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Muhia v Agricultural Finance Corporation (Civil Appeal 82 of 2020) [2026] KECA 1316 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] KECA 1316 (KLR) Republic of Kenya In the Court of Appeal at Nyeri Civil Appeal 82 of 2020 S ole Kantai, JW Lessit & A Ali-Aroni, JJA July 3, 2026 Between Kamau Muhia Appellant and Agricultural Finance Corporation Respondent (Being an appeal from the Ruling of the Environment and Land Court at Murang’a (Kemei, J.) delivered on 5th December 2019 in ELC Case No. 11 of 2019) Judgment 1.This appeal arises from a dispute between a borrower; Kamau Muhia (appellant) and a lender; Agricultural Finance Corporation (AFC) (respondent), over the exercise of the respondent’s statutory power of sale. The appellant, having charged his land parcel, Loc. 12/Subloc 3/668 (hereinafter referred to as the suit property) to secure a loan facility of Kshs. 165,000 advanced by the respondent challenges the respondent’s move to realise the security following default in the loan repayment. 2.At the heart of the dispute is the appellant’s contention that the intended sale of the charged property was unlawful, principally on the ground that the respondent had not obtained a court order prior to initiating the process of sale. The suit was initiated and filed at the Principal Magistrate’s Court at Murang'a, Civil Case No. 46 of 2011, in a plaint dated 15th March 2011, which was amended on 2nd November 2011 and where he sought a declaration that the intended sale of the suit property was unlawful and a restraining order against the sale of the suit property, whether by public auction or by private treaty. 3.To contextualise the case, a brief summary will suffice. The appellant received a loan of Kshs. 165,000, from the respondent, repayable at Kshs. 5,530 monthly. The appellant claimed to have consistently made payments. However, on 3rd January 2011, he was notified by Cash Crop Auctioneers about the likely sale of his property due to unpaid instalments. According to him, by 7th April 2009, he had made payments amounting to Kshs. 60,000, and the remaining was Kshs. 105,000. However, due to financial difficulties, he was not able to pay the remaining balance. He contended, though, that the intended sale was unlawful as it lacked a court order. 4.The respondent filed a statement of defence dated 6th April 2011, asserting that on or about 20th February 2006, the appellant applied for an agricultural loan of Kshs. 165,000 for the purchase of dairy cattle and the establishment of a zero-grazing unit, offering the suit property as security for the loan. The appellant duly executed and registered a charge over the suit property in favour of the respondent as security for the borrowed sums. 5.Due to the appellant's default on payment, the respondent instructed Cash Crop Auctioneers to issue the requisite statutory 45-day redemption notice to the appellant with the intention of exercising its statutory power of sale, asserting that the loan was secured and no court process was required for recovery. 6.With the plaint, the appellant filed a Chamber Summons dated 15th March 2011, seeking an injunction to prevent the respondent from advertising or selling the suit property by means of public auction or private treaty, which the respondent objected to, stating that they had followed all laid-down processes and an order made in favour of the appellant. 7.When the case was eventually heard, it proceeded by way of viva voce evidence. The appellant testified as PW1 and informed the court that he initially obtained a restraining order stopping the respondent from auctioning the suit property. He claimed that the respondent did not comply with the law because it lacked a court order authorising it to sell the suit property. He testified further that he had sought assistance, including from the respondent's director, as he faced difficulties. He claimed to have been a respondent's customer for many years; however, he was mistreated by the respondent’s officers. He sought the court’s assistance to allow him to pay only the principal amount without interest while continuing payments and asked that the respondent keep his title intact. 8.On the part of the respondent, Agnes Wambua (DW1), the branch manager of the respondent, testified that the appellant visited their branch and borrowed Kshs. 165,00, in 2006 for dairy development. He was issued a loan agreement dated 20th February 2006, which outlined the loan particulars. The appellant provided the title to the suit property as security for the loan, which was to be repaid over three years, from 2006 to February 2009. The appellant signed the agreement, and a charge on the title was registered. However, the appellant defaulted on the scheduled repayments. The respondent sent several demand notices; the first was issued on 12th February 2007, to which the appellant did not respond. Another demand notice was issued on 28th February 2007; again, the appellant failed to reply. 9.After the appellant failed to respond to the various letters, the respondent issued a statutory notice of 90 days on 22nd December 2008, indicating an outstanding amount of Kshs. 244,193. The appellant again did not respond. Subsequently, the respondent valued the security offered by the appellant and instructed the auctioneers to issue a 45-day notice. A notification of sale was served to the appellant on 3rd January 2011. 10.The auctioneers provided a certificate of service dated 14th January 2011 to confirm that the appellant had been served. Since the appellant did not respond to the 45-day notice, the auctioneers advertised the property for sale in the Daily Nation on 1st March 2011, with the auction scheduled for 23rd March 2011. However, the sale did not proceed because the appellant obtained an injunction against the respondent. 11.Upon hearing the parties, on 19th July 2013, the trial court delivered its judgment. The court found that the respondent strictly adhered to the law. Further, though appreciating the problems the appellant faced, the court held that it could not prevent the respondent from exercising its statutory power of sale. Consequently, the court dismissed the appellant's case. 12.Aggrieved by the outcome of the case, the appellant filed the first appeal before the Environment and Land Court (ELC). On 5th December 2019, the ELC agreed with the trial court’s findings; found the appeal had no merit and the same was dismissed with costs to the respondent 13.Dissatisfied with the outcome of the first appellate court, the appellant has filed the instant appeal, where he has raised five(5)grounds of appeal in his undated memorandum of appeal lodged on 24th June 2020, stating that the learned Judge erred in fact and law; by dismissing the appellant’s case; incorrectly determined that the respondent had fully complied with proclamation requirements; failed to consider the weight and relevance of the evidence provided by the appellant; failing to take into account the merits of the appeal; relying on extraneous findings; and ignored the appellant’s submissions. 14.The appellant has filed submissions dated 4th February 2025, wherein he submits that he was unable to repay the loan that was due and owing to the respondent due to several personal misfortunes, including serious health issues (diabetes, heart problems, hypertension) that led to vision loss and inability to work. He submits further that he also experienced a family loss as he lost his wife on 3rd September 2007, and one of his children dropped out of school due to their financial struggles; his livestock died, his businesses failed, and he was involved in a car accident with a pending compensation case. He has already paid Kshs. 60,000 towards the loan, and claims the respondent ignored his requests for humanitarian consideration, and that an AFC Branch Manager, Mr Njoka, has been obstructing him and mishandling payment records.The appellant further reminisced about the government's practice in yesteryears of waiving loans. 15.The respondent has not filed submissions. 16.Having reviewed the pleadings, the evidence placed before the court, the appellant’s submissions and the law, we are of the view that the only issue that turns for our consideration is whether the respondent complied with the legal requirements prior to the exercise of its statutory power of sale over the suit property. 17.Before addressing the issue identified above, we remind ourselves of the duty of a second appellate court as was succinctly stated in Charles Kipkoech Leting vs. Express (K) Ltd & Another [2018] eKLR, where the Court held inter alia:“This is a second appeal. Our mandate is as has been enunciated in a long line of cases decided by the Court. See Maina versus Mugiria [1983] KLR 78, Kenya Breweries Ltd versus Godfrey Odongo, Civil Appeal No. 127 of 2007, and Stanley N. Muriithi & Another versus Bernard Munene Ithiga [2016] eKLR, for the holdings inter alia that, on a second appeal, the Court confines itself to matters of law only, unless it is shown that the Courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse. See also the English case of Martin versus Glywed Distributors Ltd (t/a MBS Fastenings) 1983 ICR 511 where in, it was held inter alia that, where a right of appeal is confined to questions of law only, an appellate court has loyalty to accept the findings of fact of the lower court (s) and resist the temptation to treat findings of fact and law, and, it should not interfere with the decisions of the trial or first appellate court unless it is apparent that, on the evidence, no reasonable tribunal could have reached that conclusion, which would be the same as holding the decision is bad in law.” 18.Similarly, the court in Kenya Breweries Ltd vs. Godfrey Odoyo [2010] eKLR, Onyango Otieno, J.A., expressed himself as follows:“In a second appeal however, such as this one before us, we have to resist the temptation of delving into matters of facts. This Court, on second appeal, confines itself to matters of law unless it is shown that the two Courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse.” 19.The evidence on record shows that the appellant obtained a loan facility of Kshs. 165,000 from the respondent in the year 2006, and executed a charge over the suit property as security for repayment of the said facility. It is undisputed that the appellant defaulted on repayment of the loan. 20.The respondent’s evidence, which was accepted by both the trial court and the court on first appeal, demonstrated that demand notices were issued to the appellant and that a 90-day statutory notice dated 22nd December 2008 was served recalling the outstanding amount. Thereafter, the auctioneers issued a 45- day redemption notice and a notification of sale before the property was advertised for sale on 3rd January 2011. An auction advertisement in the Daily Nation was also done on 1st March 2011. We agree with the sentiments of the learned Judge who held:“The Appellant's contention that the Respondent should have served him with a Court order or execution decree is not founded in law. On admission of default and that he was served with the notices he cannot hide behind his own imagined notice which is not legally binding.” 21.The law is well settled that once a chargor defaults in repayment of a secured loan and the chargee has complied with the statutory notice requirements, the chargee is entitled to exercise its statutory power of sale. Courts will generally not interfere with that right merely because the chargor faces financial hardship. In Mrao Ltd vs. First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, the Court of Appeal held that:“The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged.” 22.Likewise, in Mbuthia vs. Jimba Credit Finance Corporation & Another [1988] KECA 116 (KLR), this Court held that:“The Court will not grant to a mortgagor…an injunction restraining the mortgagee from completing by conveyance a contract to sell the mortgaged property in exercise of his power of sale unless it is proved that the mortgagee entered into the contract in bad faith”.(Emphasis added) 23.From the record before us, the appellant did not dispute obtaining the loan nor the fact that he defaulted in repayment. His primary plea was that the respondent should have shown compassion in light of his personal misfortunes, including illness and family misfortune. The appellant raises poignant issues regarding his health (diabetes, heart disease), the death of his wife, and the collapse of his business. 24.While this Court sympathises with the appellant’s predicament, they do not provide a legal defence to a breach of contract. It is settled law that courts are bound to enforce lawful contractual obligations between parties. In National Bank of Kenya Ltd vs. Pipeplastic Samkolit (K) Ltd & Another [2001] (Civil Appeal 95 of 1999) [2001] KECA 362 (KLR), this Court stated:“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.” 25.The appellant did not demonstrate any illegality, fraud, or procedural impropriety in the manner the respondent sought to exercise its statutory power of sale. The evidence on record shows that the respondent complied with the applicable legal requirements before initiating the sale process. 26.The appellant claims a right to a waiver based on a letter from the then Minister of Finance and historical waivers granted to other regions. Under the Land Act and the Agricultural Finance Corporation Act, the power to vary the terms of a charge lies with the chargee. In our view, a letter from a Minister, while persuasive, does not amend a registered charge or discharge a debt unless the Corporation formally agrees to those terms. To this end, we agree with the learned Judge who stated:“I have seen the letter addressed to the Respondent by the then Minister for Finance Hon Robinson Njeru. My view of the letter is that it did not waive the interest. The matter of interest rate is comprised in the contract between the parties and the Court cannot rewrite terms of contract for the parties. It can at best interpret the rights of the parties as contained in the contract.” (Emphasis added) 27.Having carefully reviewed the record, we are satisfied that the learned Judge properly evaluated the evidence and correctly applied the law. The appellant has not demonstrated any misdirection in law that would justify this Court's interference with judges’ findings. 28.As stated earlier, the appellant’s grievances are largely founded on humanitarian considerations arising from his personal circumstances. While those circumstances evoke sympathy, they do not constitute a legal basis for restraining a chargee from exercising its statutory power of sale, where the chargor is in default and the applicable statutory procedures have been complied with. 29.In the end, we agree with the sound reasoning and findings of both the trial court and the first appellate court. We therefore find that the appeal lacks merit and dismiss it with costs. DATED AND DELIVERED AT NYERI THIS 3RD DAY OF JULY, 2026.S. ole KANTAI....................................JUDGE OF APPEALJ. LESIIT....................................JUDGE OF APPEALALI-ARONI....................................JUDGE OF APPEALI certify that this is a true copy of the original.Deputy Registrar.