Kangogo & another (Suing as the administrators of the Estate of the Late Richard

Chelimo Kangogo) v Industrial and Commercial Development Corporation

(Civil Case 2 of 2023) [2024] KEHC 4501 (KLR) (12 April 2024) (Judgment)
Neutral citation: [2024] KEHC 4501 (KLR)

REPUBLIC OF KENYA
IN THE HIGH COURT AT ITEN
CIVIL CASE 2 OF 2023
JRA WANANDA, J
APRIL 12, 2024

BETWEEN
CLARA JERUTICH KANGOGO ....................................................... 1ST PLAINTIFF
CATHERINE JEPKEMOI ................................................................... 2ND PLAINTIFF
SUING AS THE ADMINISTRATORS OF THE ESTATE OF THE LATE
RICHARD CHELIMO KANGOGO

AND
INDUSTRIAL AND COMMERCIAL DEVELOPMENT
CORPORATION .................................................................................... DEFENDANT

JUDGMENT

1. This is an old matter and it is unfortunate that it has taken this long to be concluded. The suit has had a
long and chequered history. Initially, it was led on 24/06/2015 as Eldoret High Court (Environment
and Land Division) Case No. 176 of 2015. That was before the Environment and Land Court (ELC)
was established as a fully-edged Court. In April 2018, the suit was transferred to the High Court
(Civil Division) and renamed Eldoret High Court Civil Case No. 24 of 2019. When a High Court was
established at Iten, the suit was in March 2023, transferred to Iten and assigned the current number,
namely, Iten High Court Civil Case No. 2 of 2023. The suit has therefore been in Court for about 9
years which is unacceptable. A commercial suit of this nature should not be held up in Court for such
a long time. Be that as it may, the task of bringing the matter to an end now nds itself in my hands.

2. I may also mention that I took over this matter in February 2023 after the trial had already commenced
before Hon. Justice E. Ogola. The suit was therefore part-heard. The Plaintis had already closed their
case with the 1st Plainti as their own one and only witness having already testied. On the part of the

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 Defendant, its rst witness had also already testied but it had been directed that he returns to the dock
to produce some documents.

3. I may also mention that I did disclose to the parties that I had previously worked in the same oce
elsewhere with the Defendant’s Counsel, Mr. Lazarus Odongo, before I joined the Judiciary. I therefore
inquired from the Plainti’s Counsel, Mr. Matekwa, whether he would be comfortable with myself
presiding over this matter. In response, Counsel conrmed that he had no objection to my role herein.
In the circumstances, an d with the Counsel’s concurrence, I proceeded to hear the matter.

Plaint
4. In the Plaint led on 24/06/2015 through Messrs Mwinamo Lugonzo & Co. Advocates, the Plaintis
pleaded that they were suing as the Administrators of the estate of the late Richard Chelimo Kangogo
(hereinafter referred to as “the deceased”) who was the registered owner of that parcel of land known
as EM/Iten/Township/196 (hereinafter referred to as the “suit property”), that the Defendant has a
Charge over the suit property placed on 17/03/1997, that the deceased never took any loan with the
Defendant and therefore the Charge is irregular. The Plaintis pleaded, in the alternative, that if the
deceased guaranteed any loan to any third party, the terms and conditions of the guarantee have expired
and/or overtaken by events and therefore the continued charge is unjustied and the Charge should
be lifted. Further in the alternative, the Plaintis pleaded that if the deceased gave the guarantee, then
the terms thereof have been so drastically changed as between the Defendant and the loanee such that
the same is no longer binding on the deceased and therefore the Defendant ought to discharge the suit
property and return the Certicate of title. In the prayers, the Plainti sought the following:

i. An order of declaration that the estate of the late Richard Chelimo Kangogo is not in any way
liable for any debt whatsoever owing to the Defendant.

ii. In the alternative, an order that if there ever was any guarantee executed by the late Richard
Chelimo Kangogo, the same has been so altered by the Defendant that it is no longer binding
on the estate of the late Richard Chelimo Kangogo.

iii. An order of declaration that the Charge over the plot EM/Iten/Township/196 is irregular and
unsustainable under the law.

iv. An order compelling the Defendant to discharge the charge over the plot.

v. Costs.

vi. Any other relief that this Court might deem t to award the Plaintis.

Statement of Defence
5. In its Statement of Defence led on 13/08/2015 through Lazarus M. O. Odongo Advocate, it was
denied that the 1st Plainti is the wife of the deceased and that the 2nd Plainti is the daughter of
the deceased or that the Plaintis are the joint Administrators of the estate of the deceased. It was
further pleaded that the Defendant is a statutory State Corporation established under the Industrial
and Commercial Development Corporation Act, Cap. 445 of the Laws of Kenya and as such, a body
corporate with perpetual succession and a common seal with power to hold land and to sue and be sued
in its corporate name. The Defendant reiterated that the deceased was the registered owner of the suit
property which was charged together with other lands to the Defendant for a loan of Kshs 5,000,000/-
granted by the Defendant to Boaz Kipchumba Kaino (hereinafter referred to as “the borrower”), that
prior to the suit property being charged to the Defendant, the deceased had already donated a Power
of Attorney over the same to the borrower on 28/02/1997, that the borrower utilized the Power

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 of Attorney to charge the property to the Defendant, that once the borrower utilized the Power of
Attorney to charge the property during the lifetime of the deceased, the Charge immediately became
the subject of the Registered Land Act, Chapter 300 (now repealed) in whatever form re-enacted. It
was pleaded further that the borrower read and understood the terms and conditions of the loan oer
and unconditionally accepted the same and consequently the borrower and the Defendant entered
into a legally binding loan agreement, that the terms and conditions are clear and within the ambit of
legality and the same was executed by the parties willingly and without any unconscionable conduct
or duress on the part of the Defendant.

6. The Defendant pleaded further that the loan agreement provided that the Plainti would repay to the
Defendant the loan with interest added by instalment of capital or interest unpaid on the due date
for payment thereof, that the rate of interest would be revised at the discretion of the Defendant and
that the decision of the Defendant in this regard would not be questioned on any account whatsoever,
that the loan or the balance thereof for the time being outstanding and all interest and other sums as
aforesaid would at the option of the Defendant become immediately repayable. It was then pleaded
that the borrower is in default of his obligations for he has failed to pay interest and other periodic
payments due under the loan agreement and the Charge, that this default has continued for more than
1 month and the Defendant is entitled to sell the property, that the outstanding balance was Kshs
97,390,944.25 as at 30/06/2015 and the same continues to accrue interest at the current rate of 16%
per annum until and unless the loan balance on a specic date is paid up in full.

Plainti ’s Evidence
7. PW1 was the 1st Plainti. She testied that the deceased was her husband and she then adopted
her Witness Statement. She testied further that she did not know any person by the name Boaz
Kipchumba Keino, that the deceased died on 10/08/1999 and that she did not know that the
property’s title deed was with the Defendant. In cross-examination, she denied that the deceased
created any charge on the title in favour of the Defendant and that he guaranteed any loan, that she
only discovered the loan when she went to pay land rates. In conclusion, she stated that she wants the
title back and that nobody explained to her how the charge took place.

Defendant’s Evidence
8. DWI was one Zephania Kiprop Rono who described himself as ocer with the Defendant. He testied
that he is not familiar with the Plaintis but was familiar with the deceased who had guaranteed a
loan of Kshs 5,000,000/- to the borrower and oered the suit property as security, that the borrower
was the loanee and was given a Power of Attorney. He added that the borrower defaulted in the loan
repayment, that he made periodical promises to repay the loan but failed, that because of the failure,
the Defendant proceeded to realize the security, that however, the security was not sold since one of the
guarantors went to Court and objected to the sale, and that at the ling of the defence, by 30/06/2018,
the loan balance was Kshs 97,390,944.25. In cross-examination, DW1 stated that the amount advanced
to the borrower was Kshs 5,000,000/-, that the loan was to be paid by monthly instalments of Kshs
182,947.50, that the 1st instalment was due in May 1997 and the loan was to be repaid in 5 years, that
by 31/08/2011 the balance was Kshs 53,976,623.16 and that upon default, demand letters were sent to
the borrower and not to the deceased’s wife. In Re-examination, he stated that the Power of Attorney
was registered.

9. Subsequently, the parties agreed to recall DW1 to return and produce some documents. It apparently
however became dicult for the Defendant to bring DW1 and therefore, opted to, instead, call a
dierent witness to come and produce the documents.

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10. DW2 was one Ernest Lewa Mwahui. He testied that he is a Senior Portfolio Ocer at Kenya
Development Corporation (KDC) which used to be Industrial and Commercial Development
Corporation (ICDC), the Defendant herein, after a merger. He then referred to DW1’s Further
Witness Statement and stated that DW1 used to be his colleague as a Principal Debt Ocer at the
Defendant bank but no longer works there since he has now retired, that he is however familiar with
the Further Witness Statement and wished to adopt the same as his evidence and to produce the Loan
Statement of Account. In the absence of any objection, DW2 adopted the Further Witness Statement
and also produced the Loan Statement of Account.

11. In cross-examination, DW2 stated that the 1st instalment was due on 1/05/1997 and was paid on
9/10/1997, 5 months later, that the loan was to be repaid in 60 months, that the 60th month fell
on 4/03/2002, that had he adhered to that schedule, the borrower would have paid a total of Kshs
9,176,610, approximately Kshs 4 million in interest. He added that a non-performing loan is one which
the instalments are not forthcoming as expected and the loan herein was declared “non-performing”,
that once a loan is declared “non-performing”, the bank issues a demand letter, then statutory notices
and then the recovery process commences, that from the statement, the 1st instalment was paid on
9/10/1997 and the last on 23/09/2016, about 19 years in between, that the delay to recover was
because the bank gives its customers time to settle, that by 23/09/2016, the borrower had paid
Kshs 4,950,000/-, that the Defendant is now demanding Kshs 223,738,912.94 as at present, that the
Defendant stopped charging interest as from 31/03/2021, that this was as a result of the Defendant’s
own internal arrangement, that it is good practice for lenders to stop charging interest when it realizes
that the prospects of recovery are minimal, that although Clause 7 of the charge documents permits
the Defendant to recover the full amount, recovery is at the discretion of the Defendant and that the
Defendant does not have to immediately commence the recovery process.

12. In re-examination, DW2 elaborated further that KDC came into existence as a result of a merger
between ICDC, Tourism Finance Corporation and Industrial Development Bank.

Appellant’s Submissions
13. The Plainti’s Counsel referred to the in duplum rule and submitted that the rule provides that interest
on a debt will cease to run where the total amount of arrear interest has accrued to an amount equal to
the outstanding principal debt. He cited Section 44A of the Banking Act and referred to the fact that
the Defendant is demanding a sum of Kshs 223,378,912.94 and submitted that it is moral decay on
the part of the Defendant to demand such huge unreasonable exorbitant amount from the Plaintis,
that the same is against international best practice, and that the Defendant should not levy interest that
exceeds the amount loaned. He also cited the case of Mugure & 2 Others vs HELB [2022] eKLR.

14. Counsel submitted further that the Defendant’s documents contain correspondence between the
Defendant and the borrower but no correspondence was ever sent to the deceased who was only but
a Guarantor, or even his estate after he passed on, that the Defendant did not lay any evidence that it
exhausted the resources of the borrower rst who was a Member of Parliament.

15. Counsel submitted further that the borrower was advanced a sum of Kshs 5,000,000/- by the
Defendant on 3/04/1997, that the 1st instalment was due for payment from the borrower on
1/05/1997, that the Defendant’s witness conrmed that the borrower did not pay any instalment
until 9/10/1997 (after 5 months). He cited Clause 5 of the Charge document and submitted that
upon default on any instalment or any interest, the Defendant was to give a 10 days grace period to
the borrower, that upon expiry of such 10 days, the Defendant was obligated to recover all amounts
outstanding, that therefore in the 5 months that the borrower was in default, the Defendant should

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 have recovered all the monies that were due from the borrower, that the conduct of the Defendant was
in breach and goes to the root of the Charge document, that the Defendant intended to be no longer
bound by the terms of the Charge document constraining the estate of the deceased as discharged from
any further performance, that the Defendant outed the terms of the Charge document.

Defendant’s Submissions
16. On his part, Counsel for the Defendant submitted that the 1st Plainti conrmed that the suit property
was charged to the Defendant, that although the 1st Plainti stated that since the deceased did not
take any loan from the Defendant, the Charge was irregular but that the 1st Plainti did not elaborate
how or why the Charge was irregular, and that the 1st Plainti did not make any eort whatsoever to
demonstrate that the Charge was not in accord with the law, rules, procedures or established custom
as alleged. Regarding the allegation that the terms and conditions of the Guarantee had expired or
overtaken by events, Counsel submitted that the 1st Plainti did not make any reference to any specic
document to support her allegation nor did she demonstrate that the Guarantee had an expiry date
which had since gone past. He submitted that the Court cannot take such an allegation seriously, that
if the Court were to do so, it would oend Section 107 of the Evidence Act since the 1st Plainti has
not discharged the heavy burden placed upon her by the law.

17. Regarding the allegation that the terms of the Guarantee have been so drastically changed as between
the Defendant and the loanee such that it no longer bound the deceased or his estate, Counsel reiterated
his averments above relating to the failure to demonstrate or support the allegation and the evidentiary
burden of proof bestowed upon the 1st Plainti by law.

18. Counsel submitted further that the Plaintis did not discharge the burden of proof on the allegation
that the 1st Plainti was the wife of the deceased and the 2nd Plainti the daughter or that the Plaintis
were the joint Administrators of the estate of the deceased. He added that the Defendant’s pleaded
that prior to the suit property being charged, the deceased had already donated a Power of Attorney to
the borrower on 28/02/1997, that DW1 produced the said Power of Attorney, that the Plaintis did
not produce any evidence to counter the fact of the existence of the Power of Attorney or the ability
of the borrower to utilize it to charge the suit property. Counsel also observed that the Plainti failed
to include the borrower as a co-Defendant and added that once the borrower utilized the Power of
Attorney to charge the property during the lifetime of the deceased, the Charge immediately became
the subject of the Registered Land Act (now repealed) in whatever form re-enacted, that the Plaintis
did not bring any evidence to challenge the averment that the borrower read and understood the terms
and conditions of the loan oer or that the borrower and the Defendant executed the loan agreement
willingly and without any unconscionable conduct or duress.

19. Counsel also averred that the loan agreement provided that the rate of interest would be revised at
the discretion of the Defendant and that the decision of the Defendant in this regard would not be
questioned on any account whatsoever, and that the loan balance outstanding would at the option of
the Defendant become immediately repayable. He submitted further that the borrower is in default
and which default has continued for more than one month and the Defendant is therefore entitled to
sell the property and that the Plaintis did not bring any evidence to challenge this averment.

20. Regarding the evidence of DW2, Counsel submitted that the witness stated that the interest rate
applied was 26% per annum such that the anticipated instalments translated to Kshs 152,943.50, that
the total monies received in the account as repayment to date amounts to only Kshs 4,950,000/-.

21. On whether there was a contract between the Plainti and the Defendants in respect of the suit
property, Counsel submitted that the Plaintis did not call either the borrower or the Land Registrar

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 to ascertain the validity of the Charge, that as such the Defendant’s averment that there is a valid Charge
remains uncontroverted. On whether the Defendant is entitled to demand the outstanding balance,
Counsel submitted that this is a case where the maxim res ipsa loquitur is mot applicable, that the
Defendant produced a statement of accounts, that the Plaintis did not also challenge the validity of
the gures captured in the statement of accounts except to say that the sum demanded is unreasonable
and exorbitant and oends the in duplum rule, and that in any event, the Plaintis have not made any
prayer for taking of accounts.

22. Regarding the in duplum rule, Counsel submitted that the expression “institution” at Section 2(1)(c)
of the Banking Act means a bank or nancial institution or a mortgage nance company, that the same
refers to a “nancial institution” as a company, other than a bank, which carries on, or proposes to
carry on nancial business and includes any other company which the Minister may, by notice in the
Gazette , declare a nancial institution, that the same Section also stipulates that a “mortgage nance
company” means a company (other than a nancial institution) which accepts from members of the
public, money on deposits repayable on demand or at the expiry of a xed period or after notice and is
established for the purpose of employing such money in accordance with Section 15 of the Act, that
the said Section 15 restricts the business of a mortgage nance company to the issuance of loans for the
purpose of the acquisition, construction, improvement, development, alteration or adaptation for a
particular purpose of land in Kenya, that the Act also allows a mortgage nance company to grant other
types of credit facilities against securities other than land and to engage in other prudent investment
activities, that Section 2(1)(c) states that a “bank” is a company which carries on or proposes to carry on
banking business in Kenya and includes the Co-operative Bank of Kenya Limited but does not include
the Central Bank.

23. According to Counsel therefore, the Defendant is not a bank since the Defendant does not accept from
members of the public money on deposit repayable on demand or at the expiry of a xed period or
after notice and therefore the Defendant does not carry out nancial business and is not a nancial
institution in the sense applied in the Act, that the Minister of Finance has not, by notice in the Gazette,
declared the Defendant to be a nancial institution for the purposes of the Act, that the Defendant
is not a mortgage nance company and that the Defendant is not a bank. He cited the case of Karige
Kihoro vs. Industrial Commercial Development Corporation [2011] eKLR in which, he submitted,
the Court armed the position above.

24. On the application by the Courts of the in duplum rule, Counsel appreciated that in the case of Anne
J. Mugure & 2 Others (supra), the Court held that the in duplum rule applied to all lenders as it did
to banks, but urged this Court not to follow that authority and instead, follow the decision in the case
of Momentum Credit Limited vs. Teresia Nduta Kabuiya (Civil Appeal E035 of 2022) in which, he
submitted, that the Court held that the Banking Act’s relevant provisions did not apply to non-deposit
taking institution such as the Defendant herein

Analysis & Determination

25. Before I delve further into identifying the issues for determination in this matter, I need to touch on
the issue of in duplum rule upon which the parties have argued in their Submissions. It is clear that the
issue was raised for the rst time in the Plainti’s Submissions. The same was never raised at all in the
Plaint nor touched on in the Statement of Defence. The Plainti’s case was based entirely on 3 grounds,
rst, that the deceased never took any loan from the Defendant, secondly, that in the alternative, if at
all the deceased guaranteed any loan to any third party, then the terms thereof have expired or been
overtaken by time and thirdly, that in the alternative, if at all the deceased guaranteed any loan to any

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 third party, then the terms of the guarantee have been so drastically changed such that it can no longer
be binding upon the deceased or his estate.

26. Clearly therefore the issue of the in duplum rule has been introduced by the Defendant as an
afterthought.

27. It is trite law that parties are bound by their pleadings and as such, the Plaintis having not pleaded
the issue of violation of the in duplum rule in the Plaint, cannot “sneak in” the same through post-
trial Submissions. On this point, in the case of Joshua Mungai Mulango & another v. Jeremiah Kiarie
Mukoma (2015) eKLR the Court of Appeal held as follows:

“ Parties are bound by their pleadings. The court is bound to determine a dispute on the basis
of the pleadings led by the parties and the evidence adduced on the basis of such pleadings.
In an adversarial system such as ours, it is the parties who set the agenda for the trial by
their pleadings. The need for this cannot be gainsaid. For the purpose of ensuring certainty
and nality, a party cannot be allowed to resile from its pleadings without due amendment.
Each party knows the case he has to meet and cannot be taken by surprise. The purpose and
importance of the rules in this regard clearly is to ensure that litigation is conducted in a
framework that will guarantee fair play without prolixity and needless escalation of litigation
costs”

28. Further, although the Defendant’s Counsel, despite the issue not having been pleaded in the Plaint,
still went ahead to respond extensively on the issue of the in duplum rule, his Submissions raised factual
matters but which were never canvassed at the trial. For instance, in submitting that the Defendant is
not a “deposit-taking institution” and that the Minister for Finance has not declared the Defendant to
be a “nancial institution”, Counsel went to great lengths to demonstrate the workings and manner of
operations of the Defendant. These are purely matters of fact. Clearly, Counsel found himself resorting
to this because the issue of the in duplum rule was never canvassed at the trial, the same not having
been pleaded in the Plaint in the rst place.

29. For the reasons that, as aforesaid, the issue of the in duplum rule was never pleaded in the Plaint
nor canvassed at the trial nor any evidence taken on the workings and manner of operations of the
Defendant to determine whether or not the Defendant is a “deposit-taking institution” or “nancial
institution” for the purpose of determining whether the in duplum provisions in the Banking Act apply
to the Defendant, I decline the invitation to stray into that issue of the in duplum rule.

30. In the circumstances, upon considering the record, including the pleadings, evidence presented,
Submissions and authorities cited, I nd the issues that arise for determination to be the following:

i. Whether the loan alleged herein was advanced to the borrower.

ii. Whether the deceased gave the borrower a Power of Attorney to charge the deceased’s property,
EM/Iten/Township/196, and also whether the deceased guaranteed the loan by giving out his
said property as collateral or security thereof.

iii. Whether the Guarantee has been so drastically altered or changed to the extent that it is no
longer binding

iv. Whether the borrower is in default of the loan.

v. Whether therefore the Defendant is entitled to dispose of the suit property in recovery of the
loan balance.

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31. I now proceed to analyze and answer the said issues.

i. Whether the loan alleged herein was advanced to the borrower

1. That the Defendant advanced a sum of Kshs 5,000,000/- to the borrower, one Boaz
Kaino, has not been seriously challenged. In any event, the Defendant has produced
several documents to support the advancement of the loan. Among the documents so
produced is the duly registered and witnessed Power of Attorney dated 28/12/1997
alleged to have been donated by the deceased to the borrower. The same provides as
follows:

“ I, Richard Chelimo Kangogo hereby appoint Hon. Boaz Kipchumba

Kaino of P.O. Box 44047 Nairobi …. And to charge my title No.
Elgeyo Marakwet/Iten Township/196 to Industrial and Commercial
Development Corporation (ICDC) Ltd.”

33. I note that the deceased died on 10/08/1999, 2½ years after 28/02/1997, the date of the Power of
Attorney, thus indicating that the Power of Attorney was executed during the lifetime of the deceased.
It has not been alleged that the signature thereon alleged to be that of the deceased was a forgery or
that the deceased was duped to sign the document or that he signed it under duress. The validity of the
Power of Attorney has therefore not been challenged or contradicted by any controverting evidence.

34. The Defendant has then produced the Charge document dated 5/03/1997 (before the deceased died
about 1 ½ years later on 10/08/1999) which Charge bears the signature of the borrower as signing it
on behalf of the deceased (as guarantor) on the strength of the Power of Attorney. Recitation 1 of the
Charge provides as follows:

“ The corporation has at the request of the Chargor agreed to advance the borrower the sum of
….. Kshs 5,000,000/- and it has been agreed that the repayment of the said sum with interest
……. shall be secured in the manner hereinafter appearing …..”

35. It is stated in the Charge that the same is collateral to a Charge of even date issued by the borrower over
a separate property, namely, title number E/Marakwet/Kapsowar/2027.

36. The Defendant has also produced the Loan Agreement dated 5/03/1997, numerous subsequent
correspondence exchanged between the Defendant and the borrower between August 2011 and
October 2011 and also the statement of account all which further conrm advancement of the money
to the borrower.

37. In any event, and in his legal team’s wisdom, the Plaintis have inexplicably not joined the borrower
into this case as a co-Defendant nor have they called him as a witness. Only the borrower can clarify
whether or not he received the money and, in his absence, the Plaintis cannot, on the borrower’s
behalf, purport to deny advancement of the money. Any attempt to do so will amount to heresy
evidence.

38. In the circumstances, I have no diculty in reaching the nding that indeed the Defendant did advance
to the borrower the loan of Kshs 5,000,000/-.

ii. Whether the deceased gave the borrower a Power of Attorney to charge the suit property, and
whether the deceased guaranteed the loan by giving out the property as security

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39. I have already referred to the said Power of Attorney alleged to have been donated by the deceased to the
borrower during his lifetime. I have already observed that the same is duly registered and witnessed by
an Advocate. In respect thereto, I have also already found that it has not been alleged that the signature
appearing on the Power of Attorney and said to be that of the deceased has been forged. It has also
not been alleged that the signature was procured under duress or by misrepresentation. The borrower,
who is the donee of the Power of Attorney, has also not been joined in this suit as a co-Defendant or
called as a witness. In the circumstances, I nd that there is no material before this Court to question
or doubt the validity or authenticity of the Power of Attorney.

40. On whether the deceased did guarantee the loan advanced to the borrower, I have already found that
on the basis of the Power of Attorney referred to above, a Charge document was executed, witnessed
and duly registered. By the said Charge, the deceased is stated to have given out the suit property as
collateral to secure repayment of the loan advanced to the borrower. Indeed, an ocial Search Report
conrming lodging of the Charge has also been produced in evidence. In the Plaint, the Plaintis also
acknowledged existence of the Charge.

41. Existence of the Charge is therefore not in dispute. What could have been questioned is therefore only
the validity of the Power of Attorney on the basis of which the borrower signed the Charge on behalf
of the deceased. However, in respect thereto, I have already found that the validity of the Power of
Attorney has not been questioned or challenged.

42. In the circumstances, the only inescapable conclusion that I can reach and which I do, is that there is no
evidence presented to this Court to demonstrate that the deceased did not donate to the borrower the
Power of Attorney to charge the suit property. There is also no evidence to controvert the statement
that the deceased guaranteed the loan by giving out the suit property as security.

iii. Whether the Guarantee has been so altered to the extent that it is no longer binding

43. The Plaintis pleaded, in the alternative, that if the deceased guaranteed any loan to any third party,
then the terms and conditions of the guarantee have expired and/or overtaken by events and that
therefore, the continued Charge is unjustied and the Charge should be lifted. They also pleaded that
if the deceased gave the guarantee, then the terms thereof have been so drastically changed as between
the Defendant and the loanee such that the same is no longer binding on the deceased and therefore
the Defendant ought to discharge the suit property and return the Certicate of title.

44. The basis of the Plaintis’ submissions above seems to be that the Defendant’s bundle of documents
contains correspondence between the Defendant and the borrower but none between the Defendant
and the deceased as guarantor or his estate, and that the Defendant did not demonstrate that it
had exhausted assets of the borrower before turning to recover from the deceased as guarantor. The
Plaintis also observed that although the loan was advanced on 3/04/1997 and the 1st instalment was
payable on 1/05/1997, the 1st instalment was not paid until 9/10/1997, after 5 months in default. The
Plaintis further observed that under Clause 7(a) of the Charge document, upon expiry of 10 days
after default, the Defendant was obligated to recover all amounts that were pending without leaving a
cent. The Plaintis therefore faulted the Defendant for the delay to recover.

45. Upon examination of the exhibits, I nd that, contrary to the Plainti’s submissions, there is indeed
some correspondence addressed to the deceased. For instance, there is the 90 days statutory notice of
sale dated 3/05/2004 addressed to the borrower and copied to the deceased. There is also another 90
days statutory notice of sale dated 18/12/2013 addressed to both the borrower and the deceased. The
address used for both the borrower and the deceased is P.O. Box 44047 Nairobi which is the same
one appearing in the Charge document. Although no proof of sending out the letters to the deceased

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 or receipt by him has been produced, I note that the borrower responded to the letters. Noting that
the borrower held a Power of Attorney from the deceased permitting the borrower to charge the suit
property, it can be safely presumed that acknowledgment by the borrower of receipt of the letters also
represents receipt by the deceased.

46. Regarding the delay by the Defendant to move to recover, it is true that no good reason has been given
by the Defendant for the delay. However, the Plaintis have not demonstrated that the borrower had
any alternative asset which the Defendant could have identied. Secondly, without having a recognized
charge on assets owned by the borrower, how was the Defendant expect expected to realize such
alternative assets from the borrower? There being a duly registered Charge in favour of the Defendant,
I do not agree with the Plaintis that the Defendant had any obligation to demonstrate that it had
exhausted its options of moving after the borrower.

47. In the circumstances, I do not nd any evidence to support the Plainti’s’ assertions that the Guarantee
has been so altered or changed to the extent that it is no longer binding on the deceased or his estate.

iv. Whether the borrower is in default of the loan

48. The Charge document is dated 5/03/1997 and the amount advanced to the borrower was Kshs
5,000,000/-. It is also evident that the loan was to be paid by monthly instalments of Kshs 152,947.50,
the 1st instalment was due in May 1997 and the loan was to be repaid in 5 years.

49. The Defendant’s case is that the borrower is in default since he has failed to pay interest and other
periodic payments due under the loan agreement and the Charge. DW2 testied that the borrower,
Boaz Kaino, made periodical promises to repay the loan but failed, that because of the failure, the
Defendant proceeded to realize the security, that however, the security was not sold since one of the
guarantors went to Court and objected to the sale. He added that by 31/08/2011, the balance was Kshs
53,976,623.16, at the time of ling of the defence, around 30/06/2018, it had accumulated to Kshs
97,390,944.25 and the amount now due as at present is about Kshs 223,738,912.94.

50. According to DW2, since the loan was to be repaid in 60 months (5 years), the 60th month would have
fallen on 4/03/2002, that had he adhered to that schedule, the borrower would have paid a total of
Kshs 9,176,610, approximately Kshs 4 million in interest. He further testied that by 23/09/2016, the
borrower had only paid Kshs 4,950,000/-. He also stated that the Defendant stopped charging interest
as from 31/03/2021, and that this was as a result of the Defendant’s own internal arrangement since
it is good practice for lenders to stop charging interest when they realize that the prospects of recovery
are minimal. He testied that although Clause 7 of the charge documents permits the Defendant to
recover the full amount, recovery is at the discretion of the Defendant.

51. The matters alleged above have not been challenged or controverted by the Plaintis. Further, the
Defendant has produced sucient evidence thereof, including letters from the borrower admitting the
default and the debt. In his letters, the borrower continuously sought for extension of time to clear the
loan. The Defendant also produced the statement of account conrming the amounts paid and the
balance still outstanding.

52. There is therefore no doubt that, indeed, the borrower is in default of the loan.

v. Whether the Defendant is entitled to dispose of the suit property in recovery of the loan balance

53. Clause 7(a) of the Charge is premised as follows:

“ If the Chargee shall make default in the payment of any interest on the days hereinbefore
provided or shall fail to pay any of the instalments on the days hereinbefore provided for

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 or within ten days of grace thereafter then and in such case the whole principal amount
with interest then remaining due and owing by the Chargor under this security shall
immediately become due and payable and the Corporation shall be entitled to recover the
same forthwith”

54. I have already found that the borrower is in default of his loan repayment obligations. In view thereof
and considering that the Charge permits the Defendant to realize the security in recovery of the
outstanding balance, I nd that the Defendant is entitled to dispose of the suit property in recovery
of the loan balance.

Final Orders
55. The upshot of my ndings above is that this suit is dismissed with costs to the Defendant.
DELIVERED, DATED AND SIGNED AT ELDORET THIS 12TH DAY OF APRIL 2024
…………………..
WANANDA J. R. ANURO
JUDGE
Iten High Court Civil Case No. 2 of 2023

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