https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9062

HFC Ltd (Formerly Housing Finance Company of Kenya Ltd) v Njenga (Suing as the Administrator of the Estate of Benson Njenga Ndindi - Deceased) (Commercial Appeal E293 of 2024) [2026] KEHC 9062 (KLR) (Commercial and Tax) (26 June 2026) (Judgment) Neutral citation: [2026] KEHC 9062 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Appeal E293 of 2024 FG Mugambi, J June 26, 2026 Between HFC Limited (Formerly Housing Finance Company of Kenya Limited) Appellant and Loise Wangui Njenga (Suing as the Administrator of the Estate of Benson Njenga Ndindi - Deceased) Respondent (Being an appeal from the Judgement & Decree of Hon. L. Ambasi, CM dated 6th September 2024 at the Magistrates Court, Milimani in Civil Case No. 3209 of 2018) Judgment Introduction and Background 1.The Appellant has lodged this appeal on the basis of its Memorandum of Appeal dated 4th October 2024, seeking to overturn the subordinate court's judgment of 6th September 2024. That judgment directed the Appellant to refund the Respondent a sum of Kshs. 8,441,760.92, together with interest and costs of the suit. 2.Before the subordinate court, the Respondent's case was that in 1991, the deceased secured a term loan of Kshs. 900,000.00 from the Appellant. The loan was secured by a charge over property L.R. No. 7785/370, Runda Estate, and carried an agreed interest rate of 18% per annum on a reducing balance basis. 3.A critical term of the contract provided that any variation of the interest rate would require the Appellant to furnish the borrower with four months' prior written notice, as expressly stipulated in the charge document. In breach of this provision, the Appellant unilaterally altered the interest rate, varying it between 18% and 26%, without issuing the requisite notice. The Respondent contended that such conduct was both contrary to the terms of the contract and unlawful. 4.The Respondent further accused the Appellant of imposing penalties and default interest that had not been agreed upon under the original Letter of Offer or the Charge. It was the Respondent's case that the Appellant had fraudulently inflated interest rates and charges by falsely purporting to have obtained the requisite approval from the Minister under Section 44 of the Banking Act, when in fact no such approval had been granted. The particulars of fraud alleged against the Appellant included varying charges without notifying the borrower and levying default interest without any contractual basis for doing so. 5.The Respondent further alleged that the loan account was ran in contravention of the Banking Act, the in duplum rule, the Finance Act, and other applicable Banking Regulations. It was the Respondent's case that the deceased had made repayments amounting to Kshs. 11,926,181.55 over the period spanning 1991 to 2012. She averred that the loan account had been fully redeemed as early as March 2000, yet notwithstanding this, the Appellant continued to collect a further sum of approximately Kshs. 8 million. It was contended that the Appellant achieved this by unlawfully accumulating irregular charges so as to fabricate a fictitious indebtedness, thereby deceiving the Respondent into making payments that were no longer legally due. 6.The Respondent stated that she had engaged the Interest Rates Advisory Centre (IRAC) to carry out a recalculation of the loan account. The IRAC report revealed an overpayment of Kshs. 8,441,760.92 as at 30th March 2012, comprising an interest overcharge of Kshs. 7,145,110.73 and post-redemption debits amounting to Kshs. 1,296,650.19. On the basis of the foregoing, the Respondent sought judgment against the Appellant in form of a declaration that the Appellant had overcharged the Respondent in the sum of Kshs. 8,441,760.92; an order compelling the Appellant to refund the said sum together with interest at court rates from March 2000; damages for breach of contract and the costs of the suit. 7.In its defence, the Appellant disputed the Respondent's account of the loan amount, maintaining that the deceased had applied for and been offered a term loan of Kshs. 1,200,000.00, as opposed to the Kshs. 900,000.00 alleged by the Respondent. The Appellant confirmed, however, that the facility was secured by a Charge over property L.R. No. 7785/370. 8.With respect to the terms of the Charge, the Appellant contended that the facility did not carry a fixed interest rate. It further relied on Clause 5(ii) of the Charge, which expressly permitted the Appellant to vary the interest rate upon giving four months' prior notice to the borrower. As regards repayment, the loan was structured to be repaid in monthly instalments of Kshs. 19,332.00, or by such adjusted monthly instalments as may have been agreed upon or required by the Appellant. Interest was calculated on the entire amount advanced, and no payment was to be credited toward the principal until all accrued interest had been fully discharged. The Appellant further averred that upon default, the Charge conferred upon it the power to enter the charged property, collect rent therefrom, and appoint a receiver. 9.The Appellant denied all allegations of fraud and any unlawful conduct or failure to provide the requisite notices, maintaining that the majority of the interest rate variations were in fact to the deceased's benefit, with rates ranging between 12% and 17%. It further asserted that the deceased had been duly served with the required notices in respect of all interest rate changes. With regard to the alleged contraventions of the Banking Act, the Appellant denied any violation of Sections 44 and 44A, contending that those provisions were not applicable to the mortgage account in question. Further, and without prejudice to that position, the Appellant argued that even if there had been any degree of non-compliance with Section 44, such non-compliance would not have the effect of invalidating the contract or rendering the outstanding debt unconscionable. 10.The Appellant further contended that the Respondent had misconstrued the proper effect of Section 44A(6) of the Banking Act. It denied the Respondent's assertion of overpayment and specifically challenged the findings of the IRAC report, arguing that the report was factually flawed in that it failed to account for the variable nature of the interest applicable to the loan as well as the arrears that had accrued. The Appellant additionally introduced evidence that the loan had been restructured in 2003, at which point the Respondent had accepted an outstanding balance of Kshs. 3,959,001.58 as at 10th December 2003. On the strength of this, the Appellant argued that the Respondent was estopped from subsequently challenging the indebtedness, and could not approbate and reprobate. 11.The Appellant acknowledged that it had appointed a receiver in June 2005, but maintained that this action constituted a lawful exercise of its powers under the Charge. It justified the appointment on the grounds that the deceased had fallen into arrears and that the requisite statutory notices had been duly served prior to the appointment. On the basis of the foregoing, the Appellant urged the subordinate court to dismiss the Respondent's suit with costs. 12.The matter proceeded to hearing, during which the Respondent testified on her own behalf as (PW1). She additionally called CPA Wilfred Abincha Onono of IRAC as her second witness (PW2). The Appellant, for its part, called its Debt Management Officer, Mary Githinji, as its sole witness (DW1). Upon the conclusion of the hearing, both parties filed written submissions in support of their respective cases. 13.Upon considering the pleadings, evidence, and submissions placed before the court, the learned magistrate delivered judgment in favour of the Respondent. The court found that the Appellant had increased interest rates on multiple occasions without furnishing the mandatory four months' prior notice as required under Clause 5(ii) of the Charge. In arriving at this finding, the court noted that DW1 herself had confirmed at least one instance in which such notice had not been given. The trial court further placed reliance on the expert evidence of PW2, which corroborated the finding that the Appellant had unilaterally and unlawfully varied the interest rates. The court regarded the relevant clause as an unfair imposition on the borrower, drawing support from the decision in Samaki Industries (K) Ltd V Bullion Bank Ltd, HCCC No. 485 of 1989, in which similar conduct was judicially censured. 14.The trial court further held that the Appellant had unlawfully levied charges described as “penalty interest”, “interest on arrears”, and “default charges”, on the basis that none of these charges were expressly provided for under the Charge document. The court found no contractual provision entitling the Appellant to impose such charges, and accordingly deemed them to be without legal basis. The court additionally faulted the Appellant for debiting insurance premiums against the loan account without adducing any evidence of the actual insurance policies taken out or proof that the said premiums had in fact been paid. The court held that such evidence was expressly required under Clause 7(vii) of the Charge, and in its absence, the debiting of those premiums was equally found to be contractually unlawful. 15.The subordinate court further found that the Appellant had breached the in duplum rule, having charged interest on the non-performing loan in excess of the outstanding principal amount. The court held that such conduct was contrary to the purpose of the rule, which is designed to shield borrowers from exploitation by lenders. 16.On the basis of the foregoing findings, the court declared that the Appellant had overcharged the Respondent in the sum of Kshs. 8,441,760.92 and ordered the refund of that amount together with interest at court rates from March 2000. The costs of the suit were awarded to the Respondent, along with interest on the judgment sum at court rates from the date of judgment until full payment. With respect to the Respondent's claim for damages for breach of contract, the court declined to grant that relief, finding that the Respondent had not adduced sufficient proof in support of it. 17.It is this decision that has given rise to the present appeal, which has been canvassed by way of both written and oral submissions by counsel for the respective parties. As the submissions largely mirror the arguments already outlined above, I do not propose to rehash them in their entirety, but shall make such reference to them as may be necessary in the course of my analysis and determination set out hereafter. Analysis and Determination 18.Since this is the first appeal, this court is enjoined by the provisions of section 78 of the Civil Procedure Act to evaluate and examine the trial court’s record and the evidence presented before it in order to arrive at its own conclusion. This principle of law was well settled in the case of Selle V Associated Motor Boat Co. Ltd, (1968) EA 123 where the Court of Appeal outlined the duties of a first appellate court as follows:“[An appellate court] is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect...” 19.Although the Appellant has raised twelve grounds in its Memorandum of Appeal, these have been consolidated in its submissions into four discrete issues for determination, namely:i.Whether the learned magistrate erred in making a finding that the Appellant illegally varied the interest rates and made non-contractual debits to the facility account;ii.Whether the learned magistrate erred in making a finding that the Appellant overcharged the borrower;iii.Whether the learned magistrate erred in making a finding that the Appellant violated the provisions of section 44A of the Banking Act; andiv.Whether the learned magistrate erred in ordering the Appellant to refund the Respondent the sum of Kshs. 8,441,760.22. Variation of interest rates and debits to the facility account: 20.Regarding debits for insurance premiums the Appellant argued that the issue was never pleaded in the Plaint and only emerged during cross-examination of DW1. That the subordinate court therefore lacked jurisdiction to determine an unpleaded matter, relying on Magnate Ventures Ltd V Alliance Media (K) Ltd & Others, [2015] KECA 719 (KLR). The Appellant further contended that Clause 7(vii) merely obligated it to retain custody of policies and receipts, and did not impose any duty to furnish copies to the borrower. It maintained that the deceased was in any event contractually obligated to reimburse the Appellant for premiums paid on his behalf, citing Daima Bank Ltd (In Liquidation) V David Musyimi Ndetei, [2018] KECA 713 (KLR) and Esther Getambu & another V Housing Finance Co of Kenya Ltd, [2019] KEHC 3579 (KLR), and urged that the magistrate's finding to the contrary unlawfully rewrote the contract. 21.Regarding interest on arrears the Appellant contended that Clause 4(iii) of the Charge expressly authorized the charging of interest on arrears by providing that interest would be calculated on the full advance and any interest or moneys due and unpaid at the preceding month end. It argued that the learned magistrate erroneously disregarded this express contractual provision and instead relied on PW1's parol evidence, and that the finding that interest on arrears was unlawfully charged ought to be set aside. 22.Finally, with respect to interest rate variations the Appellant submitted that Clause 5(ii) conferred upon it a discretion to vary interest rates, and that the obligation to give four months' notice was not mandatory in nature. It relied on National Bank of Kenya Ltd V Pipeplastic Samkolit (K) Ltd & Another, [2001] KECA 362 (KLR) in support of the proposition that the learned magistrate's contrary interpretation amounted to a rewriting of the contract. 23.The Appellant further contended that it had produced six notices of rate variation, that DW1 had testified that rates were duly issued and largely maintained below the contractual rate of 18%, and that the Respondent had neither challenged the service of those notices nor identified any specific unauthorized variation. It additionally relied on Clause 5(iii), which provides that revised payments fall due the month following notification, to argue that even in the absence of notice, the Appellant retained the contractual right to vary rates. On this basis, the Appellant urged that the findings of illegal and unilateral rate variation were erroneous and ought to be set aside. 24.The Respondent in countering these arguments maintained that neither penalty interest, default interest, nor interest on arrears were provided for under the Letter of Offer or the Charge, and that the Appellant had unilaterally imposed these charges and arbitrarily determined the applicable rates, which were then capitalized and compounded to the borrower's detriment. The Respondent further contended that any variation of interest rates required the Minister’s approval under Section 44 of the Banking Act, which the Appellant had failed to obtain. 25.I have carefully considered the submissions advanced by both parties on this issue. As was emphasized in National Bank of Kenya Ltd (supra), the cornerstone of the inquiry is the contractual agreement between the parties. This court is called upon to ascertain the true intention of the parties as expressed in their agreement and, in the absence of any vitiating factors, to give effect to and enforce that agreement as concluded. 26.Turning first to the question of interest rate variation, the matter of interest was unambiguously addressed under Clause 5 of the Charge. Clause 5(i) provided that, until such time as the notice contemplated under Clause 5(ii) was served, the applicable interest rate would be 18% per annum. This provision must be read conjunctively with Clause 5(ii), which stipulated that the Appellant:“…may from time to time serve on the Borrower not less than four months' notice requiring payment of interest at such increased or reduced rate. …” 27.In my view, the use of the word "may" in the latter Clause and taken together with the preceding Clause 5(i) does not render the issuance of notice optional. Rather, it confers upon the Appellant the power to vary the interest rate, while making the exercise of that power conditional upon the giving of the prescribed notice. I am therefore satisfied that the subordinate court correctly interpreted this clause. The court appropriately drew support from the decision in Samaki Industries Limited V Bullion Bank Limited, HCCC No. 485 of 1989, for the proposition that a practice whereby a lender purports to vary an interest rate unilaterally without furnishing any notice to the borrower constitutes a deviation from, and indeed a mockery of, the fundamental principle of freedom of contract. 28.The requirement for such notice serves a substantive purpose, as was recognized by this Court Odunga J, (as he then was) in Francis Joseph Kamau Ichatha V Housing Finance Company of Kenya Limited, [2014] eKLR, in which the Court observed that:“… the necessity for giving the notice is meant to give the borrower a chance to decide whether to keep the facility alive based on the new terms or to bring the contract to an end by either paying the amount due or instructing the Bank to realize the security if in his view he would not be in a position to service the facility based on the intended variations.” 29.In the present case, the Appellant's own witness, DW1, conceded under cross-examination that on at least one occasion, the interest rate was varied on the very same day that notice was issued, rather than after the expiry of the stipulated four-month period. This admission lends direct corroboration to the Respondent's case that the Appellant unilaterally and unlawfully varied the interest rates without furnishing the requisite notices. Additionally, no evidence of the approvals required under Section 44 of the Banking Act were adduced. 30.As regards the consequence of such failure, the position is well settled that a purported variation effected without due notice is unenforceable, as was held in Housing Finance Co. of Kenya Limited V Gilbert Kibe Njuguna, Nairobi HCCC No. 1601 of 1999. Accordingly, I find no basis upon which to interfere with this finding of the trial court. 31.Turning to the question of the interest payable on the facility, Clause 4(iii) of the Charge provided that interest would be calculated on the full amount of the agreed advance and any interest or moneys due and unpaid. Notably, the clause makes no express provision for a penalty interest rate or default interest. To my understanding, interest on outstanding principal which is the contractual return on money lent, is different from interest on arrears and the two terms should not be conflated as is the case here. The Respondent's expert witness, PW2, also testified that "interest on arrears" was not provided for under either the Charge or the letter of offer. In the circumstances, the Appellant's reliance on banking practice as a basis for levying such charges was insufficient to give rise to a unilateral contractual term, particularly one so prejudicial to the borrower's interests. 32.This principle was affirmed in Harilal & Co & Another V The Standard Bank Ltd, [1967] EA 512. I accordingly find that the subordinate court correctly held that such charges were unlawful, and that the Appellant was not entitled to levy penalty interest, interest on arrears, or default charges against the borrower's account. 33.On the question of the wrongful charging of insurance premiums, I am inclined to agree with the Appellant that this issue was never pleaded in the Plaint and only arose during the cross-examination of DW1. Paragraph 13 of the Plaint alleged that the Appellant had fraudulently increased the interest rate and levied penalties and that no penalties or default interest were agreed upon in the Charge or the letter of offer. I find this to be a general averment concerning penalties and interest, and not a pleading directed at insurance premiums. Furthermore, the four particulars of fraud enumerated therein relate to varying rates without informing the Respondent, increasing rates without legal sanction, representing to the Respondent that such authority had been obtained, and unilaterally charging default interest. Insurance premiums find no mention anywhere within these particulars. 34.Similarly, Paragraph 25 of the Plaint sets out various statutes and regulations alleged to have been violated by the Appellant, including the Finance Act and the Banking Act, but makes no specific reference to insurance premiums. As correctly submitted by the Appellant, parties are bound by their pleadings, and any evidence adduced that does not support, or is at variance with, the averments in the pleadings goes to no issue and must be disregarded, as was held in Independent Electoral and Boundaries Commission & Another V Mule & 3 Others, [2014] KECA 890 (KLR). 35.Since the issue of insurance premiums was not pleaded, the subordinate court ought not to have entertained it or made any finding in respect of it. I accordingly set aside the subordinate court's finding on this issue. This ground of appeal succeeds to that extent. Overcharging the deceased: 36.The Appellant challenged the reliability and probative value of the IRAC reports, particularly the second report, contending that it contained no computations or workings to demonstrate how the figure of Kshs. 8,441,760.92 had been arrived at, a deficiency that PW2 himself conceded under cross-examination. The Appellant further argued that the reports had not considered key contractual documents, including the Charge Document, the Letter of Offer, the Loan Rescheduling Agreement, and the Mortgage Statements. It was additionally noted that PW2 admitted that he had disregarded the February 2004 rebate in his computations. 37.The Appellant also took issue with the fact that the reports had neither been shared with them prior to the filing of the suit nor had the Appellant's input been sought in their preparation. It submitted that a report prepared in such circumstances lacked probative value, relying on the decision in Kenya Commercial Bank Limited V Rupa (K) Limited & 2 Others, [2014] KEHC 4048 (KLR), in which a similar IRAC report was rejected by the court as “unrealistic”. 38.The Appellant contended that the deceased had been furnished with loan statements throughout the duration of the facility, had never challenged any of the entries therein, and had on multiple occasions acknowledged being in default. In particular, the Appellant relied on the Loan Rescheduling Agreement of 10th December 2003, under which the deceased expressly acknowledged an outstanding balance of Kshs. 3,959,001.58, having been provided with an up-to-date statement of account at the time and afforded the opportunity to raise any objections. On this basis, the Appellant submitted that the Respondent was estopped from subsequently alleging overpayment or contending that the facility had been fully redeemed as early as the year 2000. It further argued that the learned magistrate had erroneously disregarded this binding agreement, and that the declaration of overcharge was accordingly unsustainable. 39.The Respondent, in reply, contended that the IRAC reports had not been objected to at trial and therefore stood as unrebutted evidence containing a summary of illegal debits, interest overcharges, and post-redemption debits levied against the account. The Respondent further submitted that PW2 had adequately defended the findings of the report under cross-examination and had specifically identified the unlawful entries therein. It was argued that a court is bound to rely on uncontroverted evidence that has been properly tendered before it, and that any failure to do so would constitute a reversible error. The Respondent accordingly submitted that the learned magistrate was both entitled and obliged to place reliance on the IRAC report in reaching her findings. 40.At the outset, I note that while the Appellant placed reliance on this court's decision in Kenya Commercial Bank Limited v Rupa (K) Limited & 2 others, supra that decision has since been set aside by the Court of Appeal in Rupa Kenya Limited & 2 Others V Kenya Commercial Bank Limited, [2024] KECA 1140 (KLR). It follows that the testimony of PW2 cannot be dismissed solely on the grounds that he relied on documents furnished to him by the Respondent, or merely because the Appellant disagrees with his methodology and conclusions. 41.That said, having carefully reviewed PW2's testimony and the IRAC report, I am constrained to observe that there are significant gaps and weaknesses in his evidence that undermine the conclusiveness of his finding that the Respondent was overcharged in the sum of Kshs. 8,441,760.92. 42.A notable concern arising from PW2's evidence is that he prepared two distinct reports in respect of the same loan account, each yielding markedly different conclusions. In the first report, the loan account was found to have been redeemed in July 2007, with a credit balance of Kshs. 5,012,651.11 in favour of the deceased. In the second report, however, the account was found to have been redeemed as early as March 2000, with a significantly higher credit balance of Kshs. 8,441,760.92 in favour of the deceased. PW2 explained this discrepancy by stating that the first report had applied the Appellant's actual interest rates, which varied between 18% and in excess of 26%, whereas the second report applied a fixed interest rate of 18% throughout, on the basis that the Appellant had failed to furnish the four months' notice required to validly vary the rates. 43.A further and significant weakness in PW2's evidence is that he did not provide detailed breakdown or mathematical workings in support of the conclusions reached in the second report, a deficiency he himself confirmed under cross-examination. The trial court was therefore left with a bare conclusion of Kshs. 8,441,760.92 without any discernible mathematical trail demonstrating how that figure had been computed. 44.PW2 further admitted that he had not considered the Loan Rescheduling Agreement of 10th December 2003, notwithstanding that he was aware that the deceased had thereunder acknowledged an outstanding balance of Kshs. 3,959,001.58, inclusive of arrears of Kshs. 2,873,210.96, as at that date. PW2 sought to justify this omission by stating that, in his opinion, the loan had already been fully redeemed in March 2000 and that there was therefore “no loan to be rescheduled”. 45.This reasoning is, with respect, unsatisfactory, as it was presumptuous, contradictory and disregarded a significant and contemporaneous acknowledgment of indebtedness by the deceased. I agree with the Appellant that the Loan Rescheduling Agreement constituted a binding contract, duly executed by the deceased, in which he expressly acknowledged an outstanding debt of approximately Kshs. 4 million as at December 2003, and undertook to repay the same in accordance with the terms of that agreement. 46.This position finds support in the decision of John Mburu V Consolidated Bank of Kenya, [2018] KECA 796 (KLR). An independent auditor cannot simply disregard a material and subsisting contract between the parties merely because it is inconsistent with the conclusion he seeks to reach. The deceased's acknowledgment of indebtedness in 2003 stands in direct and fundamental contradiction to the assertion that the loan account had been fully redeemed as early as March 2000. The inescapable conclusion is that the deceased was contractually bound to repay that which he had expressly admitted to owing, there being no evidence of any vitiating factors that would have rendered that acknowledgment invalid or unenforceable. 47.A further concern going to the reliability of PW2's report is his admission that he never made any attempt to contact the Appellant to better understand the nature of the facility or to obtain its records. He relied exclusively on documents furnished to him by the Respondent and did not provide the Appellant with a copy of the report prior to the institution of the suit. A truly independent expert would have been expected to seek input from all relevant parties in order to ensure a balanced and comprehensive analysis. By confining himself solely to the deceased's documents, PW2's report was inherently one-sided and susceptible to bias. This concern is further compounded by his inability to account for or explain the basis of a rebate of Kshs. 1,121,059.00 that appeared in the account, stating under cross-examination that he did not know why it had been granted. Such a gap in his understanding of the very account he purported to audit further undermines the credibility and reliability of his findings. 48.A further difficulty with the Respondent's case arises from an internal contradiction within her own pleadings. Paragraph 38 of the Plaint asserts that the loan account was fully amortized by the year 2000. Yet, by the Respondent's own admission, the deceased continued to make substantial payments well beyond that date, with payments persisting all the way up to 2012 and amounting in total to Kshs. 11,926,181.55. This raises a fundamental question that the Respondent has not adequately addressed: if the loan had indeed been fully redeemed in March 2000, what explains the deceased's continued and uninterrupted payments over the ensuing twelve years? 49.The Respondent's answer to this question is that the payments were made under duress, specifically under threat of sale of the charged property by the Appellant. However, this explanation is wholly unsupported by the evidence on record. There is no letter of protest, and no formal complaint at any point during his lifetime to suggest that he regarded the continued demands for payment as unlawful or that he was making payments involuntarily. On the contrary, the deceased received bank statements from the Appellant on a regular basis and, by all accounts, raised no queries or objections in respect of any of the entries therein. In fact, the record shows that it is the deceased who applied for a rescheduling of the facility through an application dated 11th November 2003. 50.It is also significant that the deceased, who was evidently capable of entering into sophisticated financial transactions such as the Loan Rescheduling Agreement of 2003, never saw fit to institute legal proceedings against the Appellant during his lifetime despite allegedly being subjected to over a decade of unlawful demands. The absence of any such action, protest, or complaint on his part over such a prolonged period is a matter that weighs heavily against the Respondent's case and is one for which no satisfactory explanation has been offered. 51.It is therefore my conclusion that while the trial court was entitled to rely on the IRAC report, the gaps in PW2's evidence mean that the conclusion of an overcharge of Kshs. 8,441,760.92 was not proven to the required standard. This ground by the Appellant succeeds. Violation of the in duplum rule: 52.With respect to the alleged violation of the in duplum rule, the Respondent's case in this regard was premised on the assumption that the facility had been fully redeemed by March 2000 and that the Appellant had thereafter fraudulently inflated the account through a series of illegal debits up to 2012. As I have already found, this assumption is fundamentally flawed and is directly contradicted by, among other things, the Loan Rescheduling Agreement of 2003. The Appellant, on the other hand, produced loan statements demonstrating an outstanding balance of Kshs. 2,919,096.45 as at 1st May 2007, being the date on which Section 44A of the Banking Act came into force. 53.Further, when the facility was ultimately redeemed on 16th May 2012, the deceased had paid a total sum of Kshs. 4,758,754.00, which fell comfortably within the in duplum limit of Kshs. 5,838,192.90 calculated on the basis of the 2007 outstanding balance. In the circumstances, the learned magistrate's reliance on the IRAC report as the basis for finding that the Appellant had breached the in duplum rule was plainly erroneous. The report was fundamentally flawed, and the trial court conducted no independent analysis of when the loan account became non-performing or what the applicable cut-off date ought to have been for the purposes of applying the rule. This ground of appeal also succeeds. Refund of the Kshs. 8,441,760.22: 54.Having found that the Respondent's claim of overcharge in the sum of Kshs. 8,441,760.22 was not proven to the requisite standard, I accordingly set aside the order of the subordinate court directing the Appellant to refund the Respondent the sum of Kshs. 8,441,760.22, together with the attendant order for interest and costs premised thereon. Conclusion and Disposition 55.Accordingly, and for the above reasons,i.The appeal is hereby allowed in part.ii.The finding of the subordinate court that the Appellant unlawfully varied the interest rates without furnishing the requisite four months' notice as stipulated under Clause 5(ii) of the Charge is upheld.iii.The finding of the subordinate court that the Appellant unlawfully levied penalty interest, interest on arrears, and default charges not provided for under the Charge or the Letter of Offer is upheld.iv.The finding of the subordinate court in respect of the wrongful debiting of insurance premiums is set aside, as that issue was not pleaded in the Plaint and the subordinate court had no jurisdiction to determine it.v.The finding of the subordinate court that the Respondent was overcharged in the sum of Kshs. 8,441,760.92 is set aside, as the IRAC report upon which it was premised was fundamentally flawed and lacked the requisite probative value to sustain such a finding.vi.The finding of the subordinate court that the Appellant breached the in duplum rule under Section 44A of the Banking Act is set aside for the reasons stated herein.vii.Consequently, the order directing the Appellant to refund the Respondent the sum of Kshs. 8,441,760.92 together with interest at court rates from March 2000 is hereby set aside.viii.The Respondent shall nonetheless be entitled to a refund of any amounts found to be due to her upon a recomputation of the loan account in accordance with the findings of this court. To that end, the parties shall, within 14 days of the date of this judgment, agree upon and jointly appoint a neutral and qualified accountant for the purpose of taking accounts and ascertaining the quantum of any overcharge, strictly in accordance with the following findings of this court:(a)the applicable interest rate throughout the duration of the facility shall be 18% per annum;(b)the Appellant was not entitled to levy penalty interest, interest on arrears, or default charges; and(c)the Loan Rescheduling Agreement dated 10th December 2003 and all other relevant contractual documents shall be considered.ix.In the event that the parties are unable to agree on the identity of the accountant within the said 14 days, either party shall be at liberty to write to the Chairperson of the Institute of Certified Public Accountants of Kenya (ICPAK) requesting the nomination of a suitable and qualified person for that purpose. The fees of the accountant so appointed shall be shared equally between the parties.x.The accountant shall file his or her report with this court within 45 days of the date of appointment, whereupon further orders shall be made giving effect to the findings therein.xi.Each party shall bear their own costs of this appeal. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JUNE 2026.F. MUGAMBIJUDGEDelivered in presence of:Chege h/b for Issa for appellantMirie for the respondentCourt Assistants: Lillian & Gloria