Court orders Housing Finance to refund Sh40 million

The High Court in Nairobi has ordered a bank that sold a borrower’s property when her secured loan had been fully repaid to refund more than Sh40 million plus interest to her.

Justice Eric Ogola also directed Housing Finance Company of Kenya (HFCK) to pay the purchaser of the property costs of the case.

In directing compensation for Scholastica Muturi for the irregular sale of her property in Kiambu, the judge said HFCK had turned her “ into a cash cow”.

The court agreed with her lawyer Titus Koceyo that the lender did not keep a proper account for its customer and relied on guesswork to calculate the amount due.

The land was sold at Sh16 million to Evanson Kamau Waitiki through a private treaty when no notice of public auction had been given as required by law.

Mr Koceyo had asked the court to make a finding that the bank had irregularly sold the property of Ms Muturi when she completed repaying the loan.

The borrower was not informed how much she owed the bank as required under the banking laws and so “HFCK relied on guesswork to calculate amount due”.

Justice Ogola declined to cancel the sale of the land valued at more than Sh32 million.


He had been asked to revert it to Ms Muturi as urged by her lawyer Mr Koceyo.

In his 50 page judgement, Justice Ogola ruled that HFCK had violated Section 44 of the Banking Act, which “protects borrowers whose loans have become non-performing from excessive interests being charged by the banks”.

He noted that Ms Muturi borrowed Sh3 million and by the time her land was sold she had paid HFCK Sh18 million. She was initially required to pay Sh7,373,704 within a period of 15 years from January 1998.

“It is clear that HFCK had treated Ms Muturi as a cash cow, which it milked to the extent of even denying the calf milk,” Justice Ogola said.

He said: “It can never be justified in any society that one borrows Sh3m and pays Sh18million”.

The court also said the bank failed to keep a proper record of the plaintiffs account and “therefore it is true the loan amount alleged to be due by HFCK is as a result of guesswork.”

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