https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12226

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT THIKA** **CIVIL APPEAL NO. E174 OF 2025** **PAUL MWANGI CHEGE ………………………………….................. APPELLANT** **VERSUS** **FAMILY BANK LTD. ………………………………….………………RESPONDENT** **(*Being an Appeal from the Judgment/ Decree of Hon. Yusuf Mukhula Barasa (PM) delivered on 5th June 2025 in Thika MCCC No. E040 of 2024)*** **J U D G M E N T** **Introduction** 1. This appeal arises from the judgment of the Chief Magistrate’s Court at Thika (***Y.M. Barasa, PM***) delivered on 5th June 2025 in Thika MCCC No. E040 of 2024. 2. By a letter of offer dated 15th March 2019, the respondent advanced Kshs. 2,820,000/- to the appellant repayable over 60 months in equal monthly instalments of Kshs. 63,909/-, at an interest rate of 4% per annum on a reducing balance. The facility was intended for the construction of rental units. 3. The facility was secured by charges over: L.R. No. Loc. 1/ Mukarara/ 2032 and L.R. No. Loc.1/ Mukarara/2036 owned by the appellant, and L.R. No. Loc. 1/ Mukarara/2033 owned by David Muchina Mwangi. The appellant’s properties secured Kshs.540,000/- and Kshs.1,200,000/-, while David Muchina’s property secured Kshs.1,080,000/-. Three charge instruments dated 29th May 2019 were prepared and registered over the said properties. In addition, David Muchina executed a personal guarantee and indemnity in respect to the secured sum of Kshs.1,080,000/-. 4. The loan was to be disbursed in 2 tranches. Following disbursement of the first tranche of Kshs.2,320,000/- on 12th September 2019, the appellant purchased a lorry, prompting the respondent to withhold the balance of Kshs.500,000/-. 5. Shortly after disbursement, the appellant fell into default, with some instalments either falling short of the agreed amount, or not remitted when due. 6. As a result, the respondent issued a statutory notice dated 15th March 2021 under Section 90 of the Land Act, followed by further notices dated 9th August 2021 and 2nd May 2023 under Section 96 of the Land Act. Upon the appellant’s failure to regularize the account, the respondent instructed Mistan Auctioneers, who issued the appellant with a redemption notice and notification of sale both dated 4th December 2023, scheduling the auction for 13th February 2024. 7. Still in arrears, the respondent instructed Intersil Global Ltd. on 15th November 2023 to undertake a valuation of the properties in preparation for the sale. As at that date, the outstanding loan balance was stated to be Kshs. 1,418,691.54/-. **Factual History** 1. Faced with the impending sale of his properties and that of David, the appellant filed **Thika MCCC No. E040 of 2024**. In his plaint, he claimed that the agreed monthly instalment was Kshs. 53,000/- for 60 months. He also claimed that the respondent only disbursed Kshs. 2,045,593.27/- and that the statement of account contained irregular charges, including Kshs. 125,500/- allegedly incurred in engaging Global Valuers Ltd. 2. The appellant maintained that he continued servicing the loan despite the effects of the Covid-19 pandemic and had repaid Kshs. 2,000,000/- by the time of the hearing. He, therefore, claimed to be surprised when he received a notice from Mistan Auctioneers claiming that he was in arrears despite not receiving statutory notices under Sections 90 and 96 of the Land Act and contended that no valid valuation had been conducted. 3. He further challenged the validity of the charge on the grounds that the Land Control Board’s consent and spousal consent had not been obtained. He averred that on account of the respondent’s actions, his health deteriorated which compromised his ability to run his business Kirwara Daycare Clinic. On that basis, he sought a permanent injunction restraining the sale, an account of all payments made excluding unlawful charges, and suspension of the accrual of interest and penalties on the loan. 4. In its defence dated 12th February 2024, the respondent maintained that the charge was valid. It asserted that the agreed monthly instalment was Kshs. 53,009.66/- for 60 months and that the appellant fell into arrears as evidenced by the statement of accounts. It further contended that all requisite statutory notices were duly served. The respondent also relied on the appellant’s affidavit indicating that he was unmarried, and therefore spousal consent was not required. 5. During hearing, **PW 1, Paul Mwangi Chege**, acknowledged receiving Kshs.2,320,000/-. He testified that although repayments were allegedly due on the 10th day of each month, this term did not appear in the letter of offer. He further stated that penalties were imposed prematurely. He admitted that he failed to pay the second instalment or the third instalments, and was inconsistent in servicing the loan, thereby falling into default. He denied receiving email notices but confirmed that his postal address corresponded with that in the charge instrument. He also claimed to have a spouse but produced no proof. While he acknowledged that a valuation was conducted, he challenged its legality. 6. **DW1, David Chege Maina**, the respondent’s relationship manager, confirmed that the appellant was required to make instalments on the 10th of each month but that the appellant failed to do so, and therefore falling into default. He maintained that only interest, not penalties, was charged. He further confirmed that a valuation was conducted prior to the advertisement and that all statutory notices were duly served. 7. In its Judgment delivered on 5th June 2025, the trial court framed three issues for determination: *whether the appellant defaulted in repayment of the loan; whether the appellant is entitled to the prayers sought in the plaint; and which party is entitled to costs of the suit*. On the first issue, the trial court held that the appellant was in arrears, a fact he had admitted. It further held that his claim of overpayment by Kshs. 1,00,000/- was unsupported by evidence. The court concluded that the respondent had complied with the legal requirements in exercising its statutory power of sale. 8. Accordingly, having found as above, the trial court found that the appellant was not entitled to the orders sought and therefore dismissed the claim with costs to the respondent. **The Appeal** 1. Disgruntled, the appellant filed a Memorandum of Appeal dated 30th June 2025 raising the following grounds of appeal, that the Learned Trial Magistrate erred in law and fact: 2. *By failing to take into account that the respondent continued debiting interest 18 days from the date of disbursing the loan contrary to the letter of offer.* 3. *In failing to note that the interest charged was very high despite the appellant having paid the first installment on time.* 4. *In failing to consider the audited report he had filed, and which raised a lot of discrepancies on the part of the respondent.* 5. *By not considering that the appellant had paid Kshs. 3,335,085/- to settle the loan.* 6. *By not taking the effect of Covid-19 Pandemic and went ahead to dismiss his case.* 7. Accordingly, he sought that the appeal be allowed, the trial court’s Judgment be set aside and for his prayers before the trial court to be granted. **The Appellant’s Submissions** 1. In his submissions dated 6th March 2026, the appellant introduced an additional ground, that *the trial court erred in law and fact by failing to note that the interest calculated on daily basis was double debited which led to double taxation*. 2. He submitted that interest began accruing 18 days after the loan was disbursed, thereby increasing his repayment obligations. He also faulted the trial court for failing to find that all debits, including ledger fees and insurance, were improper debited. The appellant also challenged the trial court’s findings, which in his view, disregarded his audit report, failing to consider his alleged payments totaling Kshs. 3,335,085/- which was over and above his loan obligations, ignoring the effects of Covid-19 and his health problems, despite which the appellant continued to meet his obligations. **The Respondent’s Submissions** 1. The respondent opposed the appeal vide its submissions dated 7th May 2026. It contended that the appellant had raised new issues in its appeal which were not the subject of trial, to wit, whether interest was levied prematurely and whether the said interest was exorbitant. Accordingly, it urged that the same be disregarded as held in ***Ol Pejeta Ranching Ltd. vs Muhoro (Civil Appeal 42 of 2015) [2017] KECA 329 (KLR)***. 2. On the issue of the audit report, the respondent submitted that it was properly disregarded it as its maker was not called to produce it. Turning to whether the trial court failed to consider the alleged payment of Kshs. 3,335,085/-, the respondent maintained that the appellant failed to prove such overpayment. With respect to the Covid-19 pandemic, it urged that the appellant’s default predated the pandemic and in any case, the pandemic did not suspend contractual obligations. In its view, reliance on the pandemic was an afterthought. In the end, it urged that the appeal be dismissed with costs. **Analysis and Determination** 1. Conscious of my duty as the first appellate Court in this matter, I have considered the evidence, assessed it and arrived at my own conclusions on the evidence, subject to the cardinal fact that I did not have the advantage of seeing and hearing the witnesses as they testified. See ***Selle v. Associated Motor Boat Co. [1968] EA 123.*** I have anxiously considered the appeal, record and rival submissions before this Court. 2. Before moving to the substantive appeal, I note that the respondent claims that grounds 1 and 2 of the appellant’s Memorandum of Appeal were not placed before the trial court. For context, these grounds are: *the trial Magistrate erred in law and fact (1) by failing to take into account that the respondent continued debiting interest 18 days from the date of disbursing the loan contrary to the letter of offer and (2) In failing to note that the interest charged was very high despite the appellant having paid the first installment on time.* 3. I agree with the respondent that a litigant is not allowed to advance a new issue that was not pleaded before the trial court. ***See Ol Pejeta Ranching Ltd. vs Muhoro (Civil Appeal 42 of 2015) [2017] KECA 329 (KLR) and Mary Kitsao Ngowa & 36 Others vs Krystalline Ltd. (2015) eKLR***. Looking at the two grounds of appeal against the record of the trial court, I am convinced that the issue of whether the interest charged was high or not was not pleaded before the trial court. Accordingly, ground 2 of the Memorandum of Appeal is struck out. As for the issue whether interest was debited 18 days from the date of disbursement, the appellant consistently raised the issue of illegal charges, including testifying that he was fined before the 10th day of the month. In the circumstances, I find that this ground of appeal is properly before this Court. 4. As a preliminary point, I note that one of the charged properties belonged to David Muchina, who is not a party to these proceedings. I further note that during trial, it was communicated to the trial court that David Muchina had separately challenged the respondent’s statutory power of sale in ***Kandara PMCC No. E007 of 2024*** and which had proceeded on appeal. There is no indication as to the fate of the said appeal. That is all I will state about L.R. No. Loc. 1/ Mukarara/2033. 5. Having found as above, I find that a single issue arises for determination, for reasons that will become clearer later in this Judgment: *Whether the charge was void for want of the consent of the LCB*. 6. While the appellant claimed that the respondent did not obtain the consent of the LCB, the respondent made no representations on the same, neither did the trial court pronounce itself on the same. Section 6 of the Land Control Act provides as follows: *(1) Each of the following transactions, that is to say—* *(a) the sale, transfer, lease, mortgage, exchange, partition or other disposal of or dealing with any agricultural land which is situated within a land control area;* *(b) the division of any such agricultural land into two or more parcels to be held under separate titles, other than the division of an area of less than twenty acres into plots in an area to which the Development and Use of Land (Planning) Regulations, 1961 (L.N. 516/1961) for the time being apply;* *(c) the issue, sale, transfer, mortgage or any other disposal of or dealing with any share in a private company or co-operative society which for the time being owns agricultural land situated within a land control area,* *is void for all purposes unless the land control board for the land control area or division in which the land is situated has given its consent in respect of that transaction in accordance with this Act.* *(2) For the avoidance of doubt it is declared that the declaration of a trust of agricultural land situated within a land control area is a dealing in that land for the purposes of subsection (1).* *(3) This section does not apply to—* *(a) the transmission of land by virtue of the will or intestacy of a deceased person, unless that transmission would result in the division of the land into two or more parcels to be held under separate titles; or* *(b) a transaction to which the Government or the Settlement Fund Trustees or (in respect of Trust land) a county council is a party.* 1. The Court of Appeal in ***Tukai vs Muge & 2 Others (Sued as Chairman, Secretary & Treasurer of Kapkween Farmers Co-operative Ltd.) (Civil Appeal 76 of 2014) [2014] KECA 155 (KLR)*** held that the reason for the stringent provisions was to avoid ***“…sub-division of land holdings into uneconomical units, thus undermining agricultural production; to mitigate the danger of landlessness inherent in unchecked sale and alienation of land; to control land holding by non-Kenyans etc…***’. 1. According to the ***Tukai Case***, the Court of Appeal cited several of its other decisions for the proposition that any disposal or dealing with agricultural land absent the LCB consent is void. The Court of Appeal further held that the words ***“void for all purposes***” must be given their ordinary meaning, adding that there can be no justification for deviating from the express provisions of statute. Neither can one find any grounding in equity as equity supplements the law, but cannot displace the law. However, the Court of Appeal may infer an implied or constructive trust where a vendor reneges on their obligations in an agreement for sale, which is certainly not the case here. 2. The first issue this Court has to determine is whether the suit properties are agricultural land. In this regard, I note that the appellant did not adduce proof thereof neither did the respondent. However, the titles read that the properties are freehold, and more notably, the valuation reports attached by the respondent described the properties as agricultural land. In the premises, I am satisfied that the properties are agricultural land. 3. The respondent did not address the issue of Land Control Board consent. Although the respondent may ordinarily be expected to perfect its securities, the record does not contain any application for consent or the consent itself. Registration of the charge establishes its existence in the land register but does not, without more, demonstrate compliance with statutory requirements governing its creation. Having challenged the charge on the basis of lack of consent, the evidentiary burden shifted to the respondent to prove compliance. Further, this was a matter within the respondent’s knowledge, and the burden lay on it under **Section 112 of the Evidence Act.** 4. I am therefore of the considered view that the charge instrument was void. Having found as much, the question now turns to the appropriate relief, if any. 5. It is worth reiterating that parties are bound by their pleadings. See ***Tukai Case***. The appellant's prayers before the trial court were: a permanent injunction restraining the respondent from repossessing or selling the charged properties; an account of all payments made, excluding unlawful charges; and an order suspending the accrual of interest and penalties on the loan. Each of these prayers presupposes that the charge remains a subsisting, enforceable instrument whose exercise is to be restrained, audited, or modified. None of them was framed, in the alternative or otherwise, as flowing from a finding that the charge itself was void ab initio. Those claims, while framed as discrete reliefs, were predicated on the existence and enforceability of the charge. 6. Having found that the charge was void for want of the LCB consent, the legal foundation upon which those reliefs were premised is fundamentally displaced. It is also not clear from the record whether the charged properties were ultimately sold. Should they remain unsold, an injunction restraining a sale under a charge already found void would, in any event, be unnecessary, since a void charge confers no power of sale to restrain in the first place. Should the properties already have been sold, the appellant's pleaded prayers - being confined to restraining a prospective sale - would similarly not avail him, and any relief consequent on a completed sale under a void charge was neither sought nor argued before this Court. 7. In the absence of such clarity, and given the manner in which the appellant’s case was framed, the Court is unable to fashion any effective relief. The invalidity of the charge does not, however, extinguish the underlying debt, which remains recoverable through other lawful means. See **Section 7 of the Land Control Act.** Further, in the absence of a properly framed and independently sustainable claim for accounts, or a demonstrated legal basis upon which this Court may interfere with the contractual accrual of interest or the respondent’s statutory rights relating to credit reporting, it would be inappropriate to grant the orders sought. To do so would amount to reconstituting the parties’ contractual relationship beyond the scope of the pleadings and the record. 8. In the circumstances, and mindful that a court of law does not issue orders in vain, no effective relief flows to the appellant within the confines of this appeal. The remedies sought herein and before the trial court are therefore not available, notwithstanding the finding on the invalidity of the charge. The appeal therefore fails. 9. Given that the appellant has succeeded on a significant point of law though not on relief, parties shall bear their own costs. **ORDERS** 1. In the end, I make the following orders: 1. ***The appeal is dismissed.*** 2. ***Parties shall bear their own costs.*** It is so ordered. ***Dated, Signed and Delivered Virtually*** *at* ***Nairobi this 30th day of July 2026.*** **DAVID MBURU** **JUDGE** **In the presence of:** *No appearance for the Appellant* *M/s Kyalo holding brief for M/s Nguri for the Respondent* *Kalondu - Court Assistant*