Maurice Agola Kong'o & 1 other v Ndhiwa Community Financial Services & 2 others

3. The lower court found in favour of the respondents and dismissed the appellant’s suit with costs in a judgment dated 8th July 2025. Being aggrieved by that decision, the appellants filed the instant appeal on the following grounds: (a) That the learned magistrate erred in law and fact in failing to observe and find that the purported contract of guarantee on record which purportedly binds the appellants to pay the monies which were lent to the principal-debtor plus accrued interest thereon was forged and is therefore null and void. (b) That the learned magistrate erred in law and fact in failing to observe and find that the signatures appearing in the respondents purported contract of guarantee on record were forged by the respondents herein in order to unlawfully and fraudulently bind the appellants to the said purported contract of guarantee. (c) That the learned magistrate erred in law and fact in dismissing the appellants’ case and in driving the appellants from the seat of judgment. (d) That the judgment rendered on the 8th July 2025 is biased and incompetent and against the weight of the evidence adduced by the parties. 4. Accordingly, the appellants prayed that their appeal be allowed with costs and that the judgment and decree given and issued by the lower court on the 8th day of July 2025 be set aside and that all the prayers sought by them in Ndhiwa MCCC/E015/2024 be allowed. The appellants also prayed that the costs of the appeal and of the proceedings in Ndhiwa MCCC/E015/2024 be awarded to them. 5. Directions were given herein on 15th October 2025 for the canvassing of the appeal by way of written submissions. Accordingly, the appellants filed written submissions dated 12th February 2026. They reiterated their stance that the 1st respondent herein instructed the 2nd respondent to collect and recover the sum of Kshs. 807,511/= plus the Auctioneers’ charges amounting to Kshs. 150,000/= from them in their capacity as guarantors of the 3rd respondent. They stated that the 2nd respondent served them with a Proclamation of Attachment without any notice of default by the borrower. 6. Being aggrieved by the action taken by the 1st and 2nd respondents, they promptly filed Ndhiwa MCCC NO. E015 of 2024 against the respondents herein and obtained injunctive orders on the 15th October 2024, restraining respondents from advertising their properties for sale as catalogued in the 2nd respondent’s Proclamation of Attachment. 7. The appellants reiterated their stance that they did not sign the Guarantee Forms and pointed out that the 2nd respondent was in South Sudan at the material time and therefore could not have signed the forms in question. They submitted that, having disowned the signatures on the Guarantee Forms, it was incumbent upon the respondents to adduce expert evidence connecting them with the impugned documents. They relied on Sections 48, 70, 71-74 and 77 of the Evidence Act and the cases of Mati & another v Gicheru (Civil Appeal E002 OF 2024) (2025) KEHC 2062 (KLR) (7th February 2025), In Re-Estate of Pradeep Behal (Deceased) (2019) KEHC 7648 (KLR) and Mwangi v Republic (Criminal Appeal EO11 of 2024) (2024) KEHC 7867 (KLR) (28 June 2024) (Judgment) to buttress their arguments. They prayed that their appeal be allowed and the orders sought therein granted. 8. The respondents did not file any submissions and appear to have opted to rely entirely on the record of the lower court. 9. This being a first appeal, it is the duty of the Court to re-evaluate the evidence adduced before the lower court with a view of coming to its own findings and conclusions thereon; while giving due https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 2

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consideration for the fact that it did not have the advantage of seeing or hearing the witnesses. This is in line with Selle & Another v Associated Motor Boat Co. Ltd & Others 1968 EA 123 wherein it was held that: ...this 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..." 10. I have given careful consideration to the evidence placed before the lower court in the light of the Grounds of Appeal filed herein, as well as the written submissions filed herein by learned counsel. Needless to mention that the burden of proof was on the appellants to prove their case before the lower court on a balance of probabilities. In this regard, Section 107(1) of the Evidence Act, Chapter 80 of the Laws of Kenya, is explicit that: Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.” 11. Similarly, Sections 109 and 112 of the Evidence Act provide that: 109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. ... 112. In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.” 12. The record of the lower court shows that the 1st appellant testified on 4th March 2025 as PW1 and adopted his witness statement dated 26th February 2024 as his evidence in chief. He stated that, sometime in 2019, the 3rd respondent approached him and asked him to be his guarantor for a loan facility of Kshs. 500,000/= that he intended to obtain from the 1st respondent. He further stated that the 3rd respondent told him that he was a member of a savings and credit society formed by the 1st respondent and had already saved Kshs. 200,000/= with the 1st respondent and that basis he acceded to the 3rd respondent’s request but did not sign any document to that effect. 13. The 1st appellant further stated that after obtaining the loan, the 3rd respondent made some remittances to the 1st respondent for some time, totaling Kshs. 100,000/= but thereafter defaulted, citing harsh economic times. Thus, the 1st appellant confirmed that the 3rd respondent was indebted to the 1st respondent to the tune of Kshs. 807,511/= at the time of filing the suit; and that the 1st respondent had sent the 2nd respondent to value the movable property at his home and served him with a Proclamation of Attachment. 14. According to the 1st appellant, the attachment was premature because he had not been served with 90 days’ notice as required by the Land Act. Or a 40-day notice to sell for purposes of Section 96(3) of the Land Act. He also complained that he had not been served with 45 days’ redemption notice as required by Rule 15(d) of the Auctioneers Rules. He further complained that he had not been served with a current valuation to protect him against undervaluation by the 1st and 2nd respondents. He https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 3

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produced several documents before the lower court, including the Proclamation served on him by the 2nd respondent, as exhibits. 15. The 2nd appellant also testified before the lower court. He likewise adopted his witness statement dated 5th July 2024 and produced the Proclamation served on him by PW2. He stated that he had travelled out of the country to Juba, South Sudan where he works as an engineer with M T N. He produced his immigration documents as exhibits. He acknowledged that the 3rd respondent is a person well known to him; and that he had mentioned to him that he was desirous of taking a loan from the 1st respondent. He however denied having offered himself to be his guarantor or having signed any document to that effect. 16. On behalf of the 1st respondent, evidence was called from its Manager, Ooro Owino (DW1). He adopted his witness statement filed on 12th December 2024. He explained that loan applicants are expected to submit an application in the prescribed form and avail guarantors to secure the facilities. DW1 further stated that it is the responsibility of the loan applicant to look for guarantors; and once identified, the 1st respondent’s oficers would confirm the position from them. 17. DW1 testified that the 3rd respondent made an application for a facility of Kshs. 500,000/= from the 1st respondent; and that upon complying with the applicable procedure the loan was approved and disbursed on 24th December 2019. He further stated that the loan was to be repaid with interest in 24 monthly instalments of Kshs. 28,344/=; but that the 3rd respondent only paid Kshs. 141,719/=. He stated that the 1st respondent acted in accordance with the terms and conditions of the facility by instructing the 2nd respondent to recover the outstanding sum including interest and penalties, from the 3rd respondent’s guarantors, who are the appellants herein. 18. DW1 further testified that that all the procedures and processes were followed in the case of the 1st respondent and the appellants. He produced the loan agreement, the identity cards and passports of the appellants as well as letter of authorization for debt, among documents to back up his assertions. 19. From the evidence presented before the lower court, there was no dispute that the appellant was given a loan by the 1st respondent, or that he failed to service the loan as agreed. In the circumstances, the issues for determination are: (a) The legality of the attachment initiated by the 1st and 2nd respondents. (b) What orders ought to be made on costs. A. On the legality of the Attachment: 20. Needless to say that it is the contractual documents that determine the terms of engagement between the parties; and that the Court can do no more than to interpret the said terms to ascertain the expressed intention of the parties when they made the contract, with a view of giving it effect. In the persuasive case of RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) 2010 UKSC 14, these principles were discussed as follows: The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 4

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21. The documents of guarantee were exhibited before the lower court and they appear at pages 156 and 158. They appear to have been duly signed by the appellants. The appellants thereby committed themselves to repay the loan on behalf of the 3rd respondent in the case of default. They further listed the properties given as security which the 1st respondent would be at liberty to attach and sell in the event of default. There is no indication in the documents that notice was required before attachment. Indeed, in their submissions, the appellants placed reliance on the provisions of the Land Act which have absolutely no relevance to the subject matter of the dispute before the lower court. 22. If, as contended by the appellants, their signatures were forged, the burden of proof was on them and not the respondents, to prove those allegations to the requisite standard. The essence of fraud, in legal parlance, is aptly captured in the definition proffered by Black's Law Dictionary, Tenth Edition, thus: Fraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right, or in some manner to do him an injury. As distinguished from negligence, it is always positive, intentional. As applied to contracts, it is the cause of an error bearing on a material part of the contract, created or continued by artifice, with design to obtain some unjust advantage to the one party, or to cause an inconvenience or loss to the other. Fraud, in the sense of a court of equity, properly includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence justly reposed, and are injurious to another, or by which an undue and unconscientious advantage is taken of another." 23. It is trite that fraud must be strictly proved. Hence, in Central Bank of Kenya Ltd v Trust Bank Ltd & 4 Others NAI Civil Appeal No. 215 of 1996, the Court of Appeal held that: ...Fraud and conspiracy to defraud are very serious allegations. The onus of prima facie proof was much heavier on the Appellant in this case than in an ordinary Civil Case..." 24. Accordingly, in Rosemary Wanjiku Murithi v George Maina Ndinwa 2014 eKLR, the Court of Appeal expressed the view that: Counsel for the appellant submitted that an element of fraud had been raised in the statement of defence and counterclaim. Proof of fraud involves questions of fact. Simply raising the issue of fraud in a statement of defence and counterclaim is not proof of fraud. The two courts below held that fraud had not been proved. The appellant has not illustrated any error or misdirection in law on the part of the learned Judge to show that fraud was indeed proved and the Judge erred in finding that it had not been proved." 25. I note that the learned magistrate properly addressed his mind to this aspect at pages 5 and 6 of his Judgment. Therefore, the learned magistrate cannot be faulted for holding that the appellant was in default. Having found that the appellant was in default, there can be no denying, in the circumstances, the 1st respondent’s right to attachment and sale had crystallized. 26. In Fidelity Commercial Bank Limited v Kenya Grange Vehicle Industries Limited 2017 eKLR the Court held: …where the intention of the parties has in fact been reduced to writing, under the so called parole evidence rule, it is generally not permissible to adduce extrinsic evidence, whether oral or written, either to show the intention, or to contradict, vary or add to the terms of the document, including implied terms. Courts adopt the objective theory of contract interpretation, and profess to have the overriding aim of giving effect to the expressed https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 5

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intentions of the parties when construing a contract. This is what sometimes is called the principle of four corners of an instrument, which insists that a document’s meaning should be derived from the document itself, without reference to anything outside of the document (extrinsic evidence), such as the circumstances surrounding its writing or the history of the party or parties signing it…” 27. Moreover, an enduring principle is that parties to arm’s length contracts are bound by the terms of their bargains; and the Court cannot interfere unless valid cause be shown for such interference. (see National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another 2002 2 EA 495). I am therefore in agreement with the position taken in Jitegemee Credit Scheme v Naomi Wanjiru Njoroge 2020 eKLR where the court held: From these terms of the contract and the Respondent's admission of indebtedness, it cannot be logically and reasonably said that the attachment of motor vehicle of KAT 035C was unlawful in the circumstances. The Appellant exercised its legal right of attachment as contracted with the Respondent in the contract and specifically asper Clause 9 of the said contract. The Court cannot rewrite the terms of the Contract by parties, they are duly bound by terms of the Contract, voluntarily entered into and the contract was duly executed by parties as the individual Loan agreement confirms. The said contract was duly executed by parties and validity of the contract was not raised as depicted by pleadings and proceedings on record. 28. In the light of the foregoing, it is my finding that the learned magistrate came to the correct conclusion on the basis of the evidence presented before him. B. What orders ought to be made on costs? 29. The proviso to Section 27(1) of the Civil Procedure Act, Chapter 21 of the Laws of Kenya is explicit that costs follow the event. Nevertheless, it is also trite that costs are awardable at the discretion of the Court. In Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & 4 Others, SC Petition No 4 of 2012; 2014 eKLR set out the guidelines that a court must consider when exercising its discretion to either award or deny costs and its states: (14) So the basic rule on attribution of costs is: costs follow the event. But it is well recognized that this principle is not to be used to penalize the losing party; rather, it is for compensating the successful party for the trouble taken in prosecuting or defending the suit. In Justice Kuloba’s words Judicial Hints on Civil Procedure, at p.94: “The object of ordering a party to pay costs is to reimburse the successful party for amounts expended on the case. It must not be made merely as a penal measure…Costs are a means by which a successful litigant is recouped for expenses to which he has been put in fighting an action. … (22) Although there is eminent good sense in the basic rule of costs – that costs follow the event – it is not an invariable rule and, indeed, the ultimate factor on award or non-award of costs is the judicial discretion. It follows, therefore, that costs do not, in law, constitute an unchanging consequence of legal proceedings – a position well illustrated by the considered opinions of this Court in other cases. The relevant question in this particular matter must be, whether or not the circumstances merit an award of costs to the applicant…” https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 6

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30. Therefore, while the law gives the court the discretion to award costs or not and to what extent, this Court must evaluate whether the particular circumstances of this case justify an award of costs. Having given due consideration to the circumstances of each party as disclosed by the evidence presented before the lower court, it is hereby ordered that each party shall bear own costs of this appeal as well as costs of the lower court matter. 31. In the result, the appeal fails and is hereby dismissed with an order that each party shall bear their own costs of this appeal as well as costs of the lower court suit. It is so ordered. DATED, SIGNED AND DELIVERED VIRTUALLY THIS 29TH DAY OF APRIL, 2026 …………………………………… HON. OLGA SEWE, JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7955/eng@2026-04-29 7

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