Slain lawyer Mbobu wins Sh70m case against shylock

 Slain Lawyer Kyalo Mbobu. [File, Standard]

Nairobi lawyer Mathew Kyalo Mbobu, who was assassinated in September 2025 and still grappling with mounting litigation when he died, has been vindicated by the High Court in a case involving a staggering informal loan that ballooned far beyond the original sum.

One month after his death, Justice Moses Ado of the High Court in Nairobi’s Commercial and Tax Division has delivered a judgment in favour of the late lawyer’s estate.

He nullified a loan agreement in which Mbobu had borrowed Sh11 million from a private lender but was later demanded to pay an astounding Sh70 million, despite evidence that he had already repaid Sh24.6 million.

Justice Ado declared the contract between Mbobu and the private lender, Hypac Investments Limited, to be unconscionable, oppressive and contrary to public policy.

He further ordered that the transaction be reversed and that the security, a multi-million-shilling parcel of land, title deed currently held by Family Bank, be restored to Mbobu’s company, Riviera Estates Limited.

“The evidence before this Court discloses a lending arrangement so exorbitant and punitive as to offend the conscience of equity,” the Judge ruled.

 “No Kenyan court can countenance a situation where a borrower repays more than double the principal and is still told he owes several times the same amount.”

The ruling caps a tumultuous chapter in the life, and death, of Advocate Mbobu, who was killed on September 10, 2025 in the city while driving home near Langʼata-Magadi road junction in the Karen estate amid mounting financial and legal pressures.

At the time of his death, Mbobu who was also a former head of the Political Parties' Dispute Tribunal and a law lecturer at the University of Nairobi, faced a debt burden estimated at Sh261 million, spanning multiple court cases, unpaid client settlements, and loans from commercial and private lenders.

In 2023, he had been ordered to pay Sh97 million (plus interest) to Korat Africa Ltd after withholding proceeds from a land sale. 

Another client had sued him for Sh40 million, claiming he failed to release arbitration funds held in his firm’s account.

Beyond those, Mbobu had borrowed heavily from private lenders, locally known as shylocks, often at usurious interest rates. 

One of those loans, a Sh17 million advance, had ballooned to Sh52 million before settlement. 

The present case involved what would have been his most crippling liability: the Sh11 million Hypac loan, which had escalated into a claim of Sh 69.5 million.

According to court records, Mbobu, alongside his company Riviera Estates Limited, approached Hypac Investments Limited in January 2021, seeking a Sh11 million loan to stabilize his practice and personal finances following the COVID-19 pandemic.

The loan was advanced under a letter of offer dated January 27, 2021, for a six-month period at a flat interest rate of 15 per cent per month and a late payment penalty of 5% per week.

As security, Mbobu and his firm Riviera transferred ownership of their residential property, LR No. 15065/64 (I.R. 83020), to the lender.

“I was under severe financial strain,” Mbobu testified during trial on April 3, 2023, before his death.

Mbobu described how, owing to financial challenges occasioned by the COVID-19 pandemic, he sought the loan and secured it by transferring his parcel of land to the lender. 

The agreement included a provision for his re-transfer of the property once repayment was completed.

“The COVID-19 disruption had paralysed my practice. I accepted the terms in desperation, understanding that once repayment was complete, the property would revert to me,” he said

“I repaid a total of Sh 24,600,000, yet  Hypac issued a demand dated  March 24 2023 for Sh 69,495,599, computed on compound interest not provided for in the contract and inclusive of unconscionable penalties.” He testified.

Mbobu further asserted that the terms were harsh, oppressive and unconscionable, the Defendant having taken advantage of his financial distress.

 “It was a deliberate attempt to dispossess me of my family home.”

In its defence, Hypac Investments, represented by Director Alex Mutuku Mbelenzi testified in court and insisted the contract was lawful and voluntarily executed by Mbobu, who as an advocate fully understood the implications.

“Mbobu approached us willingly. He was not coerced. The facility agreement clearly set out a 15 per cent monthly interest rate and a five per cent weekly penalty for default. As security, he voluntarily executed a transfer of lease and we paid the requisite stamp duty," Mbelenzi testified.

Hypac argued that by July 2021, the loan had gone into default, triggering accrued penalties amounting to Sh54 million. 

A meeting on December 17, 2021, resulted in a restructuring agreement where Mbobu would pay Sh21 million immediately and Sh 9 million by October 2022, with Sh24 million in penalties waived.

According to the defence, Mbobu made the Sh21 million payment but failed to pay the Sh9 million balance, reinstating the original terms.

“The Plaintiffs(Mbobu and his company) are simply attempting to avoid their lawful obligations,” Hypac’s lawyer argued in submissions dated May 16, 2025.

 “Courts should not rewrite contracts freely entered into by parties.”

Hypac maintained that, as of March 2023, the outstanding balance, including interest and penalties, stood at Sh69,495,599, and that as registered owner of the property, it was entitled to charge the land to a third party, Family Bank Limited.

The 2nd Defendant, Family Bank Limited, denied any wrongdoing, stating it was a stranger to the loan agreement between Mbobu and Hypac.

Through its Relationship Officer, Joseph Rukwaro Wanjohi, the bank explained that it had advanced Hypac a separate Sh27 million facility in September 2021, secured by a legal charge over the same property.

“The charge was lawfully executed. At the time, Hypac was the registered proprietor of the land. We conducted due diligence and followed all statutory procedures. There was no privity of contract with the Plaintiffs,”  Mr. Wanjohi told the Court.

Family Bank maintained that restraining its right to sell the property would cause substantial loss, as Hypac had already defaulted on its facility.

In paragraph 55 of the judgment, the court formally recorded Mbobu’s death, noting that he was fatally shot by unknown assailants after giving testimony.

“The Court conveys its condolences to the bereaved family,” the Judge observed, “but the matter must proceed to determination on the basis of the evidence already adduced.”

In his decision, Justice Ado found that the loan agreement was not in dispute as to its existence and indeed Lawyer Mbobu had borrowed Sh 11,000,000 under the letter dated  January 27, 2021, executed on February 1, 2021. 

He emphasized that the  15 per cent monthly interest rate, coupled with a 5% weekly default penalty,  translated into annualised rates exceeding 400% when compounded was manifestly harsh and contrary to the public interest.

 He described such terms as undeniably excessive and manifestly oppressive, a figure that no reasonable borrower could sustain.

“I find and hold that the loan agreement dated  January 27, 2021 … to the extent of its interest and penalty clauses, was unconscionable and contrary to public policy.”

Citing the in duplum rule, which bars recoverable interest from exceeding the principal, the Judge ruled that Hypac’s computation defied logic and legality.

“The Plaintiff borrowed Sh11 million, repaid Sh24.6 million, yet the Defendant still demanded Sh69.5 million. This defies both the arithmetic of fairness and the law of equity,” the judge ruled.

"A declaration that the interest rate of 15% per month and penalty of 5% per week were unconscionable and unenforceable," the judge ruled.

"The loan agreement dated January 27, 2021, is declared null and void. Hypac Investments Limited is directed to refund Sh13.6 million overpaid by Mbobu," Judge Ado ordered

The Court further observed that Hypac had taken advantage of Mbobu’s financial distress during the pandemic.

“Contracts freely entered into are enforceable, but freedom of contract cannot be used as a shield for exploitation. The Court cannot lend its hand to enforce a bargain that shocks the conscience," Judge ado hedla

The Court also faulted the creation of a charge over the property to Family Bank before the expiry of the loan period and without notice to Mbobu.

“Hypac irregularly created a charge in favour of Family bank prior to default and without notice, in violation of the agreement,” the Judge held.

Consequently, the charge was declared illegal, irregular, and void, and Family Bank was ordered to unconditionally discharge the property.

"An order directing Hypac and Family Bank to discharge and retransfer Title No. I.R. 83020 / L.R. No. 15065/64 to the  Riviera Estates Limited within 30 days of this judgment, failing which the Deputy Registrar of this Court shall execute all necessary transfer and discharge documents to effect the retransfer," Justice Ado ordered