https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12578

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MOMBASA** **COMMERCIAL AND TAX DIVISION** **COMMERCIAL CASE NO. E039 OF 2023** **GULF AFRICAN BANK LIMITED PLAINTIFF** **VERSUS** **CEDARLINE LIMITED 1ST DEFENDANT** **AHMED SHARRIF ABDI 2ND DEFENDANT** **ALMZAMIL ABDI MOHAMMED 3RD DEFENDANT** **JUDGMENT** **Introduction and background** 1. By a plaint dated 18 December 2023, the plaintiff sued the defendants jointly and severally for Kshs. 25,409,404.83 said to be owing as at 23 October 2023 together with contractual profits thereon at the rate of 14.5% per annum from that date until payment in full, and for costs of the suit with interest. 2. The claim arises from a banking facility. By a letter of offer dated 2 December 2022, the plaintiff advanced to the 1st defendant a Diminishing Musharakah Auto Finance Facility of Kshs. 26,880,000/= to finance the purchase of three FAW trucks and three tipper trailers. The facility was repayable in forty-eight monthly instalments commencing on the date of drawdown, with profit at rates of between 14.25% and 14.5% per annum. By two separate but similar guarantees, both dated 13 December 2022, the 2nd and 3rd defendants, who are directors of the 1st defendant, jointly and severally guaranteed the 1st defendant’s performance of its obligations under the facility up to a limit of Kshs. 27,000,000/= together with profits, commissions and costs that might accrue. 3. The facility was drawn down on or about 22 February 2023 and applied to the purchase of the trucks and trailers, which were registered as KDL 502L, KDL 503D and KDL 504D, and trailers ZH 0512, ZH 0513 and ZH 0514. The units stood as security for the facility; an initial notice in respect of the plaintiff’s security right in them was registered under the Movable Property Security Rights Act, cap. 499A on 14 April 2023, securing the sum of Kshs. 26,880,000/=. I should mention that the record is not consistent as to which trailer was coupled to which prime mover at any given time; nothing turns on this and I do not dwell on it. 4. The 1st defendant commenced repayment in February 2023 at a monthly instalment in the region of Kshs. 735,988/=, roughly Kshs. 245,996/= for each truck-and-trailer set. On 16 June 2023, KDL 503D and the trailer it was pulling were involved in an accident in the United Republic of Tanzania. The 1st defendant’s remittances thereafter became irregular; on its own account, it paid only in respect of the units that remained operational. The last instalment the plaintiff received was on 19 September 2023. 5. The plaintiff pressed for payment. It wrote on 20 July 2023 requiring the 1st defendant to regularise its account, and on 7 August 2023 it served, by electronic mail, a notification of default under section 67(1) of the Movable Property Security Rights Act. The notification put the arrears at Kshs. 780,861.44 and the total outstanding balance at Kshs. 26,816,300.69, and warned that the plaintiff would exercise its remedies, including repossession of the financed units, if the default was not rectified. A second accident followed: on or about 24 October 2023, KDL 502L was involved in an accident, and that unit ultimately ended up in the hands of the insurer. Through its advocates, the plaintiff issued a formal demand on 30 November 2023. The 1st defendant had, for its part, sued the plaintiff in Mombasa CMCC No. E1202 of 2023 seeking injunctive relief; that suit was struck out for want of pecuniary jurisdiction. 6. This suit was filed on 18 December 2023. The summons to enter appearance was served on the defendants by electronic mail on 19 December 2023 pursuant to Order 5 rule 22B of the Civil Procedure Rules. No appearance was entered, and on the plaintiff’s request for judgment dated 2 February 2024, interlocutory judgment in default of appearance was entered on 8 February 2024 and a decree extracted on 12 February 2024. On the defendants’ application dated 27 March 2024, however, the default judgment was set aside by a ruling delivered on 8 July 2024, and the defendants were let in to defend. They filed a joint defence and counterclaim dated 29 July 2024, to which the plaintiff responded by a reply to defence and defence to counterclaim dated 19 September 2024. 7. In the meantime, events had not stood still. The plaintiff repossessed KDL 504D and trailer ZH 0513. The defendants plead, and the plaintiff’s witness conceded in cross-examination, that the repossession took place on 2 February 2024; correspondence in the plaintiff’s own bundle suggests the units were held at its storage yard from 7 April 2024. Once again, nothing turns on the discrepancy. The prime mover was sold on 9 May 2024 for Kshs. 4,300,995/= and the trailer on 15 June 2024 for Kshs. 1,700,000/=, and the proceeds were credited to the loan account. Geminia Insurance Company, the insurer of the units, settled the claim in respect of KDL 503D, which it declared a constructive total loss, at its pre-accident value of Kshs. 6,800,000/= by a discharge voucher of 17 April 2024; the settlement sum was credited to the account on 13 August 2024. According to the plaintiff’s statement of account, the balance outstanding after these credits stood at Kshs. 18,855,825.03 as at 19 September 2024. **The plaintiff’s case** 8. The suit proceeded to full trial before me on 9 June 2025. The plaintiff called one witness, Mr. Lawi Sato, its senior legal officer, who adopted his witness statements dated 18 December 2023 and 23 September 2024 and produced the documents in the plaintiff’s two lists of documents of even dates as plaintiff’s exhibits 1 to 13. 9. In his first statement, the witness rehearsed the terms of the facility and the guarantees, the purchase and charging of the units, the 1st defendant’s default in payment of instalments and, as he put it, of insurance premiums, the two accidents, and the demands that preceded the suit. In the further statement, made in answer to the counterclaim, he deposed that the repossession and sale of KDL 504D and ZH 0513 were undertaken pursuant to the plaintiff’s security rights after due notification of default; that the insurance settlement for KDL 503D was received and credited; that the two remaining units are accident-damaged wrecks of no realisable value; that the plaintiff seeks no double recovery; and that the balance owing, after all credits, is Kshs. 18,855,825.03 as reflected in the statement of account produced as plaintiff’s exhibit 13. 10. Cross-examination yielded a number of concessions which I must set out because they framed much of the argument. The witness accepted that the judgment first obtained was an ex parte default judgment which was set aside on 8 July 2024; that the repossession of 2 February 2024 was effected without a court order while the suit was pending; that the sales of 9 May 2024 and 15 June 2024 took place while the defendants’ application to set aside the default judgment was pending, again without any court order, and that the sales were not disclosed to the court at the hearing of that application. He accepted that instalments were received up to 19 September 2023 and that the defendants had contributed some Kshs. 6.2 million towards the facility. On insurance, he accepted that the premium arrears with the plaintiff’s brokers had reduced to Kshs. 456,416/= by 5 October 2023 and that Kshs. 457,000/= was paid on 15 January 2024; he conceded that the premiums for the three trucks were paid, stated in terms that “we are not claiming insurance premium”, and accepted that no document in the plaintiff’s bundle showed that the insurer had dishonoured any claim. **The defendants’ case** 11. By their joint defence, the defendants admitted the facility and the guarantees but pleaded that the letter of offer of 2 December 2022 “granted the Defendants or a member of their group a Moratorium in respect of any Financial indebtedness.” They denied being in breach and turned the accusation around: it was the plaintiff, they pleaded, that breached a fundamental term of the facility by failing to grant them a moratorium immediately the trucks were involved in the accidents of 16 June 2023 and 25 October 2023, “contrary to the clear and unambiguous provision 12.8 of the letter of offer.” They pleaded that they insured the units through the plaintiff’s own insurance brokers and paid the premiums in full, yet had not been compensated; that the plaintiff was “fully responsible” for the non-compensation; that they had a legitimate expectation of a moratorium; and that the plaintiff sought to enrich itself unjustly through its unfair and illegal actions. 12. By the counterclaim, the defendants pleaded that on 2 February 2024 the plaintiff irregularly and unlawfully repossessed KDL 504D and trailer ZH 0513, during the pendency of this case and without a court order, bringing their business to a standstill and occasioning them a continuing loss of business at the rate of Kshs. 980,000/= per month. They prayed for: (a) a declaration that they were entitled to a moratorium immediately the accidents occurred to KDL 503D on 16 June 2023 and KDL 502L on 25 October 2023, stopping any demand for repayment and the charging of interest and penalties on the two trucks’ accounts until full compensation by the insurance company; (b) an order expunging the demands for monthly repayment, interest and penalties on the accounts for the two accident units with effect from the respective accident dates until full compensation by the insurance company; (c) an order for the unconditional release of KDL 504D and trailer ZH 0513 to the defendants; (d) in the alternative, an order that the plaintiff pays the defendants the invoice value of KDL 504D and trailer ZH 0513; (e) damages for loss of business at the rate of Kshs. 980,000 per month with effect from 2 February 2024 until release of the unit; and (f) costs of the counterclaim and interest. 13. The defendants called one witness, the 3rd defendant, Mr. Almzamil Abdi Mohammed, who, according to the CR12 produced in evidence, is the sole director and shareholder of the 1st defendant. He adopted his witness statements of 15 August 2024 and 17 February 2025 and produced the defendants’ bundle of documents dated 24 September 2024 and the additional documents of 13 March 2025 as defence exhibits 1 to 10. 14. His account was this. The 1st defendant serviced the facility from February 2023 until the accident of June 2023, after which it paid only in respect of the units that were working. It spent upwards of Kshs. 500,000/= bringing the damaged truck back from Tanzania. The units were insured with Geminia at the plaintiff’s instance and through its brokers, and the premiums were paid in full, albeit by instalments; the accident report form was completed and submitted on 9 August 2023, yet no compensation was forthcoming for a long time. He engaged the plaintiff over the arrears – the engagement is reflected in electronic mail of 15 and 21 August 2023 – and made a payment in good faith on 19 September 2023. He complained of conflicting directions from the plaintiff’s Mombasa branch, which he said allowed payment of the arrears in instalments, and its head office, which insisted on payment in full; of calls from auctioneers; and, ultimately, of the repossession of what he described as the only functional truck and trailer. He put the earnings of each unit at approximately Kshs. 950,000/= per month and said that no account of the sale of the repossessed units was ever rendered to him. He was not cross-examined. **Submissions** 15. At the close of the trial, the parties were directed to file written submissions. The plaintiff’s submissions are dated 18 July 2025. Counsel framed the case as one of “a borrower insisting that the lender must underwrite the borrower’s business.” On the plaint, counsel submitted that the loan is admitted and that, where a loan is advanced and not repaid, judgment follows as a matter of course unless a defence extinguishing the debt is established (See ***Sidian Bank Limited (formerly K-Rep Bank) v Microhouse Technologies Limited [2017] KEHC 4620 (KLR)*.** On the moratorium defence, counsel pointed out that the whole of clause 12 of the letter of offer deals with events of default entitling the plaintiff to call up the security, and wondered how a clause conferring rights on the plaintiff could be read as benefiting the 1st defendant. Counsel relied on ***Khunaif Trading Company Limited v Equity Bank Limited & Trevor Auctioneers [2015] KEHC 6258 (KLR)*** for the proposition that an accident befalling a financed vehicle does not absolve the borrower of its payment obligations, and on ***Seahawk General Logistics Limited & 2 others v Stanbic Bank Kenya Limited [2021] KEHC 7813 (KLR)*** for the proposition that an accommodation not mandated by the contract is gratuitous and a lender cannot be faulted for insisting on the strict terms of its bargain. 16. On the insurance defence, counsel made three points: first, that repayment of the facility was never pegged on the proceeds of any insurance claim, citing this court’s ruling in ***Bakhsons Distributors Limited v Gulf African Bank & another [2025] KEHC 2661 (KLR)***; secondly, that correspondence in the plaintiff’s bundle showed the broker could not lodge the claim while premiums – an obligation of the 1st defendant – remained outstanding; and thirdly, that the insurance contract is between the 1st defendant and the insurer, so that the doctrine of privity forecloses any attempt to hold the plaintiff liable for the insurer’s conduct. As against the 2nd and 3rd defendants, counsel submitted that a guarantee is a contract separate and distinct from the principal contract; that all that is required to attach liability to a guarantor is default by the principal and a demand, citing ***Kenindia Assurance Company Limited v First National Finance Bank Limited [2008] KECA 91 (KLR)***; and that the guarantors could not adopt the principal debtor’s defences as though they were principals. Counsel invited the court to act on the statement of account showing Kshs. 18,855,825.03 owing as at 19 September 2024, section 176 of the Evidence Act rendering it prima facie evidence of its contents, and to enter judgment in that sum with profits and default damages at 13% and 20% per annum respectively from 19 September 2024. 17. On the counterclaim, counsel submitted that no law obliges a secured creditor to obtain a court order before repossessing its security; that section 67 of the Movable Property Security Rights Act empowers repossession without resort to court; that the statutory notice was issued and went unheeded; and that contractual repossession is recognised even without notice, citing ***Diamond Trust Bank Kenya Limited v Amudede Company Limited [2018] KEHC 4210 (KLR)*.** The sales of 9 May and 15 June 2024, counsel submitted, preceded the orders of 8 July 2024, so that the plaintiff could not sensibly be accused of acting in defiance of any court order – there was none when the units were repossessed and sold. Finally, counsel submitted that the claim for Kshs. 980,000 per month is a claim in special damages which must be specifically pleaded and strictly proved, citing ***David Bagine v Martin Bundi [1997] KECA 54 (KLR)*,** and that the single month’s statement of a personal bank account of the 3rd defendant produced by the defendants, when the trucks belonged to the 1st defendant, proves nothing remotely approaching the pleaded figure. 18. In their written submissions filed in reply, the defendants open with the law of pleadings and of contract: citing ***Vishva Stones Supplies Co. Ltd v RSR Stones (2006) Ltd, Civil Appeal No. E308 of 2020*,** counsel reminds the court that each party is bound by its own pleadings and that the court is itself bound by them; and citing ***Hydro Water Well (K) Ltd v Gilbert Muthendi Wambua & 2 others, Civil Suit No. E212 of 2019***, that the remedies the courts grant in contract are designed to give effect to what the parties voluntarily undertook. Counsel emphasises that while PW1 was cross-examined at length and not re-examined, DW1 was not cross-examined at all. He then catalogues what he says is not in dispute: that the letter of offer of 2 December 2022 is the only lending agreement between the parties and contains all their contracted rights and obligations; the advance of Kshs. 26,880,000 and the purchase of the three trucks and trailers; the two accidents of June and October 2023; the repossession of 2 February 2024 during the pendency of this suit; that the insurer and the brokers were approved by the plaintiff and that the 1st defendant paid the premiums by instalments through the plaintiff; the guarantees; and regular instalments until October 2023. Three issues are framed: whether the plaintiff made it difficult for the defendants to pay instalments beyond October 2023; whether the defendants failed to pay the insurance premiums; and whether they were entitled to a moratorium upon the occurrence of the accidents. 19. On the first and third of those issues, counsel submits that the plaintiff knew the loan was to be repaid from the earnings of the trucks, a matter he says PW1 admitted; that under clause 7.1 of the letter of offer the plaintiff and the 1st defendant were to be registered as joint owners of the units; that under clause 13.14 the plaintiff was itself obliged to pay the insurance premiums on the 1st defendant’s behalf and recover them from it; and that clause 12.8, though a sub-clause of the events-of-default article, “as drafted benefits the 1st Defendant” because “it gives a moratorium to them in the event of default.” Counsel points to the defendants’ written request for a moratorium dated 16 August 2023, produced as defence exhibit 5, which the plaintiff neither answered nor granted and for which refusal it has never supplied a reason; invokes the definition of a moratorium in Black’s Law Dictionary and the observation in ***Cheyne Row Investments Ltd v Malde Holdings Ltd, Insolvency Cause No. E030 of 2021*** that a moratorium provides “a breathing space”; and submits that the refusal amounted to forcing the defendants into default, so that the plaintiff approbates and reprobates and comes to court with unclean hands, its authorities, viz. ***Sidian Bank Limited (formerly K-Rep Bank) v Microhouse Technologies Limited (supra)***, ***Khunaif Trading Company Limited v Equity Bank Limited & Trevor Auctioneers*** *(supra)* and ***Seahawk General Logistics Limited & 2 others v Stanbic Bank Kenya Limited*** *(*supra) being distinguishable. On the premiums, counsel submits that the plaintiff’s pleaded case, that unpaid premiums caused the insurer to decline the claims, collapsed in cross-examination: the brokers’ statement showed a balance of Kshs. 956,416/= as at 7 June 2023, reduced to Kshs. 456,416/= by 5 October 2023, which the Pesalink transfer of Kshs. 457,000/= on 15 January 2024, defence exhibit 3, settled in full; PW1 admitted that the insurer in fact settled one claim, which counsel says gives the lie to the refusal narrative; and on the defendants’ reading of clauses 7.1 and 13.14 the premium obligation was in any event the plaintiff’s. Counsel asserts that the insurer’s compensation was deposited with the plaintiff but that no credit was passed to the defendants. 20. In direct answer to the plaintiff’s submissions, counsel takes the pleading point in both directions: the court cannot enter judgment for Kshs. 25,409,404.83, which the plaintiff’s own statement of account contradicts; nor for Kshs. 18,855,825.03, which counsel characterises as a new prayer appearing nowhere in the plaint, raised for the first time through submissions without any amendment, and which the defendants had no opportunity to interrogate, citing ***Vishva Stones* and *Kenya Women Finance Trust v Square Deal Kenya Ltd, Civil Appeal No. 36 of 2021***. The distinction the plaintiff draws between the principal debtor and the guarantors is said not to be borne out by the plaint as drawn, and the *Kenindia* *case* is distinguishable. On the counterclaim, counsel submits that clause 6 of the letter of offer, which deals with repayment, confers no express right of repossession; that by electing to sue for recovery of the loan the plaintiff waived its self-help remedy of repossession and sale, and by dint of clause 6.5 ought to have awaited judgment and levied execution; and that the repossession and sale of the 1st defendant’s only functional unit during the pendency of this suit offended the doctrine of lis pendens – pendente lite nihil innovetur – citing ***Shavji Naran Virji v Ogla Jemel Barng’etuny [2021] eKLR*.** Finally, on damages, counsel submits that DW1’s evidence of earnings of Kshs. 980,000/= per month, supported by the bank statement produced as defence exhibit 8, went wholly unchallenged – no cross-examination, no objection to production, no question as to authenticity – and that it is not open to the plaintiff to attack through submissions evidence it declined to test at trial. **Issues for determination** 21. From the pleadings, the evidence and the submissions, the questions that fall for determination are, first, whether the defendants were entitled under the letter of offer to a moratorium upon the occurrence of the accidents; secondly, whether the plaintiff’s claim is otherwise answered by the events surrounding the insurance of the financed units; thirdly, whether the plaintiff has proved the sum claimed against the 1st defendant and against the 2nd and 3rd defendants as guarantors; fourthly, whether the defendants have proved their counterclaim; and finally, what orders should be made on reliefs and costs. **Whether the defendants were entitled to a moratorium** 22. It is common ground that the facility was advanced, that the trucks and trailers were purchased with it, and that instalments ceased flowing after 19 September 2023. The defendants’ answer to what would otherwise be a straightforward claim in debt rests, first and foremost, on clause 12.8 of the letter of offer. The clause reads: ***“A moratorium is declared in respect of any Financial Indebtedness of the Customer or a member of the Group.”*** 23. The clause does not stand alone. It is one of a series of clauses under article 12 of the letter of offer, an article dealing with events of default. Each clause in that article describes an event which, should it occur, constitutes a default entitling the plaintiff to exercise its remedies, including calling up the facility and realising its security. Read in that context, as it must be, clause 12.8 addresses the situation in which a moratorium is declared – by operation of law, in insolvency, or under some arrangement between the customer and its creditors – in respect of the customer’s financial indebtedness, and stipulates that such a declaration is itself an event of default. The clause is, in short, a shield for the lender; it is not a sword for the borrower. 24. The construction the defendants urge inverts the provision. On no sensible reading does the clause oblige the plaintiff to grant a repayment holiday, still less confer upon the customer a unilateral right to suspend instalments whenever a financed unit is involved in an accident. The clause says nothing of accidents, nothing of insurance, and nothing of suspension of payment. The defendants did not point to any other provision of the letter of offer that does. A court of law cannot rewrite a contract for the parties or import into it terms they did not make for themselves: ***National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd & another [2002] 2 EA 503*.** The 3rd defendant’s further assertion that a moratorium in these circumstances is “standard practice among financial institutions” was just that – an assertion. No evidence of any such practice, let alone a practice of such notoriety and certainty as to be imported into a written contract, was placed before the court. 25. If confirmation were needed that the defendants themselves never understood the contract in the sense they now urge, it is supplied by their own contemporaneous conduct. The defendants rely on their written request of 16 August 2023, produced as defence exhibit 5, by which they asked the plaintiff for a moratorium – a request counsel describes as made “in exercise of their right under Clause 12.8.” The document is, however, what it calls itself: a request. On 21 August 2023, in answer to the branch manager’s follow-up on the arrears, the 3rd defendant attributed the default to a client of the 1st defendant who had not paid, promised to clear the arrears as soon as possible, and then wrote: “We would also like to hear from you regarding the waiver of the 3 installment for KDL 503D.” One does not request a waiver, or ask to “hear from” the other party about it, in respect of instalments one is contractually entitled to withhold; one simply withholds them and points to the clause. The earlier exchange of 15 June 2023 is to the same effect: pressed for the overdue premium and instalment, the 1st defendant’s response was that it was awaiting remittances from its own clients – not that it was entitled to a moratorium. And the complaint, pressed in submissions, that the plaintiff never responded to the request or supplied reasons for declining it, itself concedes the point: a party with a contractual entitlement does not await the other’s response; a supplicant does. The moratorium plea has every appearance of an afterthought constructed for the purposes of this litigation. 26. The law on the point is not in doubt. In ***Khunaif Trading Company Limited v Equity Bank Limited & Trevor Auctioneers [2015] KEHC 6258 (KLR)*,** the court, faced with a borrower whose financed vehicles could not generate income, adopted the holding in ***Joseph Chege Gitau v CFC Bank Limited [2008] eKLR*** that: ***“… the fact that the motor vehicle had mechanical problems did not absolve the Appellant from his obligation to make the monthly payments, nor did it deny the Respondent its right to repossess the motor vehicle. It is evident that the agreement provided the Respondent the right to repossess the motor vehicle as long as there was default in payment of the monthly installments.”*** 27. In those circumstances the defendants could plead with the plaintiff to indulge them – as, on the evidence, they did – but they could not demand indulgence as of right. As Mabeya J. put it in ***Seahawk General Logistics Limited & 2 others v Stanbic Bank Kenya Limited [2021] KEHC 7813 (KLR)*:** ***“Whether or not to agree to accommodate the plaintiffs was in the discretion of the respondent. The respondent was entitled to insist on its pound of flesh. In so far as the accommodation being sought was not mandatory under the contract between the parties, but only gratuitous, the respondent could not be faulted for insisting on a strict application of the terms of the contract between it and the plaintiffs.”*** 28. The defendants’ resort to the dictionary meaning of a moratorium, and to the observation in ***Cheyne Row Investments Ltd v Malde Holdings Ltd*** (supra) that a moratorium affords “a breathing space,” does not advance the matter. What a moratorium is has never been in doubt; the question is who, under this contract, was entitled to one and from whom. Counsel’s formulation – that clause 12.8 “as drafted benefits the 1st Defendant” because “it gives a moratorium to them in the event of default” – lays the fallacy bare. On that reading, the very occurrence of a default would entitle the defaulting borrower to stop paying: the deeper the default, the stronger the entitlement. A construction that rewards default with immunity from the obligation to pay is commercially absurd, and clauses in an events-of-default article are not to be read as self-destructing in that fashion. Nor is there anything in the charge that the plaintiff, in declining the indulgence, approbates and reprobates or comes to court with unclean hands: both accusations assume the very entitlement I have found does not exist. A lender that declines a favour it never promised does nothing inequitable. 29. Nor can the defendants find refuge in the alleged indulgence of the plaintiff’s Mombasa branch as against its head office. Even taking that evidence at its highest, an arrangement to vary the written terms of the facility – to accept the arrears by instalments or to suspend repayment – would itself have had to possess the characteristics of a valid contract, the parties ad idem and the variation supported by consideration: ***Kenya Breweries Limited v Kiambu General Transport Agency Ltd [2000] eKLR***. No concluded variation was pleaded, let alone proved. The plea of “legitimate expectation” fares no better; it is a doctrine of public law which has no purchase in the enforcement of a private commercial bargain, and, in any event, no representation by the plaintiff capable of founding any expectation was established. The first issue must accordingly be answered against the defendants: they were not entitled to any moratorium, their failure to pay instalments after 19 September 2023 was a default, and the plaintiff committed no breach in declining the indulgence sought. **Whether the insurance events answer the claim** 30. The second strand of the defence is that repayment ought to have awaited, or come out of, compensation from the insurer, and that the plaintiff is to blame for the non-compensation. The short answer is that the 1st defendant’s obligation to repay the facility was never pegged on the proceeds of any insurance claim. The letter of offer obliged the 1st defendant to pay forty-eight monthly instalments; it did not make those instalments conditional on the fortunes of a claim against a third party. This court had occasion to make the same point, as it happens in litigation involving this very plaintiff, in ***Bakhsons Distributors Limited v Gulf African Bank & another [2025] KEHC 2661 (KLR)*:** a borrower who has admittedly defaulted cannot turn around and blame the lender for initiating recovery, or attribute its default to the failure of a third-party source of funds, unless it demonstrates that repayment of the loan was pegged on that source. No such demonstration was made or attempted here. 31. Secondly, the contract of insurance was between the 1st defendant and Geminia Insurance Company. The plaintiff was not a party to it. However the delay in settlement of the claims is to be characterised, the doctrine of privity of contract forecloses any attempt to visit the insurer’s conduct upon the plaintiff. That the plaintiff introduced the 1st defendant to the insurer and its brokers, as the 3rd defendant testified, does not make the plaintiff a party to the policy or a guarantor of the insurer’s performance. 32. The defendants sought, in submissions, to shift the premium obligation itself onto the plaintiff, relying on clause 7.1 of the letter of offer, under which the plaintiff and the 1st defendant were to be registered as joint owners of the units, and on clause 13.14, which counsel reads as obliging the plaintiff to pay the premiums on the 1st defendant’s behalf and recover them from it. Even taking that reading of clause 13.14 at face value, it does not carry the defendants anywhere. An arrangement under which a financier disburses premiums and debits its customer is a mechanism of collection, premium financing, not an assumption by the financier of the insurance obligation, still less of the insurance risk; the burden of the premiums remains the customer’s, as the defendants’ own evidence of paying the premiums “by instalments through the plaintiff” acknowledges. And the co-registration of the units under clause 7.1 reflects nothing more than the structure of a Diminishing Musharakah facility, in which the financier holds a diminishing co-ownership share as its security; it does not transfer the customer’s policy obligations to the financier. 33. Thirdly, and in any event, the controversy over the premiums leads nowhere on the evidence as it finally stood. Whatever the position may have been in mid-2023, and the statutory notification and the brokers’ correspondence show there were premium arrears then, the plaintiff’s own witness ultimately conceded that the arrears with the brokers reduced to Kshs. 456,416/= and that Kshs. 457,000/= was paid on 15 January 2024; he conceded that the premiums for the three trucks were paid; he stated in terms that the plaintiff claims no premiums in this suit; and he accepted that no document showed the insurer to have dishonoured any claim. On the contrary, the claim in respect of KDL 503D was settled at the unit’s full pre-accident value of Kshs. 6,800,000/= and the settlement credited to the loan account on 13 August 2024. To that extent the defendants are right that the premium-default narrative pleaded in the plaint did not survive the trial; but the collapse of that narrative does not discharge the debt; it merely removes one of the plaintiff’s explanations for a delay in compensation which, in the end, occurred and was made good. The further assertion in the defendants’ submissions that the compensation was deposited with the plaintiff “but the Plaintiff has not given the Defendants credit for it” is contradicted by the record: the statement of account, plaintiff’s exhibit 13, shows the credit of Kshs. 6,800,000/= on 13 August 2024, along with the sale proceeds, and the balance now claimed is computed net of all three credits. The insurance events, in short, neither discharged the defendants’ payment obligations nor diminish the claim beyond the credits already given. The second issue is likewise answered against the defendants. **Whether the plaintiff proved the sum claimed** 34. The plaintiff’s statement of account, produced as plaintiff’s exhibit 13, shows a balance of Kshs. 18,855,825.03 as at 19 September 2024, arrived at after crediting the sale proceeds of Kshs. 4,300,995 and Kshs. 1,700,000 and the insurance settlement of Kshs. 6,800,000. By dint of section 176 of the Evidence Act, entries in a banker’s book are prima facie evidence of the matters, transactions and accounts recorded in them. The defendants placed no rival computation before the court; the 3rd defendant’s complaints, such as they were, did not engage the arithmetic of the account at all. The prima facie evidence stands unrebutted, and I find the indebtedness proved in the sum of Kshs. 18,855,825.03 as at 19 September 2024. 35. As against the 2nd and 3rd defendants, the position is governed by their guarantees of 13 December 2022, by which they bound themselves jointly and severally up to Kshs. 27,000,000/= together with profits, commissions and costs. A contract of guarantee is separate and distinct from the principal contract, and what attaches liability under it is default by the principal debtor coupled with a demand. The Court of Appeal put the matter thus in ***Kenindia Assurance Company Limited v First National Finance Bank Limited [2008] KECA 91 (KLR)*:** ***“In such cases the most important factor to consider before liability can attach is whether there has been default. Once default is established and that there has been a formal demand the other conditions are of a secondary nature and may not be used to defeat the security.”*** 36. Default by the 1st defendant is established; demand was made upon the guarantors on 30 November 2023. The 2nd and 3rd defendants chose to file a joint defence with the principal debtor and to advance the very defences the principal advanced. Those defences having failed for the principal, there is nothing left for the guarantors, and the sum found due falls comfortably within the guaranteed limit. All three defendants are accordingly liable jointly and severally. 37. One matter of quantum requires attention, and it was pressed from both sides of the bar. In their submissions, counsel for the plaintiff invited the court to enter judgment for Kshs. 18,855,825.03 “together with profits and default damages at 13% & 20% per annum respectively from 19th September 2024.” Counsel for the defendants seized on this and took the pleading point in both directions: the court, he submitted, cannot award Kshs. 25,409,404.83, the sum pleaded, because the plaintiff’s own statement of account contradicts it; nor Kshs. 18,855,825.03, because that is a “new prayer” appearing nowhere in the plaint, raised for the first time through submissions without amendment; so that, on the defendants’ argument, the claim must be dismissed altogether. Counsel relied on *Vishva Stones Supplies Co. Ltd v RSR Stones (2006) Ltd* and *Kenya Women Finance Trust v Square Deal Kenya Ltd* for the proposition that parties, and the court itself, are bound by the pleadings. 38. The proposition is sound; the conclusion drawn from it is not. The plaint claims a single, identified debt: the balance of the Diminishing Musharakah facility, quantified at Kshs. 25,409,404.83 as at 23 October 2023. That sum was proved as at that date by the demand and the account. What happened thereafter – the insurance settlement of Kshs. 6,800,000 and the sale proceeds of Kshs. 4,300,995 and Kshs. 1,700,000, all realised and credited after the suit was filed, did not create a new cause of action or a different claim; it reduced the recoverable balance of the very debt sued upon, and the plaintiff was not merely entitled but bound to give credit for those receipts, on pain of the double recovery it expressly disclaims. A plaintiff who proves the debt pleaded and then gives credit for payments received pendente lite does not advance a new prayer; it asks for less than it pleaded, which the law has never forbidden. It is the converse, an award of more than is pleaded, or of a head of relief never pleaded, that the authorities counsel cites condemn. Nor is it accurate to say, as the defendants’ submissions do, that the figure of Kshs. 18,855,825.03 “was not raised by PW1 nor did it come up in the proceedings”: it was deposed to in the further witness statement of 23 September 2024, served on the defendants long before trial; it appears in the statement of account produced as plaintiff’s exhibit 13; the defendants’ own submissions engage with that very statement at page 64 of the plaintiff’s bundle; and PW1 was cross-examined at length on the account, the sales and the credits. The defendants can claim no surprise. 39. The plaintiff’s side of the pleading rule must, however, be applied with equal rigour. The prayer in the plaint was for contractual profits at 14.5% per annum; no default damages at 20% nor, for that matter, profits at 13%, were ever prayed. The claim for default damages at 20% per annum, made for the first time in submissions, is exactly the kind of relief the rule in ***Vishva Stones*** ***case*** forecloses, and it is declined. Judgment will therefore be entered for the proven balance of Kshs. 18,855,825.03, which is inclusive of profits accrued to 19 September 2024, together with contractual profits thereon at the pleaded rate of 14.5% per annum from that date until payment in full. **The counterclaim** 40. The counterclaim advances four substantive claims: the declaration of a moratorium entitlement and the consequential expunging orders; the release of KDL 504D and ZH 0513 or, in the alternative, payment of their invoice value; and damages for loss of business. 41. The first two prayers stand or fall with the construction of clause 12.8, and for the reasons already given they fall. I would only add that the prayers seek to stop the charging of interest and penalties “until full compensation is made by the Insurance Company” – a formulation overtaken by events so far as KDL 503D is concerned, compensation for that unit having been made in full and credited on 13 August 2024. As for KDL 502L, which the evidence shows was taken over by the insurer after the second accident, no evidence at all was led as to the fate of any claim in respect of it. Either way, there being no contractual foundation for the moratorium asserted, there is none for the expunging orders built upon it. 42. The third prayer – unconditional release of KDL 504D and ZH 0513 – was incapable of being granted from the moment it was made. The prime mover was sold on 9 May 2024 and the trailer on 15 June 2024; the counterclaim was filed on 29 July 2024. The court cannot order the release of units the plaintiff no longer holds. The prayer is spent, and the real question is the alternative one. 43. The alternative prayer for the invoice value of the units rests on the pleaded premise that the repossession of 2 February 2024, effected “during the pendency of this case and without Court Order,” was irregular and unlawful. That premise is unsound in law. The Movable Property Security Rights Act, under which the plaintiff’s security right was registered, expressly contemplates extra-judicial enforcement. Section 66 provides that a secured creditor may exercise its post-default rights by application to a court “or in accordance with this Part, without applying to a court.” Section 67 obliges the secured creditor first to serve a notification of default and then provides, in subsection (3), that if the grantor does not comply within the time indicated: ***“… the secured creditor may—*** ***(a) sue the grantor for any payment due and owing under the agreement;*** ***(b) appoint a receiver of the movable asset;*** ***(c) lease the movable asset;*** ***(d) take possession of the movable asset;*** ***(e) sell the movable asset; or*** ***(f) pursue any of the remedies under section 65.”*** 44. Section 71(1)(a) then provides that a secured creditor is entitled to obtain possession of the collateral where “the grantor has consented in the security agreement to the secured creditor obtaining possession, in which case no court application is required,” and section 72(1) entitles the secured creditor, after default, to sell or otherwise dispose of the collateral. The notification of default was served on 7 August 2023 and went unheeded; the security documents, whose terms were not challenged in the evidence, entitled the plaintiff to possession upon default. The want of a court order was therefore no irregularity at all: the statute dispenses with one. The point is fortified by ***Diamond Trust Bank Kenya Limited v Amudede Company Limited [2018] KEHC 4210 (KLR)*,** where repossession pursuant to a contractual default clause was upheld even in the absence of a stipulation requiring notice of intent to repossess. 45. The defendants’ submissions sought to escape the statute along three routes, none of which was pleaded but each of which I will nonetheless address. The first is that clause 6 of the letter of offer, which deals with repayment, confers no express right of repossession, and that clause 6.5 obliged the plaintiff to await judgment and levy execution. The letter of offer does not stand alone: the plaintiff’s security right over the units was created by the security documents and perfected by registration under the Act, and it is the Act that confers the remedies I have set out. Section 5 of the Act permits parties to derogate from most of its provisions by agreement; but no provision of the letter of offer excluding or postponing the statutory remedies was identified, and no clause was read to the court bearing the meaning counsel sought to attribute to clause 6.5. An argument that a secured creditor contracted away the enforcement machinery of the very statute under which its security was registered requires clear words; none were shown. 46. The second route is election: that by choosing to sue for the debt, the plaintiff waived its self-help remedies and could not thereafter repossess or sell. The Act answers this in terms. Section 65(2) provides: ***“The exercise of a post-default right with respect to the collateral does not prevent the exercise of a post-default right with respect to the secured obligation, and the exercise of a post-default right with respect to the secured obligation does not prevent the exercise of a post-default right with respect to the collateral****.”* 47. The remedies of suit and realisation are, by express statutory command, cumulative and not alternative. Section 74(4), under which the debtor remains liable for any shortfall after application of the net proceeds of disposition, presupposes precisely that a creditor may both realise its security and pursue the balance in personam. The only discipline the law imposes is against double recovery, and that discipline is observed by crediting the proceeds to the account – which, as I have found, was done. There was accordingly no election and no waiver. 48. The third route is the doctrine of lis pendens, expressed in the maxim pendente lite nihil innovetur, for which counsel cited ***Shavji Naran Virji v Ogla Jemel Barng’etuny [2021] eKLR*.** The doctrine restrains dealings in property whose title is directly in issue in pending litigation, so that the fruits of the suit are not defeated by alienation before judgment; its natural home, and the context of the authority cited, is immovable property over which rival titles are being litigated. It has no application here. This suit put in issue a debt, not title to the trucks; the trucks were collateral which the defendants had charged to the plaintiff and which the statute empowered the plaintiff to realise upon default without recourse to court. The counterclaim’s challenge to the repossession was itself filed only after the units had been sold. To hold that the mere filing of the creditor’s own debt action suspends its statutory power of realisation would be to repeal section 65(2) by judicial construction, and would produce the remarkable result that a secured creditor weakens its security by suing on the debt. The submission is rejected. 49. There remains the circumstance, candidly conceded by the plaintiff’s witness, that the sales of 9 May 2024 and 15 June 2024 were carried out while the defendants’ application to set aside the default judgment was pending, and were not disclosed to the court at the hearing of that application. That conduct was less than candid, and the court does not commend it: a litigant who realises its security while an application touching on the foundation of its judgment is pending, and says nothing of it, takes a course that sails close to the wind. But want of candour is one thing; illegality is another. There was, at the material time, no order of this court restraining possession or sale, and the pendency of an application does not of itself suspend a secured creditor’s statutory and contractual remedies. A party who requires interim protection must seek and obtain it; the defendants sought none in this suit, and their separate injunction suit in the magistrate’s court had been struck out for want of jurisdiction. The lawfulness of the repossession and sales cannot, therefore, be impeached on the ground pleaded. 50. Even apart from the pleaded ground, the alternative prayer would face an insuperable difficulty. The units whose invoice value the defendants claim were themselves acquired with the plaintiff’s money and stood as collateral for it. Upon their sale, section 74 of the Act required the proceeds to be applied first to the reasonable expenses of enforcement and then to the satisfaction of the secured obligation, the debtor remaining liable for any shortfall; and that is what the evidence shows happened – the proceeds were credited to the account, and the balance now claimed is net of them. To order the plaintiff to pay the defendants the invoice value of the units while the facility that financed that very value remains substantially unpaid would be to confer a double benefit. Had the defendants’ complaint been that the units were sold at an undervalue, or without the notification of disposition contemplated by section 73, or that no proper account of the sale was rendered – the last being the only complaint the 3rd defendant voiced in his testimony – those were cases to be pleaded and proved; none was pleaded, and no valuation or other evidence of undervalue was tendered. The alternative prayer fails. 51. The final substantive prayer is for damages for loss of business at Kshs. 980,000 per month from 2 February 2024. A claim of this nature is a claim in special damages: it must be specifically pleaded and strictly proved. The Court of Appeal’s admonition in ***David Bagine v Martin Bundi [1997] KECA 54 (KLR)*,** adopting Lord Goddard C.J. in ***Bonham Carter v Hyde Park Hotel Limited [1948] 64 TLR 177*,** bears repetition: ***“Plaintiffs must understand that if they bring actions for damage it is for them to prove damage, it is not enough to write down the particulars and, so to speak, throw them at the head of the court, saying, ‘this is what I have lost, I ask you to give me these damages.’ They have to prove it.”*** 52. Measured against that standard, the proof offered falls far short. It consisted of the 3rd defendant’s bare assertion – Kshs. 980,000/= per month in the pleading, approximately Kshs. 950,000/= per unit in his testimony – and a single month’s statement, for November 2023, of the 3rd defendant’s personal bank account, produced as defence exhibit 8. The account is not the 1st defendant’s, whose trucks these were; the statement predates the repossession by months; and its debits and credits were never explained or linked to the earnings of any truck. No contracts of carriage, invoices, delivery notes, ledgers or accounts of the 1st defendant were produced. Counsel pressed hard the point that the plaintiff neither cross-examined DW1 nor objected to the production of the statement nor questioned its authenticity, and submitted that the plaintiff cannot attack through submissions evidence it declined to test at trial. That is so, up to a point: I take the evidence exactly as it stands, unimpeached by cross-examination. But taking evidence as it stands is not the same as finding it sufficient. Where the law requires strict proof, the court’s duty to be satisfied of the quantum is not abrogated by the opposing party’s silence; the absence of challenge cannot supply proof that was never given. An unexplained one-month statement of a stranger account, taken exactly as it stands, still proves nothing about what a truck earned or what its owner lost. I note in passing that the submissions repeatedly attribute the repossession, the sale and the claimed earnings to “KDL 502D/ZH 0512”; the unit repossessed and sold was KDL 504D and trailer ZH 0513. Nothing turns on the slip, but it is emblematic of the imprecision that attends the whole of this head of claim. The claim fails for want of proof of quantum; and it would in any event have foundered on liability, for the immediate cause of the repossession was the defendants’ own default, and a borrower cannot recover from its lender losses flowing from the lawful exercise of the lender’s remedies which the borrower’s own breach provoked. 53. The result is that the counterclaim fails in its entirety and is dismissed. **Disposition** 54. For the reasons I have given, judgment is entered for the plaintiff against the 1st, 2nd and 3rd defendants jointly and severally in the following terms: (a) the defendants shall pay the plaintiff Kshs. 18,855,825.03; (b) the sum in (a) shall attract contractual profits at the rate of 14.5% per annum from 19 September 2024 until payment in full; (c) the counterclaim is dismissed; and (d) the plaintiff shall have the costs of the suit and of the counterclaim, together with interest thereon at court rates. 55. It is so ordered. **Signed, dated and published on the CTS on 6 August 2026** Ngaah Jairus **JUDGE**