https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9758

Harrogate Ltd & another v Mwananchi Credit Ltd (Civil Suit E843 of 2021) [2026] KEHC 9758 (KLR) (Commercial and Tax) (2 July 2026) (Ruling) Neutral citation: [2026] KEHC 9758 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Suit E843 of 2021 RC Rutto, J July 2, 2026 Between Harrogate Limited 1st Plaintiff Alice Muthoni Thuo 2nd Plaintiff and Mwananchi Credit Limited Defendant Ruling Background 1.Before this Court for determination is the Plaintiffs/Applicant’s Notice of Motion dated 22nd April, 2026, brought pursuant to Articles 10(2), 40, 50 and 159 of the Constitution, Sections 2, 44 and 44A of the Banking Act, Sections 104(2), 105 and 106 of the Land Act, Sections 1A, 1B, 3A and 34 of the Civil Procedure Act, Order 21 Rule 12 and 17, Order 40 Rules 1,2,3 and 8 and Order 51 Rule 1 of the Civil Procedure Rules, Regulations 18 and 11(b) (x) of the Auctioneer’s Rules 1997. 2.The Applicants seek an order of temporary injunction restraining the Defendant/Respondent or its agents from selling by public auction all that property title known as LR No. 2327/252 located in Karen Hardy within Nairobi County (hereafter the suit property) pending the hearing and determination of the application; directing the Respondent to within 7 days, give a full statement of accounts of the loan disbursed to it and proof of ministerial consent to vary interest from the inception of the loan facility to date; appointing an independent valuer to undertake a valuation of the suit property and report back to court within 30 days; re-opening the consent dated the 27th March, 2024, based on the in-duplum principle; setting aside the interest rate of 3% per month agreed in the consent; directing that the amounts payable under the loan agreement between the parties was Kshs. 86, 249,960/-; directing that the balance outstanding be payable from the proceeds of the sale of the properties L.R No. 2327/339 and 2327/340; extending time for repayment of the correctly computed loan amount, to be payable within 14 days of completion of sale; costs; and any further orders in the interest of justice. 3.The Applicants rely on the grounds on the face of the application, the supporting and further affidavits sworn by Shreedhar Girdharlal Hirji on 22nd April, 2026, and 19th May, 2026, respectively, as well as submissions dated 11th May, 2026. They contend that the Respondent advanced to them a loan facility subject to a charge over the suit property. Further, a dispute arose, leading to the filing of the main suit. Thereafter, it argues that the parties agreed to explore court-annexed mediation, culminating in a consent dated 27th March, 2024, wherein it was agreed that the 1st Applicant would pay Kshs. 100,000,000.00/-, and in default, interest at 3% per month would accrue. 4.It is the Applicants’ case that the consent dated 27th March, 2024, is unlawful and upsets the Supreme Court Decision in Stanbic Bank Kenya Ltd vs Santowels Ltd [2024] KESC 31 (KLR), in which the apex court determined that the discretion of banks and financial institutions to vary interest rates is not absolute, but is subject to regulatory process under Sections 44 and 52 of the Banking Act. They further urge that this decision settled the question of interest rate regime in the banking sector, requiring banks and financial institutions to seek the approval of the Cabinet Secretary before increasing interest rates and also settled the in duplum principle. The Applicants contend that judicial decisions establishing legal precedent apply retrospectively unless otherwise stated, and that the Supreme Court Decision is therefore applicable to the present matter. They also submit that the Respondent is a micro-finance and therefore is subject to the in-duplum rule, as is evident in the replete jurisprudence of the superior courts. 5.They consequently argue that the consent providing an interest rate of 3% per month, translating to 36% per annum, was entered on a misapprehension or ignorance of facts and therefore against public policy as per the Stanbic Kenya Limited Vs Santowels Limited (supra); and the principle that parties cannot consent against a statute. It is also the Applicants’ assertion that the consent was based on an illegality and mistake, as only Kshs 43,124,980.00 was advanced, and applying the in-duplum principle, the only amount payable is Kshs. 86,249,960/-, not the consented Kshs. 100,000.00/-. Further, the consent was entered into based on non-disclosure of material facts, to wit, the actual amounts disbursed. The Applicants argue that, in any event, compound interest on the principal is compensatory and not punitive. 6.The Applicants further argue that it commenced the sale of its LR No. 2327/339 and 2327/340 (hereinafter other properties) with an intention to settle the consented amount, the purchaser has deposited the initial payment of Kshs. 21,000,000.00/- into the Respondent’s account, and was to complete the purchase upon issuance of the titles to the other properties. However, the titling process has been stalled because the title to the other properties is in a 3rd party estate (Richard John Hedges), and the transfer of the title to the 1st Applicant and completion of the sale to the 3rd party has been delayed by the probate process. The Applicant also contends that its advocates have sought indulgence from the Respondent to enable it to finalise the sale and settle the outstanding balance. However, the Respondent has been adamant in exercising its statutory power of sale. 7.They also dispute the valuation of the suit property by the Respondent, in the valuation report dated 10th March by Lead Realtors Ltd. They argue that Section 97 of the Land Act obligates a chargee to obtain the best price reasonably obtainable at the time of sale. However, the report relied on by the Respondent is undervalued, compared to previous valuation reports by QMACS Realtors Ltd and North Court Valuers Limited. For these reasons, they submit that the Respondent has consistently undervalued the property with the intention of disposing of the property at an undervalue, at a public auction. They also contend that the undervaluation was contrary to Section 97 of the Land Act. 8.The Applicants further argue that the suit property is a matrimonial property and the intended exercise of the statutory power of sale is in bad faith. Particularly because there is a sale agreement of the other properties in place, and the proceeds of the sale are intended to settle the agreed consent amount. It also contends that the Respondent has failed to acknowledge the receipt of the Kshs. 21,000,000.00/- paid in partial settlement of the loan amount, and further failed to provide a current statement of the outstanding debt since the recording of the consent. 9.Consequently, the Applicants plead that the court reopen the consent on grounds of illegality and misapprehension of facts, and in submission, for non-disclosure of material facts. They buttress that Order 21, rule 21 of the Civil Procedure Rules empowers the court, for sufficient reasons, to order that the payment of the decreed amount be postponed or be made in instalments. It also argues that pursuant to Section 34 of the Civil Procedure Act, the Court is empowered to determine all issues towards the lawful satisfaction of a decree. It is also the case that under the Land Act, Section 104(2) permits a charger to seek indulgence to settle the debt in instalments and avoid the sale of a chargee; Section 105 permits the court to reopen a charge secured by a matrimonial property in the interest of justice; and Section 106 empowers the court to reopen the charge and vary the interest rate applicable if found illegal. 10.The application was opposed by a replying affidavit sworn by Saleh Jackline on 11th May, 2026, and submissions dated 20th May, 2026. The Respondent contends that the application is frivolous and vexatious, and an abuse of the court process. It contends that the Applicants raised the issues in the present application in their plaint and application for injunction. However, in a ruling delivered on 3rd June, 2022, the High Court dismissed the application for an injunction and observed that the Applicant was heavily indebted, had barely repaid the loan advanced, and the dispute was based on accounts which did not form the basis for stopping a chargee’s right of sale. It submits that the Court of Appeal upheld the High Court on 25th October, 2022, finding that the application for an injunction was devoid of merit as the 1st Applicant’s indebtedness was not in dispute, and allowed the Respondent to proceed with the exercise of its statutory power of sale. 11.The Respondent argues that after various other interlocutory applications, the issues being raised by the Applicant were settled through the court-annexed mediation. Wherein the parties reconciled the accounts and agreed that the sums owing to the Respondent under the loan facility were Kshs. 100,000,000.00/-. It argues that a consent was entered into and adopted as a judgment of this court on 16th May, 2024. As such, it argues that the 1st Applicant, having voluntarily offered the property as security, having failed to repay the loan advanced, both the High Court and the Court of Appeal having upheld the Respondent’s right to exercise its statutory power of sale, and the 1st Plaintiff having entered into the consent now adopted as a court judgment, the Applicants are barred from reopening the consent without any reasonable basis. 12.On the specific grounds for reopening the consent, the Respondent contends that it provided the Applicants with all the requisite documentation, including the bank statements, which culminated in the consent of 27th March, 2024. Therefore, the Applicants were well informed in agreeing to pay Kshs 100,000,000.00/- before 31st August, 2024, to pay the interest rate of 3% per month in default until 30th November, and thereafter agreeing that the Respondent be at liberty to sell the suit property to recover any unpaid balance. 13.It also argues that upon adoption of the consent, the agreed Kshs. 100,000,000.00/- became an admitted decretal sum and the 3% interest rate on non-payment was on the decretal amount and not on a loan balance. The Respondent explains that the 3% interest in the consent was not pegged on the loan facility but on the judgment decretal sums. As such, it is its submissions that decretal sums are not subject to the provisions of the Banking Act. Consequently, the Supreme Court Decision in Stanbic Kenya Limited Vs Santowels Limited (supra) is distinguishable from the facts in this dispute and is inapplicable. 14.For this reason, it argues that Applicants have not met the threshold for setting aside a consent judgment, that is, fraud, illegality, mistake or misapprehension of material facts or misrepresentation. The Respondent disputes the non-disclosure of material facts alleged by the Applicants and argues that throughout the pendency of the dispute, and particularly during mediation, it supplied the Applicants with a statement of accounts, and, as such, they were clear on the actual amounts disbursed and repaid. In any event, it is the Respondent’s case that this is a new issue raised for the first time in the Plaintiffs’ submissions and was not a ground in its application. It contends that the application is the Applicants’ attempt to escape from their obligations under the consent. 15.It is the Respondent’s further case that it has complied with the terms of the consent in its intention to sell the suit property to recover the decretal sum. Further, it issued the 45-day Auctioneer’s Notice dated 11th March 2026; furnished the Applicants with a copy of the valuation report, and provided a statement of account acknowledging the payment of Kshs. 21,000,000.00/-. It also opposes the claims that the property is undervalued, arguing that the value of the suit property is affected by fluctuations based on various market factors. It further contends that the Respondent is not privy to the sale agreements of the other properties, and the same were not part of the consent agreement. Consequently, the Respondent argues that the non-completion of the sale of the other properties, particularly in light of the numerous indulgences on its part, does not in any way prejudice its right to recover the decretal amount under the consent judgment. 16.Lastly, the Respondent also argues that the Applicants have approached this court with unclean hands, through concealment and non-disclosure of material facts, in an attempt to obtain equitable remedies. Further, the Applicants have misled the court into believing that the suit property is matrimonial property, while the property is wholly and exclusively owned by the 1st Applicant, who is a registered limited liability company. Analysis and Determination 17.Upon a careful consideration of the pleadings, evidence and written submissions filed in this matter, the crux of the application is whether the Applicants have met the threshold for setting aside a consent judgment and what attendant orders or reliefs are available. 18.As regards the setting aside of a consent judgment, the law is now well settled. In James Kanyiita Nderitu & another vs Marios Philotas Ghikas & another [2016] KECA 470 (KLR), the Court of Appeal held that:“It is trite law that a consent judgment or order can only be set aside on the same grounds as would justify the setting aside a contract, for example on grounds of fraud, mistake or misrepresentation. (See Brooke Bond Liebeg (T) Ltd v. Mallya [1975] EA 266; Flora Wasike v. Destimo Wamboko [1988] KLR 429, and Kenya Commercial Bank Ltd v. Benjoh Amalgamated & Another, CA No. 276 of 1997).” 19.In Kenya Commercial Bank Limited vs Benjoh Amalgamated Limited & Another [1998] KECA 236 (KLR), the Court further held that;“…… 'The circumstances in which a consent judgment may be interfered with were considered by this court in Hirani vs Kassam (1952), 19EACA 131, where the following passage from Seton on Judgments and Orders, 7th edition, Vol.1 p.124 was approved: 'prima facie ,any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and on those claiming under them...... and cannot be varied or discharged unless obtained by fraud or collusion, or by an agreement contrary to the policy of the court..... or if consent was given without sufficient material facts, or in misapprehension or in ignorance of material facts, or in general for a reason which would enable the court to set aside an agreement." (Emphasis mine) 20.In the instant application, the Applicants argue that the consent dated 27th March, 2024, is unlawful and upsets the Supreme Court Decision in Stanbic Kenya Limited Vs Santowels Limited (supra) for reasons that it provides for an interest rate at the rate of 3% per month, which translates to 36% annually against the in-duplum principle. Therefore, the consent was recorded on a misapprehension or ignorance of facts and is against public policy. They also urge that the consent was based on an illegality and mistake, as only Kshs. 43,124,980.00/- was advanced, and applying the in-duplum principle, the only amount payable is Kshs. 86,249,960/-, not the consented sum of Kshs. 100,000,000.00/-. 21.The Respondent, on the other hand, argues that the 3% interest in the consent was not pegged on the loan facility but on the judgment decretal sums. As such, it is its submissions that decretal sums are not subject to the provisions of the Banking Act. Consequently, Stanbic Kenya Limited Vs Santowels Limited (supra) is distinguishable from the facts in this dispute and is inapplicable. It opposes the claim that there was non-disclosure prior to negotiations culminating with the signing of the consent, urging that it supplied the Applicants with all the loan statements, which confirmed that the disbursed amounts were over Kshs. 88 million. In any event, it argues that claims for non-disclosure are a new issue raised for the first time in the Plaintiffs’ submissions and were not a ground in its application. 22.However, from the party’s pleadings, it is evident that the parties entered into a consent dated 10th June, 2024, wherein the parties agreed that;Judgment be and is hereby entered against the 1st Applicant for Kshs 100,000,000.00 (Kenya Shillings One Hundred Million Only), which entire sum shall be settled/cleared on or before the 31st August, 2024. The Defendant shall not charge any interest during the aforesaid period, to wit, by 31st August, 2014.The 1st Plaintiff shall pay the legal fees of the Defendant in respect to the proceedings herein, and which fees have been agreed by the parties at the sum of Kshs. 1,800,000.00 (One Million Eight Hundred Thousand Only) and the aforesaid legal fees shall similarly be paid on or before the 31st August, 2024.In case of default in paying the above sums in full on or before the 31st of August, 2024, the Defendant shall be at liberty to charge interest on any outstanding amount as agreed herein at a flat rate of 3% per month commencing 1st September, 2024, for the next three (3) months and every subsequent month thereafter until the entire amount is settled. … (Emphasis mine) 23.A plain reading of the terms of the consent shows that the agreed interest of 3% per month was payable only upon default in the payment of the sums stipulated in the consent. It was not the contractual interest applicable to a loan facility advanced by the Respondent to the 1st Applicant. Consequently, although the Respondent is a microfinance institution subject to the Banking Act, the agreed interest did not arise from a banking transaction but was a default interest payable upon breach of the terms of the consent. Consequently, the in-duplum principle, as settled by the Supreme Court in Stanbic Bank Kenya Ltd vs Santowels Ltd [2024] KESC 31 (KLR), is inapplicable to the circumstances of this case. It follows that the Applicants’ contention that the consent is illegal on that basis is without merit and cannot constitute a ground for setting aside the consent judgment. Consequently, the Applicants' ground of illegality for setting aside fails. 24.On the issue of material non-disclosure, the Applicants raised this ground only in their submissions and not in their application. In any event, the Respondent has demonstrated that prior to the execution of the consent, the parties participated in court-annexed mediation during which they negotiated the loan disbursed and the outstanding balance. The evidence further shows that the 1st Applicant was furnished with the relevant loan account statements during those negotiations. Accordingly, the consent to pay the agreed sum was entered into with the benefit of sufficient material information, and the allegation of material non-disclosure is without merit. 25.Similarly, the argument that the suit property constitutes matrimonial property is untenable. The suit property is registered in the name of the 1st Applicant, a duly incorporated limited liability company. As a separate legal entity, the 1st Applicant is incapable of owning matrimonial property. Consequently, the suit property cannot, in law, be characterized as matrimonial property. 26.Guided by the foregoing principles and the facts of this case, I find that no grounds have been established to warrant the setting aside of the consent judgment. There is no evidence of fraud, collusion, misrepresentation, or any other circumstances that would vitiate the consent. The material facts were known to the parties at the time the consent was recorded, and they freely agreed to its terms, which are clear, unequivocal and leave no room for mistake or misrepresentation. 27.In the foregoing, I find that the Applicants have failed to satisfy the legal threshold for setting aside a consent judgment. Consequently, there is no basis upon which this court can interfere with the consent judgment dated 16th May, 2024. Having so found, the remaining reliefs sought in the application necessarily fail. 28.Consequently, the Notice of Motion dated 22nd April, 2026, is hereby dismissed, with costs and the Applicants shall bear the costs. 29.It is so ordered. DELIVERED, DATED AND SIGNED VIRTUALLY THIS 2ND DAY OF JULY, 2026RHODA RUTTOJUDGECourt Assistant: WabwireMr. Bulowa for the RespondentMr. Anzala holding brief for Mr. Kigata for the Applicant