Introduction
1. In a plaint dated 7th February 2017, which was subsequently amended and filed on 18th July 2022, the plaintiff sought the following prayers against the defendants;
a) The defendants whether by themselves , their agents, their servants, their assigns and/or anyone acting on their instructions be stopped by way of a permanent injunction from entering into, trespassing, selling, advertising for sale, alienating, and /or interfering in any way with the plaintiff’s peaceful possession and enjoyment of all that parcel of land together with the improvements therein known as LR NO. 12715/12184, Syokimau Estate as long as the plaintiff continues servicing his loan.
b) That the 1st defendant gives an account regarding account No. 0011250000536 held by the plaintiff explaining all charges pursuant to the facility herein.
c) That a declaration be entered against the 1st defendant that all charges and penalties plumed on the account of the plaintiff since May 2016, to the date of delivery of judgment are illegal, null and void and they be expunged from the loan record of the plaintiff.
d) That a permanent injunction be issued against the 1st defendant from pluming the plaintiff loan account with illegal charges and penalties.
e) General damages for breach of contract and / or breach of statutory duty.
f) Costs of the suit.
g) Interest on 5 and 6 above.
2. The plaintiff averred that on 5th December 2015, he obtained a loan facility from the 1st defendant in the sum of Kshs. 8, 000, 000/=, which was to be repaid by monthly instalments of Kshs. 149, 338/= for a period of 10 years. That the facility created a charge over the plaintiff’s parcel No. LR 12715/12184. That the loan facility was insured at Kshs. 480, 000/= but that the 1st defendant had instead charged Kshs. 600, 000/= for the same. That the 1st defendant had been deducting illegal levies including legal fees, auctioneers fees, debt collection charges and other fees. That despite the slow economy, the effects of covid 19 and the government’s caution to banks, the 1st defendant began charging higher interest rates amounting to Kshs. 1, 388, 181. 95/= from March 2020 to February 2021. That the 1st defendant has plumed the plaintiff’s loan account with illegal penalties since May 2016 to February 2022 amounting to Kshs. 4, 698, 327. 4/= making a total of Kshs. 6, 280, 800.11/=
3. That the plaintiff was not able to pay the agreed monthly instalment but was paying an average of Kshs. 120, 000/= per a month. That he renegotiated the loan with the 1st defendant’s employees who agreed to allow him pay Kshs. 120, 000/= per a month. That the 1st defendant instructed the 2nd defendant to auction the suit property. That no notice of illegal charges have been served on the plaintiff. That it is unfair for the 1st defendant to rush to sell his property when he is keen on servicing the loan.
4. The 1st defendant’ filed defence and counterclaim dated 25th July 2022. It denied the plaintiff’s claim and stated that the plaintiff had breached the terms of the charge having defaulted in the loan repayment and owed the 1st defendant a sum of Kshs. 17, 297, 093.86/=, which sum the 1st defendant counterclaimed against the plaintiff together with interest thereon as well as costs of the counterclaim. No defence was filed by the 2nd defendant.
5. On 26th July 2023 when this matter came up for hearing, the plaintiff was unavailable in court and therefore his claim was dismissed with costs for want of prosecution.
6. Therefore the matter proceeded to hearing by way of viva voce evidence for the hearing of the 1st defendant’s case.
1st defendant’s evidence
7. DW1 was Daniel Ogola, the 1st defendant’s Assistant Manager of the Debt Recovery Unit. He adopted his witness statement dated 25th May 2023 as his evidence in chief. His testimony being that on 3rd August 2015, the plaintiff and the 1st defendant entered into an agreement where the 1st defendant advanced a loan facility to the plaintiff in the sum of Kshs. 8, 000, 000/= with interest at 19%, which was secured by a charge over parcel No. LR NO. 12715/12184. That the agreed repayment period was 120 months and the plaintiff was to make monthly instalment payments of Kshs. 149, 338/=. That parties agreed to have the credit insured at 0.6% of the loan amount being Kshs. 480, 000/=. That parties also agreed that in the event of default the 1st defendant reserved the right to realize the security.
8. That as at 11th May 2016, the plaintiff had defaulted in servicing the loan with arrears amounting to Kshs. 8, 082, 740.70/= and that on 15th June 2016, the 1st defendant instructed its advocate to issue the plaintiff with a demand letter, which did not elicit any response culminating in the issuance of the first statutory notice to the plaintiff on 30th June 2016. That on expiry of three months, the plaintiff continued in the default, which led to the issuance of the second statutory notice dated 11th October 2016. That the 1st defendant complied with all the legal procedures in notifying the plaintiff of the default and thereafter instructed Antique Auctioneers to issue a redemption notice which was issued on 5th December 2016 requiring the plaintiff to settle the loan in 45 days. That the service of the redemption notice upon the plaintiff caused him to rush to court and file his claim herein. That the 1st defendant instructed a valuer who valued the suit property at Kshs. 9, 500, 000/= as current open market value, with a forced sale value of Kshs. 7, 200, 000/= as of February 2022. That the property was latter advertised on 2nd June 2022. He denied the plaintiff’s allegation that there was an agreement to restructure the loan. He reiterated that the plaintiff had breached the loan agreement and stated that the 1st defendant was entitled to Khs. 17, 297, 093.86/= plus interest, from the plaintiff who was in default of the loan. He produced documents attached to his list of documents dated 25th July 2022 as exhibits. They included the letter of offer, duly executed charge document, demand notice, the two statutory notices, the redemption notice, valuation report and the loan account.
9. On cross examination, he stated that the loan statement of the plaintiff included among other matters legal fees and costs, valuation costs and Auctioneers costs. That as of May 2022, the plaintiff had paid Kshs. 5, 647, 827. 05/= and was still owing Kshs. 17, 297, 093. 86/=. That as of 31st January 2023, and also as of 26th July 2023, the date he was giving his testimony in court on, the plaintiff still owed the 1st defendant a sum of Kshs 11, 781, 957.49/=. That marked the close of the 1st defendant’s case. The plaintiff being unavailable, his defence to the counterclaim was also deemed as closed. Parties were directed to file and exchange written submissions in support of their respective cases. On record are the 1st defendant’s submissions dated 24th January 2024.
The 1st defendant’s submissions
10. Counsel for the 1st defendant submitted that the 1st defendant was entitled to the orders sought in the counterclaim. Counsel argued that the fact that the plaintiff was extended a loan facility by the 1st defendant and which he defaulted in the payment thereof, was not disputed. That the evidence that the sum of Ksh. 11, 294, 996/= was due and owing from the plaintiff was not controverted. Counsel referred to the cases of National Bank of Kenya Ltd v Pipe plastic Samkolit (K) Ltd [2002] 2 EA 503 and Pius Kimaiyo Langat v Cooperative Bank of Kenya Ltd [2017] e KLR for the proposition that it is not the business of the court to rewrite contracts between parties.
Analysis and determination
11. The court has carefully considered the pleadings, evidence and submissions filed. The plaintiff’s suit having been dismissed on 26th July 2023 for want of prosecution, the only issue that remains to be considered is whether the 1st defendant is entitled to the orders sought in the counterclaim.
12. In this matter, the fact that the 1st defendant extended to the plaintiff a loan facility of Kshs. 8, 000, 000/= to be paid in 10 years at a monthly instalment of Kshs. 149, 338/= on the security of the suit property, is not disputed. The fact that the plaintiff defaulted in the payment of the monthly instalments of Kshs. 149, 000/= is also not disputed. I have considered the charge instrument which was a contract between the parties herein. Paragraph 7 thereof stated that default would arise if the plaintiff failed to make payments on the date and in the manner agreed, and at that point, the 1st defendant would have the right to demand the entire amount owed. Paragraph 8 (a) thereof provided for the remedies available for the 1st defendant among them, to sue the chargor (plaintiff) for any money due and owing under the charge. And, paragraph 1 of the charge provides that the plaintiff would indemnify the 1st defendant of all legal, and other costs and expenses which the 1st defendant incurs in enforcing payment, and therefore legal fees, valuation fees and auctioneers fees incurred by the 1st defendant in its attempt at enforcing the charge when there is default on the part of the plaintiff, is payable by the plaintiff. The evidence presented by the 1st defendant show that the plaintiff was duly served with all the statutory notices, and therefore the 1st defendant properly and rightly incurred the legal, valuation and auctioneers costs and is therefore entitled to indemnity in that regard by the plaintiff. That being the position, I am therefore satisfied that the plaintiff breached the agreement he had with the 1st defendant, and the latter was within his rights to sue for the entire amount due and owing from the plaintiff.
13. The relationship between the plaintiff and the 1st defendant is based on a contract whose terms are spelt out in the charge instrument. Section 89 of the Land Act grants the chargee power to sue the chargor where there is default and the chargor has failed to comply with the chargee’s 90 day notice. Section 104 of the Land Act as read with sections 2 and 106 (1) (ii) of the same Act empowers this court to grant reliefs in regard to the remedies available for the chargee and to enforce the charge.
14. It is trite that courts will not rewrite terms of a contract between parties as parties to a contract are bound by the terms of the contract, unless it is shown that the said terms were premised on coercion, undue influence or fraud as was stated in the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] e KLR.
15. In the instant case, the 1st defendant has shown that the plaintiff defaulted in the loan repayment as agreed resulting in the bank incurring legal, valuation and auctioneers charges among other costs. The 1st defendant’s claim of Ksh. 11, 294, 996. 57/= as being the balance of the amounts owed which include the principal sum, interest thereon and costs incurred in enforcing the charge, was not rebutted by the plaintiff. I am therefore satisfied that the 1st defendant has proved its counterclaim on the required standard and I enter judgment for the 1st defendant against the plaintiff as follows;
a) The plaintiff shall pay the 1st defendant the sum of Kshs. 11, 294, 996. 57/= together with interest thereon at court rates from the date of this judgment, until payment in full.
b) The Costs of the counterclaim are awarded to the 1st defendant and shall be borne by the plaintiff.
16. It is so ordered.
DATED, SIGNED AND DELIVERED AT KAKAMEGA IN OPEN COURT/VIRTUALLY THROUGH MICROSOFT TEAMS VIDEO CONFERENCING PLATFORM THIS 5TH DAY OF NOVEMBER 2025
In the presence of;
Mr. Kitila for the 1st defendant
No appearance for the 2nd defendant
No appearance for the plaintiff
Court Assistant- Delphine