https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7061

Grofin SGB Kenya Limited v Building Construction Concepts Ltd & 2 others (Commercial Case E004 of 2023 & E069 of 2018 (Consolidated)) [2026] KEHC 7061 (KLR) (15 May 2026) (Judgment) Neutral citation: [2026] KEHC 7061 (KLR) Republic of Kenya In the High Court at Kisumu Commercial Case E004 of 2023 & E069 of 2018 (Consolidated) A Mabeya, J May 15, 2026 Between Grofin SGB Kenya Limited Plaintiff and Building Construction Concepts Ltd 1st Defendant Patrick Jackino 2nd Defendant Christine Afand Jackino 3rd Defendant Judgment 1.The plaintiff advanced the defendants a loan facility of Kshs. 50,000,000/- via an agreement which was to be repaid with interest. The facility was secured by charges over land parcels no. Kisumu Kanyakwar B 2677, Kisumu Kogony 6319, Kisumu Kogony 6321 and Kisumu Kanyakwar B 788 and an all asset debenture registered in its favour over existing movable properties owned by and to be purchased by the 1st defendant. 2.The defendants defaulted in their obligations to the plaintiff prompting the latter to exercise its statutory power of sale over the charged properties and realized Kshs. 29,232,900/- which was less than the amount owed. 3.That in line with the debenture agreement, the plaintiff attempted but failed to trace assets listed as belonging to the defendants only to find out that those presented as belonging to the defendants turned out as belonging to a third party and as a result could not realize the amounts outstanding. 4.Subsequently, the plaintiff moved this court vide a plaint dated 23/2/2023 seeking from the defendants, settlement of the outstanding amount of Kshs. 91,532,058.08 at the agreed interest rate of 19% pa as well as costs of the suit. 5.The suit was opposed by the defendants who entered appearance and filed a joint statement of defence dated 31/5/2023. In it, they contended that although the loan facility to be advanced was Kshs. 50,000,000/-, the actual amount disbursed was Kshs. 26,500,000/- and the plaintiff was to use the remaining Kshs. 23,500,000/- to directly pay for the machinery. The defendants went on to put the plaintiff strict proof of its other allegations. 6.In support of its case, the plaintiff called Martha Esiromo, its Credit Investment Manager as Pw1. She adopted her witness statement made on 23/2/2023 as her evidence in chief and produced the bundle of documents as PExh1. 7.It was her testimony that the purpose of the facility advanced to the defendants was for a business loan refinancing for purchase of equipment and working capital. That working capital was to pay the 1st defendant refinancing while the 1st defendant was supposed to source suppliers as the bank paid for the same. That there were no complaints about non-delivery of machinery from the defendants during her interaction with the defendants. That the plaintiff only recovered Kshs. 29, 233,900/- from the sale of the charged properties and there was an outstanding balance of Kshs. 91,532,058 as at January 2022 which continued to accrue interest. 8.In cross-examination, she reiterated her testimony and further stated that the plaintiff financed the purchase of the machinery whereas the 1st defendant was to take possession of the machinery. That the plaintiff had an all asset debenture over the machinery and had complied with the law prior to exercising its statutory power of sale. 9.That she had a power of attorney to testify on behalf of the plaintiff. That the interest lending rate was 18.5% p.a. during the pendency of the loan and that the said interest was applicable until the loan is repaid in full. 10.In re-examination, she stated that the plaintiff followed the proper channels and issued the relevant proceedings in realizing the securities. That the 1st defendant approached court prior to the sale and the case was dismissed in the plaintiff’s favour. That the interest continues to accrue on the outstanding loan as provided for in clause 5.3 of the loan facility agreement. 11.It was her testimony that the plaintiff attempted to exercise its rights under the debenture but never succeeded as there were 3rd parties who claimed that the machinery was sold to him. 12.Patrick Jackino Boyi testified as Dw1. He testified that he was a director of the 1st defendant and adopted his witness statement dated 31/5/2025 as his evidence in chief and produced the bundle of documents of the even date as DExh1. It was his testimony that the actual amount disbursed to the 1st defendant was Kshs. 26,500,000/- whilst the plaintiff was to use the remaining Kshs. 23,500,000/- for acquisition of machinery. 13.He stated that the loan facility was secured by the suit properties as well as debenture registered over the existing movable property owned by the 1st defendant as well as those to be purchased on its behalf by the plaintiff’s funding. It was further secured by personal loan guarantees by the 2nd and 3rd defendant. That he was aware of the defendants’ default and the subsequent realization of the securities by the plaintiff. However, the sale of machinery was forestalled by a 3rd party who claimed the same as his. 14.In cross-examination, he admitted approaching the plaintiff for a loan facility of Kshs. 50,000,000/-, that he was in default of the loan. That no movable properties had been sold. That there was no record or evidence to show that the machinery was not delivered to the defendants. That the outstanding loan was around Kshs. 90,000,000/- as per the records produced in Court. 15.Parties filed their respective submissions which the Court has considered. I have considered the pleadings, the evidence and the submissions on record. The only issue for consideration is whether the plaintiff has proved its case for Kshs. 91,532,058.08 and interest of 19%. 16.It is trite law that he who alleges must prove. Section 107 of the Evidence Act Cap 80 Laws of Kenya provide as follows: -“107 (1).Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.” 17.In Evans Nyakwana v Cleophas Bwana Ongaro [2015] eKLR, it was held that: -“As a general preposition the legal burden of proof lies upon the party who invokes the aid of law and substantially asserts the affirmative of the issue. That is the purport of Section 107(1) of the Evidence Act Chapter 80, Laws of Kenya. Furthermore, the evidential burden is cast upon any party, the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in Section 109 and 112 of the law of proof of that fact shall lie on any particular person ...”. 18.In the present case, the dispute concerns an outstanding loan facility advanced to the 1st defendant which became due following the default on the defendants’ part. 19.From the evidence, it is undisputed that the plaintiff and the defendants entered into a loan agreement wherein the facility advanced was Kshs. 50,000,000/- structured as Kshs. 23,500,000/- for purchase of equipment, Kshs. 9,301,210 and Kshs. 17,198,790 as working capital. 20.Further, it is not in dispute that the plaintiff was to pay for the machinery identified for purchase by the defendants. However, what the defendants dispute is that the funds for the machinery was never disbursed to them and that therefore, they are not liable for the same. 21.Juxtaposed against this is the uncontroverted evidence by the plaintiff that it did purchase the said machinery identified by the defendants and it was upon the defendants to take possession of the same. That however, when there was default and the plaintiff went to repossess the same, it learnt that the defendants had sold the machinery to a 3rd party. 22.The plaintiff adduced pro forma invoices and receipts of machinery acquired by the 1st defendant after the parties had agreed to the loan facility. In his own testimony, Dw1 admitted that the sale of the machinery by the plaintiff was forestalled by a 3rd party who claimed the same as his. 23.The totality of the evidence produced before this Court was that the plaintiff did pay for machinery as agreed in the loan facility agreement; that the defendants subsequently either sold the same or caused a 3rd party to acquire interest in the same. That the defendants were in default of their obligations under the facility. That after exercising its statutory power of sale over the suit properties, the plaintiff could not exercise its rights under the debenture as the said machinery had already been sold. 24.In essence, the defendants took up the entirety of the loan facility of Kshs. 50,000,000/- as agreed in the loan facility agreement. They were therefore obligated to satisfy the resultant default amount. Parties are bound by the terms of their contract and a court cannot nilly willy interfere with the same. (see NBK v Pipeplastic Samkolit (K) Ltd (2002) EA 503). Contracts that are entered into with eyes wide open, however prejudicial they may be to one of the parties, they are to be enforced. Unless there is fraud, and if the terms are unconscionable and prick the conscience of equity, they are to be strictly enforced. 25.In the present case, it is undeniable that the defendants are in default and therefore liable to settle the amount of Kshs. 91,532,058.08 claimed by the plaintiff. 26.Related to the above, I note that the plaintiff sought interest at an alleged agreed rate of 19% until full recovery of the debt. However, the loan facility agreement provides for an interest rate of 18.5%. Clause 5.3 provides that the agreement shall continue until such time the outstanding amount is redeemed in full. I thus find that the interest rate applicable to the outstanding debt is 18.5% pa. 27.The upshot of the above is that judgment is hereby entered against the defendants, jointly and severally, for Kshs. 91,532,058.08 together with interest thereon at 18.5% pa until payment in full. Costs of the suit are awarded to the plaintiff.It is so decreed. DATED AND DELIVERED AT KISUMU ON 15TH DAY OF MAY, 2026.A. MABEYA, FCI ArbJUDGE