' 1. This suit was initially filed as Eldoret Environment and Land Court Case No. 65 of 2016, before it was transferred to this Court and assigned the present case number.
2. The claim is contained in the Plaint dated 22/03/2016, and filed herein on the same date, through Messrs Rioba Omboto & Co. Advocates, in which the Plaintiff sought Judgment against the Defendant as follows:
a) A permanent injunction restraining the Defendant, its servants, agents and or auctioneers from advertising and/or offering for sale of those parcels of land namely Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727 and Eldoret Municipality Block 20/38 either by public auction or private treaty.
b) The Plaintiff (sic) to compel the Defendant to furnish the Plaintiff with the better and true particulars of the mortgage instrument to wit:-
i) The loan application form duly signed by the Plaintiff.
ii) The duly certified approval letters of the advanced loans.
iii) Letter of Offer and acceptance duly signed confirming acceptance and condition or commitment.
iv) First down payment made to the Plaintiff pursuant to the approval of the loan.
v) Duly signed forms
vi) Updated statements of the Plaintiff’s loan account if any from the time the loan was advanced by the Defendant.
vii) The Statement of Obligation Interest Account (OBLIST)
viii) The total amount on the unwarranted entries and the account interest created by the Defendant’s staff who have since been sacked and/or arrested by the Anti-Fraud Police Unit Officers.
ix) The Report and findings on the suspended/ suspension account to pave way for reconciliation and also account occasioned or caused by “computer errors”/report on the total amount with interest posted to the Plaintiff account occasioned by computer error.
x) The total amount together with accrued interest on “Debit for Blocked Account”.
xi) The Special Board or the Plaintiff’s directors meeting to discuss and pass resolutions to apply for the purported loan or overdraft facility.
c) Cost of this suit.
d) Any other relief this Honourable Court may deem fit and just to grant.
3. In the body of the Plaint, it was pleaded that on or about 23/02/2016, the Plaintiff, through its purported directors/agents was served with a Notification of Sale and 45 days Redemption notice from the Defendant''s agents, namely Legacy Auctioneers, threatening to realize an alleged loan balance amounting to the sum of Kshs 42,826,897/-. It was averred that the Plaintiff neither borrowed any money from the Defendant nor offered the advertised or proclaimed properties as collateral securities for the alleged sum, that the Plaintiff is thus a stranger to the purported outstanding loan arrears as it has never, in its legal capacity, applied for any credit facility from the Defendant at all, and neither has the Plaintiff, in its legal capacity, owned the properties or been a guarantor thereof. The Plaintiff further contended that the purported mortgage instruments affording the Defendant the option to realize the alleged securities are in contravention of the relevant provision under the Land Act and other enabling provisions of the law, and that in view of the above circumstances, the Plaintiff has asked for the better and true particulars of mortgage instruments from the Defendants as particularized in prayer (b) above.
4. Based on the above, the Plaintiff contended that the Defendant''s intended statutory power of sale is illegal, untenable, null and void and/or an exercise in futility, particulars whereof were given as purporting to instruct Auctioneers whilst knowing that the Plaintiff neither applied nor received credit facility (loan), purporting to instruct auctioneers to proclaim and advertise for sale the parcels of land without following the proper procedure in law, unlawfully subjecting the Plaintiff''s agents and/or directors to harassment, intimidation and suffering, unlawfully issuing the Plaintiff with a 45 days redemption notice and a notification of sale to a stranger/different legal entity, failing to furnish the Plaintiffs with mortgage instruments, and purporting to instruct auctioneers to advertise for sale, the Plaintiff''s parcel of land without issuing a requisite notice in the prescribed form.
5. In response, the Defendant, through Messrs Omwenga & Co. Advocates, filed the Statement of Defence dated 11/05/2016. It was stated that the Plaintiff borrowed money after offering the 3 parcels land referred to above as collateral security, that after the Plaintiff failed to pay the loan facility, the Defendant exercised its statutory power of sale and advertised the securities for sale as provided by the law. The Defendant maintained that the Plaintiff owes it the said total sum of Kshs 42,826,897/- and interest continues to accrue, that the Defendant sends out statements of accounts to its customers monthly, and that at a fee, the statements may be made available to a customer who requires the same. It was further averred that the Plaintiff is not entitled to the prayers sought since it alleges that it does not own the said parcels of land offered as security, and also, since it alleges that it has never borrowed any money from the Defendant, nor offered the properties as collateral securities. In conclusion, it was averred that there are 3 other suits which the same Plaintiff has previously instituted against the Defendant some of which have been dismissed, namely, Eldoret CMCC No. 904 of 2012, Eldoret HCCC No. 59 of 2000, and Eldoret HCCC No. 329 of 1997, and urged that the suit is an abuse of the Court process.
6. The Plaintiff then filed the Reply to Defence dated 26/05/2016, which basically reiterated the matters pleaded in the Plaint, and denied the allegations made in the Defence.
7. At the time that it filed the suit, the Plaintiff had also filed an Application seeking a temporary injunction restraining exercise of the Defendant’s statutory power of sale pending hearing and determination of the suit. By his Ruling delivered on 14/07/2017, Ombwayo J, upon finding that the Plaintiff had established a prima facie case and the other applicable conditions, allowed the Application, and thus granted the Plaintiff the temporary injunction.
8. The parties then filed Witness Statements and Lists (bundles) of documents.
9. In his Witness Statement dated 3/05/2021, one Jassan Kiptoo Kosgei stated that he is one of the directors of the Plaintiff which was, and still is, a customer of the Defendant since the 1980s. He stated that he, on behalf of the Plaintiff, operated the Bank Account No. 400-xxx-xxx, and 401-xxx-xxx [particulars withheld] at the Defendant’s Eldoret Branch and that the Plaintiff is the registered owner of the parcel of land Eldoret Municipality/Block 20 (Kapyemit)/38, which the Plaintiff, on 10/05/1994, charged to the Defendant. He however denied that the Plaintiff was advanced a loan of Kshs 5,700,000/- in exchange for the charge. He also denied that the Plaintiff is the registered owner of the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 6/190, but stated that one of them, Eldoret Municipality Block 6/190, was charged to Kenya Commercial Finance Corporation (KCFC) in 1993 in exchange for a loan of Kshs 17,000,000/-, and that it is the Defendant that referred and connected him to the said KCFC. He then stated that he finally paid the loan advanced by KCFC and the title discharged, but the Defendant, through its gimmicks, illegally charged the same property. He stated further that on 25/04/2016, the Plaintiff, through himself, was served with the Notification of Sale and 45 days’ Redemption Notice in respect to the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 20 (Kapyemit)/38.
10. He then reiterated that neither the Plaintiff nor himself has ever applied for a credit facility (loan) from the Defendant to warrant the Defendant’s exercise a statutory power of sale. According to him, the Defendant, in exercising the statutory power of sale, also issued the purported notices to the wrong entity (Plaintiff) and did not serve the bona fide loanee and/or guarantors or owners of the properties. He stated that he has on several occasions requested the Defendant to supply the particulars of the statements of account maintained with the Defend and and supply copies of the mortgage documents, but in vain. He urged further that the Plaintiff moved the Court by way of Eldoret Chief Magistrate’s Court Civil Suit No. 904 of 2012 whereof he sought orders that the Defendant do release to the Plaintiff the loan Application letters, approved letters of the loans, copies of the Letter of Offer and acceptance and statements of documents showing when the Plaintiff made its first drawings withdrawals, that Judgment was delivered on 17/05/2019 in favour of the Plaintiff and ordering the Defendant to release the said documents but however, to date, the Defendant has not complied. In conclusion, he averred that the Defendant and/or its agents, have failed to comply with Section 90(2) and 97 of the Land Act 2012, and Rule 15 of the Auctioneers Rules.
11. In his Witness Statement dated 16/07/2021, one Paul K. Chelang’a stated that he is an employee of the Defendant where he works as a Credit Remedial Manager. He stated that the Plaintiff has been a customer of the Defendant since the 1980s and had borrowed various loan facilities from the Defendant using the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 20/38, as collateral security and that the loans were advanced through the Plaintiff’s bank accounts. He averred that the Plaintiff serviced the loans but did not fully pay the same and several reminders were made to it to comply but none was obliged. He added that upon failure by the Plaintiff to pay the loans, the Defendant exercised its statutory power of sale and advertised the securities for sale as provided by the mortgage instrument to realize the outstanding balance which stands at Kshs 42,827,897/- and which continues to accrue interest and other penalties. He thus refuted the claim that the Plaintiff is a stranger to the loan arrears or that it did not apply for the loan in its legal capacity, and maintained that the loan was applied for by the Plaintiff’s director, Jassan Kiptoo Kosgei with the Plaintiff’s full authority and the loan advanced was to be used for business purposes by the Plaintiff.
12. He stated further that the Plaintiff was fully aware of the terms of the loans and knew the consequences of default, but that upon default and being served with a notice of sale, instead of repaying the balance, instituted several other claims against the Defendant arising from the same cause of action. He then urged that the Plaintiff’s Witness Statement is contradictory as it admits, in one paragraph, that the Plaintiff was advanced the loan facility but in others, denies the same. In conclusion, he stated that the Plaintiff’s actions have caused great suffering and irreparable loss to the Defendant as the Plaintiff already benefited from the loan, that the Defendant legally registered the 3 properties to secure its interest on the sum advanced, and the Plaintiff wilfully surrendered the titles as securities. According to him therefore, if the Court grants the Plaintiff the orders sought, then the Defendants shall have been closed from the avenue of having the loan arrears repaid by the Plaintiff.
13. After considerable time spent on interlocutory Applications and intervening matters, including transfer from the ELC as aforesaid, the suit eventually proceeded to full trial. At the trial, each party called 1 witness, both very lengthy though, as the Plaintiff’s witness’ testimony took 3 days while the Defendant’s took 2 days.
14. PW1 was the said Jasan Kiptoo Kosgei, who testified before me on 8/03/2023, 2/05/2023, and 26/10/2023, and who stated that he is a director of the Plaintiff together with one Jane Kosgei. Led by his Counsel, Mr. Omboto, he adopted his said Witness Statement and testified that his business relationship with the Defendant begun about 1983, and that he used to bank with the Defendant. He testified that the last took a loan with the bank in 1990 in exchange to which he gave as security, the title to the property Eldoret Municipality/5/46/1 which is in his name. He then stated that he gave out the title to the Defendant in 1983 as security for a loan of Kshs. 40,000/-.
15. He was then taken through the entries made against the title showing the various loans he took from the Defendant over the years, namely a loan of Kshs 40,000/- in 1983, Kshs 300,000/- and Kshs 800.000/-. He however denied taking any loan for Kshs 1,300,000/- as appears therein nor receiving any statement showing that amount. He also maintained that he fully paid back all the loans he had received from the Defendant. He further testified that that he gave the title document for Eldoret Municipality Block 9/1727 to the Defendant as security but he never received any payment. He further testified that there is an entry showing that he received a loan in 1983 yet the title itself was issued in 1991. He thus denied receiving the alleged amount of Kshs 40,000/- alleged. According to him, he gave out the title to the Defendant to be given funds for a construction project he had, but he got the funds elsewhere. He then referred to the title to the property Eldoret Municipality Block 20 (Kapyemit)/38 which is in the name of the Plaintiff, and when shown the entry therein showing a loan of Kshs 5,700,000/-, he admitted to charging the property but denied receiving any such money. He testified that he signed the charge but did not sign any other documents, and that he had demanded documents from the Defendant but he has not been supplied with any, and reiterated that he sued the Defendant for failing to supply the documents, and the Court ordered that he be so supplied. He reiterated that the case he filed was Eldoret CMCC No. 904 of 2012, which the Defendant appealed vide Eldoret High Court Civil Appeal No. 66 of 2019, and which appeal was dismissed.
16. At this juncture, the witness’ attempt to produce the Plaintiff’s bundle of documents was opposed by the Defendant’s Counsel, Mr. Omwenga, as some of the documents were said to be inadmissible. Under these circumstances, I stood down the witness and gave the Counsels time to discuss and agree on the documents to be produced, and once so agreed, the Plaintiff to file a fresh agreed bundle. On 2/05/2023 when the Counsels returned, they confirmed that they had managed to agree on a fresh bundle, dated 15/03/2023, and which the Plaintiff had now filed. Accordingly, the earlier bundle dated 3/05/2021 stood expunged from the record. The Counsels also informed the Court that items 4, 8 and 13 contained in the new bundle, were included in error and would therefore not be produced or considered.
17. Another relevant matter that the Court was informed of by Mr. Omboto, Counsel for the Plaintiff, was that prayer No. (b) of the Plaint – the prayer seeking the furnishing to the Plaintiff of better and true particulars of the mortgage instrument – having already been litigated upon and determined elsewhere, and thus no longer in issue, now stood abandoned.
18. Against the above background, PW1 returned to the stand to continue with his evidence-in-chief (on the said 2/05/2023) and accordingly, produced the Plaintiff’s said fresh/replacement List (bundle) of documents dated 15/3/2023 save for the items number 4, 8 and 13 thereof. Although therefore the bundle contained 17 documents, those produced were 14.
19. When PW1 resumed his testimony, he reiterated that the Defendant had announced the sale of the properties citing a balance of Kshs 42,826,897/-. yet he does not owe any such debt. He reiterated that he charged the property with the Defendant but he never received any money, that there is no application, no offer, no valuation, no approval setting out the loan, or interest or repayment schedule. According to him, a Manager at the Defendant told him that the Defendant could not grant him a long-term loan, and the Manager instead took him to the said KCFC where he was offered a long-term mortgage product, and which loan KCFC indeed agreed and gave him against the security for Eldoret Municipality Block 6/190. He testified that KCFC told him that this one security was adequate, and gave him Kshs 17,000,000/-, and that they told him that since the title for Eldoret Municipality Block 6/190 was already in the custody of the Defendant, he did not need to execute a new security or charge and that is why the Defendant did not give him a Letter of Offer.
20. He reiterated that he has never received a statement from the Defendant in respect of the alleged loan. He stated that he did not bother to collect his title deed from the Defendant, and that the Manager thereat, one Mr. Okungu told him that the reason they were referring him to KCFC was because the Defendant was experiencing financial challenges at that time. He urged the Court to compel the Defendant to return his securities. He also contended that when he asked for the Statements, the Defendant’s then new Branch Manager, Mr. Mburu who had taken over from Mr. Okungu, told him that they were still reconciling the entries because some of the Defendant’s staff had tampered with the statement. He testified further that he wrote a letter to the Central Bank of Kenya (CBK) which sent its anti-banking fraud team which upon conducting investigations, discovered irregularities and 6 staff members, plus the said Mr. Mburu were suspended. According to him, by this time, the Defendant had suspended his account and opened a separate one, and that when he made inquiries seeking the outcome of the probe, he was told that the staff were still in Court.
21. In cross-examination by Mr. Omwenga, PW1 stated that the letters from him on record were written in English because it was his Secretary who typed them but under his instructions, and that the Advocate who handled the charge with the Defendant was the Defendant’s Lawyer but he could not recall his name. He agreed that in his Statement, he stated that that on 10/5/1991, he charged the property to the Defendant, but that no loan was advanced, and that the Plaintiff is not the registered owner of the properties, which are registered in his name in his personal capacity. He maintained that it is not the company that gave the properties and agreed that he and the company are different entities in law. He also agreed that he had filed other cases against the Defendant over the same properties, one of which is Eldoret HCCC No. 325 of 1997 in which he was the Plaintiff in his own personal capacity. He agreed that in the Plaint filed in that case, he stated that he obtained a loan of Kshs 4,000,000/- from the Defendant and stated that this loan of Kshs 4,000,000/- is separate from the latter one of Kshs 17,000,000/- that he received from KCFC. He also agreed that in his statement, he stated that he has paid off the loan, that there was a current account which was serving the loan, that the amount sought by the Defendant was exaggerated, and that without giving him notice the Defendant had advertised the property for sale. He agreed that he asked for an injunction pending reconciliation of accounts or taking of accounts but stated that the Court declined to grant the injunction.
22. Regarding Eldoret HCCC No. 59 of 2000 Eldoret, he agreed that he stated that all his loans were paid, and that he had taken a total of about 4,000,000/-, and also agreed that it is the same loan that he had referred to in the Plaint in Eldoret HCCC No. 325 of 1997. He also conceded that the suit was dismissed and he did not appeal. He stated that the title he referred to in his Statement therein is Eldoret Municipality Block 6/190 and that the same is in his possession. Regarding his allegation that it is the Defendant’s Manager, George Okungu, who took him to KCFC, he agreed that he has no proof to support that allegation. He also agreed that it is him who took the titles referred to in this suit to the Defendant, and not the Advocate, and he also agreed that he has not sued the Advocate who registered the charge. He however stated that his problem is not the charge, but that he never received any money. He reiterated that he never applied for any loan or credit facility from the Defendant, that the Kshs 17,000,000/- he received from KCFC he fully paid it, and the charge was even discharged. He stated that the earlier loans from the Defendant, before the KCFC loan, were applied for by the Plaintiff company. He also agreed that in an Affidavit herein, he had stated that the properties form part of his matrimonial home and stated that he lives in Eldoret Municipality Block 5/46.
23. He also insisted that the Statutory Notice was issued to the Plaintiff company, a wrong entity, but he conceded that the Notice, if issued to him, would still be valid. He also agreed that the notice was yet to be published in the Newspapers and stated that the notice also did not show the principal sum. Due to time constraints, PW1 was again stood down and his further cross-examination fixed for a fresh date.
24. When he resumed his cross-examination on 26/10/2023, PW1 told the Court that he wants the 3 charges to discharged since he never received any money from the Defendant. In regard to the bank statements contained in the Defendant’s new Further bundle filed on 10/7/2023, he denied ever seeing the statements before but confirmed that the account was his. He termed the entries therein as not genuine, that he never made the payments indicated therein, and that he finished paying the genuine loans way back in 1992 or thereabouts. He then stated that he is not aware of Tachasis Wholesalers (1974), which is not the Plaintiff herein. He reiterated that there was interference in his account by staff of the Defendant and that he even reported the same to the CBK which conducted investigations, and that this was around 1998. He reiterated that he has never seen the alleged statements contained in the Plaintiff’s newly filed Further bundle, and insisted that although the account was genuine, the entries were not. He further insisted that the employment of the implicated bank staff was terminated as a result of the interference but denied having colluded with them, and maintained that those staff members made unwarranted entries in his account.
25. He agreed that this dispute between him and the Defendant has been in existence for a long time and confirmed that he still has a personal account with the Defendant but stated that he closed the company account and that he tried to negotiate with the Defendant to reach an amicable settlement. He conceded that he did not present to Court the unwarranted entries he referred to, but maintained that the Defendant claimed that he took a loan which he does not know of. He told the Court that when at one time he got the statements from the Defendant when he visited the Branch, he noted the unwarranted entries and when he complained to the Manager, the latter instead, detained the statements. He also conceded that he has had several Court cases with the Defendant on similar issues but denied ever seeing the Affidavit sworn on 10/9/1997 in Eldoret HCCC No. 325 of 1997 contained in the Defendant’s newly filed Further bundle. He however conceded that it bears his name, and that it alleges that he took a loan around 1990 up to 1993 of Kshs 14,500,000/-, and that it refers to the same properties in issue herein. When shown the Ruling dated 22/5/90 delivered by Hon. Lady Justice Nambuye, he agreed that the Ruling refers to the said Affidavit alleged to have been sworn by him on 10/9/1997, and that in the Ruling, the Judge gave the Plaintiff 45 days to pay the outstanding amount. He confirmed that he never appealed against the Ruling. In regard to the Ruling delivered on 17/10/2012 in Eldoret HCCC No. 59 of 2000 by Hon. Justice Ibrahim (as he then was), he agreed that he is indicated as being the Plaintiff and that the Ruling stated that he was alleged to be owing the Defendant a sum of Kshs 26,000,000/-, and that Hon. Justice Ibrahim, upheld the earlier Ruling of Hon. Justice Omondi Tunya.
26. In re-examination by his Counsel, Mr. Omboto, PW1 stated that around 1993 and 1995, he sought a loan from the Defendant and that he gave the Defendant 3 titles, that the Defendant already had one title and he added them the other two. He stated for the property Eldoret Municipality Block 5/46/1, he had received 40,000/- and that those he added the Defendants were Eldoret Municipality Block 9/1727 and Eldoret Municipality Block 20 (Kapyemit)38. He reiterated that the Defendant took him to KCFC which agreed to give him a further loan but he however maintained that only the 1st security, Eldoret Municipality Block 5/46/1, was to cater for this further loan from KCFC, and that he left the two other properties with the Defendant for custody for future use in case he needed a further loan from the Defendant. He also reiterated that he fully settled the 1993 loan with the Defendant, and reiterated further that the properties were charged but he never received the money. Regarding the statements contained in the Defendant’s said newly filed Further bundle, he pointed out that the same begins from 2/08/1994 with a balance of Kshs 7,771,755/- and is up to 31/05/1999 with a balance of Kshs 28,610,126/-. He insisted that he never received the alleged money and reiterated that the Bank Manager confiscated the statements when he complained about the entries, and that the Defendant suspended the account when it learnt of the unwarranted entries, and opened a new account instead. He also reiterated that the Defendant’s staff interfered with the account and upon investigations by the CBK, some were terminated. At this juncture, the Plaintiff closed its case.
27. When the matter came up on 20/02/2024 for defence hearing, before the same could take off, Mr. Omboto informed the Court that he had filed a Further Statement from another intended witness - one Thomas Owen Ondieki - whom he wished to call, and who would also produce further documents. He therefore prayed to re-open the Plaintiff’s case. This request was vehemently opposed by Mr. Omwenga for reasons that, inter alia, no prior communication about it had been made, the Plaintiff had already closed its case, no leave had been sought or obtained to file the Further Witness Statement or documents, the documents sought to be produced did not even belong to the Plaintiff, no good reasons had been given on why the new witness is necessary and why he was not called earlier. He also averred that he had prepared the whole day before to commence the defence case and his witness had travelled from Nairobi, and had also come to Court on several earlier occasions, that the case had already been delayed for too long due to adjournments caused by the Plaintiff, and admitting the new Witness, his statement, and documents would inevitably lead to yet another adjournment since the Defence would have to be given an opportunity to peruse and consider the new documents, yet the case was already too old and had been in Court for far too long.
28. After hearing the Counsels, I agreed with Mr. Omwenga and declined the request to re-open the Plaintiff’s case. Accordingly, I expunged the said Further Witness Statement dated 16/02/2024, together with the documents attached thereto. The defence hearing thus commenced on the said 20/02/2024.
29. DW1 was the said Paul Chelang’a who thus testified before me on 20/02/2024 and 22/10/2024. Led by his Counsel, Mr. Omboto, he adopted his Witness Statement referred to above. He agreed that the Plaintiff was the Defendant’s customer, and stated that PW1 was the Plaintiff’s officer who was dealing with the Defendant on its behalf, and was a director and also guarantor of the loan herein. He testified that the Plaintiff received loan facilities from the Defendant but defaulted and the Defendant made attempts to recover in 2016 but the Defendant filed this suit. He stated that the Defendant had duly registered a charge, and he then produced the documents contained in the Defendant’s 3 separate bundles, namely, Further List of documents dated 16/7/2021, Further List dated 13/2/2023 and the initial List dated 10/7/2023, comprising, in aggregate, 28 documents. He testified that the Plaintiff had admitted that it owed the Defendant and there are even Court Rulings to that effect, and that the Plaintiff even made some payments. He urged that the case be dismissed and the injunction vacated.
30. Under cross-examination by Mr. Omboto, DW1 stated that he has been an employee of the Defendant for 27 years, and stated that to qualify for a loan, one must be an account holder, must sign an Application letter and must also offer security, and that the purpose of the loan must also be clear. He stated that the Plaintiff made the 1st Application around 1983, the date of the very 1st charge. He also stated that there must have been a Letter of Offer but that there was a “leakage” into their internal documents and some were stolen and that they suspect the Plaintiff although the “leakage” affected many other accounts and not just the Plaintiffs. When shown the title for Eldoret Municipality Block 5/46, he agreed that the properties charged were 3, the 1st Charge being registered on 12/3/1985 at Kshs 300,000/- and which was reflected in the bank statements, the 2nd charge was registered on 15/4/1996 for Kshs 80,000/=, and the 3rd charge on 6/8/1993 for Kshs 1,300,000/-. He s
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2. The claim is contained in the Plaint dated 22/03/2016, and filed herein on the same date, through Messrs Rioba Omboto & Co. Advocates, in which the Plaintiff sought Judgment against the Defendant as follows:
a) A permanent injunction restraining the Defendant, its servants, agents and or auctioneers from advertising and/or offering for sale of those parcels of land namely Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727 and Eldoret Municipality Block 20/38 either by public auction or private treaty.
b) The Plaintiff (sic) to compel the Defendant to furnish the Plaintiff with the better and true particulars of the mortgage instrument to wit:-
i) The loan application form duly signed by the Plaintiff.
ii) The duly certified approval letters of the advanced loans.
iii) Letter of Offer and acceptance duly signed confirming acceptance and condition or commitment.
iv) First down payment made to the Plaintiff pursuant to the approval of the loan.
v) Duly signed forms
vi) Updated statements of the Plaintiff’s loan account if any from the time the loan was advanced by the Defendant.
vii) The Statement of Obligation Interest Account (OBLIST)
viii) The total amount on the unwarranted entries and the account interest created by the Defendant’s staff who have since been sacked and/or arrested by the Anti-Fraud Police Unit Officers.
ix) The Report and findings on the suspended/ suspension account to pave way for reconciliation and also account occasioned or caused by “computer errors”/report on the total amount with interest posted to the Plaintiff account occasioned by computer error.
x) The total amount together with accrued interest on “Debit for Blocked Account”.
xi) The Special Board or the Plaintiff’s directors meeting to discuss and pass resolutions to apply for the purported loan or overdraft facility.
c) Cost of this suit.
d) Any other relief this Honourable Court may deem fit and just to grant.
3. In the body of the Plaint, it was pleaded that on or about 23/02/2016, the Plaintiff, through its purported directors/agents was served with a Notification of Sale and 45 days Redemption notice from the Defendant''s agents, namely Legacy Auctioneers, threatening to realize an alleged loan balance amounting to the sum of Kshs 42,826,897/-. It was averred that the Plaintiff neither borrowed any money from the Defendant nor offered the advertised or proclaimed properties as collateral securities for the alleged sum, that the Plaintiff is thus a stranger to the purported outstanding loan arrears as it has never, in its legal capacity, applied for any credit facility from the Defendant at all, and neither has the Plaintiff, in its legal capacity, owned the properties or been a guarantor thereof. The Plaintiff further contended that the purported mortgage instruments affording the Defendant the option to realize the alleged securities are in contravention of the relevant provision under the Land Act and other enabling provisions of the law, and that in view of the above circumstances, the Plaintiff has asked for the better and true particulars of mortgage instruments from the Defendants as particularized in prayer (b) above.
4. Based on the above, the Plaintiff contended that the Defendant''s intended statutory power of sale is illegal, untenable, null and void and/or an exercise in futility, particulars whereof were given as purporting to instruct Auctioneers whilst knowing that the Plaintiff neither applied nor received credit facility (loan), purporting to instruct auctioneers to proclaim and advertise for sale the parcels of land without following the proper procedure in law, unlawfully subjecting the Plaintiff''s agents and/or directors to harassment, intimidation and suffering, unlawfully issuing the Plaintiff with a 45 days redemption notice and a notification of sale to a stranger/different legal entity, failing to furnish the Plaintiffs with mortgage instruments, and purporting to instruct auctioneers to advertise for sale, the Plaintiff''s parcel of land without issuing a requisite notice in the prescribed form.
5. In response, the Defendant, through Messrs Omwenga & Co. Advocates, filed the Statement of Defence dated 11/05/2016. It was stated that the Plaintiff borrowed money after offering the 3 parcels land referred to above as collateral security, that after the Plaintiff failed to pay the loan facility, the Defendant exercised its statutory power of sale and advertised the securities for sale as provided by the law. The Defendant maintained that the Plaintiff owes it the said total sum of Kshs 42,826,897/- and interest continues to accrue, that the Defendant sends out statements of accounts to its customers monthly, and that at a fee, the statements may be made available to a customer who requires the same. It was further averred that the Plaintiff is not entitled to the prayers sought since it alleges that it does not own the said parcels of land offered as security, and also, since it alleges that it has never borrowed any money from the Defendant, nor offered the properties as collateral securities. In conclusion, it was averred that there are 3 other suits which the same Plaintiff has previously instituted against the Defendant some of which have been dismissed, namely, Eldoret CMCC No. 904 of 2012, Eldoret HCCC No. 59 of 2000, and Eldoret HCCC No. 329 of 1997, and urged that the suit is an abuse of the Court process.
6. The Plaintiff then filed the Reply to Defence dated 26/05/2016, which basically reiterated the matters pleaded in the Plaint, and denied the allegations made in the Defence.
7. At the time that it filed the suit, the Plaintiff had also filed an Application seeking a temporary injunction restraining exercise of the Defendant’s statutory power of sale pending hearing and determination of the suit. By his Ruling delivered on 14/07/2017, Ombwayo J, upon finding that the Plaintiff had established a prima facie case and the other applicable conditions, allowed the Application, and thus granted the Plaintiff the temporary injunction.
8. The parties then filed Witness Statements and Lists (bundles) of documents.
9. In his Witness Statement dated 3/05/2021, one Jassan Kiptoo Kosgei stated that he is one of the directors of the Plaintiff which was, and still is, a customer of the Defendant since the 1980s. He stated that he, on behalf of the Plaintiff, operated the Bank Account No. 400-xxx-xxx, and 401-xxx-xxx [particulars withheld] at the Defendant’s Eldoret Branch and that the Plaintiff is the registered owner of the parcel of land Eldoret Municipality/Block 20 (Kapyemit)/38, which the Plaintiff, on 10/05/1994, charged to the Defendant. He however denied that the Plaintiff was advanced a loan of Kshs 5,700,000/- in exchange for the charge. He also denied that the Plaintiff is the registered owner of the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 6/190, but stated that one of them, Eldoret Municipality Block 6/190, was charged to Kenya Commercial Finance Corporation (KCFC) in 1993 in exchange for a loan of Kshs 17,000,000/-, and that it is the Defendant that referred and connected him to the said KCFC. He then stated that he finally paid the loan advanced by KCFC and the title discharged, but the Defendant, through its gimmicks, illegally charged the same property. He stated further that on 25/04/2016, the Plaintiff, through himself, was served with the Notification of Sale and 45 days’ Redemption Notice in respect to the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 20 (Kapyemit)/38.
10. He then reiterated that neither the Plaintiff nor himself has ever applied for a credit facility (loan) from the Defendant to warrant the Defendant’s exercise a statutory power of sale. According to him, the Defendant, in exercising the statutory power of sale, also issued the purported notices to the wrong entity (Plaintiff) and did not serve the bona fide loanee and/or guarantors or owners of the properties. He stated that he has on several occasions requested the Defendant to supply the particulars of the statements of account maintained with the Defend and and supply copies of the mortgage documents, but in vain. He urged further that the Plaintiff moved the Court by way of Eldoret Chief Magistrate’s Court Civil Suit No. 904 of 2012 whereof he sought orders that the Defendant do release to the Plaintiff the loan Application letters, approved letters of the loans, copies of the Letter of Offer and acceptance and statements of documents showing when the Plaintiff made its first drawings withdrawals, that Judgment was delivered on 17/05/2019 in favour of the Plaintiff and ordering the Defendant to release the said documents but however, to date, the Defendant has not complied. In conclusion, he averred that the Defendant and/or its agents, have failed to comply with Section 90(2) and 97 of the Land Act 2012, and Rule 15 of the Auctioneers Rules.
11. In his Witness Statement dated 16/07/2021, one Paul K. Chelang’a stated that he is an employee of the Defendant where he works as a Credit Remedial Manager. He stated that the Plaintiff has been a customer of the Defendant since the 1980s and had borrowed various loan facilities from the Defendant using the properties, Eldoret Municipality Block 5/46/1, Eldoret Municipality Block 9/1727, and Eldoret Municipality Block 20/38, as collateral security and that the loans were advanced through the Plaintiff’s bank accounts. He averred that the Plaintiff serviced the loans but did not fully pay the same and several reminders were made to it to comply but none was obliged. He added that upon failure by the Plaintiff to pay the loans, the Defendant exercised its statutory power of sale and advertised the securities for sale as provided by the mortgage instrument to realize the outstanding balance which stands at Kshs 42,827,897/- and which continues to accrue interest and other penalties. He thus refuted the claim that the Plaintiff is a stranger to the loan arrears or that it did not apply for the loan in its legal capacity, and maintained that the loan was applied for by the Plaintiff’s director, Jassan Kiptoo Kosgei with the Plaintiff’s full authority and the loan advanced was to be used for business purposes by the Plaintiff.
12. He stated further that the Plaintiff was fully aware of the terms of the loans and knew the consequences of default, but that upon default and being served with a notice of sale, instead of repaying the balance, instituted several other claims against the Defendant arising from the same cause of action. He then urged that the Plaintiff’s Witness Statement is contradictory as it admits, in one paragraph, that the Plaintiff was advanced the loan facility but in others, denies the same. In conclusion, he stated that the Plaintiff’s actions have caused great suffering and irreparable loss to the Defendant as the Plaintiff already benefited from the loan, that the Defendant legally registered the 3 properties to secure its interest on the sum advanced, and the Plaintiff wilfully surrendered the titles as securities. According to him therefore, if the Court grants the Plaintiff the orders sought, then the Defendants shall have been closed from the avenue of having the loan arrears repaid by the Plaintiff.
13. After considerable time spent on interlocutory Applications and intervening matters, including transfer from the ELC as aforesaid, the suit eventually proceeded to full trial. At the trial, each party called 1 witness, both very lengthy though, as the Plaintiff’s witness’ testimony took 3 days while the Defendant’s took 2 days.
14. PW1 was the said Jasan Kiptoo Kosgei, who testified before me on 8/03/2023, 2/05/2023, and 26/10/2023, and who stated that he is a director of the Plaintiff together with one Jane Kosgei. Led by his Counsel, Mr. Omboto, he adopted his said Witness Statement and testified that his business relationship with the Defendant begun about 1983, and that he used to bank with the Defendant. He testified that the last took a loan with the bank in 1990 in exchange to which he gave as security, the title to the property Eldoret Municipality/5/46/1 which is in his name. He then stated that he gave out the title to the Defendant in 1983 as security for a loan of Kshs. 40,000/-.
15. He was then taken through the entries made against the title showing the various loans he took from the Defendant over the years, namely a loan of Kshs 40,000/- in 1983, Kshs 300,000/- and Kshs 800.000/-. He however denied taking any loan for Kshs 1,300,000/- as appears therein nor receiving any statement showing that amount. He also maintained that he fully paid back all the loans he had received from the Defendant. He further testified that that he gave the title document for Eldoret Municipality Block 9/1727 to the Defendant as security but he never received any payment. He further testified that there is an entry showing that he received a loan in 1983 yet the title itself was issued in 1991. He thus denied receiving the alleged amount of Kshs 40,000/- alleged. According to him, he gave out the title to the Defendant to be given funds for a construction project he had, but he got the funds elsewhere. He then referred to the title to the property Eldoret Municipality Block 20 (Kapyemit)/38 which is in the name of the Plaintiff, and when shown the entry therein showing a loan of Kshs 5,700,000/-, he admitted to charging the property but denied receiving any such money. He testified that he signed the charge but did not sign any other documents, and that he had demanded documents from the Defendant but he has not been supplied with any, and reiterated that he sued the Defendant for failing to supply the documents, and the Court ordered that he be so supplied. He reiterated that the case he filed was Eldoret CMCC No. 904 of 2012, which the Defendant appealed vide Eldoret High Court Civil Appeal No. 66 of 2019, and which appeal was dismissed.
16. At this juncture, the witness’ attempt to produce the Plaintiff’s bundle of documents was opposed by the Defendant’s Counsel, Mr. Omwenga, as some of the documents were said to be inadmissible. Under these circumstances, I stood down the witness and gave the Counsels time to discuss and agree on the documents to be produced, and once so agreed, the Plaintiff to file a fresh agreed bundle. On 2/05/2023 when the Counsels returned, they confirmed that they had managed to agree on a fresh bundle, dated 15/03/2023, and which the Plaintiff had now filed. Accordingly, the earlier bundle dated 3/05/2021 stood expunged from the record. The Counsels also informed the Court that items 4, 8 and 13 contained in the new bundle, were included in error and would therefore not be produced or considered.
17. Another relevant matter that the Court was informed of by Mr. Omboto, Counsel for the Plaintiff, was that prayer No. (b) of the Plaint – the prayer seeking the furnishing to the Plaintiff of better and true particulars of the mortgage instrument – having already been litigated upon and determined elsewhere, and thus no longer in issue, now stood abandoned.
18. Against the above background, PW1 returned to the stand to continue with his evidence-in-chief (on the said 2/05/2023) and accordingly, produced the Plaintiff’s said fresh/replacement List (bundle) of documents dated 15/3/2023 save for the items number 4, 8 and 13 thereof. Although therefore the bundle contained 17 documents, those produced were 14.
19. When PW1 resumed his testimony, he reiterated that the Defendant had announced the sale of the properties citing a balance of Kshs 42,826,897/-. yet he does not owe any such debt. He reiterated that he charged the property with the Defendant but he never received any money, that there is no application, no offer, no valuation, no approval setting out the loan, or interest or repayment schedule. According to him, a Manager at the Defendant told him that the Defendant could not grant him a long-term loan, and the Manager instead took him to the said KCFC where he was offered a long-term mortgage product, and which loan KCFC indeed agreed and gave him against the security for Eldoret Municipality Block 6/190. He testified that KCFC told him that this one security was adequate, and gave him Kshs 17,000,000/-, and that they told him that since the title for Eldoret Municipality Block 6/190 was already in the custody of the Defendant, he did not need to execute a new security or charge and that is why the Defendant did not give him a Letter of Offer.
20. He reiterated that he has never received a statement from the Defendant in respect of the alleged loan. He stated that he did not bother to collect his title deed from the Defendant, and that the Manager thereat, one Mr. Okungu told him that the reason they were referring him to KCFC was because the Defendant was experiencing financial challenges at that time. He urged the Court to compel the Defendant to return his securities. He also contended that when he asked for the Statements, the Defendant’s then new Branch Manager, Mr. Mburu who had taken over from Mr. Okungu, told him that they were still reconciling the entries because some of the Defendant’s staff had tampered with the statement. He testified further that he wrote a letter to the Central Bank of Kenya (CBK) which sent its anti-banking fraud team which upon conducting investigations, discovered irregularities and 6 staff members, plus the said Mr. Mburu were suspended. According to him, by this time, the Defendant had suspended his account and opened a separate one, and that when he made inquiries seeking the outcome of the probe, he was told that the staff were still in Court.
21. In cross-examination by Mr. Omwenga, PW1 stated that the letters from him on record were written in English because it was his Secretary who typed them but under his instructions, and that the Advocate who handled the charge with the Defendant was the Defendant’s Lawyer but he could not recall his name. He agreed that in his Statement, he stated that that on 10/5/1991, he charged the property to the Defendant, but that no loan was advanced, and that the Plaintiff is not the registered owner of the properties, which are registered in his name in his personal capacity. He maintained that it is not the company that gave the properties and agreed that he and the company are different entities in law. He also agreed that he had filed other cases against the Defendant over the same properties, one of which is Eldoret HCCC No. 325 of 1997 in which he was the Plaintiff in his own personal capacity. He agreed that in the Plaint filed in that case, he stated that he obtained a loan of Kshs 4,000,000/- from the Defendant and stated that this loan of Kshs 4,000,000/- is separate from the latter one of Kshs 17,000,000/- that he received from KCFC. He also agreed that in his statement, he stated that he has paid off the loan, that there was a current account which was serving the loan, that the amount sought by the Defendant was exaggerated, and that without giving him notice the Defendant had advertised the property for sale. He agreed that he asked for an injunction pending reconciliation of accounts or taking of accounts but stated that the Court declined to grant the injunction.
22. Regarding Eldoret HCCC No. 59 of 2000 Eldoret, he agreed that he stated that all his loans were paid, and that he had taken a total of about 4,000,000/-, and also agreed that it is the same loan that he had referred to in the Plaint in Eldoret HCCC No. 325 of 1997. He also conceded that the suit was dismissed and he did not appeal. He stated that the title he referred to in his Statement therein is Eldoret Municipality Block 6/190 and that the same is in his possession. Regarding his allegation that it is the Defendant’s Manager, George Okungu, who took him to KCFC, he agreed that he has no proof to support that allegation. He also agreed that it is him who took the titles referred to in this suit to the Defendant, and not the Advocate, and he also agreed that he has not sued the Advocate who registered the charge. He however stated that his problem is not the charge, but that he never received any money. He reiterated that he never applied for any loan or credit facility from the Defendant, that the Kshs 17,000,000/- he received from KCFC he fully paid it, and the charge was even discharged. He stated that the earlier loans from the Defendant, before the KCFC loan, were applied for by the Plaintiff company. He also agreed that in an Affidavit herein, he had stated that the properties form part of his matrimonial home and stated that he lives in Eldoret Municipality Block 5/46.
23. He also insisted that the Statutory Notice was issued to the Plaintiff company, a wrong entity, but he conceded that the Notice, if issued to him, would still be valid. He also agreed that the notice was yet to be published in the Newspapers and stated that the notice also did not show the principal sum. Due to time constraints, PW1 was again stood down and his further cross-examination fixed for a fresh date.
24. When he resumed his cross-examination on 26/10/2023, PW1 told the Court that he wants the 3 charges to discharged since he never received any money from the Defendant. In regard to the bank statements contained in the Defendant’s new Further bundle filed on 10/7/2023, he denied ever seeing the statements before but confirmed that the account was his. He termed the entries therein as not genuine, that he never made the payments indicated therein, and that he finished paying the genuine loans way back in 1992 or thereabouts. He then stated that he is not aware of Tachasis Wholesalers (1974), which is not the Plaintiff herein. He reiterated that there was interference in his account by staff of the Defendant and that he even reported the same to the CBK which conducted investigations, and that this was around 1998. He reiterated that he has never seen the alleged statements contained in the Plaintiff’s newly filed Further bundle, and insisted that although the account was genuine, the entries were not. He further insisted that the employment of the implicated bank staff was terminated as a result of the interference but denied having colluded with them, and maintained that those staff members made unwarranted entries in his account.
25. He agreed that this dispute between him and the Defendant has been in existence for a long time and confirmed that he still has a personal account with the Defendant but stated that he closed the company account and that he tried to negotiate with the Defendant to reach an amicable settlement. He conceded that he did not present to Court the unwarranted entries he referred to, but maintained that the Defendant claimed that he took a loan which he does not know of. He told the Court that when at one time he got the statements from the Defendant when he visited the Branch, he noted the unwarranted entries and when he complained to the Manager, the latter instead, detained the statements. He also conceded that he has had several Court cases with the Defendant on similar issues but denied ever seeing the Affidavit sworn on 10/9/1997 in Eldoret HCCC No. 325 of 1997 contained in the Defendant’s newly filed Further bundle. He however conceded that it bears his name, and that it alleges that he took a loan around 1990 up to 1993 of Kshs 14,500,000/-, and that it refers to the same properties in issue herein. When shown the Ruling dated 22/5/90 delivered by Hon. Lady Justice Nambuye, he agreed that the Ruling refers to the said Affidavit alleged to have been sworn by him on 10/9/1997, and that in the Ruling, the Judge gave the Plaintiff 45 days to pay the outstanding amount. He confirmed that he never appealed against the Ruling. In regard to the Ruling delivered on 17/10/2012 in Eldoret HCCC No. 59 of 2000 by Hon. Justice Ibrahim (as he then was), he agreed that he is indicated as being the Plaintiff and that the Ruling stated that he was alleged to be owing the Defendant a sum of Kshs 26,000,000/-, and that Hon. Justice Ibrahim, upheld the earlier Ruling of Hon. Justice Omondi Tunya.
26. In re-examination by his Counsel, Mr. Omboto, PW1 stated that around 1993 and 1995, he sought a loan from the Defendant and that he gave the Defendant 3 titles, that the Defendant already had one title and he added them the other two. He stated for the property Eldoret Municipality Block 5/46/1, he had received 40,000/- and that those he added the Defendants were Eldoret Municipality Block 9/1727 and Eldoret Municipality Block 20 (Kapyemit)38. He reiterated that the Defendant took him to KCFC which agreed to give him a further loan but he however maintained that only the 1st security, Eldoret Municipality Block 5/46/1, was to cater for this further loan from KCFC, and that he left the two other properties with the Defendant for custody for future use in case he needed a further loan from the Defendant. He also reiterated that he fully settled the 1993 loan with the Defendant, and reiterated further that the properties were charged but he never received the money. Regarding the statements contained in the Defendant’s said newly filed Further bundle, he pointed out that the same begins from 2/08/1994 with a balance of Kshs 7,771,755/- and is up to 31/05/1999 with a balance of Kshs 28,610,126/-. He insisted that he never received the alleged money and reiterated that the Bank Manager confiscated the statements when he complained about the entries, and that the Defendant suspended the account when it learnt of the unwarranted entries, and opened a new account instead. He also reiterated that the Defendant’s staff interfered with the account and upon investigations by the CBK, some were terminated. At this juncture, the Plaintiff closed its case.
27. When the matter came up on 20/02/2024 for defence hearing, before the same could take off, Mr. Omboto informed the Court that he had filed a Further Statement from another intended witness - one Thomas Owen Ondieki - whom he wished to call, and who would also produce further documents. He therefore prayed to re-open the Plaintiff’s case. This request was vehemently opposed by Mr. Omwenga for reasons that, inter alia, no prior communication about it had been made, the Plaintiff had already closed its case, no leave had been sought or obtained to file the Further Witness Statement or documents, the documents sought to be produced did not even belong to the Plaintiff, no good reasons had been given on why the new witness is necessary and why he was not called earlier. He also averred that he had prepared the whole day before to commence the defence case and his witness had travelled from Nairobi, and had also come to Court on several earlier occasions, that the case had already been delayed for too long due to adjournments caused by the Plaintiff, and admitting the new Witness, his statement, and documents would inevitably lead to yet another adjournment since the Defence would have to be given an opportunity to peruse and consider the new documents, yet the case was already too old and had been in Court for far too long.
28. After hearing the Counsels, I agreed with Mr. Omwenga and declined the request to re-open the Plaintiff’s case. Accordingly, I expunged the said Further Witness Statement dated 16/02/2024, together with the documents attached thereto. The defence hearing thus commenced on the said 20/02/2024.
29. DW1 was the said Paul Chelang’a who thus testified before me on 20/02/2024 and 22/10/2024. Led by his Counsel, Mr. Omboto, he adopted his Witness Statement referred to above. He agreed that the Plaintiff was the Defendant’s customer, and stated that PW1 was the Plaintiff’s officer who was dealing with the Defendant on its behalf, and was a director and also guarantor of the loan herein. He testified that the Plaintiff received loan facilities from the Defendant but defaulted and the Defendant made attempts to recover in 2016 but the Defendant filed this suit. He stated that the Defendant had duly registered a charge, and he then produced the documents contained in the Defendant’s 3 separate bundles, namely, Further List of documents dated 16/7/2021, Further List dated 13/2/2023 and the initial List dated 10/7/2023, comprising, in aggregate, 28 documents. He testified that the Plaintiff had admitted that it owed the Defendant and there are even Court Rulings to that effect, and that the Plaintiff even made some payments. He urged that the case be dismissed and the injunction vacated.
30. Under cross-examination by Mr. Omboto, DW1 stated that he has been an employee of the Defendant for 27 years, and stated that to qualify for a loan, one must be an account holder, must sign an Application letter and must also offer security, and that the purpose of the loan must also be clear. He stated that the Plaintiff made the 1st Application around 1983, the date of the very 1st charge. He also stated that there must have been a Letter of Offer but that there was a “leakage” into their internal documents and some were stolen and that they suspect the Plaintiff although the “leakage” affected many other accounts and not just the Plaintiffs. When shown the title for Eldoret Municipality Block 5/46, he agreed that the properties charged were 3, the 1st Charge being registered on 12/3/1985 at Kshs 300,000/- and which was reflected in the bank statements, the 2nd charge was registered on 15/4/1996 for Kshs 80,000/=, and the 3rd charge on 6/8/1993 for Kshs 1,300,000/-. He s
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