The Court of Appeal judges faulted High Court judge Josephine Mong’are saying the elderly widow did not justify the award.
A widow has lost Sh150 million after the Court of Appeal overturned the compensation awarded by the High Court on allegations that a mortgage lender illegally sold her house to recover Sh500,000.
Housing Finance Group (HF) won a reprieve after appellate judges invalidated a lower court decision directing the mortgage lender to pay Ms Faith Wanjiru Kimeriah Sh150 million for unlawful sale of her property in Nairobi's Langata area in 1980.
Three Court of Appeal judges quashed the decision issued in November 2023 and faulted High Court judge Josephine Mong’are saying the elderly widow did not justify the award.
Justice Mong’are had awarded Ms Kimeriah, the administrator of the estate of her late husband Harrison Charles Kimeriah, the lump sum as compensation after her house was sold by the lender. The court had ruled that the widow had proved her case against the mortgage provider and was entitled to compensation.
The High Court judge had agreed with her that she was not served with the statutory notice as required by law before the property was disposed of to a third party in July 2006.
But in a twist of fate, Justices Daniel Musinga, Mumbi Ngugi and George Odunga said the judge failed to take into account that the couple had received sh40 million from the man who purchased the property.
Ms Kimeriah, through lawyer Gichuki Kinga’ra, argued that her husband had fully repaid the Sh500,000 he borrowed in 1980 and as at 1994, the lender had no claim against the couple.
The deceased had approached HF and borrowed Sh500,000 on July 8, 1980. The couple then charged the 4.2 acre parcel and its developments where the patriarch was the principal borrower.
According to court proceedings, the loan was to be insured and that her late husband contributed Sh451.25 to cover the insurance policy.
The terms of the loan agreement stated that in the event of death, the loan balance would be fully redeemed by the insurer and the charged property discharged.
Death of her husband
But this assertion was dismissed by the appeal judges who stated that Mr Kimeriah’s account was in arrears long before he passed away.
The widow claimed that upon the death of her husband, she visited the lender and gave out her new postal address for purposes of all future communication but testified that she did not receive any communication until she was forcibly evicted from the premises.
On the issue of insurance, the appeal judges differed with the High Court findings that there was valid life insurance cover in place equivalent to the loan advanced to the deceased at the time of his death.
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The widow had claimed that the lender varied the rate of interest contrary to the terms of the letter of offer hence increasing the monthly repayments.
In contrast, the judges noted that Mr Kimeriah had admitted defaulting in payment but the widow claimed the default was brought about by the economic conditions in the country which adversely affected their Westlands Quality Butchery business, a beneficiary of the loan advanced.
The court heard that the butchery business eventually collapsed without making any repayments leaving him with no alternative other than to raise money from other sources.
Appeal judges faulted the High Court for finding that the facility was repaid in excess of Sh1,000,000, contrary to the statements of accounts produced before the court.
Consequently, the judges ruled that sale of the property was undertaken in accordance with the failure by Mr Kimeriah to comply with the consent court order and that the widow “cannot be heard to complain that the statutory notice was not served.”
“We are therefore satisfied that as regards the service of the statutory notice, the judge failed to consider and analyse the evidence, only to arrive at the wrong decision,” said the three-judge bench.
