Background
1. The suit herein is instituted by a 2nd Further Amended Plaint dated 5/10/2018, after leave was granted to the plaintiff to substitute her husband, Mr. Kuria Gikonyo. The plaintiff’s husband approached the 1st defendant (hereinafter the Bank) for a loan facility of Kshs. 3,000,000/=. The loan was repayable within 15 years at an interest rate of 26%, translating to a monthly installment of Kes. 66,398/=. The facility was secured by land parcel No. L.R. NAIROBI 77851/311-RUNDA (the suit property).
2. The plaintiff contends that her husband paid the monthly installments along with interest until September 2004, when he realized that he had paid a total sum of Kshs. 8,448,000/=. That notwithstanding, the Bank still issued a Statutory Notice to the plaintiff’s husband, demanding arrears of Kshs. 4,453,396.55.
3. The plaintiff further contends that the the suit property was sold by private treaty to the 2nd defendant without the plaintiff’s knowledge. The 3rd defendant, made way into the suit property on instructions from the 2nd defendant, carried away the plaintiff’s household items and evicted the plaintiff’s family from the suit property.
4. The plaintiff and her husband eventually discovered that the suit property had been transferred by the 1st defendant to the 2nd defendant on 19/7/2007, while the case herein was still pending before this Honorable Court.
5. The plaintiff seeks the following reliefs:
i) A declaration that the purported charge created on the aforesaid parcel of land on 22nd August 1995 is null and void and that all monies paid in excess of Kes. 3,000,000.00 be refunded to the Plaintiff;
ii) A declaration that the sale and subsequent transfer of Land Parcel No. L.R. Nairobi 77851/311-Runda by the 1st Defendant to the 2nd Defendant was/is equally unlawful and a legal nullity;
iii) An order further declaring the act of the 3rd Defendant of attaching and carrying away the previous plaintiff’s household goods as well as his motor vehicle without giving notice as required by the law null and void and a further order compelling the said 3rd Defendant to reinstate to the plaintiff their household goods without any conditions whatsoever;
iv) An order in the alternative that the 2nd and 3rd Defendants do compensate the Plaintiff the value of the household goods and the motor vehicle carried away.
v) An order compelling the defendants to pay the Plaintiff all the mesne profits they have earned from the time they dispossessed the Plaintiff the suit property is re-conveyed back to the Plaintiff plus interest thereon calculated at the interest provided for in the subject charge;
vi) An order in the alternative to the effect that the suit property be reconveyed back to the Plaintiff with the condition that the Plaintiff refunds the Kes. 11,882,514.30 minus Kes. 1,664,089.15 unaccounted for by the 1st Defendant, minus the mesne profits and minus the general damages;
vii) An order in the alternative that the 1st and 2nd Defendants do compensate the Plaintiff the current value of the Property; and General damages plus interest thereon at court rates.
6. The 1st defendant (hereinafter the Bank) through its Statement of Defence confirms the loan facility advanced to the plaintiff’s husband but contends that he defaulted in repayment of the loan. That the loan was restructured in March 2003 but the default persisted. After issuing the relevant statutory notices and having the suit property valued the same was sold by private treaty.
7. It is the Bank’s case that the suit property was sold at Kshs. 18,000,000/= and the proceeds applied towards settling the loan account. The credit balance of Kshs. 11,882,514.30/= was then paid to the plaintiff’s husband.
8. The 2nd and 3rd defendants did not file any statements in defence of the plaintiff’s case and neither did they participate in the trial.
9. The plaintiff called two witnesses. She testified as PW1, and PW2 was WILFRED ONONO, an expert witness on interest rate analysis. The 1st defendant's witness was EMMANUEL KIPRONO YEBEI, a Debt Management Officer with the Bank. I will not reiterate the testimonies of the witnesses, which reflect the summary of the facts as previously outlined. However, I will refer to these testimonies in my analysis as necessary.
Analysis and determination
10. Having carefully considered the pleadings, evidence, authorities and submissions presented by the parties, the following issues lend themselves for determination:
i. Whether the charge created on the aforesaid parcel of land on 22nd August 1995 was valid and enforceable;
ii. Whether the interest rate levied upon the plaintiff’s husband was illegal;
iii. Whether the sale and subsequent transfer of the suit property by the 1st Defendant to the 2nd Defendant was legal and valid; (valuation, notices, interest rates); and
iv. Whether the Plaintiff is entitled to the reliefs sought.
Whether the charge created on the aforesaid parcel of land on 22/8/1995 was valid and enforceable:
11. The plaintiff relies on the Court of Appeal decision in Standard Chartered Bank Kenya Ltd V Intercom Services Ltd & 4 Others, [2014] eKLR. In that case the Court held that:
“No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if that illegality is duly brought to the notice of the court.”
12. The plaintiff contends that the Charge failed to comply with the requirements of Section 59 of the Transfer of Property Act, 1882. This section mandates that any Charge must be signed by the chargor and attested by two witnesses. The plaintiff asserts that this provision is essential to ensure that the parties entered into the agreement voluntarily and comprehended its terms and implications.
13. Additionally, the plaintiff points out that the alleged Charge does not disclose the identity or designation of the individual who witnessed the chargor's signature.
14. The plaintiff further contends that the Bank had failed to demonstrate that the effect of section 69(1) of the Transfer of Property Act was explained to the plaintiff’s husband, casting doubt on whether an advocate attended to the said documents as required by law.
15. On its part, the Bank argues that the plaintiff’s husband acknowledged the existence of the loan throughout its term, referencing the various correspondence as evidence. The Bank relies on the case of Noorbegum Fazal (Suing as a holder of Power of Attorney in favor of Nadra Hussein Fazal) V Diamond Trust Bank, [2015] eKLR, to support its submission that the plaintiff’s husband enjoyed the benefit of the facility and, having acquiesced to the illegality, should not be allowed to avoid the same after benefiting from it.
16. The Bank also notes as regard the certification of the Charge, that the plaintiff had confirmed appearing before and advocate. This is contained at paragraph 6 of the Amended Plaint. That being the case, the plaintiff was bound by her pleading.
17. I have carefully studied Standard Chartered Bank case (supra) referred to by the plaintiff. Of importance is the Judgment of Onyango Otieno, Ag. J.A (as he then was) from which the plaintiffs quoted albeit selectively. The Learned Judge noted that:
“No court ought to enforce illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if illegality is duly brought to the notice of the court, and if the person invoking the aid of the Court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality, the Court ought not to assist him.” (Emphasis mine).
18. The decision by the High Court in King’orani Investments Co. Ltd V Kenya Commercial Bank of Kenya Limited & Another, [2007] eKLR relied on by the Bank is in all forms with the instant case in as far as the role of the party alleging illegality is concerned. The Court (Lesiit, J as she then was) found in part that:
“…a debtor, who has executed debentures, charges and so on, and obtained moneys, cannot be allowed to escape liability on allegations the documents so executed were invalid.”
19. This position was equally supported in Reveille Independent LLC V Anotech International (UK) Ltd, [2016] EWCA Civ 443. In this case the Court held that:
“… a draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a court will not reach this conclusion lightly.
The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty.”
20. To cement the positions espoused in judicial pronouncements I further refer to the Halsburys Laws of England, Volume 9 at paragraph 667 which provides that:
“Whether or not the parties intend a subsequent formal agreement, an outline agreement may achieve sufficient certainty for that agreement to be complete by reason of the maxim that that which is capable of being made certain is to be treated as certain.”
21. There is nothing presented before this Court to show that the plaintiff’s husband raised the issue of lack of attestation or defect in certification with the bank in 1995. On the contrary, the correspondence on record indicates that the plaintiff’s husband benefited from the facility, and that there was a lender/borrower the relationship between the plaintiff’s husband and the Bank for many years thereafter.
22. The plaintiff raising challenges on the charge 13 years later is undoubtedly an insincere afterthought. If there was such a significant omission in the documentation, the plaintiff’s husband should have refrained from taking the loan. The totality of the judicial pronouncements and analysis that I have cited clearly leans towards not allowing chargors to escape liability based on allegations of documents allegedly not properly executed, especially after the fact.
23. Accordingly, I find that the contract was, at the very least, voidable, allowing the plaintiff's husband the option to avoid or continue with it. He chose the latter, invalidating the claim of illegality. Therefore, this Court will treat as done that which ought to have been done under the contract, based on the conduct of the parties. This ground fails on that account.
Whether the interest rate levied upon the plaintiff’s husband was illegal:
24. The plaintiff argues that the interest rate charged by the Bank on the facility was illegal. This position was supported by PW2, the Managing Consultant of the Interest Rates Advisory Centre (I.R.A.C.). The plaintiff contends that at the time of executing the Charge on 22/8/1995, the maximum applicable interest rate for loans exceeding three years was 19%. Therefore, the interest rate of 26% per annum imposed by the Bank was significantly higher than the prevailing maximum rate.
25. In support of this argument the plaintiff produced three Gazette Notices (hereinafter G/N). G/N 1458/1990 was published first and came into effect on 1/4/1990. G/N 1617/1990 published subsequently also came into effect on 1/4/1990 and superseded G/N 1458/1990. It introduced a maximum interest rate of 19% for loans granted for a term exceeding three (3) years from 1/4/1990. G/N 1617/1990 was revoked on 23/7/1991 vide G/N 3348/1991.
26. The Bank does not deny that indeed there was an interest-controlled regime subsisting during the period between 1990 and 1991. Its submission though, which I agree with, is that this regime ended with G/N 3348/1991 which revoked the previous two gazette notices. The Bank therefore contends that these Gazette Notices are not relevant to the proceedings before court and urges that the interest rate applicable was that contained in the Charge document.
27. According to the Bank, the contract between the parties was binding particularly Clauses 3 and 4 which allowed the Bank to vary the interest rates from time to time. It is their case that even the court cannot vary the terms which parties have agreed upon.
28. It is commonplace that until 1990, bank interest rate regulation was controlled by the Central Bank of Kenya, by dint of Section 39 of the Central Bank of Kenya Act. It provided that:
“The Bank may, from time to time, acting in consultation with the Minister, determine and publish the maximum and minimum rates of interest which specified banks or specified financial institutions may pay on deposits and charge for loans or advances: provided that the Bank may in consultation with the Minister determine different rates of interest—
i. for different types of deposits and loans; and
ii. for different types of specified bank and financial institutions.”
29. It was on this basis that the G/Ns were published. As correctly noted by the Bank, the effect of G/N 3348/1991 was to revoke the previous G/Ns thereby removing controls and liberalizing the interest rate regime that existed before the publication of the G/Ns. Despite the repeal of the said provision, there remained a requirement for banks to seek approval before varying their interest rates. Section 44 of the Banking Act provided as follows:
“No institution shall increase its rate of banking or other charges except with the prior approval of the Minister.”
30. In other words, I take the view that any other interest rate was not prohibited but had to comply with the law. That is the purport of section 52(3) of the Banking Act which provides as follows:
“This section shall not permit any institution to recover in any court of law interest and other charges which exceed the maximum permitted under the provisions of this Act or the Central Bank of Kenya Act.”
31. The Court of Appeal in Margaret Njeri Muiruri V Bank of Baroda(K) Ltd, CA No. 9 of 2001 confirmed this position. In applying section 112 of the Evidence Act the Court emphasized that the burden was on the Bank to prove that it had sought such approval, and not on the borrower to prove otherwise. Failure to prove so would attract the presumption that the bank did not comply with the statutory requirement to increase the interest rate. This was held in John Gatu Nderitu V Kenya Commercial Bank Ltd, [2011] eKLR (CC No. 55 of 2001).
32. Equally aligned to this finding was the case of Santowels Limited V Stanbic Bank Kenya Limited, [2018] eKLR. It was held as follows:
“However, there remained residual powers of control by the Central Bank of Kenya under Section 39 of the Central Bank of Kenya Act during the time period between 23 July1991 and 1996, when Section 39 was ultimately repealed; and thereafter under Section 44 of the Banking Act. Accordingly, in addition to notifying their customers of any variations in the rate of interest chargeable, the specified banks and financial institutions still had the additional responsibility of ensuring that the approval of the Minister was obtained prior to any such variation, in accordance with Section 44 of the Banking Act.”
33. The Bank relies on Clause 3 and 4 in its submission that it was at liberty to vary the interest rates as long as notice was issued to the plaintiff, which was done. It is apt to reproduce these clauses which provide as follows:
“3) It is hereby further agreed that the rate of interest payable on all money hereby secured shall be determined as follows:
i. Until the service of such a notice is hereinafter referred to interest shall be at the rate of Twenty-fix per centum (26 %) per annum.
ii. For the whole of each succeeding year interest shall be calculated on the amount of money hereby secured (whether principal or interest) on the preceding Thirty-first Day of December: Interest on any principal money advanced to or becoming owing by the Borrower during any such succeeding year shall be calculated on the amount so advanced or owing as from the date on which it was advanced or becoming owing until and including the following Thirty-first Day of December.
4) It is hereby agreed that interest payable by the borrower to the chargee hereunder shall be calculated as follows:
i. Until and including the Thirty-first Day of December next following the date of this charge interest shall be calculated on the whole of the money advanced to or becoming owing by the Borrower before the said Thirty-first Day of December as from the day on which it was advanced or become owing.
ii. For the whole of each succeeding year interest shall be calculated on the amount of money hereby secured (whether principal or interest) on the preceding Thirty-first Day of December: Interest on any principal money advanced to or becoming owing by the Borrower during any such succeeding year shall be calculated on the amount so advanced or owing as from the date on which it was advanced or becoming owing until and including the following Thirty-first Day of December.
iii. such circumstances as it considers to be relevant and the decision of the company in this behalf shall not be questioned on any account whatsoever.
iv. In the event of the chargee requiring an increase in the rate of interest under the provisions of sub-clause (ii) of this clause the chargee will notify the chargor of the amount of the resulting increased monthly instalments payable under the provisions of Clause 2 hereof and the first of such increased monthly instalments shall become due and payable on the first day of the month next after notification of the amount thereof to the chargor.”
34. I disagree with the submission by the Bank that it was at liberty to increase the interest rates simply because the same had been agreed upon between the parties. On a similar point the Court of Appeal stated in Margaret Njeri Muiruri [supra]:
“While we agree that the clause does appear to give the respondent discretion to vary the rate of interest, we do not accept that this discretion was absolute. Once interest is agreed upon, and an agreement is entered into which in effect gives a lender the discretion to vary the interest, it is our view that the discretion cannot be exercised willy nilly to charge exorbitant interest.”
35. Equally, I have perused the record presented by the Bank and I find no approvals sought from the Minister to vary the interest rates from 19% or any other rate for that matter. It is nonetheless clear from the bank statements that while there are few instances when the interest rate was lower than 19%, more often than not the interest rate was beyond 19%.
36. On the veracity of the bank statements, I am satisfied with the explanation that was given by DW1 regarding the difference in appearance in the previous and later statements provided by the Bank. These are as a result of the migration from one system to another.
37. All in all, by parity of reasoning, the Bank should not be allowed to retain sums that were paid to it in contravention of legislation. Accordingly, it is my finding that the maximum rate of interest chargeable on the loan account at all times remained at 19%. Any other rate of interest was null and void ab initio and the Bank was not entitled to the same.
The application of the in duplum rule:
38. This rule came into force through an amendment to section 44A of the Banking Act. Section 44A repealed Section 39 of the CBK Act in 2006, vide the Banking (Amendment Act) Act No. 9 of 2006. It took effect from 1/5/2007 (Pursuant to Legal Notice No 52 of 2007). It provides as follows:
“44 A. (1) An institution shall be limited in what it may recover from a debtor with respect to a non-performing loan to the maximum amount under subsection (2).
(2) The maximum amount referred to in subsection (1) is the sum of the following—
a) the principal owing when the loan becomes non-performing;
b) interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and
c) expenses incurred in the recovery of any amounts owed by the debtor.
(3) If a loan becomes non-performing and then the debtor resumes payments on the loan and then the loan becomes non-performing again, the limitation under paragraphs (a) and (b) of subsection (1) shall be determined with respect to the time the loan last became non-performing.”
39. This section applies retrospectively to loans made before its implementation, including those that had already become non-performing. This is by dint of section 44A (6). It provides thus:
“This section shall apply with respect to loans made before this section comes into operation, including loans that have become non-performing before this section comes into operation.”
40. The in duplum rule provides that interest stops accruing once the unpaid interest equals the unpaid principal. The Bank argues that this rule applies 90 days after the loan becomes non-performing. To support this argument, they have cited the case of HFCK V Scholarstica Nyaguthii Muturi & Another, [2020] eKLR. In interpreting this provision, the Court found that:
“By that provision if a loan becomes non-performing and the debtor resumes payment on the loan and then the loan becomes non-performing again the limitation under the said paragraphs shall be determined with respect to the time the loan last became non-performing.”
41. The bank acknowledges that the loan became non-performing on 9/6/2006 when the last payment of Kshs. 250,000/= was made. According to the Bank, 90 days from this was 9/9/2006 and that ought to be the reference point for calculating the maximum amount due under the in duplum rule.
42. While I may agree with this submission, it is unfortunate that the Bank has not provided a breakdown of the principal amount and interest at the time the loan became non-performing. In the absence of specific figures, even if we were to presume that the plaintiff took the loan and paid nothing to the Bank, which is not the case, the amount recoverable in a worst-case scenario—combining principal and interest—cannot have exceeded Kshs. 6,000,000/=.
43. The plaintiff contends that her husband repaid an amount far exceeding the principal. She asserts that by 2004, when this suit was filed, her husband had paid Kshs. 8,448,000/=. This submission is not contested by the Bank. Despite the mortgage being serviced to this extent, the Bank proceeded to sell the suit property. Of the Kshs. 18,000,000/= sale proceeds, Kshs. 7,000,000/= was apparently used to settle the mortgage, and the balance of Kshs. 11,000,000/= was refunded to the plaintiff.
44. Even if I were to consider the plaintiff's submission as an exaggeration of the monies paid, the sale of the suit property alone and the Bank's retention of the Kshs. 7,000,000/=, which has been acknowledged, is nonetheless a breach of the in duplum rule.
45. Accordingly, I find that the Bank’s actions were in breach of the in duplum rule.
Whether the sale and subsequent transfer of the suit property by the 1st defendant to the 2nd defendant was legal and valid:
46. Having already found that there was an overcharge of the interest rate on the plaintiff’s mortgage account and that the Bank was in breach of the in duplum rule, these two issues are sufficient to dispose of the question of the legality of the sale, even without considering the substance of the other submissions raised by the plaintiff.
47. It suffices to say that the statutory right of sale had not arisen as it was based on invalid notices issued by the Bank on erroneous figures. Indeed, the plaintiff had repaid what was required by law. Therefore, on this basis, it is my finding that the sale of the suit property by the Bank was illegal.
48. The plaintiff also takes issue with the undervaluation of the suit property, arguing that the valuation was inaccurate because the valuers did not conduct an on-site inspection before making their report. The Bank on the other hand confirms that a valuation was done on the property on 30/5/2006 which returned a market value of Kshs. 16,200,000/= and mortgage value of Kshs. 12,960,000/=.
49. Section 97(1) and (2) of the Land Act outlines the duty of a chargee in terms of valuation. It provides that:
“(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.
(2) A chargee shall, before exercising the right of sale, ensure that a forced sale valuation is undertaken by a valuer.”
50. It is now established through judicial pronouncement that a basis must be established on which a valuation report is challenged. The plaintiff has herself cited the case of Mbuthia V Jimba Credit Finance Corporation 7 Another, [1986- 1989] EA 340; [1988] KLR 1 where this was emphasized.
51. As to whether the valuation of the suit property was properly carried out, I consider several factors. First, the valuation was carried out in May 2006 and the sale took place in July 2007. The period in between was reasonable. A letter dated 6/6/2006 was produced by the Bank. Through the letter the plaintiff’s husband was made aware of the proposed reserve price of Kshs. 11,340,000/=. The plaintiff’s husband did not object to this reserve price at the time and only raised the same 1n 2017 through a second valuation report, which could explain the difference in value.
52. The valuation report produced by the Bank states that the valuers did not conduct a physical inspection of the suit property because they were denied access by the occupants, who were the plaintiff and her family. Since the plaintiff does not deny this, she is estopped from blaming the Bank for this infraction. It is inequitable for the plaintiff to benefit from her own wrongdoing, and she must be prepared to accept the consequences of denying entry to the valuers.
53. On this ground I do therefore find that the sale by the Bank was illegal but I find no fault of the valuation of the suit property.
Whether the plaintiff has any reliefs against the 2nd defendant:
54. The Bank contends that it sold and transferred the property to the 2nd defendant legally and denies any fraud in cohort with the 2nd defendant. While I have stated that there is no statement of defense by the 2nd defendant, this court is nonetheless required to test the veracity of the plaintiff’s averments and determine whether the 2nd defendant is a bona fide purchaser for value and in good faith.
55. The Black’s Law Dictionary 9th Edition defines a bona fide purchaser as:
“One who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in or infirmities, claims, or equities against the seller’s title; one who has in good faith paid valuable consideration for property without notice of prior adverse claims.”
56. The Supreme Court in the case of Dina Management Limited V County Government of Mombasa & 5 Others, [2023] KESC 30KLR) cited with approval from the Court of Appeal in Uganda in Katende V Haridar & Company Ltd, [2008] 2 EA 173. In that case the Court discussed the threshold for determining whether a party can successfully claim to be a bona fide purchaser. It was held that:
“For a purchaser to successfully rely on the bona fide doctrine he must prove that:
a) he holds a certificate of title;
b) he purchased the property in good faith;
c) he had no knowledge of the fraud;
d) he purchased for valuable consideration;
e) the vendors had apparent valid title;
f) he purchased without notice of any fraud; and
g) he was not party to the fraud.”
57. I have considered the facts and evidence before me against the threshold set out in this case. I start by noting that the ownership of the suit property was not in issue. The sale was permitted by the charge document entered into between the parties. The 2nd defendant was therefore justified to presume that the sale by the Bank that in legal exercise of its statutory power of sale. The plaintiff confirms in her pleadings that at the time of sale there was no injunctive order stopping the sale of the suit property.
58. The unexecuted sale agreement dated 7/7/2007 cannot be considered in isolation. This does not in itself point at any suspicion of fraud or bad faith as alleged by the plaintiff and neither does the sale by private treaty. From the record, there is lack of evidence linking the 2nd defendant to any fraudulent scheme.
59. Moreover, the submission by the plaintiff that her husband only got to know of the sale after the property had been sold is not accurate. It is on record that the plaintiff was informed of the intended reserve price for the suit property before the sale had taken place. There is on record a Transfer that is duly executed by the Bank and the 2nd defendant.
60. The evidence of consideration paid by the 2nd defendant is found in the bank statements on page 49 of the same bundle. An entry on 20/8/2007 corresponds to the date of sale. In the absence of any other explanation for the credit of Kshs. 17,999,999/= into the mortgage account, I find, on a balance of probabilities, that this is evidence of consideration for the sale. A subsequent entry of Kshs. 11,882,514.30/= indicated as a "refund" on the same day corresponds to the cheque issued to the plaintiff’s husband. This is sufficient proof that the balance of the consideration was received by the plaintiff’s husband.
61. For the reasons spelt out, I find no evidence of fraud or illegality on the part of the 2nd defendant.
Claim against the 3rd defendant:
62. Regarding the distress for rent and auction by the 3rd defendant allegedly acting as the agent of the 2nd defendant, the plaintiff has attached a list of the goods that were allegedly carted away and auctioned, at pg 55(b) of their Bundle of Documents. The schedule is dated 11/12/2019.
63. Besides this, there is no proof of the value of the said movable properties, no reconciliation of this with the Notification of Sale dated 5/9/2007 or the Goods Acceptance Form dated 5/8/2007 and also no valuation of the vehicle supposedly auctioned. The plaintiff has not provided proof of the amounts that had been paid in rent to the 2nd defendant as alleged. As such this head of damages fails.
Conclusion
64. In conclusion therefore, it is my finding that the Bank charged unauthorized interest on the plaintiff and acted in disregard of the in duplum rule. While the Bank sold the plaintiff’s property without any right, the 2nd defendant was nonetheless a bona fide purchaser for value and good faith. Part of the purchase price was refunded to the plaintiff’s husband. The claim against the 2nd and 3rd defendants is unsustainable as it has not been proved.
65. In light of the foregoing, the recourse available to the plaintiff, in my view, lies in a refund of Kshs. 7,000,000/=, being the proceeds of the sale wrongfully retained by the Bank after the debt had been fully serviced. Additionally, the plaintiff is entitled to general and exemplary damages to compensate her for the wrongful sale of the suit property and to deter the egregious conduct of the Bank.
Disposition
66. Accordingly, the suit succeeds in the following terms:
i. A declaration is hereby issued that the sale and subsequent transfer of Land Parcel No. L.R. Nairobi 77851/311-Runda by the 1st defendant to the 2nd defendant was unlawful;
ii. The 1st defendant shall refund the plaintiff the amount of Kshs. 7,000,000/= being the amount that the 1st defendant wrongfully utilized towards the mortgage out of the proceeds of the sale;
iii. The plaintiff shall further have general and exemplary damages for the wrongful sale of the suit property to be paid by the 1st defendant calculated at Kshs. 3,000,000/=;
iv. Interest shall be paid on ii and iii at court rates from the date of filing this suit until payment in full.
v. The suit against the 2nd and 3rd defendants is dismissed with no order as to costs.
vi. The plaintiff shall have the costs of the suit payable by the 1st defendant.