(Being an Appeal from the judgment and decree of the Hon. Robbert M. Oanda, Senior Principal Magistrate at Winam Court in Civil Suit No. E179 of 2024)
A. INTRODUCTION
1. The Plaintiffs, vide a Plaint dated 23 rd September 2024, instituted a suit against the Defendants seeking judgment against them jointly and severally for a declaration that the intended sale by public auction or any other way disposing of the interest of the Plaintiffs in the parcel of land known as KISUMU/BAR/2178 is untenable in law, unlawful and improper in as much as it is illegal; seeking a permanent injunction restraining the Defendants, by themselves, their servants, agents, or advocates or any of them or otherwise from offering for sale by public auction, or purporting to sell by public auction the piece or parcel of land known as KISUMU/BAR/2178, Kisumu County or otherwise howsoever dealing with or interfering in any way whatsoever with the Plaintiff’s proprietary interests thereof; a declaration that the Plaintiffs did not execute any loan agreements or charge documents over the parcel of land known as KISUMU/BAR/2178 as such the registration of a change in favor of the 1 st Defendant is unlawful and improper in as much as it is illegal; an order that the trial court compels the 1 st Defendant to sign all discharge of charge documents and provide all requisite documents to enable the deregistration of the charge over the land parcel number KISUMU/BAR/2178 and in default the trial court to execute the same on behalf of the Defendants; and cost of the suit.
2. The Plaintiffs averred that at all material times, the land parcel number KISUMU/BAR/2178 was and remained the registered property of the 1 st Plaintiff who had been shown a newspaper advert that showed that the suit property was set to be auctioned on the 24 th September 2024 allegedly on a loan borrowed by the 2 nd Plaintiff, a fact both the Plaintiffs were not aware since they did not borrow the said loan.
3. The Plaintiffs further averred that they conducted a search at the Kisumu District Land Registry which showed that the subject parcel land number KISUMU/BAR/2178 was charged to the 1 st Defendant on or about the month of February 2013 by the 2 nd Plaintiff. During this period, the Plaintiffs were not in the Republic of Kenya as they lived and stayed in Norway and therefore the Plaintiffs could not have executed any loan applications or charge documents in favor of the 1 st Defendant.
4. The Plaintiffs further stated that the Defendants caused the suit property to be put up on sale on the 24 th September 2024 by way of public auction without strict compliance with the provisions of Sections 90, 96, 97 and 98 of the Land Act 2012 and which action is therefore illegal, irregular, in bad faith and totally unlawful.
5. In response, the Defendants filed a defense denying the claim and averring that on 26 th September 2012, Desnol Investment Limited where the 1 st Plaintiff serves as a Director applied for and was granted a facility worth Kshs. 28 million. The facility was secured by the properties L.R. No Kisumu/Bar/2178 registered in the name of the 1 st Plaintiff, L.R. No. Kisumu/Ojola 4116 and 3927 registered in the name of Desnol Investments Limited
6. They averred that the Plaintiffs, together with Noel Kagame Natome later sought financing in the amount of Kshs. 8 million. Subsequently, Desnol Investments Limited applied for and was granted several facilities which were later restructured resulting in an outstanding liability amounting to Kshs. 91,101,100/=.
7. The trial court delivered judgment on 27 th October 2024 after determining two issues: whether the Plaintiffs had proved their case on a balance of probabilities, and whether they were entitled to the reliefs sought.
8. On whether the Plaintiffs had proved their case, the trial court rejected their contention that they did not execute the charge because they were allegedly out of the country at the time. The court held that a person residing abroad would ordinarily possess the requisite residence permits and travel documents. Since the Plaintiffs failed to produce any documents demonstrating that they had travelled to or resided in Norway, the allegation remained unsubstantiated.
9. The trial court further held that the Plaintiffs' allegation that they did not execute the charge amounted to a claim of fraud, which is a criminal offence attracting penal sanctions. The court observed that, had the allegations been genuine, the Plaintiffs ought to have reported the matter to the police to facilitate investigations. However, no such report was pleaded or shown to have been made.
10. The trial court also noted that the 2 nd Plaintiff, who was the 1st Plaintiff's daughter, was not called to testify. It further relied on the holding in Nyanza Fish Processers Limited v. Barclays Bank of Kenya Limited (Civil suit 40 of 2025) [2023] KEHC 1641 (KLR ) , where the court held that a party alleging that a charge was not intended must explain why the title documents were released to the bank, why the property remained charged for nearly ten years, why transactions with the bank continued throughout that period, and why no objection was raised until the bank sought to realize the security.
11. On the issue of service of the statutory notices under sections 90 and 96 of the Land Act, the trial court acknowledged that, in an earlier ruling, it had found that the notices had not been properly served and had consequently granted interim injunctive orders. The court, however, proceeded to determine whether that omission justified the grant of a permanent injunction. Relying on Kenya Power & Lighting Co. Ltd v. Sheriff Molana Habi [2018] eKLR, John Karanja Njenga & Another v. Bank of Africa [2015] eKLR and Daniel Kamau Mugambi v. Housing Company of Kenya Limited , the trial court held that a permanent injunction is only granted in appropriate circumstances and that a party seeking such relief must come to court with clean hands. It concluded that granting the injunction would prejudice the 1st Defendant's statutory right to realize its security and adversely affect the interests of third parties who were not parties to the proceedings.
12. The learned magistrate, in conclusion, held as follows: “For the foregoing reasons, I find that the Plaintiffs have not proven their case as against the Defendants on a balance of probabilities. They are thus not deserving and/or entitled to the reliefs and/orders prayed for. The entire suit thus fails and the same is dismissed with costs to the 1 st Defendant.
13. Being dissatisfied with the judgment of the trial court, the Plaintiffs lodged the present appeal vide a Memorandum of Appeal dated 25 th November 2025, raising the following grounds:-
(a) That the learned magistrate erred in law and in fact by dismissing the Appellant’s suit thereby arriving at a grossly unfair decision and in all circumstances failed to do justice to the Appellants.
(b) That the learned magistrate erred in law and fact by raising the standard of proof in this matter to a standard above the required balance of probabilities by finding that other than producing their Kenya Passports in court, the 1 st Appellant needed to provide a Visa and Travel Documents to prove that she was away in Norway at the time the loan documents were purported to have been executed and registered.
(c) That the learned magistrate erred in law and in fact by dismissing the Appellant suit and in effect allowing the Respondents to proceed with the sale of the land of the parcel number KISUMU/BAR/2178 to recover credit facilities that were not secured by the said parcel of land.
(d) That the learned magistrate erred in law and in fact by dismissing the Appellants suit and in effect allowing the Respondents to proceed with the sale of the land parcel number KISUMU/BAR/2178 despite the 1 st Appellant, the registered owner of the land parcel number KISUMU/BAR/2178 demonstrating that she did not owe the 1 st Respondent any loan sums.
(e) That the learned magistrate erred in law and fact by dismissing the Appellants suit and in effect allowing the Respondents to proceed with the sale of the land parcel number KISUMU/BAR/2178 despite agreeing with the Appellant that there was no strict compliance with the provisions of Sections 90, 96, 97, and 98 of the Land Act 2012.
(f) That the learned magistrate erred in law and in fact by failing to appreciate that the 1 st Appellant, the registered owner of the land parcel number KISUMU/BAR/ 2178 did not execute any documents allowing the 1 st Respondent to use the said parcel of land to secure other loan facilities unknown to the 1 st Appellant.
(g) That the learned magistrate failed and/or neglected to cumulatively and/or exhaustively evaluate the entire evidence (both oral and documentary) on record and hence arrived at an erroneous and slanted conclusion, contrary to and in merit.
(h) That the learned magistrate erred in law by finding that the Appellants suit lacked merit.
14. The appeal was canvassed by way of written submissions. Before delving into the submissions of both parties, this court notes that, being the first appellate court, it is required under Section 78 of the Civil Procedure Act and as was held in Selle v. Associated Motor Boat Co. Ltd [1969] E.A 123 , to re-evaluate, re-assess and analyze the evidence adduced before the trial court and arrive at its own independent conclusions, while bearing in mind that it neither saw nor heard the witness when they testified
B. SUBMISSIONS BY PARTIES
Appellant’s Submissions
15. The Appellants submitted themselves on three issues. They framed their first issue as whether the intended sale by public auction was lawful and whether the Respondents served upon all the Appellants with the statutory notices prior to the intended sale. The Appellants submitted that the intended sale by public auction was unlawful because the Respondents failed to serve the Appellants with the mandatory statutory notices before exercising its statutory power of sale. It was argued that, having found that the statutory notices had never been issued, the trial court ought to have ordered the Respondents to reissue the notices before proceeding with any sale, if the loan remained outstanding, rather than sanctioning the intended sale.
16. The Appellants relied on Martha Khayanga Simiyu v Housing Finance Co. of Kenya & 2 Others, Nairobi HCCC No. 937 of 2001 [2001] 2 EA 540 , where the court held that service of valid statutory notices and a notification of sale are mandatory preconditions to the lawful exercise of the statutory power of sale. The Appellants contended that failure to comply renders the purported sale void and liable to be nullified at the chargor's instance, rather than being a mere irregularity remediable by damages.
17. The Appellants second issue was whether 1 st Appellant used the land parcel number KISUMU/BAR/2178 as security to borrow a loan facility from the 1 st Respondent and whether it was a continuing security. The Appellants submitted that it was undisputed that the 1 st Appellant was the registered proprietor of KISUMU/BAR/2178 . She testified that she presented her passport, which confirmed that she was in JKIA on 9 th January 2013 , departed for Amsterdam on 10 th January 2013 , and returned to Kenya on 6 th December 2013 . They argued that it was therefore impossible for her to have executed the charge on 11 th February 2013 , which was purportedly registered on 15 th February 2013 in favour of the 1 st Respondent to secure a loan of Kshs. 2,000,000/= .
18. The Appellants further submitted that the Respondent's witnesses admitted that the property was treated as a continuing security for subsequent loans advanced to other persons without the 1 st Appellant’s consent. They contended that the 1 st Appellant never signed the charge document and relied on Vijay Morjaria v Nansingh Madhusingh Darbar & Another [2000] eKLR to argue that fraud must be specifically pleaded and strictly proved and cannot be inferred. They also relied on Kinyanjui Kamau v George Kamau [2015] eKLR , submitting that the burden of proving fraud rested on the Respondents and reiterating that it was impossible for the 1 st Appellant to have executed the charge while she was outside Kenya.
19. The Appellants further argued that even if the charge had been validly executed, it only secured the Kshs. 2,000,000/= loan advanced to Desnol Investments Limited , and no further charge was ever registered over the title. They maintained that the 1 st Appellant only consented to guarantee that specific loan, and the Respondent's subsequent use of the property to secure borrowings by third parties was unlawful and rendered the intended sale illegal. They emphasized that the borrower was Desnol Investments Limited , while the 1 st Appellant was merely a guarantor whose liability was limited to that loan.
20. The Appellants further submitted that the Respondent's own witness admitted that the 1 st Appellant never consented to the property being used to secure other loan facilities and that no evidence was produced showing she had been informed of or agreed to such use. Relying on Abraham K. Kiptanui v Delphis Bank Ltd & Another Nairobi (Milimani Commercial Courts) HCC No. 1864 of 1991 , as cited in George Williams Omondi & Another v Co-operative Bank of Kenya Ltd & 2 Others [2016] eKLR , they argued that varying the guaranteed transaction or extending security without the guarantor's consent discharged the guarantor from liability.
21. The Appellants further contended that the doctrine of continuing security was inapplicable because the 1 st Appellant never consented to the property securing any other facilities. They pointed out that the redemption notices and subsequent newspaper advertisement related to a loan advanced to the 2 nd Appellant, Desma Adhiambo Natome , and there was no evidence that the suit property had been offered as security for that facility.
22. The Appellants also argued that the Respondent's own documents showed that the loan secured by KISUMU/BAR/2178 had already been settled after the 1 st Respondent took over ownership of KISUMU/OJOLA/3927 and 4116 from Desnol Investments Limited , thereby extinguishing the secured debt.
23. Further, the Appellants submitted that the trial magistrate erred in requiring them to prove that no debt existed. They argued that once they asserted that the loan secured by the suit property had been settled, the burden shifted to the 1 st Respondent to prove that an outstanding debt remained. They maintained that the bank statement produced related to a separate loan obtained by the 2 nd Appellant and not the facility secured by KISUMU/BAR/2178 . Relying on Almasi Bottlers Ltd v M'Mbijiwe & 3 Others (Civil Suit E012 of 2022), they submitted that a party cannot be required to prove a negative, and the burden rested on the 1 st Respondent to establish the existence of the alleged outstanding loan.
24. The Appellants third issue was whether the Respondents proved that there was a loan facility owing to the 1 st Appellant to warrant it to exercise a statutory power of sale. The Appellants submitted that the Respondents failed to prove the existence of an outstanding loan facility owed by the 1 st Appellant so as to justify the exercise of the statutory power of sale. They argued that although the Respondents produced documents alleging that the 1 st Appellant had guaranteed a loan advanced to DESNOL Investments Limited, those documents only showed that the bank was pursuing recovery of a facility borrowed by DESMA Adhiambo Natome and not the 1st Appellant. Further, the bank statement produced by the 1st Respondent allegedly reflected a debt owed by DESMA Adhiambo Natome and not by the 1 st Appellant.
25. The Appellants contended that DESNOL Investments Limited and DESMA Adhiambo Natome were separate borrowers and there was no evidence of legal charges showing that parcel number Kisumu/Bar/2178 had been charged to secure a loan advanced to DESMA. In their view, the bank could not therefore rely on that property as security or offer it for sale.
26. They further argued that if any loan advanced to DESNOL Investments Limited had existed, it had already been settled, as the loan account number was omitted from the statement of account. Consequently, they submitted that no loan balance remained outstanding, there was no basis for the continued charge over Kisumu/Bar/2178, and the property ought to have been discharged.
Respondent’s Submissions
27. The 1 st Respondent framed the first issue for determination as the duty of the Appellate court and submitted that the duty of a first appellate court is to re-evaluate, re-assess and re-analyze the entire record, independently consider the evidence, draw its own conclusions, and determine whether the trial court's findings should stand, while bearing in mind that it neither saw nor heard the witnesses. In support, reliance was placed on Abok James Odera T/A A. J. Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates [2013] eKLR , where the court, citing Kenya Ports Authority v Kusthon (Kenya) Limited (2009) 2 EA 212 , held that a first appellate court must reconsider and re-evaluate the evidence on record and reach its own conclusions without introducing extraneous matters or interfering with the trial court's findings merely because it would have reached a different conclusion.
28. The 1 st Respondent further submitted that the appellate court's review is confined to the Record of Appeal and the evidence presented before the trial court, and that the trial court's findings should only be disturbed where they are shown to be plainly erroneous. Accordingly, the Appellants cannot introduce matters outside the record or re-litigate the dispute as though it were being heard afresh.
29. The second issue was whether the learned magistrate erred in law and fact by applying a standard of proof higher than the balance of probabilities. The Respondents submitted that the learned magistrate applied a standard of proof higher than the civil standard of a balance of probabilities by requiring the 1 st Appellant to produce visa and travel documents to prove that she was outside the country when the loan and security documents were executed and registered. Relying on Bingwa Sacco Society Limited v Ngatia (Civil Appeal E318 of 2023) [2024] KEHC 8748 (KLR) , the Respondents argued that civil cases are determined on a balance of probabilities and that in Re H and Others (Minors) [1996] AC 563 , the court stated that an event is proved on a balance of probabilities if its more likely than not to have occurred, with the strength of evidence depending on the seriousness of the allegation.
30. In addition, the 1 st Respondent submitted that the 2 nd Appellant and Noel Natome had applied for and were granted a banking facility of Kshs. 8 million pursuant to a duly executed letter of offer. The loan was subsequently disbursed and secured by a charge over the suit property in favour of Desnol Investments Limited for Kshs. 2 million. The 1 st Respondent produced the executed letter of offer, loan statements and other facility documents, whose authenticity was neither challenged nor rebutted, thereby demonstrating that the facility had been duly applied for, approved and disbursed, establishing a borrower–lender relationship between the parties.
31. The 1 st Respondent further submitted that the Appellants' contention that they were out of the country when the facility was advanced and therefore could not have executed the charge instrument was unsupported. Although the 1 st Appellant had produced a passport extract allegedly showing travel abroad between January and December 2013, the trial court had correctly found that such a claim required supporting immigration documents, such as a visa or permit, which had not been produced. The lower court had therefore properly held that the allegation of continuous residence abroad had not been substantiated. It had further observed that, if the allegations were true, they would amount to fraud, yet no report of the alleged fraud had been made to the police. The 2 nd Appellant had neither testified nor produced any documentary evidence to support her claim that she had been out of the country at the material time. Being a beneficiary of the loan facility, she ought to have testified but elected not to participate in the proceedings, thereby failing to discharge the evidential burden under section 108 of the Evidence Act.
32. The 1 st Respondent further submitted that, in the absence of any rebuttal, the Appellants' assertions had remained unsubstantiated. Having produced all the documentation relating to the loan facility, the evidential burden had shifted to the Appellants to rebut the bank's case with cogent evidence, which they failed to do.
33. On the issue of the bank's exercise of its statutory power of sale, the 1 st Respondent submitted that the loan statement showed the account had remained active and had been serviced, with the last instalment having been received on 7 May 2018, confirming both the existence of the facility and its repayment history. It was therefore submitted that the loan account had remained in default after the last repayment, thereby justifying the bank's recovery process. Consequently, the learned magistrate had correctly determined the matter on a balance of probabilities in favour of the 1 st Respondent, whose evidence had effectively rebutted the allegations made against it.
34. The third issue was whether the charge instrument was valid and whether the 1 st appellant authorized the existing charge to secure the facility in dispute. The 1 st Respondent submitted that although the 1 st Appellant denied executing or consenting to the existing charge being used to secure the disputed facility, the evidence demonstrated that a valid charge had been created over the suit property in favour of Desnol Investments Limited to secure Kshs. 2 million. The charge was duly registered, and since the 1st Appellant was a director of Desnol Investments Limited, she was aware of the liabilities secured by the charge.
35. It was further submitted that during cross-examination, the 1 st Appellant admitted that she did not have custody of the title documents and acknowledged that the property had been charged. Although she claimed she had not executed the charge because she was outside the country, she failed to prove that allegation on a balance of probabilities.
36. The 1 st Respondent argued that the Appellant's allegations challenged the validity of a registered security yet the bank's documentation demonstrated that all the legal requirements for creation of the charge including execution of the instrument, obtaining spousal consent where applicable, and registration of the bank's interest had been complied with and remained uncontroverted. Consequently, the evidential burden shifted to the 1st Appellant to disprove the validity of the charge and her involvement in the transaction, which she failed to do. Reliance was placed on Equip Agencies Limited v I & M Bank Limited [2017] eKLR, where the court held that failure to challenge a charge at the appropriate time renders subsequent allegations an afterthought.
37. The Respondents further submitted that the disputed facility was procured by the 2nd Appellant, the 1 st Appellant's daughter, and the parties had agreed in the letter of offer that the existing securities in favour of Desnol Investments Limited would continue to secure the facility. The list of securities confirmed that the suit property remained a continuing security, and since there was no evidence that the existing charge had been discharged, limited or restricted, and no fresh charge was registered for the Kshs. 8 million facility, the existing charge continued to secure the facility in dispute.
38. Additionally, the Respondents argued that the 1 st Appellant's conduct reinforced the existence of a continuing security arrangement. Reliance was placed on Nyanza Fish Processors Limited v Barclays Bank of Kenya Limited [2023] KEHC 1641 (KLR ), where the court held that a chargor who had allowed property to remain charged for years without objection and only challenged the charge after realization of the security lacked candour.
39. The Respondents therefore maintained that the evidence established that the charge instrument was validly executed and that the suit property was lawfully offered as security for the disputed facility. The 1st Appellant's allegations were unsubstantiated and amounted to an afterthought.
40. The Respondent’s final issue for determination was whether the statutory notices were properly issued. The 1 st Respondent submitted that the Appellants' contention that the statutory notices were improperly issued and ought to have been reissued was misconceived because no such relief had been sought before the trial court. Instead, the Appellants had sought to restrain the bank from exercising its statutory power of sale altogether. Relying on Kinyanjui v Njoki (Civil Appeal No. 298 of 2023) [2024] KEHC 9725 (KLR) , the 1 st Respondent argued that parties are bound by their pleadings and that a court cannot grant relief that has not been specifically pleaded. It was therefore submitted that the trial magistrate properly confined the determination to the issues raised in the pleadings, making the Appellants' complaint regarding reissuance of statutory notices misplaced.
41. The 1 st Respondent further submitted that all the requisite statutory notices were duly issued and produced before the trial court together with proof of service. The notices were served upon the Appellants, the consenting spouse, and Desnol Investments Limited through the postal address provided at the time the charge was executed. It was argued that any challenge to the exercise of the statutory power of sale could not properly be determined without the participation of Desnol Investments Limited.
42. The 1 st Respondent also contended that the Appellants' complaint regarding the absence of statements of account for Desnol Investments Limited was irrelevant, as the suit did not place the company's liabilities in issue. It was further submitted that the Appellants had taken contradictory positions by asserting that Desnol Investments Limited had settled its loan facility while simultaneously disputing the validity of the charge securing that indebtedness.
43. Accordingly, the 1 st Respondent maintained that the evidence demonstrated full compliance with all statutory and contractual requirements governing the issuance and service of notices, thereby entitling the bank to lawfully exercise its statutory power of sale.
44. Conclusively, the 1 st Respondent submitted that the Appellants had failed to demonstrate any error of fact or law warranting interference with the trial court's decision. It was argued that the evidence established that the loan facility had been properly disbursed and secured by valid and enforceable securities, while the Appellants failed to discharge the evidentiary burden in support of their allegations. Consequently, the Respondents urged the court to find that the appeal lacked merit, constituted an improper challenge to valid contractual and statutory processes, and should therefore be dismissed with costs.
45. In the circumstances, I have considered the submissions from both the Appellants and the Respondents and I therefore wish to have the following as issues for determination;
C. ISSUES FOR DETERMINATION
(a) Whether the learned trial magistrate erred in finding that the Appellants failed to prove that the charge over land parcel KISUMU/BAR/2178 was invalid, fraudulent, or was not executed by the 1 st Appellant.
(b) Whether land parcel KISUMU/BAR/2178 lawfully secured the loan facilities in dispute and whether the 1 st Respondent was entitled to exercise its statutory power of sale over the suit property.
(c) Whether the 1 st Respondent complied with the statutory requirements governing the exercise of its statutory power of sale, particularly the issuance and service of the statutory notices under Sections 90 and 96 of the Land Act, and if not, what was the legal effect of such non-compliance.
(d) Who bears the costs?
D. ANALYSIS AND DETERMINATION
Whether the learned trial magistrate erred in finding that the Appellants failed to prove that the charge over land parcel KISUMU/BAR/2178 was invalid, fraudulent, or was not executed by the 1 st Appellant
46. The Appellants contend that the learned trial magistrate erred in law and fact by requiring them to prove their case beyond the requisite civil standard of a balance of probabilities. They argue that the 1st Appellant produced her Kenyan passport demonstrating that she departed Kenya on 10th January 2013 and only returned on 6th December 2013, making it impossible for her to have executed the charge instrument dated 11th February 2013. They further submit that the trial court wrongly insisted on the production of visas and other travel documents despite the passport bearing immigration stamps evidencing her departure and return.
47. The Respondents, on the other hand, maintains that the Appellants failed to discharge the burden of proving that the charge was invalid or fraudulently procured. It contends that the charge was duly executed and registered, the loan was disbursed, and the supporting banking documents remained unchallenged. According to the Respondents, the passport alone did not prove continuous residence abroad, while the allegations of fraud were never reported to the police nor supported by
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A. INTRODUCTION
1. The Plaintiffs, vide a Plaint dated 23 rd September 2024, instituted a suit against the Defendants seeking judgment against them jointly and severally for a declaration that the intended sale by public auction or any other way disposing of the interest of the Plaintiffs in the parcel of land known as KISUMU/BAR/2178 is untenable in law, unlawful and improper in as much as it is illegal; seeking a permanent injunction restraining the Defendants, by themselves, their servants, agents, or advocates or any of them or otherwise from offering for sale by public auction, or purporting to sell by public auction the piece or parcel of land known as KISUMU/BAR/2178, Kisumu County or otherwise howsoever dealing with or interfering in any way whatsoever with the Plaintiff’s proprietary interests thereof; a declaration that the Plaintiffs did not execute any loan agreements or charge documents over the parcel of land known as KISUMU/BAR/2178 as such the registration of a change in favor of the 1 st Defendant is unlawful and improper in as much as it is illegal; an order that the trial court compels the 1 st Defendant to sign all discharge of charge documents and provide all requisite documents to enable the deregistration of the charge over the land parcel number KISUMU/BAR/2178 and in default the trial court to execute the same on behalf of the Defendants; and cost of the suit.
2. The Plaintiffs averred that at all material times, the land parcel number KISUMU/BAR/2178 was and remained the registered property of the 1 st Plaintiff who had been shown a newspaper advert that showed that the suit property was set to be auctioned on the 24 th September 2024 allegedly on a loan borrowed by the 2 nd Plaintiff, a fact both the Plaintiffs were not aware since they did not borrow the said loan.
3. The Plaintiffs further averred that they conducted a search at the Kisumu District Land Registry which showed that the subject parcel land number KISUMU/BAR/2178 was charged to the 1 st Defendant on or about the month of February 2013 by the 2 nd Plaintiff. During this period, the Plaintiffs were not in the Republic of Kenya as they lived and stayed in Norway and therefore the Plaintiffs could not have executed any loan applications or charge documents in favor of the 1 st Defendant.
4. The Plaintiffs further stated that the Defendants caused the suit property to be put up on sale on the 24 th September 2024 by way of public auction without strict compliance with the provisions of Sections 90, 96, 97 and 98 of the Land Act 2012 and which action is therefore illegal, irregular, in bad faith and totally unlawful.
5. In response, the Defendants filed a defense denying the claim and averring that on 26 th September 2012, Desnol Investment Limited where the 1 st Plaintiff serves as a Director applied for and was granted a facility worth Kshs. 28 million. The facility was secured by the properties L.R. No Kisumu/Bar/2178 registered in the name of the 1 st Plaintiff, L.R. No. Kisumu/Ojola 4116 and 3927 registered in the name of Desnol Investments Limited
6. They averred that the Plaintiffs, together with Noel Kagame Natome later sought financing in the amount of Kshs. 8 million. Subsequently, Desnol Investments Limited applied for and was granted several facilities which were later restructured resulting in an outstanding liability amounting to Kshs. 91,101,100/=.
7. The trial court delivered judgment on 27 th October 2024 after determining two issues: whether the Plaintiffs had proved their case on a balance of probabilities, and whether they were entitled to the reliefs sought.
8. On whether the Plaintiffs had proved their case, the trial court rejected their contention that they did not execute the charge because they were allegedly out of the country at the time. The court held that a person residing abroad would ordinarily possess the requisite residence permits and travel documents. Since the Plaintiffs failed to produce any documents demonstrating that they had travelled to or resided in Norway, the allegation remained unsubstantiated.
9. The trial court further held that the Plaintiffs' allegation that they did not execute the charge amounted to a claim of fraud, which is a criminal offence attracting penal sanctions. The court observed that, had the allegations been genuine, the Plaintiffs ought to have reported the matter to the police to facilitate investigations. However, no such report was pleaded or shown to have been made.
10. The trial court also noted that the 2 nd Plaintiff, who was the 1st Plaintiff's daughter, was not called to testify. It further relied on the holding in Nyanza Fish Processers Limited v. Barclays Bank of Kenya Limited (Civil suit 40 of 2025) [2023] KEHC 1641 (KLR ) , where the court held that a party alleging that a charge was not intended must explain why the title documents were released to the bank, why the property remained charged for nearly ten years, why transactions with the bank continued throughout that period, and why no objection was raised until the bank sought to realize the security.
11. On the issue of service of the statutory notices under sections 90 and 96 of the Land Act, the trial court acknowledged that, in an earlier ruling, it had found that the notices had not been properly served and had consequently granted interim injunctive orders. The court, however, proceeded to determine whether that omission justified the grant of a permanent injunction. Relying on Kenya Power & Lighting Co. Ltd v. Sheriff Molana Habi [2018] eKLR, John Karanja Njenga & Another v. Bank of Africa [2015] eKLR and Daniel Kamau Mugambi v. Housing Company of Kenya Limited , the trial court held that a permanent injunction is only granted in appropriate circumstances and that a party seeking such relief must come to court with clean hands. It concluded that granting the injunction would prejudice the 1st Defendant's statutory right to realize its security and adversely affect the interests of third parties who were not parties to the proceedings.
12. The learned magistrate, in conclusion, held as follows: “For the foregoing reasons, I find that the Plaintiffs have not proven their case as against the Defendants on a balance of probabilities. They are thus not deserving and/or entitled to the reliefs and/orders prayed for. The entire suit thus fails and the same is dismissed with costs to the 1 st Defendant.
13. Being dissatisfied with the judgment of the trial court, the Plaintiffs lodged the present appeal vide a Memorandum of Appeal dated 25 th November 2025, raising the following grounds:-
(a) That the learned magistrate erred in law and in fact by dismissing the Appellant’s suit thereby arriving at a grossly unfair decision and in all circumstances failed to do justice to the Appellants.
(b) That the learned magistrate erred in law and fact by raising the standard of proof in this matter to a standard above the required balance of probabilities by finding that other than producing their Kenya Passports in court, the 1 st Appellant needed to provide a Visa and Travel Documents to prove that she was away in Norway at the time the loan documents were purported to have been executed and registered.
(c) That the learned magistrate erred in law and in fact by dismissing the Appellant suit and in effect allowing the Respondents to proceed with the sale of the land of the parcel number KISUMU/BAR/2178 to recover credit facilities that were not secured by the said parcel of land.
(d) That the learned magistrate erred in law and in fact by dismissing the Appellants suit and in effect allowing the Respondents to proceed with the sale of the land parcel number KISUMU/BAR/2178 despite the 1 st Appellant, the registered owner of the land parcel number KISUMU/BAR/2178 demonstrating that she did not owe the 1 st Respondent any loan sums.
(e) That the learned magistrate erred in law and fact by dismissing the Appellants suit and in effect allowing the Respondents to proceed with the sale of the land parcel number KISUMU/BAR/2178 despite agreeing with the Appellant that there was no strict compliance with the provisions of Sections 90, 96, 97, and 98 of the Land Act 2012.
(f) That the learned magistrate erred in law and in fact by failing to appreciate that the 1 st Appellant, the registered owner of the land parcel number KISUMU/BAR/ 2178 did not execute any documents allowing the 1 st Respondent to use the said parcel of land to secure other loan facilities unknown to the 1 st Appellant.
(g) That the learned magistrate failed and/or neglected to cumulatively and/or exhaustively evaluate the entire evidence (both oral and documentary) on record and hence arrived at an erroneous and slanted conclusion, contrary to and in merit.
(h) That the learned magistrate erred in law by finding that the Appellants suit lacked merit.
14. The appeal was canvassed by way of written submissions. Before delving into the submissions of both parties, this court notes that, being the first appellate court, it is required under Section 78 of the Civil Procedure Act and as was held in Selle v. Associated Motor Boat Co. Ltd [1969] E.A 123 , to re-evaluate, re-assess and analyze the evidence adduced before the trial court and arrive at its own independent conclusions, while bearing in mind that it neither saw nor heard the witness when they testified
B. SUBMISSIONS BY PARTIES
Appellant’s Submissions
15. The Appellants submitted themselves on three issues. They framed their first issue as whether the intended sale by public auction was lawful and whether the Respondents served upon all the Appellants with the statutory notices prior to the intended sale. The Appellants submitted that the intended sale by public auction was unlawful because the Respondents failed to serve the Appellants with the mandatory statutory notices before exercising its statutory power of sale. It was argued that, having found that the statutory notices had never been issued, the trial court ought to have ordered the Respondents to reissue the notices before proceeding with any sale, if the loan remained outstanding, rather than sanctioning the intended sale.
16. The Appellants relied on Martha Khayanga Simiyu v Housing Finance Co. of Kenya & 2 Others, Nairobi HCCC No. 937 of 2001 [2001] 2 EA 540 , where the court held that service of valid statutory notices and a notification of sale are mandatory preconditions to the lawful exercise of the statutory power of sale. The Appellants contended that failure to comply renders the purported sale void and liable to be nullified at the chargor's instance, rather than being a mere irregularity remediable by damages.
17. The Appellants second issue was whether 1 st Appellant used the land parcel number KISUMU/BAR/2178 as security to borrow a loan facility from the 1 st Respondent and whether it was a continuing security. The Appellants submitted that it was undisputed that the 1 st Appellant was the registered proprietor of KISUMU/BAR/2178 . She testified that she presented her passport, which confirmed that she was in JKIA on 9 th January 2013 , departed for Amsterdam on 10 th January 2013 , and returned to Kenya on 6 th December 2013 . They argued that it was therefore impossible for her to have executed the charge on 11 th February 2013 , which was purportedly registered on 15 th February 2013 in favour of the 1 st Respondent to secure a loan of Kshs. 2,000,000/= .
18. The Appellants further submitted that the Respondent's witnesses admitted that the property was treated as a continuing security for subsequent loans advanced to other persons without the 1 st Appellant’s consent. They contended that the 1 st Appellant never signed the charge document and relied on Vijay Morjaria v Nansingh Madhusingh Darbar & Another [2000] eKLR to argue that fraud must be specifically pleaded and strictly proved and cannot be inferred. They also relied on Kinyanjui Kamau v George Kamau [2015] eKLR , submitting that the burden of proving fraud rested on the Respondents and reiterating that it was impossible for the 1 st Appellant to have executed the charge while she was outside Kenya.
19. The Appellants further argued that even if the charge had been validly executed, it only secured the Kshs. 2,000,000/= loan advanced to Desnol Investments Limited , and no further charge was ever registered over the title. They maintained that the 1 st Appellant only consented to guarantee that specific loan, and the Respondent's subsequent use of the property to secure borrowings by third parties was unlawful and rendered the intended sale illegal. They emphasized that the borrower was Desnol Investments Limited , while the 1 st Appellant was merely a guarantor whose liability was limited to that loan.
20. The Appellants further submitted that the Respondent's own witness admitted that the 1 st Appellant never consented to the property being used to secure other loan facilities and that no evidence was produced showing she had been informed of or agreed to such use. Relying on Abraham K. Kiptanui v Delphis Bank Ltd & Another Nairobi (Milimani Commercial Courts) HCC No. 1864 of 1991 , as cited in George Williams Omondi & Another v Co-operative Bank of Kenya Ltd & 2 Others [2016] eKLR , they argued that varying the guaranteed transaction or extending security without the guarantor's consent discharged the guarantor from liability.
21. The Appellants further contended that the doctrine of continuing security was inapplicable because the 1 st Appellant never consented to the property securing any other facilities. They pointed out that the redemption notices and subsequent newspaper advertisement related to a loan advanced to the 2 nd Appellant, Desma Adhiambo Natome , and there was no evidence that the suit property had been offered as security for that facility.
22. The Appellants also argued that the Respondent's own documents showed that the loan secured by KISUMU/BAR/2178 had already been settled after the 1 st Respondent took over ownership of KISUMU/OJOLA/3927 and 4116 from Desnol Investments Limited , thereby extinguishing the secured debt.
23. Further, the Appellants submitted that the trial magistrate erred in requiring them to prove that no debt existed. They argued that once they asserted that the loan secured by the suit property had been settled, the burden shifted to the 1 st Respondent to prove that an outstanding debt remained. They maintained that the bank statement produced related to a separate loan obtained by the 2 nd Appellant and not the facility secured by KISUMU/BAR/2178 . Relying on Almasi Bottlers Ltd v M'Mbijiwe & 3 Others (Civil Suit E012 of 2022), they submitted that a party cannot be required to prove a negative, and the burden rested on the 1 st Respondent to establish the existence of the alleged outstanding loan.
24. The Appellants third issue was whether the Respondents proved that there was a loan facility owing to the 1 st Appellant to warrant it to exercise a statutory power of sale. The Appellants submitted that the Respondents failed to prove the existence of an outstanding loan facility owed by the 1 st Appellant so as to justify the exercise of the statutory power of sale. They argued that although the Respondents produced documents alleging that the 1 st Appellant had guaranteed a loan advanced to DESNOL Investments Limited, those documents only showed that the bank was pursuing recovery of a facility borrowed by DESMA Adhiambo Natome and not the 1st Appellant. Further, the bank statement produced by the 1st Respondent allegedly reflected a debt owed by DESMA Adhiambo Natome and not by the 1 st Appellant.
25. The Appellants contended that DESNOL Investments Limited and DESMA Adhiambo Natome were separate borrowers and there was no evidence of legal charges showing that parcel number Kisumu/Bar/2178 had been charged to secure a loan advanced to DESMA. In their view, the bank could not therefore rely on that property as security or offer it for sale.
26. They further argued that if any loan advanced to DESNOL Investments Limited had existed, it had already been settled, as the loan account number was omitted from the statement of account. Consequently, they submitted that no loan balance remained outstanding, there was no basis for the continued charge over Kisumu/Bar/2178, and the property ought to have been discharged.
Respondent’s Submissions
27. The 1 st Respondent framed the first issue for determination as the duty of the Appellate court and submitted that the duty of a first appellate court is to re-evaluate, re-assess and re-analyze the entire record, independently consider the evidence, draw its own conclusions, and determine whether the trial court's findings should stand, while bearing in mind that it neither saw nor heard the witnesses. In support, reliance was placed on Abok James Odera T/A A. J. Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates [2013] eKLR , where the court, citing Kenya Ports Authority v Kusthon (Kenya) Limited (2009) 2 EA 212 , held that a first appellate court must reconsider and re-evaluate the evidence on record and reach its own conclusions without introducing extraneous matters or interfering with the trial court's findings merely because it would have reached a different conclusion.
28. The 1 st Respondent further submitted that the appellate court's review is confined to the Record of Appeal and the evidence presented before the trial court, and that the trial court's findings should only be disturbed where they are shown to be plainly erroneous. Accordingly, the Appellants cannot introduce matters outside the record or re-litigate the dispute as though it were being heard afresh.
29. The second issue was whether the learned magistrate erred in law and fact by applying a standard of proof higher than the balance of probabilities. The Respondents submitted that the learned magistrate applied a standard of proof higher than the civil standard of a balance of probabilities by requiring the 1 st Appellant to produce visa and travel documents to prove that she was outside the country when the loan and security documents were executed and registered. Relying on Bingwa Sacco Society Limited v Ngatia (Civil Appeal E318 of 2023) [2024] KEHC 8748 (KLR) , the Respondents argued that civil cases are determined on a balance of probabilities and that in Re H and Others (Minors) [1996] AC 563 , the court stated that an event is proved on a balance of probabilities if its more likely than not to have occurred, with the strength of evidence depending on the seriousness of the allegation.
30. In addition, the 1 st Respondent submitted that the 2 nd Appellant and Noel Natome had applied for and were granted a banking facility of Kshs. 8 million pursuant to a duly executed letter of offer. The loan was subsequently disbursed and secured by a charge over the suit property in favour of Desnol Investments Limited for Kshs. 2 million. The 1 st Respondent produced the executed letter of offer, loan statements and other facility documents, whose authenticity was neither challenged nor rebutted, thereby demonstrating that the facility had been duly applied for, approved and disbursed, establishing a borrower–lender relationship between the parties.
31. The 1 st Respondent further submitted that the Appellants' contention that they were out of the country when the facility was advanced and therefore could not have executed the charge instrument was unsupported. Although the 1 st Appellant had produced a passport extract allegedly showing travel abroad between January and December 2013, the trial court had correctly found that such a claim required supporting immigration documents, such as a visa or permit, which had not been produced. The lower court had therefore properly held that the allegation of continuous residence abroad had not been substantiated. It had further observed that, if the allegations were true, they would amount to fraud, yet no report of the alleged fraud had been made to the police. The 2 nd Appellant had neither testified nor produced any documentary evidence to support her claim that she had been out of the country at the material time. Being a beneficiary of the loan facility, she ought to have testified but elected not to participate in the proceedings, thereby failing to discharge the evidential burden under section 108 of the Evidence Act.
32. The 1 st Respondent further submitted that, in the absence of any rebuttal, the Appellants' assertions had remained unsubstantiated. Having produced all the documentation relating to the loan facility, the evidential burden had shifted to the Appellants to rebut the bank's case with cogent evidence, which they failed to do.
33. On the issue of the bank's exercise of its statutory power of sale, the 1 st Respondent submitted that the loan statement showed the account had remained active and had been serviced, with the last instalment having been received on 7 May 2018, confirming both the existence of the facility and its repayment history. It was therefore submitted that the loan account had remained in default after the last repayment, thereby justifying the bank's recovery process. Consequently, the learned magistrate had correctly determined the matter on a balance of probabilities in favour of the 1 st Respondent, whose evidence had effectively rebutted the allegations made against it.
34. The third issue was whether the charge instrument was valid and whether the 1 st appellant authorized the existing charge to secure the facility in dispute. The 1 st Respondent submitted that although the 1 st Appellant denied executing or consenting to the existing charge being used to secure the disputed facility, the evidence demonstrated that a valid charge had been created over the suit property in favour of Desnol Investments Limited to secure Kshs. 2 million. The charge was duly registered, and since the 1st Appellant was a director of Desnol Investments Limited, she was aware of the liabilities secured by the charge.
35. It was further submitted that during cross-examination, the 1 st Appellant admitted that she did not have custody of the title documents and acknowledged that the property had been charged. Although she claimed she had not executed the charge because she was outside the country, she failed to prove that allegation on a balance of probabilities.
36. The 1 st Respondent argued that the Appellant's allegations challenged the validity of a registered security yet the bank's documentation demonstrated that all the legal requirements for creation of the charge including execution of the instrument, obtaining spousal consent where applicable, and registration of the bank's interest had been complied with and remained uncontroverted. Consequently, the evidential burden shifted to the 1st Appellant to disprove the validity of the charge and her involvement in the transaction, which she failed to do. Reliance was placed on Equip Agencies Limited v I & M Bank Limited [2017] eKLR, where the court held that failure to challenge a charge at the appropriate time renders subsequent allegations an afterthought.
37. The Respondents further submitted that the disputed facility was procured by the 2nd Appellant, the 1 st Appellant's daughter, and the parties had agreed in the letter of offer that the existing securities in favour of Desnol Investments Limited would continue to secure the facility. The list of securities confirmed that the suit property remained a continuing security, and since there was no evidence that the existing charge had been discharged, limited or restricted, and no fresh charge was registered for the Kshs. 8 million facility, the existing charge continued to secure the facility in dispute.
38. Additionally, the Respondents argued that the 1 st Appellant's conduct reinforced the existence of a continuing security arrangement. Reliance was placed on Nyanza Fish Processors Limited v Barclays Bank of Kenya Limited [2023] KEHC 1641 (KLR ), where the court held that a chargor who had allowed property to remain charged for years without objection and only challenged the charge after realization of the security lacked candour.
39. The Respondents therefore maintained that the evidence established that the charge instrument was validly executed and that the suit property was lawfully offered as security for the disputed facility. The 1st Appellant's allegations were unsubstantiated and amounted to an afterthought.
40. The Respondent’s final issue for determination was whether the statutory notices were properly issued. The 1 st Respondent submitted that the Appellants' contention that the statutory notices were improperly issued and ought to have been reissued was misconceived because no such relief had been sought before the trial court. Instead, the Appellants had sought to restrain the bank from exercising its statutory power of sale altogether. Relying on Kinyanjui v Njoki (Civil Appeal No. 298 of 2023) [2024] KEHC 9725 (KLR) , the 1 st Respondent argued that parties are bound by their pleadings and that a court cannot grant relief that has not been specifically pleaded. It was therefore submitted that the trial magistrate properly confined the determination to the issues raised in the pleadings, making the Appellants' complaint regarding reissuance of statutory notices misplaced.
41. The 1 st Respondent further submitted that all the requisite statutory notices were duly issued and produced before the trial court together with proof of service. The notices were served upon the Appellants, the consenting spouse, and Desnol Investments Limited through the postal address provided at the time the charge was executed. It was argued that any challenge to the exercise of the statutory power of sale could not properly be determined without the participation of Desnol Investments Limited.
42. The 1 st Respondent also contended that the Appellants' complaint regarding the absence of statements of account for Desnol Investments Limited was irrelevant, as the suit did not place the company's liabilities in issue. It was further submitted that the Appellants had taken contradictory positions by asserting that Desnol Investments Limited had settled its loan facility while simultaneously disputing the validity of the charge securing that indebtedness.
43. Accordingly, the 1 st Respondent maintained that the evidence demonstrated full compliance with all statutory and contractual requirements governing the issuance and service of notices, thereby entitling the bank to lawfully exercise its statutory power of sale.
44. Conclusively, the 1 st Respondent submitted that the Appellants had failed to demonstrate any error of fact or law warranting interference with the trial court's decision. It was argued that the evidence established that the loan facility had been properly disbursed and secured by valid and enforceable securities, while the Appellants failed to discharge the evidentiary burden in support of their allegations. Consequently, the Respondents urged the court to find that the appeal lacked merit, constituted an improper challenge to valid contractual and statutory processes, and should therefore be dismissed with costs.
45. In the circumstances, I have considered the submissions from both the Appellants and the Respondents and I therefore wish to have the following as issues for determination;
C. ISSUES FOR DETERMINATION
(a) Whether the learned trial magistrate erred in finding that the Appellants failed to prove that the charge over land parcel KISUMU/BAR/2178 was invalid, fraudulent, or was not executed by the 1 st Appellant.
(b) Whether land parcel KISUMU/BAR/2178 lawfully secured the loan facilities in dispute and whether the 1 st Respondent was entitled to exercise its statutory power of sale over the suit property.
(c) Whether the 1 st Respondent complied with the statutory requirements governing the exercise of its statutory power of sale, particularly the issuance and service of the statutory notices under Sections 90 and 96 of the Land Act, and if not, what was the legal effect of such non-compliance.
(d) Who bears the costs?
D. ANALYSIS AND DETERMINATION
Whether the learned trial magistrate erred in finding that the Appellants failed to prove that the charge over land parcel KISUMU/BAR/2178 was invalid, fraudulent, or was not executed by the 1 st Appellant
46. The Appellants contend that the learned trial magistrate erred in law and fact by requiring them to prove their case beyond the requisite civil standard of a balance of probabilities. They argue that the 1st Appellant produced her Kenyan passport demonstrating that she departed Kenya on 10th January 2013 and only returned on 6th December 2013, making it impossible for her to have executed the charge instrument dated 11th February 2013. They further submit that the trial court wrongly insisted on the production of visas and other travel documents despite the passport bearing immigration stamps evidencing her departure and return.
47. The Respondents, on the other hand, maintains that the Appellants failed to discharge the burden of proving that the charge was invalid or fraudulently procured. It contends that the charge was duly executed and registered, the loan was disbursed, and the supporting banking documents remained unchallenged. According to the Respondents, the passport alone did not prove continuous residence abroad, while the allegations of fraud were never reported to the police nor supported by
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