Introduction and Background
1. By their amended plaint dated 5 th March 2025, the Plaintiffs (“the Company” and “Otieno”) claim that in the years 2018 and 2019, the 1 st Defendant (“the Bank”) advanced the Company loan facilities totaling USD 100,000 secured by a charge over a property in Syokimau, L.R. No. 12715/9612 , owned by Otieno(“the suit property”). The Plaintiffs state that they struggled to service the loan in 2020 due to the impact of COVID-19 and that the Bank sold the suit property in September 2022 without their knowledge.
2. The Plaintiffs claim that this sale was illegal and a breach of duty for reasons that the Bank sold the property for Kshs. 10,500,000.00, which is far below its true value. They state that at the time of obtaining the facility, the market value of the suit property was placed at Kshs. 28,000,000.00 and the forced sale value at Kshs. 22,000,000. Therefore, the sale at a price of Kshs. 10,500,000.00 is a breach of section 97 of the Land Act .
3. The Plaintiffs claim that the Bank used a valuation report from 9 th July 2021, which was conducted without access to the suit property and that this report was done in bad faith to facilitate a sale at a loss and that the suit property could not be sold below the reserve price of Kshs. 15,000,000.00 even based on this report. Furthermore, they aver the valuation was invalid for the sale as it was not conducted within 12 months of the sale as required by law and they contend the Bank did not act in good faith to obtain the best price for the suit property.
4. The Plaintiffs allege the Bank failed to serve the mandatory statutory notices required under sections 90 and 96 of the Land Act before exercising its statutory power of sale. For these reasons, the Plaintiffs seek declarations that the sale of the suit property was illegal and void and that the same was sold at a gross undervalue. They also seek orders that the Bank pays them Kshs. 17,500,000.00 being the difference between the alleged market value of Kshs. 28,000,000.00 and the sale price of Kshs. 10,500,000.00 together with general and punitive damages for breach of duty. They further seek a declaration that the Plaintiffs are discharged and released from all liability under the charge and orders that the Bank pays the costs of this suit.
5. The Bank responded to the suit through its amended defence dated 12 th May 2025 denying most of the allegations and asserting that the sale of the suit property was conducted lawfully. The Bank admits that it advanced a loan facility of USD 100,000 in 2019 but adds that a further facility of USD 50,000 was advanced, both secured by a Charge and Further Charge over the suit property. The Bank claims the Plaintiffs failed to make their monthly loan repayments as agreed and it issued demand notices, but the Plaintiffs failed to regularize the default, forcing the Bank to exercise its statutory power of sale.
6. The Bank clarifies that the suit property was actually auctioned and sold on 10 th November 2021, not in 2022 as the Plaintiffs allege and that all lawful procedures were followed in the sale. That the suit property was valued by an independent, professional valuer, Landmark Realtors Limited on 7 th July 2021, which was a valid forced sale valuation carried out in compliance with the law and that the valuation was conducted within the required 12 months before the sale, as per Rule 11(b)(x) of the Auctioneers Rules .
7. The Bank claims it exercised its duty of care by receiving several bids and the highest bid of Kshs. 10,500,000.00 was the best obtainable price at the time. The Bank states that the suit is now overtaken by events because the suit property has already been sold to a third party and the Plaintiffs cannot overturn the sale or prevent the new owner from taking possession of the suit property. The Bank reveals that the Plaintiffs had previously filed a similar case in the Magistrate's Court which was dismissed for lack of jurisdiction on 17 th March 2023 and the present suit was filed while the subordinate court case was still pending and is now a vexatious abuse of the court process and it should be struck out with costs. For these reasons, the Bank prays that the court dismisses or strikes out the Plaintiffs' Amended Plaint with costs to the Bank.
8. At the hearing, Otieno testified on behalf of the Plaintiffs (PW 1) and relied on his witness statement dated 27 th October 2025 and he produced their List and Bundle of Documents dated 15 th March 2022 (PExhibit 1-5). The Bank called its Officer – SME Recoveries, Sarah Ochako who adopted her witness statement dated 19 th August 2025 and produced the List and Bundle of Documents dated 17 th May 2024(DExhibit 1-13). After hearing the parties, the court directed them to file written submissions which are on record and since the same are a mirror of the parties’ positions highlighted above, I will not rehash the same but make relevant references in my analysis and determination below.
Analysis and Determination
9. As these are civil proceedings, it should not be lost that the court’s determination is on a balance of probabilities and is guided by the principle that he who alleges must prove. Denning J., in Miller v Minister Of Pensions [1947]2 All ER 372 discussed the burden of proof and he stated as follows:
“That degree is well settled. It must carry a reasonable degree of probability , but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘we think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance of probabilities means a win, however narrow . A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un) convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”
10. The aforementioned position has now been espoused by our superior courts and finds statutory comfort in sections 107 and 108 of the Evidence Act(Chapter 80 of the Laws of Kenya) which provide as follows:
107. Burden of proof.
(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
108. Incidence of burden.
The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
(Also see Ignatius Makau Mutisya v Reuben Musyoki Muli [2015] KECA 612 (KLR )
11. From the parties’ submissions, the court is being asked to determine the following abridged issues:
a) Whether the Plaintiffs were in default
b) Whether failure to serve the statutory notices invalidated the sale
c) Whether the suit property was sold at a gross undervalue and in contravention of section 97 of the Land Act
d) Whether the Plaintiffs are entitled to the remedies sought
Default of the Plaintiffs
12. The Bank submits that the Plaintiffs’ default is incontrovertible and an admitted fact and that Para. 6 of the Amended Plaint explicitly concedes that the loan account fell into arrears and PW 1 confirmed this during cross-examination. Further, that Loan statements (DExhibit 6,7 & 8) show sustained, prolonged default exceeding the one-month statutory threshold set under section 90(1) of the Land Act . The Bank submits that because the Plaintiffs freely negotiated the Charge and Further Charge instruments, the Bank’s statutory and contractual right to exercise the power of sale fully crystallized upon this default. They submit that the Plaintiffs cannot approbate and reprobate by acknowledging default while attempting to block its legal consequences.
13. I am in agreement with the Bank that from the pleadings and evidence, the Plaintiffs admitted defaulting on their repayment obligations in respect of the loan. At Para. 6 of the amended plaint, the Plaintiffs state that “ … sometimes in 2020 it had problems servicing the loan since his primary business of tours and travel had been affected by the covid-19". PW 1 admitted as much in his testimony and I therefore find that at all material times in this suit, the Plaintiffs were in default of the loan facilities
Service of the statutory notices
14. The Plaintiffs submitted that statutory notices under sections 90 and 96 of the Land Act were sent to the wrong postal address, P.O. Box 20659-00100 Nairobi instead of the correct address, P.O. Box 20659-00200 Nairobi. The Plaintiffs state that all key documents including the charge instrument, bank statements, and affidavit listed the correct address with the code 00200 but the Defendants replicated the wrong address 00100 on the certificates of posting and that no proof of service or posting was provided for the Notification of Sale. Citing various case law including the Court of Appeal decision of Nyangilo Ochieng & another v Fanuel B. Ochieng & 2 others [1996] KECA 205 (KLR), the Plaintiffs contend that the statutory notices before sale are mandatory substantive safeguards protecting the chargor’s equity of redemption. Thy further submitted that the Notice of sale was never served, violating Rule 15 of the Auctioneers Rules and they conclude that non-service or defective service vitiates the entire exercise of statutory power of sale, rendering the purported sale illegal and a nullity ab initio .
15. In response, the Defendants submitted that this argument by the Plaintiffs elevates form over substance since the box number 20659 and town, Nairobi, were accurate, both codes serve Nairobi, and there was no evidence of returned mail. The Bank averred that it proved dispatch by registered post through the produced Certificates of Posting and that the burden of proof shifted to the Plaintiffs to disprove receipt which they failed to do. That the Notification of Sale was served through the Auctioneer, containing the exact date, mode of service and identity of a named witness and that a bare denial by the Plaintiffs cannot displace verifiable documentary records signed in the presence of an identifiable witness.
16. As submitted by the parties, Once a chargor, in this case, Otieno, alleges non-receipt of the statutory notice it is for the charge, that is the Bank, to prove that such notice was in fact sent. Further, the Court of Appeal in Nyagilo Ochieng & Another v Fanuel Ochieng(supra) held that a certificate of posting is prima facie proof of service of the said notices. The Bank produced Certificates of Posting for the section 90 and section 96 notices (DExhibit 9). I am in agreement with the Bank that the difference between 00100 and 00200 is a minor variation in the postal code for Nairobi. The primary identifier, that is the box number, 20659 and the town, Nairobi, were correct. There is no evidence from the Plaintiffs, such as a letter from the Post Office, to prove that the notices were returned undelivered or that P.O. Box 20659 exists in two different locations. Since the Plaintiffs made the allegation of non-service and the Bank provided evidence of dispatch, the burden then shifted to the Plaintiffs to prove that the service was defective. A bare denial of receipt, without more, is insufficient to displace the prima facie evidence provided by the certificates of posting. The Plaintiffs failed to do this and the minor address discrepancy is not a strong enough argument to invalidate the entire statutory process and I find that the Notices were sent to the correct box number in Nairobi and the Plaintiffs are deemed to have received them.
Undervaluation of the suit property
17. The Plaintiffs submit that under section 97(1) of the Land Act , a chargee owes a duty to the chargor to obtain the best price reasonably obtainable at the time of sale. That in 2019, the suit property was valued at Kshs. 28,000,000.00 with a forced sale value Kshs. 22,000,000.00 but in July 2021, a second valuation placed the market value down to Kshs. 20,000,000.00. The Plaintiffs submit that the second valuer expressly admitted to having limited access or no access to the premises and relied on the 2019 report while noting no adverse physical or environmental conditions on the suit property.
18. Relying on court’s decisions in Minolta Limited v National Bank of Kenya Limited [2018] KEHC 3055 (KLR) and Komassai Plantations Ltd v Bank of Baroda (K) Ltd [2015] KEHC 2541 (KLR) , the Plaintiffs submitted that property values rarely plummet without physical deterioration and the massive discrepancy without explanation indicates bad faith and a valuation engineered to sell the suit property far below market rate. The Plaintiffs submitted that the suit property was sold for Kshs. 10,500,000.00 and under section 97(2) of the Land Act , a sale price at or below 75% of market value creates a rebuttable presumption of breach of duty and selling at Kshs. 10,500,000.00 fell way below the statutory benchmark.
19. Further, that under section 98(2) of the Land Act , public auction sales must be duly advertised and that DW 1 admitted in his testimony that advertisements were only placed in 2020, but no advertisement was done for the 2021 sale, preventing competitive bidding to secure the best price.
20. In response, the Bank submitted that the duty under section 97(1) is to obtain the “best price reasonably obtainable at the time of sale” and not the highest abstract price conceivable. The Bank contended that it took reasonable precautions by commissioning a professional pre-sale valuation, issuing notices, advertising and holding a public auction. That the Plaintiffs provided no independent valuation report or expert evidence to support their claim that the suit property was undervalued.
21. The Bank submitted that as per various decisions including Palmy Company Limited v Consolidated Bank of Kenya Limited [2014] KEHC 4811 (KLR), an undervalue alone is insufficient to set aside a sale or award damages and it must be accompanied by proven fraud, bad faith or collusion and the chargor must present cogent material showing why the Bank's valuation was defective. That forced sale market conditions differ from open market transactions, and the Bank was not obligated to delay the sale in hopes of higher market prices.
22. As submitted by the parties, the duty of the Bank is to act in good faith and obtain the best price reasonably obtainable under section 97 of the Land Act in exercising its statutory power of sale and the Bank was obligated to sell the charged property as per the forced sale value and not the market value (see Shah & another v I & M Bank Limited [2024] KEHC 16303 (KLR) ].
23. Section 97(1) of the Land Act provides as follows:
Duty of chargee exercising power of sale
(1) A chargee who exercises a power to sell the charged land, including the exercise of the power to sell in pursuance of an order of a court, owes a duty of care to the chargor, any guarantor of the whole or any part of the sums advanced to the chargor, any chargee under a subsequent charge or under a lien to obtain the best price reasonably obtainable at the time of sale .
24. Rule 11(b)(x) of the Auctioneers Rules also provides as follows: “ The reserve price for each separate piece of land based on a professional valuation carried out not more than 12 months prior to the proposed sale .” From the evidence, it was not disputed that the Bank obtained a valuation for the suit property through the firm of M/s Landmark Properties Limited which returned a forced sale value of Kshs. 15,000,000.00 (DExhibit 13) and the property was sold on November 2021 as per the Certificate of Sale produced by the Bank(DExhibit 12). I therefore find that the Bank complied with section 97(2) of the Land Act by obtaining a forced sale valuation from a professional valuer which was just four months before the sale in November 2021. Thus, the valuation was conducted within the 12-month timeframe required by the Auctioneers Rules above.
25. I note that the Plaintiffs are comparing the sale price to the market value from 2019 or to the forced sale value from 2019. I find this approach to be legally flawed because the duty under section 97(1) is to obtain the best price “reasonably obtainable at the time of sale” , which is specifically reflected in the forced sale valuation. A forced sale price is by definition lower than an open market value and I find that the Plaintiffs failed to produce an independent valuation report to counter the Bank's 2021 forced sale valuation. It is not enough to merely claim undervalue and the Plaintiff must produce cogent evidence to discredit the Defendant's professional valuation and a general denial and reference to an older, higher value does not satisfy this burden. Even in the case of Komassai Plantations Ltd(supra) the court made a determination that the valuation was flawed after considering different valuation reports from the parties. In Minolta Limited(supra) the court ordered a joint valuation of the property therein to ascertain its true value before the auction could proceed.
26. It should that not be lost that a valuation report is a product of professional and expert opinion by a duly qualified valuer, conducted based on accepted parameters. Courts are slow to interfere with such expert opinions unless clear and compelling evidence is presented to show that the valuation was conducted in bad faith, was grossly erroneous, or was based on a fundamental mistake. None of these was demonstrated in this case and the Bank produced the Certificate of Sale that the suit property was sold at a public auction, which is the standard and prescribed method for obtaining a competitive price. The Bank asserted that the sale price of Kshs. 10,500,000.00 was the highest bid received, and therefore the "best price reasonably obtainable" under the circumstances of a forced sale. It is therefore my finding that the suit property was not sold at an undervalue and that the valuation was not in contravention of section 97 of the Land Act .
Remedies sought by the Plaintiffs
27. From the remedies sought by the Plaintiffs, they are seeking to have the sale declared a nullity and to be discharged from liability. However, the suit property has already been admittedly sold to a third party and a Certificate of Sale has been issued. The law is well settled that once a property is sold at a public auction and the hammer falls, the charger's equity of redemption is extinguished, and the title passes to the purchaser (see Jacob Ochieng' Muganda v Housing Finance Company of Kenya Limited [2002] KECA 109 (KLR) and Bomet Beer Distributors Ltd,Wilson Maritim Lasoi v Kenya Commercial Bank Ltd & 4 others [2005] KEHC 2932 (KLR) ].The court cannot undo this without severely prejudicing the rights of an innocent third-party purchaser who is not even a party to this suit.
28. The Plaintiffs also seek that they be discharged from liability under the charge, however, this is not possible considering the Plaintiffs are in admitted default of the facilities. This, together with the findings above that the Bank had the legal right to sell the suit property, that it provided prima facie and conclusive evidence that statutory notices were dispatched and the Plaintiffs failed to rebut this, that it complied with the law by obtaining a forced sale valuation before the sale , means that the Plaintiffs are not entitled to the reliefs they seek in their amended plaint.
Conclusion and Disposition
29. In the upshot, I now dismiss the Plaintiffs’ suit with costs to the Bank.
DATED SIGNED AND DELIVERED virtually this 28 TH DAY OF JULY 2026
............................................................................
J W W MONGARE
JUDGE
IN THE PRESENCE OF
1. Mr. Odhiambo for the Plaintiff
2. N/A for the Defendants
3. Amos/Godfrey- Court Assistant
2 | Page
1. By their amended plaint dated 5 th March 2025, the Plaintiffs (“the Company” and “Otieno”) claim that in the years 2018 and 2019, the 1 st Defendant (“the Bank”) advanced the Company loan facilities totaling USD 100,000 secured by a charge over a property in Syokimau, L.R. No. 12715/9612 , owned by Otieno(“the suit property”). The Plaintiffs state that they struggled to service the loan in 2020 due to the impact of COVID-19 and that the Bank sold the suit property in September 2022 without their knowledge.
2. The Plaintiffs claim that this sale was illegal and a breach of duty for reasons that the Bank sold the property for Kshs. 10,500,000.00, which is far below its true value. They state that at the time of obtaining the facility, the market value of the suit property was placed at Kshs. 28,000,000.00 and the forced sale value at Kshs. 22,000,000. Therefore, the sale at a price of Kshs. 10,500,000.00 is a breach of section 97 of the Land Act .
3. The Plaintiffs claim that the Bank used a valuation report from 9 th July 2021, which was conducted without access to the suit property and that this report was done in bad faith to facilitate a sale at a loss and that the suit property could not be sold below the reserve price of Kshs. 15,000,000.00 even based on this report. Furthermore, they aver the valuation was invalid for the sale as it was not conducted within 12 months of the sale as required by law and they contend the Bank did not act in good faith to obtain the best price for the suit property.
4. The Plaintiffs allege the Bank failed to serve the mandatory statutory notices required under sections 90 and 96 of the Land Act before exercising its statutory power of sale. For these reasons, the Plaintiffs seek declarations that the sale of the suit property was illegal and void and that the same was sold at a gross undervalue. They also seek orders that the Bank pays them Kshs. 17,500,000.00 being the difference between the alleged market value of Kshs. 28,000,000.00 and the sale price of Kshs. 10,500,000.00 together with general and punitive damages for breach of duty. They further seek a declaration that the Plaintiffs are discharged and released from all liability under the charge and orders that the Bank pays the costs of this suit.
5. The Bank responded to the suit through its amended defence dated 12 th May 2025 denying most of the allegations and asserting that the sale of the suit property was conducted lawfully. The Bank admits that it advanced a loan facility of USD 100,000 in 2019 but adds that a further facility of USD 50,000 was advanced, both secured by a Charge and Further Charge over the suit property. The Bank claims the Plaintiffs failed to make their monthly loan repayments as agreed and it issued demand notices, but the Plaintiffs failed to regularize the default, forcing the Bank to exercise its statutory power of sale.
6. The Bank clarifies that the suit property was actually auctioned and sold on 10 th November 2021, not in 2022 as the Plaintiffs allege and that all lawful procedures were followed in the sale. That the suit property was valued by an independent, professional valuer, Landmark Realtors Limited on 7 th July 2021, which was a valid forced sale valuation carried out in compliance with the law and that the valuation was conducted within the required 12 months before the sale, as per Rule 11(b)(x) of the Auctioneers Rules .
7. The Bank claims it exercised its duty of care by receiving several bids and the highest bid of Kshs. 10,500,000.00 was the best obtainable price at the time. The Bank states that the suit is now overtaken by events because the suit property has already been sold to a third party and the Plaintiffs cannot overturn the sale or prevent the new owner from taking possession of the suit property. The Bank reveals that the Plaintiffs had previously filed a similar case in the Magistrate's Court which was dismissed for lack of jurisdiction on 17 th March 2023 and the present suit was filed while the subordinate court case was still pending and is now a vexatious abuse of the court process and it should be struck out with costs. For these reasons, the Bank prays that the court dismisses or strikes out the Plaintiffs' Amended Plaint with costs to the Bank.
8. At the hearing, Otieno testified on behalf of the Plaintiffs (PW 1) and relied on his witness statement dated 27 th October 2025 and he produced their List and Bundle of Documents dated 15 th March 2022 (PExhibit 1-5). The Bank called its Officer – SME Recoveries, Sarah Ochako who adopted her witness statement dated 19 th August 2025 and produced the List and Bundle of Documents dated 17 th May 2024(DExhibit 1-13). After hearing the parties, the court directed them to file written submissions which are on record and since the same are a mirror of the parties’ positions highlighted above, I will not rehash the same but make relevant references in my analysis and determination below.
Analysis and Determination
9. As these are civil proceedings, it should not be lost that the court’s determination is on a balance of probabilities and is guided by the principle that he who alleges must prove. Denning J., in Miller v Minister Of Pensions [1947]2 All ER 372 discussed the burden of proof and he stated as follows:
“That degree is well settled. It must carry a reasonable degree of probability , but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘we think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance of probabilities means a win, however narrow . A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un) convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”
10. The aforementioned position has now been espoused by our superior courts and finds statutory comfort in sections 107 and 108 of the Evidence Act(Chapter 80 of the Laws of Kenya) which provide as follows:
107. Burden of proof.
(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
108. Incidence of burden.
The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
(Also see Ignatius Makau Mutisya v Reuben Musyoki Muli [2015] KECA 612 (KLR )
11. From the parties’ submissions, the court is being asked to determine the following abridged issues:
a) Whether the Plaintiffs were in default
b) Whether failure to serve the statutory notices invalidated the sale
c) Whether the suit property was sold at a gross undervalue and in contravention of section 97 of the Land Act
d) Whether the Plaintiffs are entitled to the remedies sought
Default of the Plaintiffs
12. The Bank submits that the Plaintiffs’ default is incontrovertible and an admitted fact and that Para. 6 of the Amended Plaint explicitly concedes that the loan account fell into arrears and PW 1 confirmed this during cross-examination. Further, that Loan statements (DExhibit 6,7 & 8) show sustained, prolonged default exceeding the one-month statutory threshold set under section 90(1) of the Land Act . The Bank submits that because the Plaintiffs freely negotiated the Charge and Further Charge instruments, the Bank’s statutory and contractual right to exercise the power of sale fully crystallized upon this default. They submit that the Plaintiffs cannot approbate and reprobate by acknowledging default while attempting to block its legal consequences.
13. I am in agreement with the Bank that from the pleadings and evidence, the Plaintiffs admitted defaulting on their repayment obligations in respect of the loan. At Para. 6 of the amended plaint, the Plaintiffs state that “ … sometimes in 2020 it had problems servicing the loan since his primary business of tours and travel had been affected by the covid-19". PW 1 admitted as much in his testimony and I therefore find that at all material times in this suit, the Plaintiffs were in default of the loan facilities
Service of the statutory notices
14. The Plaintiffs submitted that statutory notices under sections 90 and 96 of the Land Act were sent to the wrong postal address, P.O. Box 20659-00100 Nairobi instead of the correct address, P.O. Box 20659-00200 Nairobi. The Plaintiffs state that all key documents including the charge instrument, bank statements, and affidavit listed the correct address with the code 00200 but the Defendants replicated the wrong address 00100 on the certificates of posting and that no proof of service or posting was provided for the Notification of Sale. Citing various case law including the Court of Appeal decision of Nyangilo Ochieng & another v Fanuel B. Ochieng & 2 others [1996] KECA 205 (KLR), the Plaintiffs contend that the statutory notices before sale are mandatory substantive safeguards protecting the chargor’s equity of redemption. Thy further submitted that the Notice of sale was never served, violating Rule 15 of the Auctioneers Rules and they conclude that non-service or defective service vitiates the entire exercise of statutory power of sale, rendering the purported sale illegal and a nullity ab initio .
15. In response, the Defendants submitted that this argument by the Plaintiffs elevates form over substance since the box number 20659 and town, Nairobi, were accurate, both codes serve Nairobi, and there was no evidence of returned mail. The Bank averred that it proved dispatch by registered post through the produced Certificates of Posting and that the burden of proof shifted to the Plaintiffs to disprove receipt which they failed to do. That the Notification of Sale was served through the Auctioneer, containing the exact date, mode of service and identity of a named witness and that a bare denial by the Plaintiffs cannot displace verifiable documentary records signed in the presence of an identifiable witness.
16. As submitted by the parties, Once a chargor, in this case, Otieno, alleges non-receipt of the statutory notice it is for the charge, that is the Bank, to prove that such notice was in fact sent. Further, the Court of Appeal in Nyagilo Ochieng & Another v Fanuel Ochieng(supra) held that a certificate of posting is prima facie proof of service of the said notices. The Bank produced Certificates of Posting for the section 90 and section 96 notices (DExhibit 9). I am in agreement with the Bank that the difference between 00100 and 00200 is a minor variation in the postal code for Nairobi. The primary identifier, that is the box number, 20659 and the town, Nairobi, were correct. There is no evidence from the Plaintiffs, such as a letter from the Post Office, to prove that the notices were returned undelivered or that P.O. Box 20659 exists in two different locations. Since the Plaintiffs made the allegation of non-service and the Bank provided evidence of dispatch, the burden then shifted to the Plaintiffs to prove that the service was defective. A bare denial of receipt, without more, is insufficient to displace the prima facie evidence provided by the certificates of posting. The Plaintiffs failed to do this and the minor address discrepancy is not a strong enough argument to invalidate the entire statutory process and I find that the Notices were sent to the correct box number in Nairobi and the Plaintiffs are deemed to have received them.
Undervaluation of the suit property
17. The Plaintiffs submit that under section 97(1) of the Land Act , a chargee owes a duty to the chargor to obtain the best price reasonably obtainable at the time of sale. That in 2019, the suit property was valued at Kshs. 28,000,000.00 with a forced sale value Kshs. 22,000,000.00 but in July 2021, a second valuation placed the market value down to Kshs. 20,000,000.00. The Plaintiffs submit that the second valuer expressly admitted to having limited access or no access to the premises and relied on the 2019 report while noting no adverse physical or environmental conditions on the suit property.
18. Relying on court’s decisions in Minolta Limited v National Bank of Kenya Limited [2018] KEHC 3055 (KLR) and Komassai Plantations Ltd v Bank of Baroda (K) Ltd [2015] KEHC 2541 (KLR) , the Plaintiffs submitted that property values rarely plummet without physical deterioration and the massive discrepancy without explanation indicates bad faith and a valuation engineered to sell the suit property far below market rate. The Plaintiffs submitted that the suit property was sold for Kshs. 10,500,000.00 and under section 97(2) of the Land Act , a sale price at or below 75% of market value creates a rebuttable presumption of breach of duty and selling at Kshs. 10,500,000.00 fell way below the statutory benchmark.
19. Further, that under section 98(2) of the Land Act , public auction sales must be duly advertised and that DW 1 admitted in his testimony that advertisements were only placed in 2020, but no advertisement was done for the 2021 sale, preventing competitive bidding to secure the best price.
20. In response, the Bank submitted that the duty under section 97(1) is to obtain the “best price reasonably obtainable at the time of sale” and not the highest abstract price conceivable. The Bank contended that it took reasonable precautions by commissioning a professional pre-sale valuation, issuing notices, advertising and holding a public auction. That the Plaintiffs provided no independent valuation report or expert evidence to support their claim that the suit property was undervalued.
21. The Bank submitted that as per various decisions including Palmy Company Limited v Consolidated Bank of Kenya Limited [2014] KEHC 4811 (KLR), an undervalue alone is insufficient to set aside a sale or award damages and it must be accompanied by proven fraud, bad faith or collusion and the chargor must present cogent material showing why the Bank's valuation was defective. That forced sale market conditions differ from open market transactions, and the Bank was not obligated to delay the sale in hopes of higher market prices.
22. As submitted by the parties, the duty of the Bank is to act in good faith and obtain the best price reasonably obtainable under section 97 of the Land Act in exercising its statutory power of sale and the Bank was obligated to sell the charged property as per the forced sale value and not the market value (see Shah & another v I & M Bank Limited [2024] KEHC 16303 (KLR) ].
23. Section 97(1) of the Land Act provides as follows:
Duty of chargee exercising power of sale
(1) A chargee who exercises a power to sell the charged land, including the exercise of the power to sell in pursuance of an order of a court, owes a duty of care to the chargor, any guarantor of the whole or any part of the sums advanced to the chargor, any chargee under a subsequent charge or under a lien to obtain the best price reasonably obtainable at the time of sale .
24. Rule 11(b)(x) of the Auctioneers Rules also provides as follows: “ The reserve price for each separate piece of land based on a professional valuation carried out not more than 12 months prior to the proposed sale .” From the evidence, it was not disputed that the Bank obtained a valuation for the suit property through the firm of M/s Landmark Properties Limited which returned a forced sale value of Kshs. 15,000,000.00 (DExhibit 13) and the property was sold on November 2021 as per the Certificate of Sale produced by the Bank(DExhibit 12). I therefore find that the Bank complied with section 97(2) of the Land Act by obtaining a forced sale valuation from a professional valuer which was just four months before the sale in November 2021. Thus, the valuation was conducted within the 12-month timeframe required by the Auctioneers Rules above.
25. I note that the Plaintiffs are comparing the sale price to the market value from 2019 or to the forced sale value from 2019. I find this approach to be legally flawed because the duty under section 97(1) is to obtain the best price “reasonably obtainable at the time of sale” , which is specifically reflected in the forced sale valuation. A forced sale price is by definition lower than an open market value and I find that the Plaintiffs failed to produce an independent valuation report to counter the Bank's 2021 forced sale valuation. It is not enough to merely claim undervalue and the Plaintiff must produce cogent evidence to discredit the Defendant's professional valuation and a general denial and reference to an older, higher value does not satisfy this burden. Even in the case of Komassai Plantations Ltd(supra) the court made a determination that the valuation was flawed after considering different valuation reports from the parties. In Minolta Limited(supra) the court ordered a joint valuation of the property therein to ascertain its true value before the auction could proceed.
26. It should that not be lost that a valuation report is a product of professional and expert opinion by a duly qualified valuer, conducted based on accepted parameters. Courts are slow to interfere with such expert opinions unless clear and compelling evidence is presented to show that the valuation was conducted in bad faith, was grossly erroneous, or was based on a fundamental mistake. None of these was demonstrated in this case and the Bank produced the Certificate of Sale that the suit property was sold at a public auction, which is the standard and prescribed method for obtaining a competitive price. The Bank asserted that the sale price of Kshs. 10,500,000.00 was the highest bid received, and therefore the "best price reasonably obtainable" under the circumstances of a forced sale. It is therefore my finding that the suit property was not sold at an undervalue and that the valuation was not in contravention of section 97 of the Land Act .
Remedies sought by the Plaintiffs
27. From the remedies sought by the Plaintiffs, they are seeking to have the sale declared a nullity and to be discharged from liability. However, the suit property has already been admittedly sold to a third party and a Certificate of Sale has been issued. The law is well settled that once a property is sold at a public auction and the hammer falls, the charger's equity of redemption is extinguished, and the title passes to the purchaser (see Jacob Ochieng' Muganda v Housing Finance Company of Kenya Limited [2002] KECA 109 (KLR) and Bomet Beer Distributors Ltd,Wilson Maritim Lasoi v Kenya Commercial Bank Ltd & 4 others [2005] KEHC 2932 (KLR) ].The court cannot undo this without severely prejudicing the rights of an innocent third-party purchaser who is not even a party to this suit.
28. The Plaintiffs also seek that they be discharged from liability under the charge, however, this is not possible considering the Plaintiffs are in admitted default of the facilities. This, together with the findings above that the Bank had the legal right to sell the suit property, that it provided prima facie and conclusive evidence that statutory notices were dispatched and the Plaintiffs failed to rebut this, that it complied with the law by obtaining a forced sale valuation before the sale , means that the Plaintiffs are not entitled to the reliefs they seek in their amended plaint.
Conclusion and Disposition
29. In the upshot, I now dismiss the Plaintiffs’ suit with costs to the Bank.
DATED SIGNED AND DELIVERED virtually this 28 TH DAY OF JULY 2026
............................................................................
J W W MONGARE
JUDGE
IN THE PRESENCE OF
1. Mr. Odhiambo for the Plaintiff
2. N/A for the Defendants
3. Amos/Godfrey- Court Assistant
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