawn by an advocate who at the time did not hold a practicing certificate, are not recoverable, would be to sanction unjust enrichment to unscrupulous borrowers, while depriving innocent lenders thereby creating a wide scope of fraudulent borrowing [see note 63 of the judgment].