[1] The plaintiff is a limited liability company engaged in the business of real estate development and transportation. It filed this suit against the two defendants in connection with an agreement for sale of property between it and the 2 nd defendant. The agreement was in respect of the property known as Plot No. 4811/VI/MN for a consideration of Kshs. 165,000,000/=. It was the averment of the plaintiff that the 2 nd defendant made a down payment of Kshs. 60,000,000, leaving a balance of Kshs. 105,500,000/= which was to be paid by instalments of Kshs. 1,765,000/= per month from September 2010.
[2] The Agreement provided that the balance of the purchase price would be guaranteed by a reputable bank. To which end the 1 st defendant furnished the plaintiff with a guarantee on behalf of the 2 nd defendant for Kshs. 105,500,000/=. The guarantee, No. GTE03-101046 was dated 24 th August 2010. On the basis thereof, the plaintiff applied for a term loan of Kshs. 70,000,000/= from the 1 st defendant, payable within 60 months by monthly instalments of Kshs. 1,610,689/=. According to the plaintiff, it was agreed between the parties that the 1 st defendant would timeously credit the plaintiff’s loan account with the monthly payments received from the 2 nd defendant; and that the issue of default or penalties would not arise, granted that the payments had been guaranteed by the 2 nd defendant.
[3] The plaintiff’s cause of action was that, in breach of the obligations placed upon the 1 st defendant as a banking institution by the Constitution of Kenya, the Banking Act and the Consumer Protection Act, the 1 st defendant made wrongful deductions from its account in September 2013 and credited the same to the loan account in disregard of the agreement between the parties. In the plaintiff’s view, the deductions were fraudulent. He supplied the particulars of fraud in the Plaint dated 19 th August 2019, at paragraph 35. The plaintiff also pleaded the particulars of breach of the Consumer Protection Act.
[4] Accordingly, the plaintiff prayed for the following reliefs against the two defendants jointly and severally:
[a] Immediate payment of the sum of Kshs. 25,819,141.88 as claimed in the Plaint.
[b] Interest on the aforesaid sum at commercial rate from the date of filing the suit.
[c] Immediate and unconditional release of the original certificate of title Cr. No. 60789 and Cr. No. 60790 being held by the 1 st defendant to the plaintiff.
[d] General damages in respect of the illegal lien exercised by the 1 st defendant over the original certificates of title Cr. No. 60789 and Cr. No. 60790.
[e] Refund of all monies unlawfully charged as penalty interest payments and default charges/late fees.
[f] Interest on [e] above from the date of filing the suit.
[g] A declaration that the payment was not under any contract or contractual agreement or otherwise to repay the term loan of Kshs. 70,000,000/=.
[h] A declaration that the term loan minimum monthly repayment was limited to Kshs. 1,610,689.25 and the maximum monthly repayment was limited to the guaranteed monthly payment of Kshs. 1,765,000/=.
[i] A declaration that the letter of offer dated 3 rd August 2010 did not provide for the monthly repayments exceeding the monthly payment under the repayment guarantee.
[j] An order that account be taken between the plaintiff and the 1 st defendant.
[k] interest on [j] above at court rate.
[l] Costs of the suit.
[m] Any other relief the Court may deem fit to grant.
[5] The plaintiff amended the Plaint on 28 th June 2021 with the leave of the Court to furnish details of the various accounts it held with the 1 st defendant and to provide further particulars in relation to the loan and its repayment terms. The plaintiff also amended Prayer [a] to read Kshs. 57,401,810.70 as the total sum of amounts wrongfully debited by the 1 st defendant from its account. The plaintiff prayed for interest on that sum, at paragraph (b) of the Amended Plaint, at commercial rates from 1 st July 2015 when the loan account was to be closed. Other notable amendments in the prayers included additional prayers for damages for wrongful referral of the plaintiff to the Credit Reference Bureau and an order directing the 1 st defendant to remove the plaintiff’s name from the Credit Reference Bureau.
[6] The 1 st defendant filed an Amended Defence on 31 st August 2021. It denied that the facility granted to the plaintiff was granted on the strength of the real estate transaction between the plaintiff and the 2 nd defendant as alleged in Paragraph 6A of the Amended Plaint. It averred that, sometime in May 2010, the plaintiff made an application for the grant of a development loan in the sum of Kshs. 86,000,000/=; and that, vide a Letter of Offer dated 3 rd August 2010, the 1 st defendant agreed to provide to the plaintiff a facility in the sum of Kshs. 70,000,000/=.
[7] According to the 1 st defendant, the loan proceeds having been disbursed to the plaintiff on the 25 th August 2010, it was expected that the monthly repayments would commence one month thereafter on the 25 th September 2010, and thereafter on the 25 th day of each subsequent month until full payment. The 1 st defendant averred that the plaintiff cannot now feign ignorance of the repayment date. The 1 st defendant further stated that it was a term of their agreement that the repayments would, by the express instructions of the plaintiff, be deducted from its current account No. 100 000 2271, depending on availability of funds in the said account.
[8] The 1 st defendant conceded that it was aware of the sale transaction between the plaintiff and the 2 nd defendant; and that the 2 nd defendant would make monthly payments of Kshs. 1,765,000/= through the plaintiff’s current account. It however denied that the plaintiff was thereby relieved of any obligation to ensure timely repayment of the loan facility. The 1 st defendant further averred that the Letter of Offer dated 3 rd August 2010 provided that, in the event of default, it would charge 1 percent per month on the portion in default in addition to the agreed rate of interest. It was therefore the assertion of the 1 st defendant that any late fees, interest or penalty charges levied on the plaintiff’s account were contractual, lawful and levied with the full knowledge and consent of the plaintiff.
[9] The 1 st defendant denied having fraudulently deducted any money from the plaintiff’s account or having exercised lien over the plaintiff’s Certificates of Title No. CR. 60789 or CR. No. 60790 as alleged in the Amended Plaint or at all. It denied violating lending principles or breaching its obligations under the Constitution, the Banking Act or Consumer Protection Act as alleged by the plaintiff and put the plaintiff to strict proof thereof. It therefore averred that the plaintiff is not entitled to any of the reliefs sought in the Amended Plaint.
[10] The 2 nd defendant also denied the plaintiff’s allegations. Its Statement of Defence dated 29 th August 2019 was filed herein on 30 th August 2019. It confirmed that it entered into a Sale Agreement dated 27 th May 2010 with the plaintiff for sale of the property known as Mainland North/Section VI/4811 at the agreed price of Kshs. 165,000,000/=. The 2 nd defendant further stated that, pursuant to the terms of their agreement, it made a down payment of Kshs. 60,000,000/= and was to pay the balance of Kshs. 105,000,000/= in monthly instalments of Kshs. 1,765,000/= from September 2010; which it cleared on 1 st July 2015.
[11] The 2 nd defendant therefore averred that it has fully discharged its obligation under the Agreement dated 27 th May 2010; and therefore it is not liable in any way to the plaintiff. It further stated, that the plaintiff’s cause of action is based on Bank/Customer relationship to which it is not privy; and that the Guarantee was only meant to secure the payment of the balance of the purchase price in the event of default. The 2 nd defendant added that, since no act of default occurred in respect of payment of the purchase price, it was wrongly impleaded in this suit.
[12] At the hearing of the suit, the plaintiff called its Managing Director, Joseph Mbugua Gichanga (PW1). He adopted his witness statement dated 28 th June 2021. He explained that the plaintiff is a client of the 1 st defendant’s and had 7 different accounts with the 1 st defendant as at the year 2010. PW1 testified that the plaintiff’s key business is real estate development, farming and transportation; and that between 2010 and 2015, the plaintiff’s real estate business was booming. He stated that the plaintiff had six clients making substantial monthly payments to the main current account; hence the need for each disbursement to be credited to the appropriate account to satisfy each contractual obligation.
[13] PW1 further testified that this suit relates to a facility granted by the 1 st defendant on the strength of a real estate transaction between the plaintiff and the 2 nd defendant, whereby the 2 nd defendant agreed to purchase the plaintiff’s property known as LR 4811/VI/MN situated in Mombasa County at a consideration of Kshs. 165,000,000/=. He further testified that upon depositing Kshs. 60,000,000/= the 2 nd defendant was to pay the balance in monthly instalments of Kshs. 1,765,000/= over a period of 5 years; and that the instalments were to be credited by the 1 st defendant into the plaintiff’s loan account No. 1-0000-02271 on the 25 th day of each month with effect from 25 th September 2010.
[14] To ensure that the 2 nd defendant repaid the balance of the purchase price as agreed, it obtained a Guarantee from the 1 st defendant, being Guarantee No. GTE03-101046 dated 24 th August 2010. It was therefore the testimony of PW1 that, based on the above arrangements, the plaintiff applied for a term loan of Kshs. 86,000,000/= from the defendant, repayable within 60 months. The facility, which was intended to finance the plaintiff’s development projects, was duly approved by the 1 st defendant but in the sum of Kshs. 70,000,000/= only.
[15] It was further the testimony of PW1 that the term loan was secured by a general indemnity by the 2 nd defendant against the Guarantee of Kshs. 105,500,000/=; an irrevocable standing order dated 25 th September 2010 by the 2 nd defendant as well as an irrevocable standing order by the plaintiff dated 25 th September 2010. In addition, the 1 st defendant demanded a cash cover collateral of Kshs. 105,500,000/= from the 2 nd defendant for the Guarantee. Thus, the plaintiff’s case was that the 1 st defendant was to credit the term loan account with monies deposited monthly by the 2 nd defendant, such that it was not necessary for any funds to be drawn from the plaintiff’s current account.
[16] It was therefore the plaintiff’s case that, the mandate given to the 1 st defendant as supported by the terms of the Letter of Offer, created a principal/agent relationship between the plaintiff and the 1 st defendant; and therefore it was expected that the 1 st defendant would carry out the exact instructions of the plaintiff as far as crediting the term loan account with the repayment instalments of Kshs. 1,610,689.25 as received from the 2 nd defendant. PW1 testified that the 1 st defendant not only breached those instructions by failing to remit the agreed amount to the loan account in time, but also proceeded to load unwarranted interest and penalty charges on the plaintiff’s account.
[17] Regarding the last instalment payment of Kshs. 1,365,000/=, PW1 testified that the same was credited into the plaintiff’s account on 25 th August 2015, but was thereafter reversed by the 1 st defendant on 28 th August 2015, creating a ‘NIL’ effect in terms of the loan repayment for no apparent reason. PW1 also mentioned that on 29 th April 2014, the 1 st defendant dishonoured a cheque issued by the plaintiff for Kshs. 300,000/= in the ordinary course of business, contending that there were insufficient funds in the account, yet the said account was in funds at the time to the tune of Kshs. 2,300,000/=.
[18] It was also the testimony of PW1 that the plaintiff deposited two Certificates of Title with the 1 st defendant through its Regional Manager, Mr. Mwamburi . According to PW1, the Certificates were given as additional security for the term loan and that receipt thereof was duly acknowledged by the 1 st defendant vide an email dated 29 th February 2016 (at page 197 of the plaintiff’s Bundle of Documents). The plaintiff sought the release of those Certificates of Title.
[19] Lastly, the plaintiff accused the 1 st defendant of having unprocedurally reported it to the Credit Reference Bureau (CRB) due to purported later charges which were never the case. The plaintiff stated that this action by the 1 st defendant had adversely affected its real estate development business and integrity. Accordingly, the plaintiff sought to be compensated by way of general damages for having been wrongfully listed in the CRB database and for failure to remove the listing after demands were made for such removal.
[20] The plaintiff called Thomas Odero Arucho (PW2) as its second witness. PW1, an auditor with the firm of Irungu Macharia Associates, was instructed by the plaintiff to carry out an audit of its accounts to ascertain the status thereof. Upon undertaking the audit exercise, PW2 prepared his report which he produced as the Plaintiff’s Exhibit 53. The report is at pages 187 to 216 of the plaintiff’s Bundle of Documents. PW2’s finding was that the 1 st defendant over-deducted monies from the plaintiff’s account to the tune of Kshs. 57,660,596.11 which ought to be refunded by the 1 st defendant.
[21] On behalf of the 1 st defendant, its Assistant Credit Manager, Ms. Sally Ooko , testified on 2 nd October 2023. She confirmed that the plaintiff was given a facility of Kshs. 70,000,000/= by the 1 st defendant. She further confirmed that the facility was to be repaid over a period of 5 years in instalments of Kshs. 1,610,689.25 at a variable interest rate of 1 percent above the base rate of 14.5 percent. DW1 also confirmed that the loan was disbursed on 25 th August 2010 and that the first instalment was due one month later on 25 th September 2010.
[22] DW1 testified that they reconciled the plaintiff’s account and established that his claim of overpayment of Kshs. 57 million was baseless. According to the 1 st defendant, the total amount repaid by the plaintiff was Kshs. 105,289,791.33 and not Kshs. 154,301,951.11 as alleged by the plaintiff. She discounted the approach taken by PW2 and explained that he relied on misleading conclusions from the bank statements to come up with the amount alleged to be an overpayment. DW1 further testified that there were four occasions when the repayment instalments were delayed and therefore the 1 st defendant was entitled to charge a penalty for such late payments.
[23] DW1 adopted her witness statement and produced the 1 st defendant’s Bundle of Documents as exhibits.
[24] The 2 nd defendant also denied the plaintiff’s allegations. Its evidence, through its Legal Manager, Ms. Cecilia Ndeti (DW2), was that the 2 nd defendant had a land sale agreement with the plaintiff at an agreed purchase price of Kshs. 165,000,000/=. DW2 confirmed that the money was paid in instalments of Kshs. 1,765,000/= over a period of 60 months after a down payment of Kshs. 60,000,000/=. DW2 further confirmed that all the instalments were paid by way of a standing order from the 2 nd defendant’s account to the account of the plaintiff; and that the 2 nd defendant furnished a Payment Guarantee to the plaintiff through the 1 st defendant. She denied that any of the instalments was delayed.
[25] In its closing submissions, the plaintiff reiterated its evidence and proposed the following issues for determination:
[a] Whether there was an overpayment in the loan account, and if so, by how much?
[b] Whether the 1 st defendant is holding the original certificates of the plaintiff.
[c] Whether the plaintiff is entitled to the reliefs sought in the Amended Plaint dated 28 th June 2021.
[26] The plaintiff relied on the Audit Report produced by PW2 to support his claim that the loan was overpaid by Kshs. 57,401,810/70. The plaintiff pointed out that no audited statement or report was produced by the 1 st defendant to controvert PW2’s Audit Report. Therefore, it submitted that its unchallenged report ought to guide the Court in confirming the overpayment. The plaintiff relied on Dick Omondi Ndiewo t/a Ditch Engineering Service v Cell Care Electronics [2015] eKLR for the proposition that the evidence of an expert can only be challenged by the evidence of another expert.
[27] The plaintiff took issue with the assertion by the 1 st defendant that the loan was repayable on the 25 th day of the subsequent months. It submitted that where a date for repayment of monies secured by a charge is not specified in the charge instrument, or where repayment is not demanded by the chargee on the date specified, the money shall be deemed to be repayable three months after the service of a demand in writing by the chargee. In this regard, the plaintiff relied on Section 7 of the Consumer Protection Act, 2012, Section 56(2) of the Land Registration Act as well as the cases of Bamboo Holding Ltd v National Bank of Kenya Limited [2019] eKLR and Kwanza Estates Ltd v Dubai Bank Kenya Ltd [2013] eKLR.
[28] The plaintiff also submitted that the 1 st defendant had the obligation to notify it of any variations in the interest rate. The plaintiff relied on Nairobi HCCC No. 1601 of 1999: Housing Finance Co. of Kenya Limited v Gilbert Kibe Njuguna to support its submission that any variation of the interest rate on the term loan without prior notice was therefore unlawful and punitive.
[29] The plaintiff submitted at length on what it perceived to be wrongful deductions by way of interest. It contended that no penalties ought to have been charged on the term loan considering that its repayment was guaranteed by the 2 nd defendant through a Payment Guarantee issued by the 1 st defendant as well as a cash cover provided by the 2 nd defendant. The plaintiff argued that it would be wrong for the 1 st defendant to submit, as it did, that the Guarantee was a separate arrangement and did not form part of the term loan agreement, yet it formed part of the conditions precedent for the term loan.
[30] The plaintiff relied on Brogden v Metropolitan Railway Company [1876-7] L.R. 2 App Cas 666 (House of Lords) for the submission that acceptance of a written contract/offer can either be explicit or implicit and therefore that both the 1 st and 2 nd defendants were liable to ensure the instalments paid by the 2 nd defendant were applied towards repayment of the term loan. Hence, the plaintiff’s stance was that the 1 st defendant’s obligation would only cease once the Guarantee was fully effected or upon full payment of the property purchase instalments by the 2 nd defendant.
[31] The plaintiff also urged the Court to find as a fact that the 1 st defendant is holding two of its Certificates of Title, being CR. No. 60789 and CR. No. 60790 on the basis of the evidence adduced by it. It submitted that the intention was the creation of a Charge for another facility; which facility was not granted by the 1 st defendant. Accordingly, the plaintiff submitted that there is no justification for the 1 st defendant to keep holding the said documents. He placed reliance on George Njogu Residences Limited v National Bank of Kenya Ltd [2013] eKLR in which it was held that it cannot be right or proper for an intended chargee to hold onto title documents of the chargor indefinitely as that would amount to an interference with the rights of proprietor of the suit land. Consequently, the plaintiff submitted that its suit is well merited and should be allowed with costs.
[32] The 1 st defendant filed written submissions dated 19 th February 2024 and thereby proposed the following issues for determination:
[a] Who was under the obligation to repay the loan facility advanced to the plaintiff?
[b] Whether the loan facility was to attract interest a variable rate;
[c] Whether the 1 st defendant could charge late fees.
[d] Whether the 1 st defendant was in possession or custody of the plaintiff’s Original Titles over the properties known as C.R. 60789 and C.R. 60790;
[e] Whether the plaintiff has made out a case for the refund of the sums sought;
[f] Whether the expert testimony is reliable and accurate;
[g] Whether the plaintiff is entitled to an order directing the 1 st defendant to remove its name from the Credit Reference Bureau and damages for listing with the Credit Reference Bureau.
[h] Whether the 1 st defendant violated the provisions of the Consumer Protection Act, 2012.
[33] It was the submission of the 1 st defendant that the responsibility for the repayment of the loan facility advanced to the plaintiff lay squarely with the plaintiff; and that the Guarantee would only come into effect in the event of default and upon a 30-day demand notice being given. The 1 st defendant urged the Court to note that while the Guarantee is dated 24 th August 2010, the loan facility was approved on 3 rd August 2010. The 1 st defendant therefore submitted that its role was limited to transferring funds from the plaintiff’s current account to the loan account.
[34] The 1 st defendant further submitted that it was a term of the facility that the interest rate was variable; and therefore the total sum payable by the plaintiff to the 1 st defendant would also vary depending on the repayment pattern of the facility. Accordingly, the 1 st defendant posited that the plaintiff would only have paid Kshs. 96,641,355/= if the facility was paid on time without late payments that would attract default interest, and if the Base Rate remained at 14.5 percent per annum for the entire term of the facility.
[35] The 1 st defendant relied on National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd [2002] 2 EA 503 and Shah v Guilders International Bank Ltd [2002] 1 EA 269 for the proposition that a court of law cannot rewrite a contract between the parties; and that where the rate of interest has been agreed upon by the parties, the court is obliged to enforce the agreed rate unless it is illegal, unconscionable or fraudulent.
[36] On whether the 1 st defendant could charge late fees, reference was made to page 17 of the Letter of Offer dated 3 rd August 2010 to demonstrate that an additional charge of 1 percent per month in addition to the normal rate of interest was provided for in the event of default. The 1 st defendant pointed out that, whilst the Letter of Offer did not contain a repayment date, the first instalment was due one month from the date of disbursement of the loan. In the same vein, subsequent instalments would be payable on the same date of disbursement.
[37] The 1 st defendant therefore contended that failure to pay the instalments on the 25 th day of the month would attract late payment charges. It pointed out that there were several instances when the instalments were not paid in time; and therefore it was justified in levying late payment penalties. In particular, the 1 st defendant singled out the months of February and August 2013, December 2014 and May 2015 as some of the months in which delays were witnessed.
[38] Regarding the two Certificates of Title allegedly handed over to the 1 st defendant as security, the 1 st defendant submitted that no evidence was led by the plaintiff to demonstrate this allegation. The 1 st defendant pointed out that the email communication exhibited at page 107 of the plaintiff’s Bundle of Documents does not state specifically which Titles were deposited and in relation to which facility. The 1 st defendant urged the Court to rely on the list of titles furnished by it at page 37 of its Bundle of Documents; which list does not include the Titles in question. The 1 st defendant therefore urged for the dismissal of the plaintiff’s prayers in connection with the two Titles, No. C.R. 60789 and 60790.
[39] On whether the plaintiff has made out a case for the refund of the sums allegedly wrongfully debited from the loan account, the 1 st defendant submitted that the claim is premised on an Amortization Schedule whose authenticity is in question. It also pointed out the sums were calculated on the basis of a false assumption that the interest rate was invariable; and that no late payments were chargeable. In addition, the 1 st defendant explained that the plaintiff’s auditors erred by treating “payments received”, “principal repayment” and “interest repayment” as separate and distinct payments into the plaintiff’s loan account.
[40] In the submission of the 1 st defendant, the issue of whether the plaintiff overpaid the loan facility is not of a technical or scientific nature as to require an expert or to disqualify Sally Ooko (DW1) being an employee of the 1 st defendant working in the Credit Risk Department from testifying in the matter. The 1 st defendant relied on Stephen Kirimi Wang’ondu v The Ark Ltd [2016] eKLR and Oriental Commercial Bank Ltd v Kenya Hotel Ltd [2021] eKLR for the proposition that expert testimony is not foolproof.
[41] On whether the plaintiff is entitled to an order directing the 1 st defendant to remove its name from the CRB and damages for such listing, the 1 st defendant submitted that it is required by law to furnish the CRB on a monthly basis with details of patterns of payment of credit facilities or default in payment by its customers. It therefore submitted that the plaintiff needed to demonstrate that the listing complained of was in respect of the subject loan facility; which was not done. The 1 st defendant relied on Section 31(5)(f) of the Banking Act (Cap 488) and the case of Rupa Cotton Mills (EPZ) Ltd & 2 others v Bank of Baroda (Kenya) Ltd [2012] eKLR as to the whole purpose of CRB listing.
[42] Lastly, the 1 st defendant made submissions in connection with the allegation that it violated the provisions of the Consumer Protection Act. According to the 1 st defendant, the plaintiff failed to plead with specificity in its Amended Plaint the alleged violations or when the alleged violations took place. It also pointed out that the Act came into force on 14 th March 2013 long after the subject loan was advanced to the plaintiff; and therefore that the Act cannot be said to apply retrospectively to the lending between the plaintiff and the 1 st defendant. In this regard, reliance was placed by the 1 st defendant on Municipality of Mombasa v Nyali Limited [1963] EA 371 and Commissioner of Income Tax v Pan African Paper Mills [E.A.) Limited [2018] eKLR in urging the Court to find that the Consumer Protection Act was not intended to have retrospective application. Accordingly, the 1 st defendant urged for the dismissal of the suit with costs.
[43] The 2 nd defendant relied on its written submissions dated 31 st January 2024. Its contention was essentially that no claim whatsoever arises from the Agreement dated 27 th May 2010 against it and that nowhere in the Plaint has any complaint been raised against it. It submitted that the plaintiff’s pleadings as framed do not establish a cause of action against it. It made reference to Attorney General & another v Andrew Maina Githinji & another [2016] eKLR and Letang v Cooper [1964] 2 All ER 929 for the definition of a “cause of action” . It also referred to Dakianga Distributors (K) Ltd v Kenya Seed Company Limited [2015] eKLR and Jones v National Coal Board [1957] 2 QB 55 for the submission that parties are bound by their pleadings.
[44] The 2 nd defendant also made submissions on the doctrine of privity of contract and posited that the plaintiff lacks locus standi to sue it on the basis of the loan agreement or the alleged overcharge committed by the 1 st defendant. It relied on Savings & Loans (K) Ltd v Kanyenje Karangaita Gakombe & another [2015] eKLR, Agricultural Finance Corporation v Lendetia Ltd and Kenindia Assurance Co. Ltd v Otiende [1991] KLR 38. On that account the 2 nd defendant prayed for the dismissal of the suit against it with costs.
[45] The Court has given careful consideration to the pleadings and the evidence adduced by the parties in support thereof. Due attention has also been given to the written submissions filed herein by the parties. It is common ground that the plaintiff was a longtime client of the 1 st defendant and that, over time, the 1 st plaintiff had opened and was operating several accounts with the 1 st defendant. The particulars of the various accounts were supplied as hereunder:
Account Number
Purpose of Account
1
1000696877
Term Loan Account
2
1-0000-02271
Main (Mother) Account
3
4-100-001274 CLI
Money DR from Main Account to Loan Account
4
1001946637
Asset Finance Loan
5
1002006107
Insurance Premium Loan
6
1001936367
Loan Account
7
1001936367
Asset Finance Loan
8
1002866567
Take on Account
9
1001602434
Take on Account
[46] It is not in dispute therefore that vide an agreement for sale dated 27 th May 2010, the plaintiff sold its property, namely Plot No. 4811/VI/MN to the 2 nd defendant for a consideration of Kshs. 165,000,000/=. The 2 nd defendant made a down payment of Kshs. 60,000,000, leaving a balance of Kshs. 105,500,000/= which was to be paid by instalments of Kshs. 1,765,000/= per month from September 2010. The entire purchase price was to be paid over a period of 60 months. Both the plaintiff and the 2 nd defendant were in agreement that the purchase price was duly and timeously paid.
[47] The plaintiff and the 1 st defendant were also in agreement that at around the same time, the plaintiff applied for a term loan facility from the 1 st defen
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[2] The Agreement provided that the balance of the purchase price would be guaranteed by a reputable bank. To which end the 1 st defendant furnished the plaintiff with a guarantee on behalf of the 2 nd defendant for Kshs. 105,500,000/=. The guarantee, No. GTE03-101046 was dated 24 th August 2010. On the basis thereof, the plaintiff applied for a term loan of Kshs. 70,000,000/= from the 1 st defendant, payable within 60 months by monthly instalments of Kshs. 1,610,689/=. According to the plaintiff, it was agreed between the parties that the 1 st defendant would timeously credit the plaintiff’s loan account with the monthly payments received from the 2 nd defendant; and that the issue of default or penalties would not arise, granted that the payments had been guaranteed by the 2 nd defendant.
[3] The plaintiff’s cause of action was that, in breach of the obligations placed upon the 1 st defendant as a banking institution by the Constitution of Kenya, the Banking Act and the Consumer Protection Act, the 1 st defendant made wrongful deductions from its account in September 2013 and credited the same to the loan account in disregard of the agreement between the parties. In the plaintiff’s view, the deductions were fraudulent. He supplied the particulars of fraud in the Plaint dated 19 th August 2019, at paragraph 35. The plaintiff also pleaded the particulars of breach of the Consumer Protection Act.
[4] Accordingly, the plaintiff prayed for the following reliefs against the two defendants jointly and severally:
[a] Immediate payment of the sum of Kshs. 25,819,141.88 as claimed in the Plaint.
[b] Interest on the aforesaid sum at commercial rate from the date of filing the suit.
[c] Immediate and unconditional release of the original certificate of title Cr. No. 60789 and Cr. No. 60790 being held by the 1 st defendant to the plaintiff.
[d] General damages in respect of the illegal lien exercised by the 1 st defendant over the original certificates of title Cr. No. 60789 and Cr. No. 60790.
[e] Refund of all monies unlawfully charged as penalty interest payments and default charges/late fees.
[f] Interest on [e] above from the date of filing the suit.
[g] A declaration that the payment was not under any contract or contractual agreement or otherwise to repay the term loan of Kshs. 70,000,000/=.
[h] A declaration that the term loan minimum monthly repayment was limited to Kshs. 1,610,689.25 and the maximum monthly repayment was limited to the guaranteed monthly payment of Kshs. 1,765,000/=.
[i] A declaration that the letter of offer dated 3 rd August 2010 did not provide for the monthly repayments exceeding the monthly payment under the repayment guarantee.
[j] An order that account be taken between the plaintiff and the 1 st defendant.
[k] interest on [j] above at court rate.
[l] Costs of the suit.
[m] Any other relief the Court may deem fit to grant.
[5] The plaintiff amended the Plaint on 28 th June 2021 with the leave of the Court to furnish details of the various accounts it held with the 1 st defendant and to provide further particulars in relation to the loan and its repayment terms. The plaintiff also amended Prayer [a] to read Kshs. 57,401,810.70 as the total sum of amounts wrongfully debited by the 1 st defendant from its account. The plaintiff prayed for interest on that sum, at paragraph (b) of the Amended Plaint, at commercial rates from 1 st July 2015 when the loan account was to be closed. Other notable amendments in the prayers included additional prayers for damages for wrongful referral of the plaintiff to the Credit Reference Bureau and an order directing the 1 st defendant to remove the plaintiff’s name from the Credit Reference Bureau.
[6] The 1 st defendant filed an Amended Defence on 31 st August 2021. It denied that the facility granted to the plaintiff was granted on the strength of the real estate transaction between the plaintiff and the 2 nd defendant as alleged in Paragraph 6A of the Amended Plaint. It averred that, sometime in May 2010, the plaintiff made an application for the grant of a development loan in the sum of Kshs. 86,000,000/=; and that, vide a Letter of Offer dated 3 rd August 2010, the 1 st defendant agreed to provide to the plaintiff a facility in the sum of Kshs. 70,000,000/=.
[7] According to the 1 st defendant, the loan proceeds having been disbursed to the plaintiff on the 25 th August 2010, it was expected that the monthly repayments would commence one month thereafter on the 25 th September 2010, and thereafter on the 25 th day of each subsequent month until full payment. The 1 st defendant averred that the plaintiff cannot now feign ignorance of the repayment date. The 1 st defendant further stated that it was a term of their agreement that the repayments would, by the express instructions of the plaintiff, be deducted from its current account No. 100 000 2271, depending on availability of funds in the said account.
[8] The 1 st defendant conceded that it was aware of the sale transaction between the plaintiff and the 2 nd defendant; and that the 2 nd defendant would make monthly payments of Kshs. 1,765,000/= through the plaintiff’s current account. It however denied that the plaintiff was thereby relieved of any obligation to ensure timely repayment of the loan facility. The 1 st defendant further averred that the Letter of Offer dated 3 rd August 2010 provided that, in the event of default, it would charge 1 percent per month on the portion in default in addition to the agreed rate of interest. It was therefore the assertion of the 1 st defendant that any late fees, interest or penalty charges levied on the plaintiff’s account were contractual, lawful and levied with the full knowledge and consent of the plaintiff.
[9] The 1 st defendant denied having fraudulently deducted any money from the plaintiff’s account or having exercised lien over the plaintiff’s Certificates of Title No. CR. 60789 or CR. No. 60790 as alleged in the Amended Plaint or at all. It denied violating lending principles or breaching its obligations under the Constitution, the Banking Act or Consumer Protection Act as alleged by the plaintiff and put the plaintiff to strict proof thereof. It therefore averred that the plaintiff is not entitled to any of the reliefs sought in the Amended Plaint.
[10] The 2 nd defendant also denied the plaintiff’s allegations. Its Statement of Defence dated 29 th August 2019 was filed herein on 30 th August 2019. It confirmed that it entered into a Sale Agreement dated 27 th May 2010 with the plaintiff for sale of the property known as Mainland North/Section VI/4811 at the agreed price of Kshs. 165,000,000/=. The 2 nd defendant further stated that, pursuant to the terms of their agreement, it made a down payment of Kshs. 60,000,000/= and was to pay the balance of Kshs. 105,000,000/= in monthly instalments of Kshs. 1,765,000/= from September 2010; which it cleared on 1 st July 2015.
[11] The 2 nd defendant therefore averred that it has fully discharged its obligation under the Agreement dated 27 th May 2010; and therefore it is not liable in any way to the plaintiff. It further stated, that the plaintiff’s cause of action is based on Bank/Customer relationship to which it is not privy; and that the Guarantee was only meant to secure the payment of the balance of the purchase price in the event of default. The 2 nd defendant added that, since no act of default occurred in respect of payment of the purchase price, it was wrongly impleaded in this suit.
[12] At the hearing of the suit, the plaintiff called its Managing Director, Joseph Mbugua Gichanga (PW1). He adopted his witness statement dated 28 th June 2021. He explained that the plaintiff is a client of the 1 st defendant’s and had 7 different accounts with the 1 st defendant as at the year 2010. PW1 testified that the plaintiff’s key business is real estate development, farming and transportation; and that between 2010 and 2015, the plaintiff’s real estate business was booming. He stated that the plaintiff had six clients making substantial monthly payments to the main current account; hence the need for each disbursement to be credited to the appropriate account to satisfy each contractual obligation.
[13] PW1 further testified that this suit relates to a facility granted by the 1 st defendant on the strength of a real estate transaction between the plaintiff and the 2 nd defendant, whereby the 2 nd defendant agreed to purchase the plaintiff’s property known as LR 4811/VI/MN situated in Mombasa County at a consideration of Kshs. 165,000,000/=. He further testified that upon depositing Kshs. 60,000,000/= the 2 nd defendant was to pay the balance in monthly instalments of Kshs. 1,765,000/= over a period of 5 years; and that the instalments were to be credited by the 1 st defendant into the plaintiff’s loan account No. 1-0000-02271 on the 25 th day of each month with effect from 25 th September 2010.
[14] To ensure that the 2 nd defendant repaid the balance of the purchase price as agreed, it obtained a Guarantee from the 1 st defendant, being Guarantee No. GTE03-101046 dated 24 th August 2010. It was therefore the testimony of PW1 that, based on the above arrangements, the plaintiff applied for a term loan of Kshs. 86,000,000/= from the defendant, repayable within 60 months. The facility, which was intended to finance the plaintiff’s development projects, was duly approved by the 1 st defendant but in the sum of Kshs. 70,000,000/= only.
[15] It was further the testimony of PW1 that the term loan was secured by a general indemnity by the 2 nd defendant against the Guarantee of Kshs. 105,500,000/=; an irrevocable standing order dated 25 th September 2010 by the 2 nd defendant as well as an irrevocable standing order by the plaintiff dated 25 th September 2010. In addition, the 1 st defendant demanded a cash cover collateral of Kshs. 105,500,000/= from the 2 nd defendant for the Guarantee. Thus, the plaintiff’s case was that the 1 st defendant was to credit the term loan account with monies deposited monthly by the 2 nd defendant, such that it was not necessary for any funds to be drawn from the plaintiff’s current account.
[16] It was therefore the plaintiff’s case that, the mandate given to the 1 st defendant as supported by the terms of the Letter of Offer, created a principal/agent relationship between the plaintiff and the 1 st defendant; and therefore it was expected that the 1 st defendant would carry out the exact instructions of the plaintiff as far as crediting the term loan account with the repayment instalments of Kshs. 1,610,689.25 as received from the 2 nd defendant. PW1 testified that the 1 st defendant not only breached those instructions by failing to remit the agreed amount to the loan account in time, but also proceeded to load unwarranted interest and penalty charges on the plaintiff’s account.
[17] Regarding the last instalment payment of Kshs. 1,365,000/=, PW1 testified that the same was credited into the plaintiff’s account on 25 th August 2015, but was thereafter reversed by the 1 st defendant on 28 th August 2015, creating a ‘NIL’ effect in terms of the loan repayment for no apparent reason. PW1 also mentioned that on 29 th April 2014, the 1 st defendant dishonoured a cheque issued by the plaintiff for Kshs. 300,000/= in the ordinary course of business, contending that there were insufficient funds in the account, yet the said account was in funds at the time to the tune of Kshs. 2,300,000/=.
[18] It was also the testimony of PW1 that the plaintiff deposited two Certificates of Title with the 1 st defendant through its Regional Manager, Mr. Mwamburi . According to PW1, the Certificates were given as additional security for the term loan and that receipt thereof was duly acknowledged by the 1 st defendant vide an email dated 29 th February 2016 (at page 197 of the plaintiff’s Bundle of Documents). The plaintiff sought the release of those Certificates of Title.
[19] Lastly, the plaintiff accused the 1 st defendant of having unprocedurally reported it to the Credit Reference Bureau (CRB) due to purported later charges which were never the case. The plaintiff stated that this action by the 1 st defendant had adversely affected its real estate development business and integrity. Accordingly, the plaintiff sought to be compensated by way of general damages for having been wrongfully listed in the CRB database and for failure to remove the listing after demands were made for such removal.
[20] The plaintiff called Thomas Odero Arucho (PW2) as its second witness. PW1, an auditor with the firm of Irungu Macharia Associates, was instructed by the plaintiff to carry out an audit of its accounts to ascertain the status thereof. Upon undertaking the audit exercise, PW2 prepared his report which he produced as the Plaintiff’s Exhibit 53. The report is at pages 187 to 216 of the plaintiff’s Bundle of Documents. PW2’s finding was that the 1 st defendant over-deducted monies from the plaintiff’s account to the tune of Kshs. 57,660,596.11 which ought to be refunded by the 1 st defendant.
[21] On behalf of the 1 st defendant, its Assistant Credit Manager, Ms. Sally Ooko , testified on 2 nd October 2023. She confirmed that the plaintiff was given a facility of Kshs. 70,000,000/= by the 1 st defendant. She further confirmed that the facility was to be repaid over a period of 5 years in instalments of Kshs. 1,610,689.25 at a variable interest rate of 1 percent above the base rate of 14.5 percent. DW1 also confirmed that the loan was disbursed on 25 th August 2010 and that the first instalment was due one month later on 25 th September 2010.
[22] DW1 testified that they reconciled the plaintiff’s account and established that his claim of overpayment of Kshs. 57 million was baseless. According to the 1 st defendant, the total amount repaid by the plaintiff was Kshs. 105,289,791.33 and not Kshs. 154,301,951.11 as alleged by the plaintiff. She discounted the approach taken by PW2 and explained that he relied on misleading conclusions from the bank statements to come up with the amount alleged to be an overpayment. DW1 further testified that there were four occasions when the repayment instalments were delayed and therefore the 1 st defendant was entitled to charge a penalty for such late payments.
[23] DW1 adopted her witness statement and produced the 1 st defendant’s Bundle of Documents as exhibits.
[24] The 2 nd defendant also denied the plaintiff’s allegations. Its evidence, through its Legal Manager, Ms. Cecilia Ndeti (DW2), was that the 2 nd defendant had a land sale agreement with the plaintiff at an agreed purchase price of Kshs. 165,000,000/=. DW2 confirmed that the money was paid in instalments of Kshs. 1,765,000/= over a period of 60 months after a down payment of Kshs. 60,000,000/=. DW2 further confirmed that all the instalments were paid by way of a standing order from the 2 nd defendant’s account to the account of the plaintiff; and that the 2 nd defendant furnished a Payment Guarantee to the plaintiff through the 1 st defendant. She denied that any of the instalments was delayed.
[25] In its closing submissions, the plaintiff reiterated its evidence and proposed the following issues for determination:
[a] Whether there was an overpayment in the loan account, and if so, by how much?
[b] Whether the 1 st defendant is holding the original certificates of the plaintiff.
[c] Whether the plaintiff is entitled to the reliefs sought in the Amended Plaint dated 28 th June 2021.
[26] The plaintiff relied on the Audit Report produced by PW2 to support his claim that the loan was overpaid by Kshs. 57,401,810/70. The plaintiff pointed out that no audited statement or report was produced by the 1 st defendant to controvert PW2’s Audit Report. Therefore, it submitted that its unchallenged report ought to guide the Court in confirming the overpayment. The plaintiff relied on Dick Omondi Ndiewo t/a Ditch Engineering Service v Cell Care Electronics [2015] eKLR for the proposition that the evidence of an expert can only be challenged by the evidence of another expert.
[27] The plaintiff took issue with the assertion by the 1 st defendant that the loan was repayable on the 25 th day of the subsequent months. It submitted that where a date for repayment of monies secured by a charge is not specified in the charge instrument, or where repayment is not demanded by the chargee on the date specified, the money shall be deemed to be repayable three months after the service of a demand in writing by the chargee. In this regard, the plaintiff relied on Section 7 of the Consumer Protection Act, 2012, Section 56(2) of the Land Registration Act as well as the cases of Bamboo Holding Ltd v National Bank of Kenya Limited [2019] eKLR and Kwanza Estates Ltd v Dubai Bank Kenya Ltd [2013] eKLR.
[28] The plaintiff also submitted that the 1 st defendant had the obligation to notify it of any variations in the interest rate. The plaintiff relied on Nairobi HCCC No. 1601 of 1999: Housing Finance Co. of Kenya Limited v Gilbert Kibe Njuguna to support its submission that any variation of the interest rate on the term loan without prior notice was therefore unlawful and punitive.
[29] The plaintiff submitted at length on what it perceived to be wrongful deductions by way of interest. It contended that no penalties ought to have been charged on the term loan considering that its repayment was guaranteed by the 2 nd defendant through a Payment Guarantee issued by the 1 st defendant as well as a cash cover provided by the 2 nd defendant. The plaintiff argued that it would be wrong for the 1 st defendant to submit, as it did, that the Guarantee was a separate arrangement and did not form part of the term loan agreement, yet it formed part of the conditions precedent for the term loan.
[30] The plaintiff relied on Brogden v Metropolitan Railway Company [1876-7] L.R. 2 App Cas 666 (House of Lords) for the submission that acceptance of a written contract/offer can either be explicit or implicit and therefore that both the 1 st and 2 nd defendants were liable to ensure the instalments paid by the 2 nd defendant were applied towards repayment of the term loan. Hence, the plaintiff’s stance was that the 1 st defendant’s obligation would only cease once the Guarantee was fully effected or upon full payment of the property purchase instalments by the 2 nd defendant.
[31] The plaintiff also urged the Court to find as a fact that the 1 st defendant is holding two of its Certificates of Title, being CR. No. 60789 and CR. No. 60790 on the basis of the evidence adduced by it. It submitted that the intention was the creation of a Charge for another facility; which facility was not granted by the 1 st defendant. Accordingly, the plaintiff submitted that there is no justification for the 1 st defendant to keep holding the said documents. He placed reliance on George Njogu Residences Limited v National Bank of Kenya Ltd [2013] eKLR in which it was held that it cannot be right or proper for an intended chargee to hold onto title documents of the chargor indefinitely as that would amount to an interference with the rights of proprietor of the suit land. Consequently, the plaintiff submitted that its suit is well merited and should be allowed with costs.
[32] The 1 st defendant filed written submissions dated 19 th February 2024 and thereby proposed the following issues for determination:
[a] Who was under the obligation to repay the loan facility advanced to the plaintiff?
[b] Whether the loan facility was to attract interest a variable rate;
[c] Whether the 1 st defendant could charge late fees.
[d] Whether the 1 st defendant was in possession or custody of the plaintiff’s Original Titles over the properties known as C.R. 60789 and C.R. 60790;
[e] Whether the plaintiff has made out a case for the refund of the sums sought;
[f] Whether the expert testimony is reliable and accurate;
[g] Whether the plaintiff is entitled to an order directing the 1 st defendant to remove its name from the Credit Reference Bureau and damages for listing with the Credit Reference Bureau.
[h] Whether the 1 st defendant violated the provisions of the Consumer Protection Act, 2012.
[33] It was the submission of the 1 st defendant that the responsibility for the repayment of the loan facility advanced to the plaintiff lay squarely with the plaintiff; and that the Guarantee would only come into effect in the event of default and upon a 30-day demand notice being given. The 1 st defendant urged the Court to note that while the Guarantee is dated 24 th August 2010, the loan facility was approved on 3 rd August 2010. The 1 st defendant therefore submitted that its role was limited to transferring funds from the plaintiff’s current account to the loan account.
[34] The 1 st defendant further submitted that it was a term of the facility that the interest rate was variable; and therefore the total sum payable by the plaintiff to the 1 st defendant would also vary depending on the repayment pattern of the facility. Accordingly, the 1 st defendant posited that the plaintiff would only have paid Kshs. 96,641,355/= if the facility was paid on time without late payments that would attract default interest, and if the Base Rate remained at 14.5 percent per annum for the entire term of the facility.
[35] The 1 st defendant relied on National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd [2002] 2 EA 503 and Shah v Guilders International Bank Ltd [2002] 1 EA 269 for the proposition that a court of law cannot rewrite a contract between the parties; and that where the rate of interest has been agreed upon by the parties, the court is obliged to enforce the agreed rate unless it is illegal, unconscionable or fraudulent.
[36] On whether the 1 st defendant could charge late fees, reference was made to page 17 of the Letter of Offer dated 3 rd August 2010 to demonstrate that an additional charge of 1 percent per month in addition to the normal rate of interest was provided for in the event of default. The 1 st defendant pointed out that, whilst the Letter of Offer did not contain a repayment date, the first instalment was due one month from the date of disbursement of the loan. In the same vein, subsequent instalments would be payable on the same date of disbursement.
[37] The 1 st defendant therefore contended that failure to pay the instalments on the 25 th day of the month would attract late payment charges. It pointed out that there were several instances when the instalments were not paid in time; and therefore it was justified in levying late payment penalties. In particular, the 1 st defendant singled out the months of February and August 2013, December 2014 and May 2015 as some of the months in which delays were witnessed.
[38] Regarding the two Certificates of Title allegedly handed over to the 1 st defendant as security, the 1 st defendant submitted that no evidence was led by the plaintiff to demonstrate this allegation. The 1 st defendant pointed out that the email communication exhibited at page 107 of the plaintiff’s Bundle of Documents does not state specifically which Titles were deposited and in relation to which facility. The 1 st defendant urged the Court to rely on the list of titles furnished by it at page 37 of its Bundle of Documents; which list does not include the Titles in question. The 1 st defendant therefore urged for the dismissal of the plaintiff’s prayers in connection with the two Titles, No. C.R. 60789 and 60790.
[39] On whether the plaintiff has made out a case for the refund of the sums allegedly wrongfully debited from the loan account, the 1 st defendant submitted that the claim is premised on an Amortization Schedule whose authenticity is in question. It also pointed out the sums were calculated on the basis of a false assumption that the interest rate was invariable; and that no late payments were chargeable. In addition, the 1 st defendant explained that the plaintiff’s auditors erred by treating “payments received”, “principal repayment” and “interest repayment” as separate and distinct payments into the plaintiff’s loan account.
[40] In the submission of the 1 st defendant, the issue of whether the plaintiff overpaid the loan facility is not of a technical or scientific nature as to require an expert or to disqualify Sally Ooko (DW1) being an employee of the 1 st defendant working in the Credit Risk Department from testifying in the matter. The 1 st defendant relied on Stephen Kirimi Wang’ondu v The Ark Ltd [2016] eKLR and Oriental Commercial Bank Ltd v Kenya Hotel Ltd [2021] eKLR for the proposition that expert testimony is not foolproof.
[41] On whether the plaintiff is entitled to an order directing the 1 st defendant to remove its name from the CRB and damages for such listing, the 1 st defendant submitted that it is required by law to furnish the CRB on a monthly basis with details of patterns of payment of credit facilities or default in payment by its customers. It therefore submitted that the plaintiff needed to demonstrate that the listing complained of was in respect of the subject loan facility; which was not done. The 1 st defendant relied on Section 31(5)(f) of the Banking Act (Cap 488) and the case of Rupa Cotton Mills (EPZ) Ltd & 2 others v Bank of Baroda (Kenya) Ltd [2012] eKLR as to the whole purpose of CRB listing.
[42] Lastly, the 1 st defendant made submissions in connection with the allegation that it violated the provisions of the Consumer Protection Act. According to the 1 st defendant, the plaintiff failed to plead with specificity in its Amended Plaint the alleged violations or when the alleged violations took place. It also pointed out that the Act came into force on 14 th March 2013 long after the subject loan was advanced to the plaintiff; and therefore that the Act cannot be said to apply retrospectively to the lending between the plaintiff and the 1 st defendant. In this regard, reliance was placed by the 1 st defendant on Municipality of Mombasa v Nyali Limited [1963] EA 371 and Commissioner of Income Tax v Pan African Paper Mills [E.A.) Limited [2018] eKLR in urging the Court to find that the Consumer Protection Act was not intended to have retrospective application. Accordingly, the 1 st defendant urged for the dismissal of the suit with costs.
[43] The 2 nd defendant relied on its written submissions dated 31 st January 2024. Its contention was essentially that no claim whatsoever arises from the Agreement dated 27 th May 2010 against it and that nowhere in the Plaint has any complaint been raised against it. It submitted that the plaintiff’s pleadings as framed do not establish a cause of action against it. It made reference to Attorney General & another v Andrew Maina Githinji & another [2016] eKLR and Letang v Cooper [1964] 2 All ER 929 for the definition of a “cause of action” . It also referred to Dakianga Distributors (K) Ltd v Kenya Seed Company Limited [2015] eKLR and Jones v National Coal Board [1957] 2 QB 55 for the submission that parties are bound by their pleadings.
[44] The 2 nd defendant also made submissions on the doctrine of privity of contract and posited that the plaintiff lacks locus standi to sue it on the basis of the loan agreement or the alleged overcharge committed by the 1 st defendant. It relied on Savings & Loans (K) Ltd v Kanyenje Karangaita Gakombe & another [2015] eKLR, Agricultural Finance Corporation v Lendetia Ltd and Kenindia Assurance Co. Ltd v Otiende [1991] KLR 38. On that account the 2 nd defendant prayed for the dismissal of the suit against it with costs.
[45] The Court has given careful consideration to the pleadings and the evidence adduced by the parties in support thereof. Due attention has also been given to the written submissions filed herein by the parties. It is common ground that the plaintiff was a longtime client of the 1 st defendant and that, over time, the 1 st plaintiff had opened and was operating several accounts with the 1 st defendant. The particulars of the various accounts were supplied as hereunder:
Account Number
Purpose of Account
1
1000696877
Term Loan Account
2
1-0000-02271
Main (Mother) Account
3
4-100-001274 CLI
Money DR from Main Account to Loan Account
4
1001946637
Asset Finance Loan
5
1002006107
Insurance Premium Loan
6
1001936367
Loan Account
7
1001936367
Asset Finance Loan
8
1002866567
Take on Account
9
1001602434
Take on Account
[46] It is not in dispute therefore that vide an agreement for sale dated 27 th May 2010, the plaintiff sold its property, namely Plot No. 4811/VI/MN to the 2 nd defendant for a consideration of Kshs. 165,000,000/=. The 2 nd defendant made a down payment of Kshs. 60,000,000, leaving a balance of Kshs. 105,500,000/= which was to be paid by instalments of Kshs. 1,765,000/= per month from September 2010. The entire purchase price was to be paid over a period of 60 months. Both the plaintiff and the 2 nd defendant were in agreement that the purchase price was duly and timeously paid.
[47] The plaintiff and the 1 st defendant were also in agreement that at around the same time, the plaintiff applied for a term loan facility from the 1 st defen
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