Housing Finance Company (K) Ltd v Kimeriah (Suing in her capacity as the Administrator of the Estate of harrisson Charles Kimeriah - Deceased) (Civil Appeal E061 of 2024) [2025] KECA 1215 (KLR)
The bottom line
#Kenya's Court of Appeal threw out a Kshs 150 million judgment against Housing Finance, ruling the borrower's admitted default made the bank's sale of the charged property lawful.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.whether the deceased defaulted in servicing the facility
- 2.whether the statutory power of sale had accrued
- 3.whether the sale of the suit property was lawful
- 4.whether the appellant breached the terms of the contract between it and the deceased by failing to insure the suit property
- 5.whether the award of Kshs 150,000,000 to the respondent was justified
Key legal issues
#Whether the deceased defaulted in servicing the facility
He did; the deceased admitted default in his 1982 affidavit and in the 2000 consent order, and PW2 admitted irregular repayments and flawed recalculations.
The deceased's affidavit of 11th May 1982 was an unequivocal admission of debt; the consent order of 23rd March 2000 required payment of Kshs 700,000, Kshs 1.5 million and monthly instalments of Kshs 500,000, and default entitled the appellant to sell. PW2 admitted the deceased 'did not pay regularly' and that he had used the wrong interest basis (flat rate from the letter of offer rather than the charge). The trial court's finding that the loan was repaid was contrary to the statements of account and amounted to a misapprehension of evidence justifying interference.
Whether the statutory power of sale had accrued
It had, following the admitted default.
Following its own decision in Joseph Okoth Waudi v National Bank of Kenya, the court held that once default in servicing the mortgage was proved, the chargee had a basis for exercising the statutory power of sale under the charge. Since the deceased was admittedly in default, the power of sale had accrued.
Whether the sale of the suit property was lawful despite alleged non-service of statutory notices
The sale was lawful; the sale flowed from breach of a consensual court order and receipt of the statutory notice was acknowledged in the respondent's advocates' letter of 24th August 2007.
The consent order in HCCC No. 693 of 1982 permitted sale on default, and the deceased defaulted. Further, the respondent's advocates' letter acknowledged receipt of the statutory notice dated 26th January 2006, contesting only the amount claimed. Where receipt of a statutory notice is acknowledged, non-service is a non-issue; the trial court's conclusion was reached without evaluating the rival contentions as required by Order 21 rules 4 and 5 of the Civil Procedure Rules.
Whether the appellant breached the contract by failing to insure the loan
No breach; the trial judge imposed an onerous and erroneous burden on the chargee notwithstanding the borrower's default.
No clause obliged the appellant to insure notwithstanding default. The deceased's account was in arrears long before his death, so the mortgage protection cover could not extend to arrears. Relying on Housing Finance Company Limited v Mary Wambui Muturi, the borrower had an equal responsibility to ensure premiums were paid. The trial judge's premise that the appellant 'diligently collected the premiums' was erroneous, and the obligation lay on the borrower and respondent.
Whether the award of Kshs 150,000,000 was justified
It was not; no reasons were given, the figure was unsupported by any valuation, and it ignored the Kshs 40,000,000 received from the 2nd defendant.
The trial judge awarded a figure simply pleaded in the plaint without evaluating the conflicting valuations or giving reasons for preferring one. Damages for an irregular sale should be based on the value at the time of sale, not at trial, since trial-date valuation may capture third-party developments. The respondent's loss, if any, would be the value at sale less the amount due, and the Kshs 40,000,000 received from the 2nd defendant on the same cause of action was a material fact ignored.
Legal principles established
#- Where receipt of a statutory notice is acknowledged by the recipient, the allegation of non-service ceases to be an issue requiring proof.
- Where a debtor's account is in arrears, the borrower bears responsibility for ensuring sufficient funds to cover repayments and insurance premiums; the chargee is not under an onerous duty to insure notwithstanding default.
- Damages for an irregular sale of charged property must be assessed on the value of the property at the time of sale, not at the date of trial, and any sum received from another party in respect of the same cause of action must be taken into account.
- A first appellate court must re-evaluate and reanalyse the evidence and draw its own conclusions, though with allowance for not having seen the witnesses.
Court orders
#- 1.Appeal allowed in its entirety
- 2.Judgment of the High Court set aside
- 3.Respondent's suit dismissed with costs to the appellant
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya
- not stated in judgment (original suit instituted by plaint dated 12th May 2008, amended 16th January 2017)
- Jurisdiction invoked
- First appeal under section 78 of the Civil Procedure Act read with rule 31(1)(a) of the Court of Appeal Rules
Relief refused
#Declaration that the deceased had fully repaid the loan amount advanced by the appellant
The deceased had admitted default in affidavit evidence and in the consent order of 23rd March 2000; PW2 admitted the account was not regular
Declaration that the charge/sale was null and void and damages of Kshs 150,000,000
The statutory power of sale had accrued on admitted default and service of the statutory notice was acknowledged; the award of Kshs 150,000,000 was unsupported by the evidence
Costs
The respondent's suit dismissed with costs to the appellant.
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.
We set aside the judgement of the learned Judge and substitute therefor an order dismissing the respondent’s suit with costs to the appellant.
we find merit in this appeal, which we hereby allow in its entirety.
In our view, where the receipt of the statutory notice is acknowledged, the allegation of non-service of the same becomes a non-issue.
The obligation to ensure that there were suficient funds in the account to cover both the periodic repayments and the insurance premiums was on the respondent and the deceased.
In light of our finding that the deceased was admittedly in default, we find that the appellant’s exercise of its statutory power of sale had accrued.
The respondent would only have been entitled to the value of the suit property as at the time of its sale, less the amount that was due and payable.
It is our finding that no basis was laid by the learned Judge to justify the award of Kshs 150,000,000.
Issues in the judgment
#The respondent's name is not stated in the judgment text supplied; the coram lists only the judges, so the case title and party name had to be inferred from context (the widow and administrator of Harrison Charles Kimeriah).
The Court of Appeal case number and the High Court case number of the suit are not stated in the judgment text supplied.
The judgment refers inconsistently to the name of the enforcing suit: 'Nairobi HCCC No. 693 of 1982-Housing Finance Company Kenya Limited v Harrison Charles Kimeriah' in the grounds, 'Housing Finance Company Limited v Harrison Charles Kimeria' at paragraph 32, and 'Housing Finance Company Kenya Limited v Harrison Charles Kimeriah' elsewhere.
The ground of appeal cites 'John Okoth Waudi v National Bank of Kenya' while the submissions cite 'John Okoth Waudi v National Bnak of Kenya [2006] KLR' - a typographical variant of the same case.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Housing Finance Company (K) Ltd v Kimeriah (Suing in her capacity as the Administrator of the Estate of harrisson Charles Kimeriah - Deceased) (Civil Appeal E061 of 2024) [2025] KECA 1215 (KLR)", Case Analysis (2025). Court of Appeal Civil Appeal (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1215/eng@2025-07-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.