KENYA COMMERCIAL BANK LTD vs MWANZAU MBALUKA & ANOTHER [1998] KECA 238 (KLR)
The bottom line
#Kenya's Court of Appeal ruled a bank must formally demand payment from a guarantor before suing them, and courts cannot decide issues nobody pleaded.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether sufficient evidence was adduced to establish the first respondent guarantor's liability, given that the guarantee required default by the debtor and a formal demand on the guarantor
- 2.Whether the trial Judge erred in raising and determining an issue (statutory notice under section 74(1) of the Registered Land Act) that was neither pleaded nor arising from the evidence
- 3.Whether the omission of a specific prayer in the memorandum of appeal for return of the Kshs.15,000 refund, or for judgment in terms of the plaint, was fatal to the appeal
- 4.Whether the respondents' counterclaim, not prosecuted at the hearing, should be dismissed
Key legal issues
#Liability of the guarantor absent proof of formal demand
The appeal against the first respondent guarantor fails because the bank proved default but not the formal demand on the guarantor required by the guarantee.
The guarantee limited the first respondent's liability to Kshs.75,000 and made it conditional on default by the debtor and a demand by the bank. The bank's witness fell short of proving that demand was made, and appellant's counsel conceded the point. Without proof of demand, the guarantor's liability was never established, so the appeal against him lacked any basis.
Trial court deciding unpleaded issues
The trial Judge erred by determining whether a statutory notice under section 74(1) of the Registered Land Act had been issued and served, an issue neither pleaded nor arising from the evidence, thereby introducing a new cause of action; his judgment could not stand.
The respondents' defence challenged only the regularity of the sale and counterclaimed the undervalue; they never challenged the bank's statutory right of sale. Relying on Gandy v Caspair and Nkalubo v Kibirige, the Court held that deciding a suit on matters outside the agreed issues is an error apparent on the face of the record and cannot be invoked to introduce a new cause of action.
Omission of a specific prayer for judgment in the memorandum of appeal
The omission was not fatal; the Court could substitute judgment for the appellant against the second respondent for the full claimed sum with interest.
Although the memorandum of appeal sought only setting aside of the judgment and costs, the Court inferred the intention to obtain judgment, especially as counsel asked for appropriate judgment. The Court exercised its discretion to grant judgment for Kshs.117,237.70 with interest as prayed in the plaint.
Unprosecuted counterclaim
The counterclaim should have been dismissed under Order IXB rule 4 of the Civil Procedure Rules because the respondents failed to attend court to prosecute it.
Neither the respondents nor their counsel attended the trial despite due service, so the counterclaim was not prosecuted. With no prayer for annulment of the sale or refund, the Court dismissed the counterclaim and directed that any refund received by the second respondent be paid over to the first respondent as proceeds of his land.
Legal principles established
#- A trial court commits an error apparent on the face of the record by deciding a suit against a party on matters outside the issues pleaded or arising from the evidence, and such a judgment cannot stand.
- A guarantor's liability arises only upon default by the debtor and upon a formal demand being made on the guarantor in terms of the guarantee; failure to prove demand defeats the claim against the guarantor.
- Omission of a specific prayer in a memorandum of appeal for judgment in terms of the plaint is not fatal where the appeal, by setting aside the judgment below, necessarily seeks that relief.
- A counterclaim that is not prosecuted at the hearing should be dismissed under Order IXB rule 4 of the Civil Procedure Rules.
Court orders
#- 1.Appeal against the first respondent, Mwanzau Mbaluka, dismissed
- 2.Appeal against the second respondent, Lazarus Kitili Vetu, allowed; the judgment in his favour set aside and substituted with judgment for the appellant against him for Kshs.117,237.70 with interest as prayed in the plaint
- 3.Counterclaim dismissed
- 4.Second respondent to pay the appellant's costs of the appeal and of the claim and counterclaim in the court below; no order as to costs against the first respondent
- 5.Second respondent to pay over to the first respondent the Kshs.15,000 or any part thereof he may have received, as it came from the sale of the first respondent's property
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Machakos
- H.C.C.C. No. 105 of 1993
- Jurisdiction invoked
- First appeal to the Court of Appeal from the decree of the High Court (superior court) under the Constitution and the Appellate Jurisdiction Act (appeal as of right on facts and law)
Relief refused
#Appeal against the first respondent guarantor
No formal demand was proved as required by the guarantee, so the guarantor's liability was never established; counsel for the appellant conceded this
Annulment of the sale of the first respondent's land or refund of the sale price
No prayer was raised by the first respondent for annulment of the sale or refund, and the counterclaim was not prosecuted
Costs
The second respondent shall bear the appellant's costs of the appeal, the claim and counterclaim in the court below; no order as to costs against the first respondent; the second respondent to pay over to the first respondent the Kshs.15,000 or any part thereof he received from the sale of the first respondent's property.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the circumstances and for the reasons above we dismiss the appeal against the Ist respondent, Mwanzau Mbaluka, but allow the appeal against the 2nd respondent, Lazarus Kitili Vetu; set aside the judgment in his favour and substitute it with a judgment for the appellant against him for Kshs.117,237.70 with interest thereon as prayed in the plaint.
The trial Judge by raising and determining the suit on an issue which was neither pleaded nor evidence adduced on thereby introduced a new cause of action against the appellant. He clearly went astray and his judgment cannot be left to stand on that account.
Having not gone further to adduce evidence that there had been a formal demand in terms of the guarantee we do not think sufficient evidence was adduced to establish the Ist respondent's liability.
We have considered the matter and hold that the omission to make a specific prayer in that regard is not fatal to the appeal.
The respondents having failed to attend court to prosecute their counterclaim it should have been dismissed under O>IXB rule 4 of the Civil Procedure Rules.
Issues in the judgment
#The judgment spells the second respondent's name inconsistently ('Lazarus Kitili Vetu' in the title and orders, 'Laxarus Kitili Vetu' in the body).
The judgment states the appeal was from a decree given on 17th June 1994 but is dated and delivered on 5th June 1998, while the cover heading describes it as an appeal from a judgment given on the 17th day of June, 1994; the long interval is unexplained on the record.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Mwadzaya v County Government of Kilifi & another (Civil Appeal 46 of 2019) [2025] KECA 869 (KLR)[2025] KECA 869 (KLR)23 May 2025
Cite this brief
#Cite this brief
Caselaw, "KENYA COMMERCIAL BANK LTD vs MWANZAU MBALUKA & ANOTHER [1998] KECA 238 (KLR)", Case Analysis (1998). Civil Appeal No. 274 of 1997. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/238/eng@1998-06-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.