https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8499

Maina v KCB Kenya Ltd & 3 others (Commercial Case 21 of 2017) [2026] KEHC 8499 (KLR) (Commercial & Admiralty) (11 June 2026) (Judgment) Neutral citation: [2026] KEHC 8499 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Admiralty Commercial Case 21 of 2017 PM Mulwa, J June 11, 2026 Between Chaxton Geoffrey Kamami Maina Plaintiff and Kcb Kenya Limited 1st Defendant Jeed Auto Spares Limited 2nd Defendant Edward N Murimi 3rd Defendant Esmael Elisha Eshikote T/A High Class Auctioneers 4th Defendant Judgment 1.The Plaintiff vide the amended plaint dated 21st November 2016 instituted this suit against the Defendants jointly and severally for.i.A declaration that any sale conducted by the 1st Defendant is illegal and of no consequence.ii.An order of injunction be issued restraining the Defendants, their servants, agents, employees or otherwise, from transferring, alienating, or in any other way interfering with the Plaintiff’s ownership and occupation of plot L.R. no. 18111/53 Baraka estate, Phase 11, House no. D35 Nairobi.iii.Costs of the suitiv.Any other relief the court may deem fit 2.The Plaintiff’s case is that in the year 2007, he applied and was granted a mortgage facility by the 1st Defendant for the sum of Kshs. 2,400,000/=, which was paid to M/s Pandington Holdings Ltd to complete the purchase of the residential property situated in L.R. No. 18111/53 Baraka estate, Phase 11, House No. D35 (herein referred to as the suit property). 3.The Plaintiff avers that when his business went down, he would at some point default in the monthly repayment and compensate by making lump sum repayments that he fell into arrears, and on 25th August 2016, his statement of account revealed that the 2nd Defendant had deposited large sums into his accounts and on inquiry he was advised that it was proceeds from the sale of the suit property. 4.The Plaintiff’s case is that he was not served with any statutory notices before the sale. The Plaintiff avers that the property was greatly undervalued and fraudulently sold to a relative of the Account Manager. 5.The Plaintiff further avers that he had paid a substantive amount of the loan of Kshs. 2,848,212/= and was thus unjustly deprived of his property 6.In opposition to the suit, the Defendants filed their statements of defence. 7.The 1st and 4th Defendant filed a joint statement of defence dated 20th January 2017. The 1st Defendant avers that there was no instance in which the Plaintiff was advised that he could default on the monthly repayment and compensate by paying a lump sum. It is averred that the statutory notices were issued as required by law, and it is contended that the Plaintiff was all along aware of the auction. The auction was advertised in a newspaper with nationwide circulation. 8.The 1st Defendant avers that the allegation of tribalism or collusion is not substantiated, as the Meru Account Manager has not been enjoined to the proceedings to answer to the charges . 9.It contends that a valuation was conducted before the sale of the suit property, which established that the value of the suit property was Kshs. 8 Million. The property was sold through public auction to the highest bidder. 10.The 2nd Defendant was struck out of the suit by this court’s ruling of 28th November 2019. 11.The 3rd Defendant filed a statement of Defence dated 24th July 2023. He denies the averments in the plaint and avers that the plaint, as drawn, discloses no cause of action against him. He contends that he bought the suit property for Kshs. 8 million at a public auction held on 15th July 2016 at the offices of the 4th Defendant. He avers that at the fall of the hammer, he paid 25% of the purchase price. 12.The 1st Defendant executed a transfer in its favour dated 4th September 2016 and was later registered on 4th November 2016. He averred that he is the rightful owner of the suit property pursuant to the public auction. 13.This matter proceeded to hearing where the Plaintiff called two witnesses in support of his case, and the Defendants called three witnesses to ventilate their case. Plaintiff’s case 14.Mr. Chaxton Geoffrey Karori Maina testified as Pw1. He adopted his witness statement dated 30th August 2016 and the list of documents dated 11th June 2021 as his evidence in chief. 15.In cross-examination, he testified that the loan of Kshs. 2.4 million was advanced through the letter of offer dated 30th November 2007. The loan was to be repaid in 15 years at Kshs. 33,390/= per month, secured by a charge over L.R. No. 18111/53, Baraka Estate, Nairobi, House No. D35 Nairobi. 16.He testified that the terms of the offer letter stated that in default, the defendant would be at liberty to sell the property. He testified that he paid a monthly instalment but defaulted when his financial position worsened. 17.He testified that the statement of account established on 18th June 2017 that his account had money deposited thus; 900,000, 900,000 and 200,000. He testified that he did not know the source of income, and on calling the bank, he was informed that the money was from the sale of his property. 18.He testified that he paid Kshs. 15,000 on 30th November 2014 and paid some other amounts, and later defaulted. He testified that clause 16 provided that, in the event of default, the bank would recover the arrears. 19.Mr Karori testified that he wrote to the Defendant vide the letters dated 11th September 2013 and 6th February 2014 requesting the bank for more time to pay the arrears. 20.He told the court the letter dated 8th January 2015 by the 1st defendant addressed to him informing him that he had defaulted and was in arrears, and that in case of failure to pay the outstanding arrears, the bank would move to sell the property. 21.He testified that the letter dated 4th May 2015 is a statutory notice under section 9b, which had his address and bore the amount in arrears. 22.He confirmed that the property was advertised on 29th June 2019 (sic) for sale on 15th July 2016. 23.He testified that after the statutory notice of 4th October 2015, he did not pay any money to the bank. 24.Arikanjeru Kinyua Njiru testified as Pw2. He told the court that he was a registered valuer and a director of Shelter M Valuers Ltd. He produced a valuation report for the suit property, which showed its value was Kshs. 14 million. 25.In cross-examination by Mr. Mbaabu for the 1st Defendant, Pw2 testified that the report was prepared by Anthony Gichehe, who was his partner but now deceased, having died in 2019. He told the court that he did not visit the suit property. That the report did not have a breakdown of the value of the house and the land, and the Kshs. 14 million was a blanket figure for both. He testified that at the time of instructions, they were informed the property was charged to KCB bank and were not aware the house had been sold, as the client indicated the valuation was for advisory purposes on the current market value. 26.In cross-examination by Mr. Mwangi for the 3rd Defendant, Pw2 testified that he was instructed in October 2016 to prepare a valuation for advisory purposes. He testified that he was unaware at the time that the property had been sold. Defendant’s case 27.Nancy Gaitho testified as Dw1. She adopted her witness statement dated 3rd April 2019 and the list of documents as her evidence in chief. 28.During cross-examination by Mr. Irungu, counsel for the Plaintiff, she stated that the memorandum of sale proves Edward Murimi bought the property at the fall of the hammer at Kshs. 2 million, and the balance of Kshs. 6 million was to be paid within 30 days. She testified that the money was paid through a Swift Inward by Jeed Auto Spares. 29.During cross-examination by Mr. Mwangi, counsel for the 3rd Defendant, she stated that the property was sold at an auction to the 3rd Defendant and the transfer was effected. 30.Dw2 - Danson Muthomi Mati testified that he is a registered valuer and a director at Danco Limited. He testified that he prepared the valuation report dated 7th July 2015 in respect of the suit property under the instructions of KCB Bank. He testified that the market value of the property was Kshs. 10.5 million, with a forced sale value of Kshs. 7,875,000/=. 31.In cross-examination by Mr. Irungu for the Plaintiff, he stated the valuation was for mortgage purposes. During the process, he learned that the purpose of the valuation was for sale. 32.He testified that a valuation for mortgage purposes does not give conservative figures besides other figures and the margin discrepancies should be between 10% and 15%. 33.Edward Njoroge Murimi testified as Dw3 and adopted his witness statement dated 24th July 2023 and the list of documents dated of even date as his evidence in chief. He testified that he bought the suit property at a public auction and paid the initial deposit of Kshs. 2 million at the fall of the hammer, with the balance paid later. He testified that the certificate of title confirms the property was transferred to him on 4th November 2016 and that he is currently the registered owner of the suit property. 34.He testified that the balance of Kshs. 6Million was paid by Jeed Auto Spares Company, a family business owned by him and his late wife. 35.At the close of the Defendants’ case, the court directed the parties to file written submissions. The Plaintiff's submissions are dated 21st July 2025, while the 1st and 4th Defendant’s submissions are dated 7th October 2025, and the 3rd Defendant's submissions are dated 24th October 2025. Analysis and determination 36.I have considered the pleadings, the oral and documentary evidence tendered by the parties, together with the written submissions filed on their behalf. The issues that arise for determination are:i.Whether the 1st Defendant complied with the statutory requirements preceding the exercise of the statutory power of sale.ii.Whether the sale of the suit property by public auction was unlawful, fraudulent or conducted at an undervalue.iii.Whether the 3rd Defendant acquired a valid title as a bona fide purchaser for value.iv.Whether the Plaintiff is entitled to the reliefs sought. Whether the 1st Defendant complied with the statutory requirements 37.It is common ground that the Plaintiff obtained a mortgage facility of Kshs. 2,400,000/= from the 1st Defendant secured by a charge over the suit property, L.R. No. 18111/53 Baraka Estate Phase II House No. D35 Nairobi. It is equally not disputed that the Plaintiff fell into arrears in repayment of the loan facility. 38.In his testimony, the Plaintiff candidly admitted that due to financial difficulties, he defaulted in servicing the loan. He further admitted writing letters dated 11th September 2013 and 6th February 2014 requesting the Bank for indulgence and additional time to clear the arrears. He also acknowledged receipt of the demand letter dated 8th January 2015 and the statutory notice dated 4th May 2015, which notified him of the default and the Bank's intention to realize the security in the event of default of payment. 39.The Plaintiff further admitted that after receipt of the statutory notice, he did not make any payment towards redemption of the property. He contends that no statutory notice was served upon him before the sale. 40.Section 96 of the Land Act outlines the obligations of a Chargee to issue notices to the Chargor before exercising the power of sale. The purpose of this section is to protect borrowers' rights by ensuring they are adequately informed about any impending actions that may affect their property. The section provides the following:“1)Where a Chargor is in default of the obligation under a charge and remains in default at the expiry of the time provided for the rectification of the default in the notice served on the Chargor under Section 90 (1), a Chargee may exercise the power to sell the charged land.2)Before exercising the power to sell the charged land, the Chargee shall serve on the Chargor a notice to sell in the prescribed form. It shall not proceed to complete any contract for the sale of the charged land until at least forty days have elapsed from the date of the service of that notice to sell.” 37.Compliance with the above section is mandatory. The failure to issue these mandatory notices invalidates any subsequent action taken by the chargee. 38.The 1st Defendant exhibited the statutory notice under Section 90 dated 8th January 2015 addressed to the Plaintiff, which was sent through registered post. The notice detailed the nature and extent of the default and demanded a total payment of Kshs. 2,143,069.77, which was the amount due as of the date. It gave the Plaintiff three months to rectify the default and warned the Plaintiff that failure to comply would result in the realization of the charge. At the hearing, the Plaintiff acknowledged receiving the statutory notice. 39.As per Section 96 of the Land Act, if the chargor fails to rectify the default, he is entitled to a 40-day notice under Section 96(2) of the Land Act. The 1st Defendant exhibited the statutory notice to sell under Section 96, dated 4th May 2015, which was sent by registered post on 12th May 2015. The Plaintiff also confirmed receiving the notice. 40.At the expiration of the 40-day notice, High Glass auctioneers issued a 45-day redemption notice, which, by an affidavit sworn by Michael M. Siloya, confirms it was served on the Plaintiff on 6th May 2016. But the Plaintiff refused to sign the copy. 41.A chargee must demonstrate compliance with the statutory notice requirements before exercising the power of sale. In Nyangilo Ochieng & Another v Kenya Commercial Bank Ltd [1996] eKLR, the Court of Appeal held that where service of statutory notices is challenged, the burden rests upon the chargee to prove service. 42.In the present case, the Plaintiff's own evidence substantially weakened his case. He expressly acknowledged receiving the letter dated 8th January 2015 and the statutory notice dated 4th May 2015. He confirmed that the notice bore his address and specified the arrears due. Having admitted receipt of the notices, the Plaintiff cannot thereafter be heard to contend that no notices were served. 43.The evidence further shows that after issuance of the notices, the property was advertised for sale through a newspaper of nationwide circulation before the auction scheduled for 15th July 2016. 44.I am therefore satisfied that the 1st Defendant discharged its obligation of issuing and serving the requisite notices before the sale. The Plaintiff's allegation that no statutory notices were served is unsupported by the evidence and must fail. Whether the sale was fraudulent, illegal or conducted at an undervalue 49.The Plaintiff alleged that the suit property was fraudulently sold to a relative of the Bank's account manager and that the property was grossly undervalued. 50.Allegations of fraud are serious and the law requires that fraud must not only be specifically pleaded but also strictly proved to a standard higher than the balance of probabilities, though not beyond a reasonable doubt. The onus is on the Plaintiff. See (Ratilal Gordhanbhai Patel v Lalji Makanji [1957] EA 314). 51.A party that alleges fraud bears a higher onus to demonstrate the same. The Plaintiff herein has not discharged that onus, and hence, nothing turns on his allegations of fraud against the Defendant. Apart from alleging that the purchaser was related to a Bank official, the Plaintiff did not call any evidence to establish that relationship. No documentary evidence was produced, and the alleged account manager was neither joined as a party nor called as a witness. 52.The allegation of collusion and fraud, therefore, remains unproven. Whether the property was undervalued 52.The Plaintiff relied on a valuation report indicating a value of Kshs. 14 million. The report was produced through Pw2. However, Pw2 admitted that he did not personally inspect the property. He further admitted that his deceased partner prepared the report. He also testified that the valuation was conducted in October 2016 for advisory purposes and that at the time he was unaware that the property had already been sold. 53.The evidential weight of that report is considerably diminished. Pw2 was not the author of the report and was unable to explain the methodology used to arrive at the valuation figure. 54.On the other hand, Dw2, a registered valuer, testified that he personally conducted a valuation of the suit property on 7th July 2015 under instructions from the Bank. His report assessed the market value at Kshs. 10.5 million, and the forced sale value at Kshs. 7,875,000/=. 55.The property was eventually sold for Kshs. 8 million. That price was slightly above the forced sale value assessed by Dw2. 56.Section 97 of the Land Act imposes upon a chargee a statutory duty of care to obtain the best price reasonably obtainable at the time of sale. To safeguard that duty, Section 97(2) expressly requires a chargee, before exercising the power of sale, to ensure that a qualified valuer undertakes a forced sale valuation. 57.The Court of Appeal in Palmy Company Limited v Consolidated Bank of Kenya Limited [2014] eKLR emphasized that compliance with Section 97 is mandatory and that a chargee must demonstrate that a valuation was undertaken before the sale. The purpose of the valuation is to ascertain the prevailing market and forced sale values of the property to protect the chargor against a sale at an undervalue. 58.In the present case, the Plaintiff contends that the suit property was sold at a gross undervalue. The 1st Defendant relied on the valuation report produced by Dw2 dated 7th July 2015. However, Dw2 candidly testified that the valuation had been commissioned for mortgage purposes. The report itself indicates a market value of Kshs. 10.5 million, a mortgage value of Kshs. 8.4 million and a forced sale value of Kshs. 7,875,000/=. 59.While the report contains an assessment of the forced sale value, the evidence before the Court does not demonstrate that it was prepared as a pre-sale valuation in contemplation of the auction conducted on 15th July 2016. More importantly, the 1st Defendant did not place before the Court any evidence of a contemporaneous valuation undertaken immediately before the exercise of the statutory power of sale. The valuation relied upon was undertaken approximately one year before the auction and at the time of the mortgage transaction. 60.In my view, a valuation undertaken at the inception of a lending transaction cannot, without more, satisfy the requirements of Section 97(2) of the Land Act. The statute contemplates a valuation undertaken before exercising the power of sale to ascertain the property's value at the time of realization. Property values are not static and may appreciate or depreciate over time. A chargee seeking to rely on Section 97 must therefore demonstrate that a current valuation was procured before the sale. 61.I therefore find that the 1st Defendant failed to demonstrate compliance with Section 97(2) of the Land Act. Consequently, the Bank breached the statutory duty of care imposed on it by law by failing to obtain a current forced-sale valuation before the auction of the suit property. Whether the 3rd Defendant acquired a valid title 52.The question that follows is whether the Bank's failure to comply with Section 97(2) of the Land Act renders the sale and subsequent transfer to the 3rd Defendant null and void. 53.The answer is found in Section 99 of the Land Act. Section 99(4) provides that a person prejudiced by an unauthorized, improper or irregular exercise of the power of sale has a remedy in damages against the person exercising that power. The provision was enacted to protect innocent purchasers who acquire property through the exercise of a statutory power of sale and to promote certainty in commercial transactions. 54.The Court of Appeal in Bomet Beer Distributors Ltd & Another v Kenya Commercial Bank Ltd & 4 Others [2005] eKLR observed that once a property is sold by public auction and transferred to a purchaser, the chargor's remedy ordinarily lies in damages and not in the setting aside of the sale. The Court emphasized that the law seeks to protect purchasers who acquire property in good faith and for value. 55.In the present case, the Plaintiff alleged that the 3rd Defendant colluded with the Bank and that the property was sold to a relative of the Bank's account manager. However, as already observed, no evidence whatsoever was tendered to support those allegations. The Plaintiff neither identified the alleged relationship nor called any evidence demonstrating fraud, collusion, bad faith or participation by the 3rd Defendant in any irregularity surrounding the sale. 56.The evidence before the Court shows that the 3rd Defendant attended the public auction conducted on 15th July 2016, and emerged as the highest bidder at Kshs. 8,000,000/=, paid the requisite deposit at the fall of the hammer and subsequently paid the balance of the purchase price. The property was thereafter transferred and registered in his name on 4th November 2016. 57.I am therefore satisfied that the 3rd Defendant purchased the suit property at a public auction for valuable consideration and acquired title without any proven fraud, collusion or notice of impropriety. He was therefore a bona fide purchaser for value whose title is protected by law. 58.Consequently, while the Bank may have breached its statutory duty under Section 97 of the Land Act by failing to undertake a current forced sale valuation before the sale, that breach alone is insufficient to invalidate the transfer already effected in favour of the 3rd Defendant. 59.The Plaintiff's remedy, if any, lies in damages against the 1st Defendant for breach of its statutory duty of care and not in the recovery of the suit property from the 3rd Defendant. Whether the Plaintiff is entitled to the reliefs sought 52.The Plaintiff sought a declaration that the sale of the suit property was illegal and of no consequence and a permanent injunction restraining the Defendants from interfering with his ownership and occupation of the property. 53.Having found that the Plaintiff was in default under the charge, that the requisite statutory notices were duly served, that the 3rd Defendant acquired title as a bona fide purchaser for value, and that the sale cannot be impeached notwithstanding the Bank's failure to comply with Section 97(2) of the Land Act, it follows that the declaratory and injunctive reliefs sought cannot issue. 54.The Court appreciates that the Plaintiff had made substantial repayments towards the loan facility. However, it is settled law that once property is offered as security for a loan, it becomes available for realization upon default. 55.The Plaintiff has not laid any legal basis upon which the Court can set aside the completed sale or revoke the title issued to the 3rd Defendant. 56.In the result, I find that the Plaintiff has failed to prove his claim on a balance of probabilities. 57.The Plaintiff's suit is hereby dismissed with costs of the suit awarded to the 1st, 3rd and 4th Defendants.It is so ordered. JUDGMENT DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBITHIS 11TH DAY OF JUNE 2026.P.M. MULWAJUDGEIn the presence of:Mr. Irungu Mwangi for PlaintiffMr. Seda h/b for Ms. Nkatha for 1st & 4th DefendantMr. Mwangi, M.N. for 3rd DefendantCourt Assistant: LispaPage 6 of 6