( Being an appeal from the judgment and decree by Hon. C.N.C Ouro, Principal Magistrate, in in Rongo Magistrate's Civil Suit No. 297 of 2017 delivered on 14 th day of February, 2024 )
JUDGMENT
1. This is an appeal by Kenya Women Finance Trust (the Appellant) against the judgement of the Hon. C.N.C Ouro Principal Magistrate dated and delivered on 14/2/2024 .
2. That by a plaint dated the 11 th September, 2017 filed by the 1 st Respondent, the Appellant was sued by the 1 st Respondent for an order of permanent injunction, costs of the suit & any other remedy the trial court deemed fit and just to grant.
3. The 1 st Respondent pleaded that on or about the 18 th day of June, 2014 she entered into a loan agreement with the Appellant herein whereby the Appellant advanced the 1 st Respondent a sum of Kenya shillings One Million Six Hundred Thousand (KES 1,600,000.00) which was attracting an interest of 20% per annum. It was pleaded that the 1 st Respondent was to repay the loan by way of monthly instalments of Kshs. 72,000.00 per month until payment in full.
4. That further by a plaint dated the 22 nd September, 2017 filed by the 2 nd Respondent the Appellant was sued by the 2 nd Respondent for orders that a declaration be issued that the 2 nd Respondent is not a guarantor but a witness to the guarantor of the 1 st Respondent, an order of permanent injunctions, costs and interests of the suit.
5. It was further pleaded by the 2 nd Respondent that he appended his signature as a witness to the execution of the chattels mortgage agreement and was never a guarantor and is therefore not aware why he was included as a guarantor having received a notice from agents of the Appellant threatening to attach and sell his property.
6. Both matters, being Rongo SPMCC No. 290 of 2017 and Rongo SPMCC No. 297 of 2017 were consolidated on the 19 th October, 2021 making Rongo SPMCC No. 290 of 2017 the main suit .
7. The Appellant filed their Defence in which they denied the allegations in the Plaint and put the Respondents to strict proof thereof. After hearing, the trial court allowed the Respondents’ suit with costs.
8. Being aggrieved by the judgement of the trial court the Appellant filed a Memorandum of Appeal dated the 14 th May, 2024 on the following Eleven (11) grounds: -
1. The learned trial magistrate erred in law and fact by ordering a permanent injunction to issue against the Appellant restraining it from attaching the mortgaged property whereas the Respondent admitted not having completed payment of the sum of money owed to the Appellant by the Respondent, under Chattel’s Mortgage.
2. The learned trial magistrate erred in law and fact by making a favourable award to the Respondent who admitted to being a loan defaulter.
3. The trial magistrate erred in law and fact by making a favourable award to the 2 nd Respondent, contrary to the facts and the evidence on record.
4. The learned trial magistrate erred in law and fact by giving final orders in his judgement and decree contrary to the plaint filed on 11 th September, 2017.
5. The learned trial magistrate erred in law and fact in deciding over matters that were neither pleaded not evidence tendered before the court.
6. The learned trial magistrate erred in law and fact by awarding costs to the 1 st Respondent who was a defaulter.
7. The learned trial magistrate erred in law and fact by awarding costs to the 2 nd Respondent who was a defaulter.
8. The learned trial magistrate erred in law and fact in permanently absolving the Respondent from repaying the loan obligation hence stopping the Appellant from recovering what was owed to it.
9. The learned trial magistrate erred in delivering a judgement that was contrary to the weight of evidence.
10. The learned trial magistrate erred in law and in fact in ignoring the evidence and submissions tendered by the Appellant.
11. The learned trial magistrate erred in law by disregarding binding precedents and authorities hence proceeded to err in his judgement.
9. Directions on the appeal were taken and the appeal was canvassed by way of written submissions. The Appellant filed submissions dated the 12 th May, 2026. The 1 st Respondent filed their submission dated the 25 th May, 2026 and a replying affidavit in opposition to the Memorandum of Appeal dated 7 th June, 2026. The 2 nd Respondent filed his submissions dated the 6 th day of March, 2026 which I have duly considered.
10. I have considered the grounds of appeal, the submissions by the appellant and the Respondents and the trial court’s record and the only issues for determination seems to be: -
a) Whether the trial court determined matters that were outside the parties' pleadings and the evidence tendered before the court.
b) Whether the orders issued had the effect of extinguishing the Respondents' contractual obligation to repay the loan and precluding the Appellant from enforcing its rights under the Chattel Mortgage.
11. This is a first appeal. It is settled law that the duty of the first appellate court is to re-evaluate the evidence which was adduced in the subordinate court both on points of law and fact and come up with its own findings and conclusions [ see Peters -vs- Sunday Post Limited [1958] E.A 424 ]
12. Further in SELLE & Another -vs- Associated Motor Boat Company Ltd & Others [1968] 1. E.A 123 it was stated as follows:
“...this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind [the fact] that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears that he has clearly failed on some point to take into account of particular circumstances or probabilities materially to estimate the evidence.”
13. Likewise, in Gitobu Imanyara & 2 Others -vs- Attorney General [2016] eKLR , the court of Appeal stated thus;
“An appeal to this court is by way of a retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.”
14. Therefore, the appropriate standard of review in cases of appeal can be summarized in the following three principles: -
1) On first appeal the court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions.
2) In reconsidering and re-evaluating the evidence of the first appeal court must bear in mind and give due allowance for the fact that the trial court had the advantage of seeing and hearing the witnesses.
3) It is not open to the first appellate court to review the findings of a trial court simply on the basis that it would have reached a different conclusion had it been hearing the matter for the first time.
15. On the first issue, I have reconsidered the pleadings, the documentary evidence and the testimony tendered before the subordinate court as required of a first appellate court. The Appellant submits that the learned trial magistrate ventured outside the pleadings. I am unable to agree with that contention.
16. The record demonstrates that it was common ground that the 1 st Respondent obtained a loan facility of Kshs. 1,600,000.00 from the Appellant. The 1 st Respondent equally admitted that she defaulted in servicing the agreed monthly instalments of approximately Kshs. 72,000.00. It was further uncontested that the loan was secured by a duly executed Chattel Mortgage in which the 1 st Respondent's husband executed the security as the grantor
17. The Appellant’s witness who testified before the trial court admitted that upon the 1 st Respondent's default it exercised its contractual rights by attaching and subsequently selling part of the secured chattels.
18. This Court notes from the record that the witness merely stated in his cross examination that property sold by the auctioneer could not recover the loan. However, despite the sale having taken place, no returns of sale, inventory, valuation, statement of account or reconciliation showing how the proceeds were applied towards the Respondent's indebtedness were ever filed before the court. He merely asserted that the proceeds realized were insufficient to satisfy the outstanding loan.
19. The issue that consequently arose before the trial court was whether, after exercising the power of attachment and sale, the Appellant had discharged its legal burden of proving the outstanding balance allegedly due from the 1 st Respondent.
20. That issue did not arise outside the pleadings. Rather, it arose directly from the Appellant's own testimony. Once the Appellant admitted that part of the security had been realized, it is the Court’s considered opinion that it became incumbent upon the Appellant to account for the proceeds realized and demonstrate the balance, if any, that remained outstanding.
21. Sections 107, 109 and 112 of the Evidence Act, Cap. 80, Laws of Kenya , are instructive. Section 107 places the burden of proof upon the party asserting a fact. Section 109 places the burden upon the party wishing the court to believe in the existence of a particular fact, while Section 112 places the burden upon a party in possession of facts peculiarly within its knowledge.
22. The realization of the attached chattels, the proceeds obtained, deductions made and the computation of the alleged outstanding balance were matters exclusively within the Appellant's knowledge. The Respondents could not reasonably be expected to prove facts relating to the Appellant's realization of the security. It was not shown that the Appellants invited the Respondents to the auction, no list of the attached items was presented, no indication of whether the sale was by private treaty or public auction and even when the sale actually took place.
23. The Court of Appeal in Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & Another [2005] eKLR held that although the legal burden of proof remains constant throughout a case, the evidential burden shifts depending on the evidence adduced by each party. Similarly, in Karugi & Another v Kabiya & 3 Others [1987] KLR 347 , the Court held that the burden of proof does not lessen simply because the opposing party fails to adduce evidence.
24. Likewise, in Trust Bank Limited v Paramount Universal Bank Limited & 2 Others [2009] eKLR , the Court of Appeal reiterated that a court can only determine disputes based on evidence properly placed before it and cannot speculate on matters not proved.
25. The equitable maxim " Equity follows the law " is equally applicable. Although the parties' rights arose from contract, the Appellant having invoked equitable remedies available to a secured creditor through realization of the security, equally assumed the corresponding equitable obligation to account fully for the exercise of those rights.
26. I therefore find that the learned trial magistrate did not determine an issue outside the pleadings. The question of accounting for the realized security naturally flowed from the evidence tendered by the Appellant itself and was central to determining whether the Appellant had proved its entitlement to continue enforcing the alleged outstanding debt.
27. On the second issue, the Appellant contends that the learned trial magistrate effectively extinguished the 1 st Respondents’ contractual obligation to repay the loan and permanently restrained the Appellant from enforcing its rights under the Chattel Mortgage.
28. This Court is of the considered view that it is not that the 1 st Respondent who ceased to owe the debt merely because part of the security had been realized. Rather, that after the Appellant electing to enforce the security and disposing of the attached chattels, the Appellant failed to place before the trial court any credible evidence from which the outstanding indebtedness could be ascertained.
29. It is not disputed that realization of security does not, in itself, extinguish the principal debt unless the proceeds fully satisfy the indebtedness. However, where a lender elects to exercise its remedies under a security instrument, it bears the corresponding duty and burden of accounting for the proceeds realized and how those proceeds were appropriated before demanding any alleged deficiency from the borrower.
30. In the present case, the Appellant’s witness admitted that some of the attached goods were sold. Nevertheless, it produced no auction returns, no inventory of the attached assets, no valuation reports, no statement of account reflecting the proceeds realized, no reconciliation of the 1 st Respondent's loan account and no evidence showing how the alleged balance was computed and the Court cannot act on bare assertions.
31. The Appellant, having exercised the contractual remedy of attachment and sale, could not thereafter seek to recover the original loan amount as though no realization had taken place. To permit such a course would expose the Respondents to the risk of double recovery and would offend the equitable principles governing securities.
32. The equitable maxim " He who seeks equity must do equity " is particularly apt in this case. A mortgagee or secured lender invoking the court's equitable jurisdiction to enforce contractual rights must itself demonstrate fairness, candor and accountability in exercising those rights. Equally applicable is the maxim " He who comes into equity must come with clean hands ." A party that has failed to account for the realization of another's property cannot expect equitable relief while withholding material information that is solely within its knowledge.
33. Further, equity regards a security merely as an incident of the debt. Once a creditor elects to realize the security, partially if so, as is evident herein, it becomes their duty to account for the proceeds before pursuing any alleged deficiency. That duty is founded upon the equitable relationship between the parties and is intended to prevent unjust enrichment and multiple recoveries.
34. The Appellant had failed to establish the amount, if any, that payments remained outstanding after the realization of the mortgaged security. The permanent injunction issued by the trial court did not extinguish the 1 st Respondent's contractual obligations but rather, it prevented further enforcement in circumstances where the Appellant had failed to discharge its burden of proving the debt remaining after exercising its contractual remedies.
35. Accordingly, I find no basis upon which this Court can interfere with the findings of the learned trial magistrate. The Appellant failed to demonstrate, through cogent documentary evidence, the proceeds realized from the sale of the secured chattels or the balance allegedly outstanding. In the absence of such proof, the trial court correctly concluded that the Appellant could not continue enforcing the Chattel Mortgage or pursue recovery of the balance of the original loan sum without first rendering a proper account.
36. The appeal therefore fails with costs of the appeal awarded to the Respondents .
Orders accordingly.
Dated, signed and delivered virtually via Microsoft Teams this 6 th Day of August 2026
HCCA NO. E026 OF 2024 KWFT VS MONICA S.A. UMALA & ANO. JUDGMENT Pg. 10
JUDGMENT
1. This is an appeal by Kenya Women Finance Trust (the Appellant) against the judgement of the Hon. C.N.C Ouro Principal Magistrate dated and delivered on 14/2/2024 .
2. That by a plaint dated the 11 th September, 2017 filed by the 1 st Respondent, the Appellant was sued by the 1 st Respondent for an order of permanent injunction, costs of the suit & any other remedy the trial court deemed fit and just to grant.
3. The 1 st Respondent pleaded that on or about the 18 th day of June, 2014 she entered into a loan agreement with the Appellant herein whereby the Appellant advanced the 1 st Respondent a sum of Kenya shillings One Million Six Hundred Thousand (KES 1,600,000.00) which was attracting an interest of 20% per annum. It was pleaded that the 1 st Respondent was to repay the loan by way of monthly instalments of Kshs. 72,000.00 per month until payment in full.
4. That further by a plaint dated the 22 nd September, 2017 filed by the 2 nd Respondent the Appellant was sued by the 2 nd Respondent for orders that a declaration be issued that the 2 nd Respondent is not a guarantor but a witness to the guarantor of the 1 st Respondent, an order of permanent injunctions, costs and interests of the suit.
5. It was further pleaded by the 2 nd Respondent that he appended his signature as a witness to the execution of the chattels mortgage agreement and was never a guarantor and is therefore not aware why he was included as a guarantor having received a notice from agents of the Appellant threatening to attach and sell his property.
6. Both matters, being Rongo SPMCC No. 290 of 2017 and Rongo SPMCC No. 297 of 2017 were consolidated on the 19 th October, 2021 making Rongo SPMCC No. 290 of 2017 the main suit .
7. The Appellant filed their Defence in which they denied the allegations in the Plaint and put the Respondents to strict proof thereof. After hearing, the trial court allowed the Respondents’ suit with costs.
8. Being aggrieved by the judgement of the trial court the Appellant filed a Memorandum of Appeal dated the 14 th May, 2024 on the following Eleven (11) grounds: -
1. The learned trial magistrate erred in law and fact by ordering a permanent injunction to issue against the Appellant restraining it from attaching the mortgaged property whereas the Respondent admitted not having completed payment of the sum of money owed to the Appellant by the Respondent, under Chattel’s Mortgage.
2. The learned trial magistrate erred in law and fact by making a favourable award to the Respondent who admitted to being a loan defaulter.
3. The trial magistrate erred in law and fact by making a favourable award to the 2 nd Respondent, contrary to the facts and the evidence on record.
4. The learned trial magistrate erred in law and fact by giving final orders in his judgement and decree contrary to the plaint filed on 11 th September, 2017.
5. The learned trial magistrate erred in law and fact in deciding over matters that were neither pleaded not evidence tendered before the court.
6. The learned trial magistrate erred in law and fact by awarding costs to the 1 st Respondent who was a defaulter.
7. The learned trial magistrate erred in law and fact by awarding costs to the 2 nd Respondent who was a defaulter.
8. The learned trial magistrate erred in law and fact in permanently absolving the Respondent from repaying the loan obligation hence stopping the Appellant from recovering what was owed to it.
9. The learned trial magistrate erred in delivering a judgement that was contrary to the weight of evidence.
10. The learned trial magistrate erred in law and in fact in ignoring the evidence and submissions tendered by the Appellant.
11. The learned trial magistrate erred in law by disregarding binding precedents and authorities hence proceeded to err in his judgement.
9. Directions on the appeal were taken and the appeal was canvassed by way of written submissions. The Appellant filed submissions dated the 12 th May, 2026. The 1 st Respondent filed their submission dated the 25 th May, 2026 and a replying affidavit in opposition to the Memorandum of Appeal dated 7 th June, 2026. The 2 nd Respondent filed his submissions dated the 6 th day of March, 2026 which I have duly considered.
10. I have considered the grounds of appeal, the submissions by the appellant and the Respondents and the trial court’s record and the only issues for determination seems to be: -
a) Whether the trial court determined matters that were outside the parties' pleadings and the evidence tendered before the court.
b) Whether the orders issued had the effect of extinguishing the Respondents' contractual obligation to repay the loan and precluding the Appellant from enforcing its rights under the Chattel Mortgage.
11. This is a first appeal. It is settled law that the duty of the first appellate court is to re-evaluate the evidence which was adduced in the subordinate court both on points of law and fact and come up with its own findings and conclusions [ see Peters -vs- Sunday Post Limited [1958] E.A 424 ]
12. Further in SELLE & Another -vs- Associated Motor Boat Company Ltd & Others [1968] 1. E.A 123 it was stated as follows:
“...this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind [the fact] that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears that he has clearly failed on some point to take into account of particular circumstances or probabilities materially to estimate the evidence.”
13. Likewise, in Gitobu Imanyara & 2 Others -vs- Attorney General [2016] eKLR , the court of Appeal stated thus;
“An appeal to this court is by way of a retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.”
14. Therefore, the appropriate standard of review in cases of appeal can be summarized in the following three principles: -
1) On first appeal the court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions.
2) In reconsidering and re-evaluating the evidence of the first appeal court must bear in mind and give due allowance for the fact that the trial court had the advantage of seeing and hearing the witnesses.
3) It is not open to the first appellate court to review the findings of a trial court simply on the basis that it would have reached a different conclusion had it been hearing the matter for the first time.
15. On the first issue, I have reconsidered the pleadings, the documentary evidence and the testimony tendered before the subordinate court as required of a first appellate court. The Appellant submits that the learned trial magistrate ventured outside the pleadings. I am unable to agree with that contention.
16. The record demonstrates that it was common ground that the 1 st Respondent obtained a loan facility of Kshs. 1,600,000.00 from the Appellant. The 1 st Respondent equally admitted that she defaulted in servicing the agreed monthly instalments of approximately Kshs. 72,000.00. It was further uncontested that the loan was secured by a duly executed Chattel Mortgage in which the 1 st Respondent's husband executed the security as the grantor
17. The Appellant’s witness who testified before the trial court admitted that upon the 1 st Respondent's default it exercised its contractual rights by attaching and subsequently selling part of the secured chattels.
18. This Court notes from the record that the witness merely stated in his cross examination that property sold by the auctioneer could not recover the loan. However, despite the sale having taken place, no returns of sale, inventory, valuation, statement of account or reconciliation showing how the proceeds were applied towards the Respondent's indebtedness were ever filed before the court. He merely asserted that the proceeds realized were insufficient to satisfy the outstanding loan.
19. The issue that consequently arose before the trial court was whether, after exercising the power of attachment and sale, the Appellant had discharged its legal burden of proving the outstanding balance allegedly due from the 1 st Respondent.
20. That issue did not arise outside the pleadings. Rather, it arose directly from the Appellant's own testimony. Once the Appellant admitted that part of the security had been realized, it is the Court’s considered opinion that it became incumbent upon the Appellant to account for the proceeds realized and demonstrate the balance, if any, that remained outstanding.
21. Sections 107, 109 and 112 of the Evidence Act, Cap. 80, Laws of Kenya , are instructive. Section 107 places the burden of proof upon the party asserting a fact. Section 109 places the burden upon the party wishing the court to believe in the existence of a particular fact, while Section 112 places the burden upon a party in possession of facts peculiarly within its knowledge.
22. The realization of the attached chattels, the proceeds obtained, deductions made and the computation of the alleged outstanding balance were matters exclusively within the Appellant's knowledge. The Respondents could not reasonably be expected to prove facts relating to the Appellant's realization of the security. It was not shown that the Appellants invited the Respondents to the auction, no list of the attached items was presented, no indication of whether the sale was by private treaty or public auction and even when the sale actually took place.
23. The Court of Appeal in Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & Another [2005] eKLR held that although the legal burden of proof remains constant throughout a case, the evidential burden shifts depending on the evidence adduced by each party. Similarly, in Karugi & Another v Kabiya & 3 Others [1987] KLR 347 , the Court held that the burden of proof does not lessen simply because the opposing party fails to adduce evidence.
24. Likewise, in Trust Bank Limited v Paramount Universal Bank Limited & 2 Others [2009] eKLR , the Court of Appeal reiterated that a court can only determine disputes based on evidence properly placed before it and cannot speculate on matters not proved.
25. The equitable maxim " Equity follows the law " is equally applicable. Although the parties' rights arose from contract, the Appellant having invoked equitable remedies available to a secured creditor through realization of the security, equally assumed the corresponding equitable obligation to account fully for the exercise of those rights.
26. I therefore find that the learned trial magistrate did not determine an issue outside the pleadings. The question of accounting for the realized security naturally flowed from the evidence tendered by the Appellant itself and was central to determining whether the Appellant had proved its entitlement to continue enforcing the alleged outstanding debt.
27. On the second issue, the Appellant contends that the learned trial magistrate effectively extinguished the 1 st Respondents’ contractual obligation to repay the loan and permanently restrained the Appellant from enforcing its rights under the Chattel Mortgage.
28. This Court is of the considered view that it is not that the 1 st Respondent who ceased to owe the debt merely because part of the security had been realized. Rather, that after the Appellant electing to enforce the security and disposing of the attached chattels, the Appellant failed to place before the trial court any credible evidence from which the outstanding indebtedness could be ascertained.
29. It is not disputed that realization of security does not, in itself, extinguish the principal debt unless the proceeds fully satisfy the indebtedness. However, where a lender elects to exercise its remedies under a security instrument, it bears the corresponding duty and burden of accounting for the proceeds realized and how those proceeds were appropriated before demanding any alleged deficiency from the borrower.
30. In the present case, the Appellant’s witness admitted that some of the attached goods were sold. Nevertheless, it produced no auction returns, no inventory of the attached assets, no valuation reports, no statement of account reflecting the proceeds realized, no reconciliation of the 1 st Respondent's loan account and no evidence showing how the alleged balance was computed and the Court cannot act on bare assertions.
31. The Appellant, having exercised the contractual remedy of attachment and sale, could not thereafter seek to recover the original loan amount as though no realization had taken place. To permit such a course would expose the Respondents to the risk of double recovery and would offend the equitable principles governing securities.
32. The equitable maxim " He who seeks equity must do equity " is particularly apt in this case. A mortgagee or secured lender invoking the court's equitable jurisdiction to enforce contractual rights must itself demonstrate fairness, candor and accountability in exercising those rights. Equally applicable is the maxim " He who comes into equity must come with clean hands ." A party that has failed to account for the realization of another's property cannot expect equitable relief while withholding material information that is solely within its knowledge.
33. Further, equity regards a security merely as an incident of the debt. Once a creditor elects to realize the security, partially if so, as is evident herein, it becomes their duty to account for the proceeds before pursuing any alleged deficiency. That duty is founded upon the equitable relationship between the parties and is intended to prevent unjust enrichment and multiple recoveries.
34. The Appellant had failed to establish the amount, if any, that payments remained outstanding after the realization of the mortgaged security. The permanent injunction issued by the trial court did not extinguish the 1 st Respondent's contractual obligations but rather, it prevented further enforcement in circumstances where the Appellant had failed to discharge its burden of proving the debt remaining after exercising its contractual remedies.
35. Accordingly, I find no basis upon which this Court can interfere with the findings of the learned trial magistrate. The Appellant failed to demonstrate, through cogent documentary evidence, the proceeds realized from the sale of the secured chattels or the balance allegedly outstanding. In the absence of such proof, the trial court correctly concluded that the Appellant could not continue enforcing the Chattel Mortgage or pursue recovery of the balance of the original loan sum without first rendering a proper account.
36. The appeal therefore fails with costs of the appeal awarded to the Respondents .
Orders accordingly.
Dated, signed and delivered virtually via Microsoft Teams this 6 th Day of August 2026
HCCA NO. E026 OF 2024 KWFT VS MONICA S.A. UMALA & ANO. JUDGMENT Pg. 10