[2024] KEHC 11145 (KLR)

Focus Homes Limited & 2 others v Spire Bank Limited (Commercial Civil Case 373 of 2018) [2024] KEHC 11145 (KLR) (Commercial and Tax) (19 September 2024) (Judgment)

Neutral citation: [2024] KEHC 11145 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Civil Case 373 of 2018

PM Mulwa, J

September 19, 2024

Between

Focus Homes Limited

1st Plaintiff

Jitan Shantilal Dhanani

2nd Plaintiff

Sheikh Muratab Ali

3rd Plaintiff

and

Spire Bank Limited

Defendant

Judgment

Introduction And Background 1. By a plaint dated 6th September 2018, the plaintiffs filed this suit claiming that sometime in 2013, the defendant (the Bank) took over a facility in favour of the 1st plaintiff (the Company) from Bank of Baroda for the sum of Kshs. 200,000,000. 00 for purposes of development of 20 apartments on the property known as L.R. No. 37/369 and registered as Grant Number I.R. 69578/1 (the suit property) owned by the Company. That by a facility letter made on or around 27th June 2013, the Bank agreed to advance the sum of Kshs. 200,000,000. 00 and that it was an express term that the said facility was subject to the following conditions precedent: A first legal charge over 20 flats erected on the suit property; a personal guarantee of the 2nd and 3rd plaintiffs for Kshs. 200,000,000. 00; assignment of sales proceeds from all the flats sold and discharge of the lease agreements done upon receipt of the full amount and that this was to be done for each and every apartment in the sequence they were sold; and assignment of rental income on the rented apartments (if any).

2. The Company avers that under the facility letter it has fulfilled each and every obligation therein. That as per the terms of the facility letter, upon the sale of a flat the Company would assign all sale proceeds to the Company’s account held with the Bank who would then deduct the amounts deposited to offset the amount owed as per the borrowing. Further, the Bank would release the Title to the Company in order to register leases in favour of the purchasers of the flats and then the Bank would acknowledge receipt of payments made.

3. From the year 2016, the Company claims that when the Bank’s new management took over, the Bank started to interfere and manipulate the loan accounts by converting the Company’s current account into an overdraft facility without the plaintiffs’ consent or application for the same and transferring the Company’s current account to an overdraft facility thereby changing the interest rate from the agreed 18% at the time and lumping the same together with the loan account. That there were various unexplainable debits and credits of huge sums which were made on the Company’s account that defy accounting principles and which completely distorted the status of the account.

4. The plaintiffs contend that pursuant to the facility letter, the Company continued to make payment towards liquidation of the loan but the Bank clogged and fettered its equity of redemption by lumping the loan account with unlawful penalties, interest and other charges contrary to the law. That the Bank on or around 4th October 2017 started making unnecessary, unfounded and wild demands to the Company, that the latter was indebted to a tune of Kshs. 136,558,972. 97 and as a result the Bank issued the Company with a final demand and notice of intention to disclose default information to all registered Credit Reference Bureaus. The Company requested for particulars of the demand, especially information regarding - the principal loan amount; the interest rate applicable including the variation of such interest rate, together with any notice on the variation of such interest rates addressed to the Company; the outstanding loan amount to date, if any; a copy of the facility letter; copies of authorization by the Company in respect of the facility letter and acceptance of the Bank terms and conditions to the loan facility as set out in the letter of offer; original guarantees (if any) by the 2nd and 3rd plaintiffs; and a duly registered original Charge securing the loan amount.

5. The plaintiffs state that the Bank chose to ignore, not to respond and/ or grant the information in writing and would instead use its senior staffers to call the 2nd and 3rd plaintiffs and intimidate them with vile threats. That on or around the 15th November 2017, the 2nd and 3rd plaintiffs received a demand for immediate payment of Kshs. 139,670,354. 72 in their capacity as guarantors of the Company allegedly by virtue of a Deed of Guarantee and Indemnity dated 4th September 2013. That upon request to be furnished with the aforesaid purported Deed of Guarantee and Indemnity, the Bank failed, refused and/or neglected to provide the same timeously, until 12th January 2018 after relentless inquires.

6. On or around 19th April 2018, the Bank emailed to the 2nd and 3rd plaintiffs a statutory notice under Section 90 of the Land Act threatening to sell the suit property as per an alleged legal Charge dated 3rd January 2018. The plaintiffs also aver that the Bank failed, refused and/or neglected to furnish them with a copy of the alleged original registered legal Charge dated 3rd January 2018 until the period indicated in the aforementioned notice had lapsed. The plaintiffs contend that the Charge was not only defective but was fraught with fraud and blatant forgeries. That while the Charge is dated 3rd January 2018, the execution pages reveal that the Company and the Bank executed the same on the 7th November 2013 and 11th November 2013 respectively. That Page 16 of the Charge comprises a different font and print tone, which suggests that the page is an alteration and a forgery, that the Charge has a Schedule that incorporates leases of flats that were to be registered post the execution date of the Charge by the Company, that the securities were all registered between 10th December 2014 and 30th June 2016 three years after the alleged execution of the Charge by the Company and that the Bank had on the 20th November 2017 applied to the Registrar of Titles for a Caveat on the suit property on the grounds that Company had declined to execute the Charge instrument in favour of the Bank.

7. The plaintiffs further claim that as per the entries made on the title document to the suit property, it is evident from “Entry No. 10” that registration of the listed leases was effected after execution. That only 1 to 9 out of the 22 entries listed had been registered at the time of execution of the facility letter and the Charge and therefore it was not possible to have contemplated the registration details of all the other units. That in the Schedule to the Charge setting out the exempted long-term leases, Number LR. 69578/23 is actually a discharge of Charge and therefore a fatal error on the part of the Bank and that the facility letter referred to a total of 30 units out of which 10 were exempted, however, the Schedule to the Charge exempts 22 units which is a huge variance. The plaintiffs therefore believe that the alleged registered Legal Charge was acquired illegally, un-procedurally and/ or through a corrupt scheme and the Charge is therefore null and void.

8. According to the Company other than being fraught with fraud, the alleged registered Legal Charge is also defective, inconsistent and flawed with anomalies. That the Charge was drawn in favour of Equatorial Commercial Bank Limited on the 3rd January 2018 more than one year after a name change dated 20th May 2016. The said charge was presented for registration on 21st December 2017 and 10th January 2018 under the same daybook number 389 but the same was rejected. That on 21st December 2017, the Charge was never stamped therefore it could not have been registered. That the Charge was further presented on the 29th January 2018 for registration. A closer inspection of the Charge document clearly shows that the Charge was assessed for stamp duty on the 8th January 2018 and was stamped on the 9th January 2018. The Plaintiffs further claim that the Charge creates security over 21 units as per “Schedule 1” instead of 20 Apartments as represented by the Bank vide the facility letter.

9. The plaintiffs claim that the alleged legal Charge was not registered within the stipulated period in accordance with Section 885 (1) (a) of the Companies Act and that the Bank failed to ensure that the Charge was properly executed, attested and validated. Further, that the alleged legal Charge is void as against the Bank as a creditor of the Company for failure to register the Charge in accordance with Section 889 of the Companies Act.

10. The plaintiffs aver that the Bank by email to the 2nd and 3rd plaintiffs sent the Company a Statutory Notice to Sell pursuant to Section 96 (2) of the Land Act dated 25th July 2018 giving notice to the Company to redeem the suit property within 40 days by making a payment of Kshs. 159,651,130. 98. The plaintiffs contend that this Statutory Notice to Sell is unlawful and illegal as it relates to a defective and fraudulently registered Charge dated 3rd January 2018, the Notice was never served formally on the Company, the Notice contains an interest rate that is currently at 13. 5% per annum contrary to the alleged legal Charge wherein the interest rate was indicated to be at “seventeen percent (18%)”and that the Notice contains a default interest rate at 2. 71% per annum contrary to the alleged legal Charge wherein the default interest rate was indicated to be at 28. 5%. The Company claims that it was never given notice of the variation of interest rates aforementioned contrary to Clause 2 (d) of the alleged legal Charge dated 3rd January 2018 and that the demand was issued to exert pressure to the plaintiffs to pay sums not due and owing.

11. The 2nd and 3rd plaintiffs admit that they executed the Deed of Guarantee and indemnity dated 4th September 2013 but aver that the Bank has breached the terms of the facility letter by its fraudulent misrepresentation and inducement. The Company asserts that it has paid all sums outstanding on the loan and that in these circumstances, the 2nd and 3rd plaintiffs are entitled to and do claim recession of the Deed of Guarantee and indemnity dated 4th September 2013.

12. For these reasons, the plaintiff prays for the following orders:a.Spentb.Spentc.Permanent injunction restraining the defendant whether by itself, employees, servants and/or agents or otherwise assigns and/or any other person whatsoever acting on its behalf and/or under its mandate and/or instructions from alienating, advertising for sale, offering for sale, selling, taking possession of, leasing, ,transferring, charging or otherwise in any manner whatsoever interfering with L.R. No. 37/369 and registered as Grant Number I.R. 69578/1 and any of the 1st plaintiff s title documents in the defendant’s possession.d.A declaration that the Legal charge dated 3 January 2018 is null and void and of no legal effect or enforceable as against the 1st plaintiff and that the 1st plaintiff is released and discharged from the said charge.e.A declaration that the 1st plaintiff does not owe the defendant any money and the continued holding of a legal Charge registered as I.R. 69578/38 against Grant Number LR. 69578/1 by the defendant is unlawful and unequitable.f.The defendant do forthwith execute and handover to the plaintiff an instrument of Discharge of the legal Charge dated 3rd January 2018 registered as I.R. 69578/38 against Grant Number I.R. 69578/1 and in default of executing such instrument, the Deputy Registrar of the court do execute the same on behalf of the defendant.g.A declaration that the alleged personal guarantee executed by the 2nd and 3rd plaintiffs are invalid by reason of fraud.h.A declaration that the Deed of Guarantee and Indemnity dated 14th September 2013 is unenforceable and void ab initio.i.An Order that the defendant do deliver up the Guarantees to be cancelled forthwith.j.Damages for fraud as against the defendant.k.Costs of this suitl.Interests on (j) and (k) above at court rates from the date of filing suit until payment thereof in fullm.Any other relief the court deems fit to grant.

13. The Bank responded to the plaintiffs’ averments above through its statement of defence and counterclaim dated 15th January 2019. The Bank generally denies the claim and states that the Company did not comply with the terms of the facility letter and that on 11th July 2014, the parties executed a variation of the same as follows; the legal Charge to be over 10 apartments erected on the suit property for Kshs. 100,000,000. 00 and duly executed. The Bank claims that the plaintiffs frustrated it and failed to sign the Charge document pursuant to the facility letter and that the Company failed to assign all sale proceeds to its Account held at the Bank. That the repayments by the plaintiffs were erratic thus attracted penalties as agreed by the parties and that the plaintiffs defaulted on repaying the loan leading to the Bank demanding the stated sum of Kshs. 136,558,972. 00 and notice of intention to disclose default information to the Credit Reference Bureau as per the Central Banking Regulations.

14. The Bank avers that the 2nd and 3rd plaintiffs executed deeds of guarantee for Kshs. 200,000,000. 00 each and indemnity which was duly stamped. It denies the allegations of non-compliance with section 90 of the Land Act and reiterates that the Statutory Notices were formally served through registered post and that the same had complied with the law. The Bank denies the allegations and particulars of fraud, fraudulent misrepresentation and forgery as stated in the plaint and reiterates that pursuant to the variation of the facility letter, the plaintiffs failed to sign the charge and that they registered a caveat on the suit property. That a Miscellaneous Application No. 199 of 2018 was filed and orders granted extending the time to register the charge document. It contends that it followed the laid down procedure in registration of the Charge document and in sum states that the prayers sought in the plaint cannot be granted as there is a clear debt owed to the Bank. That the reliefs sought would only prevent the Bank from recovering the amount rightfully owed and further this would amount to the court rewriting the contract. For these reasons, the Bank urges the court to dismiss the suit against it.

15. In its counterclaim, the Bank reiterates its position above and states that the Company, in blatant breach of the terms of the loan facility persistently defaulted in making punctual payment of the monthly installments as and when they fell due, and was as at 13th September 2018, indebted to the Bank in the sum of Kshs. 164,194,742. 66 which amount continues to accrue interest at the agreed contractual rates until payment in full. That on 19th April 2018, the Bank issued the requisite statutory notices for the recovery of the entire outstanding amount under the charge and that it has been frustrated by the plaintiffs. That on a without prejudice basis and in the alternative the Bank’s claim is for the sum of Kshs. 164,194,742. 66 as at 13th September 2018 being the balance due on the account of the Company. The Bank further seeks interest on the said amount at contractual rates from the aforementioned date until the date of payment in full.

16. In a nutshell, the Bank prays for orders thus:a.An order that units outlined in the Charge erected on IR 69578 on Land Reference Number 37/369 be sold in a public auction in exercise of the defendant’s power of sale:b.In the alternative the claim of Kshs. Kshs. 164,194,742. 66/=c.Interest on (b) above;d.Costs of this suit and counterclaim;e.Any such other or further relief the Court may deem appropriate.

17. The matter was set down for hearing and plaintiffs presented two witnesses. Martin Esakina Papa (Pw1), a Forensic Investigator relied on his affidavit sworn on 29th October 2018 and produced his forensic document examination report dated 8th October 2018 (P-Exhibit 1). The 3rd plaintiff testified as Pw2 and relied on his further supporting affidavit sworn on 29th October 2018 and witness statement dated 6th September 2018. He produced the plaintiffs’ List of Documents dated 6th September 2018. On its part, the defendant called John Wageche Kariuki (Dw1), an advocate and former Legal Manager of the Bank who relied on his witness statement dated 30th August 2023 and produced the List of Documents dated 15th January 2018 (D-Exhibit 1-30).

18. Thereafter, parties filed written submissions which are on record. Since the evidence by the witnesses and submissions are along the lines I have already highlighted above, I will not rehash or highlight the same, but I will make relevant references in my analysis and determination.

Analysis and determination 19. From the pleadings, evidence and submissions of the parties, I have isolated the following issues for the court’s determination:a.Whether there is a nexus between Spire Bank and Equity Bankb.Whether the Charge was defective and/or invalidc.Whether the statutory notices were issued and if so, whether they were validd.Whether the deed of guarantee and indemnity is unenforceable and void ab initioe.Whether the plaintiffs are entitled to the prayers sought in the plaintf.Whether the Bank is entitled to the prayers sought in the counterclaimg.Who bears the cost of the suit and counterclaim?

Nexus between Spire Bank and Equity Bank 20. In his testimony, Dw1 stated that Equity Bank acquired certain assets of the defendant Bank and that the Company’s account is one of those that moved to Equity Bank. The Bank submits that this acquisition is a matter of public notoriety and that the court should find that Equity Bank is the recognized legal person and has the locus standi to pursue the debt. On the other hand, the plaintiffs dispute the alleged acquisition as contended by the Bank and they aver that the there has to be a gazette notice of the same by the relevant Cabinet Secretary as required by Section 9 of the Banking Act which provides in part as follows:9. Amalgamations and transfers of assets and liabilities(1)No amalgamation or arrangement which involves an institution as one of the principal parties to the relevant transaction, and no arrangement for the transfer of all or any part of the assets and liabilities of an institution to another person, shall have legal force except with the prior written approval of the Cabinet Secretary.

21. The plaintiffs further rely on the CBK Prudential Guidelines to submit that Dw1 did not produce any evidence to show a nexus between the defendant and Equity Bank and that in the absence of such evidence of transfer of assets, Dw1’s evidence is hearsay, irrelevant and prejudicial and lacks probative value.

22. Section 60 (1)(o) of the Evidence Act provides that the court shall take judicial notice of “all matters of general or local notoriety”. Even though the instrument of acquisition was not produced, this court in Thomas & Piron Grands Lacs Limited v Lighthouse Property Company Limited; Chasebank Kenya Limited (In Receivership) & another (Interested Parties) [2019] eKLR held that the court can take judicial notice of such an instrument if the same does exist and which instrument can include a gazette notice. I note that the Kenya Gazette issue of 27th January 2023 had Gazette Notice No. 660, thus:The Banking Act (cap. 488) Acquisition Of Certain Assets And Liabilities Of Spire Bank Limited By Equity Bank (kenya) LimitedIT IS notified for information of the general public that pursuant to the provisions of section 9 (1) and (5) of the Banking Act:(a)The Shareholders of Spire Bank Limited vide a Resolution passed at a General Meeting held on the 8th September, 2022, approved the acquisition of certain Assets and Liabilities of Spire Bank Limited by Equity Bank (Kenya) Limited, pursuant to the Sale and Purchase Agreement dated the 12th September, 2022. (b)The Shareholders of Equity Bank (Kenya) Limited vide a Resolution passed on the 2nd September, 2022, approved the purchase of certain assets and assumption of the certain liabilities of Spire Bank Limited pursuant to the Sale and Purchase Agreement dated the 12th September, 2022. (c)Pursuant to section 9 (1) of the Banking Act, the Cabinet Secretary for the National Treasury and Planning on the 24th January, 2023, approved the acquisition of certain Assets and Liabilities of Spire Bank Limited by Equity Bank (Kenya) Limited.(d)The acquisition shall take effect on 31st January, 2023. Dated the 25th January, 2023. Patrick Njoroge,Governor, Central Bank of Kenya.

23. With the above, I take judicial notice that Equity Bank acquired certain assets and liabilities of Spire Bank and this established a nexus between the two banks. Dw1 had the requisite locus standi to testify on behalf of Equity Bank in pursuit of the alleged debt owed by the plaintiffs to the Bank.

Validity of the Charge 24. As stated, the plaintiffs impugned the Charge for reasons that it was altered by the Bank without their knowledge and consent and that this changed the contents, makeup, structure, intent and purport of the Charge. That the Charge that was executed by the parties in 2013 was not the same one registered by the Bank almost 5 years later in 2018. Pw1 testified that page 16 of the impugned charge was at variance with the rest of the document and he concluded that the page had a different font and style as compared to the other pages of the Charge.

25. On its part, Dw1 testified that the facility letter was varied by the letter dated 11th July 2014 which provided in part as follows:……Kindly note that the following variation has been made on the “Facility” and the amendment will read as follows;Principal Covenants & Securities Amount & Type:3. First legal charge over 10 apartments erected on I.R 69578 Land Reference Number 37/369 for Kshs. 100,000,000. 00;11. Duly executed legal charge documents over 10 apartments erected on I.R 69578 Land Reference Number 37/369 for Kshs. 100,000,000. 00;All other terms and conditions shall remain unchanged as per the offer letter (REF: ECB/ADV/101/2013), dated 27th June 2013…….

26. The Bank went on to state that the charge was not registered immediately as it is the plaintiffs who sought the aforementioned variation and that when the Bank presented the varied charge, the plaintiffs frustrated the execution of the same. That the plaintiffs registered a caution against the title further frustrating the registration. Dw1 admitted that even though the Bank instructed the firm of Sichangi & Co. Advocates to prepare a first legal charge over 20 flats, he could not say which leases were excluded from the charge. He further admitted that he could not demonstrate that it was the plaintiffs who sought a variation of the charge and that there was no evidence of leases registered after June 2013 and July 2018. He further admitted that there was nothing to show the charge registered in favour of the 10 apartments as set out in the variation facility letter. However, Dw1 asserted that the impugned page 16 of the charge was in the charge document when the plaintiffs signed the same in 2013.

27. I have carefully gone through the evidence on record. The plaintiffs dispute that they requested for a variation of the facility letter, but they did not deny the signatures of the borrower and guarantor appearing on the said variation letter of 11th July 2014. Indeed, Pw2 admitted the same in his testimony. He also admitted the Bank forwarded two draft charges for the 10 units each as per the variation but that they sought to have the same amended as per their letter of 29th September 2014. Pw2 also admitted that between 2013 and 2018 some units were sold before the charge document was registered and that other units had been sold before the Bank took over the loan facility whereas others were sold after the take-over. This explains the impugned entries 11-22 in the title to the suit property that were entered after execution of the charge.

28. Further, whereas the plaintiffs stated that they did not execute the charge dated 3rd January 2018 that was produced in both parties’ documents, they did not produce any alternative charge of what they deemed and claimed to be the correct one. True, the impugned page 16 was different in font and style, but Pw1 admitted that it is possible to print one document with different fonts. In short, the plaintiffs did not demonstrate that the charge document they signed in 2013 was not the same one that was registered in 2018. It therefore remains that the charge document on record dated 3rd January 2018 was signed by the plaintiffs and that they were aware of all the contents therein. I find no evidence of the Bank fraudulently altering the said document as contended by the plaintiffs.

29. In any event, it is my finding that even if there were any alterations or amendments to the charge document after the execution, the same did not alter the intent and purpose of charge and that the terms and contents indicated therein were always within the knowledge of the plaintiffs and was common to the parties. Such alterations and amendments were allowed by the charge document and did not need the consent of the plaintiffs as Clause 40 of the Charge document provides that “No alteration, amendment, variation or addition to this Charge shall be effective unless made in writing and executed by the Bank”. All that was required was for the amendment to be in writing and executed by the Bank. For these reasons, I find that the Charge is valid and enforceable between the parties.

Validity of the Deed of Guarantee and Indemnity 30. The plaintiffs also challenged the deed of guarantee and indemnity executed by the 2nd and 3rd plaintiffs for not indicating any amount therein and that the same was executed by false and fraudulent misrepresentation. Pw2 admitted that he did not complain to the Bank that he had been induced to the sign the same. The plaintiffs did not also deny that the guarantee provided in part that “...if the guaranteed amount is not inserted in this clause, this guarantee shall be interpreted as unlimited” and that the 2nd and 3rd plaintiffs bound themselves to pay the Bank “…all money that is now or shall at any time or time hereafter be due or owing…by the principal…” and further pay “…All interest, costs, commissions and other banking charges including penalties and expenses…against the principal…”

31. By its very definition a guarantee means to assume a suretyship obligation; to agree to answer for a debt or default; to promise that a contract or legal act will be duly carried out; or to give security for (Black’s Law Dictionary - 11th Edition). It is evident that the 2nd and 3rd plaintiffs agreed to answer for any debt that was owing to the Bank by the Company and that there was no limit as to the amount of liability to be shouldered by the guarantors. I therefore reject the plaintiffs’ contention that the deed of guarantee and indemnity they executed is unenforceable or void ab initio for reasons that no amount is indicated therein. I further find that there is no evidence of fraud or fraudulent misrepresentation as contended by the plaintiffs.

Reliefs sought by the plaintiffs 32. These are as I had stated hereinabove. I have already found that the Charge and the Guarantee are valid and enforceable therefore the plaintiffs’ prayers sought on these documents cannot be granted. I have also found that there is no evidence of fraud on the part of the Bank and therefore no damages are available to the plaintiffs. This leaves the prayers for an injunction and declaration of the plaintiffs not being indebted to the Bank. The question of the plaintiffs’ indebtedness is one of fact and evidence. Even though the plaintiffs claim that they have repaid the loan owing to the Bank, Pw2 admitted that they did not have any evidence of payment of Kshs. 230 million as proceeds for the units sold. I have also gone through the email correspondence produced by the plaintiffs between pages 75 – 83 of the plaintiffs’ documents. In the email of 14th June 2018, Pw2 admitted that the Bank was inviting them to discuss a way forward on the payment plan the Plaintiffs had sought and that the meeting was to discuss how to settle what the Bank was demanding. This was actually an admission that the plaintiffs were indebted to the Bank as of that date. This was during the period when the statutory notice dated 19th April 2018 (page 95 of the plaintiffs’ bundle) had been sent and was subsisting. At the time, the Bank was demanding a sum of Kshs. 149,667,370. 60.

33. The Bank produced an account statement which indicates that the Company had a debit balance of Kshs. 164,194,742. 66 as at 13th September 2018. Section 176 of the Evidence Act creates a presumption in favour of the Bank on the terms that “A copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transactions and accounts therein recorded.” This statement of account was produced without objection, meaning the court ought to admit it as a true and accurate entry unless demonstrated otherwise. The plaintiff has not demonstrated any false entry in the statement and that its attempts to do so did not substantially upstage the indebtedness indicated therein. This statement, coupled with the plaintiffs’ admissions above leads me to conclude that indeed the plaintiffs are indebted to the Bank. No injunction can therefore be issued against the Bank from exercising its statutory right of sale, which right I find has now crystallized. The net effect is that the plaintiffs are not entitled to any and all of the reliefs sought in the plaint.

Prayers sought in the counterclaim 34. As stated, the Bank seeks an order that the units outlined in the charge be sold in a public auction in exercise of its power of sale, or in the alternative the claim of Kshs. 164,194,742. 66 be allowed. Having found that the plaintiffs are indebted to the Bank in respect of this sum, I find no reason why the Bank should not be allowed from exercising their statutory power of sale over the charged units. The counterclaim is therefore for allowing.

Costs of the suit and counterclaim 35. Since the plaintiffs have been unsuccessful in their suit and the Bank has been successful in their counterclaim, it follows that the plaintiffs will bear the costs of both the suit and counterclaim. Costs follow the event (See Jasbir Singh Rai & 3 others v. Tarlochan Singh Rai and 4 others [2014] eKLR).

Conclusion and disposition 36. I make the following final dispositive orders:1. The plaintiffs’ suit is dismissed.2. The defendant’s counterclaim is allowed and judgment be and is hereby entered for the defendant against the plaintiffs for the sum of Kshs. 164,194,742. 66. This will attract interest at the contractual rate of 18% from date of filing suit.3. The defendant is at liberty to exercise its statutory power of sale by selling by way of public auction the units erected on Land Reference Number 37/369 IR 69578 and outlined in the Charge dated 3rd January 2018. The defendant is awarded costs of the suit and counterclaim.

JUDGMENT DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 19TH DAY OF SEPTEMBER 2024. P. MULWAJUDGEIn the presence of:Ms. Athman for plaintiffsMs. Karanu for defendantCourt Assistant: Carlos