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Bank’s decision to sell property over loan returns to haunt it

BUSINESS
By Everlyne Kwamboka | March 1st 2021

The decision by a bank to forcefully sell a property used to acquire Sh3.4 million loan without informing the owner has come back to haunt it.

Barclays Bank of Kenya has now been ordered to pay the property owner general damages, being the difference between the sale value of Sh7.1 million and the undisclosed purchase price achieved at the auction. Barclays Kenya has since changed hands and re-branded as Absa.

High Court Judge Francis Tuiyott also ordered the bank to furnish Paul Kuria Ngugi with information and documents in support of the amount credited to his account on realisation of the suit property and the sale price achieved at the public auction that took place on November 18, 2015.

Justice Tuiyott said the bank failed to call evidence or challenge the assertion that it did not furnish Ngugi with documents relating to the sale.

Ngugi’s tribulations started when he took a loan and used his piece of land in Muguga as security, but fell into hard times that saw him default in repaying the loan, forcing the bank to sell the property in question.

When he failed to get copies of the sale documents from the bank, he filed the suit, saying the refusal by the bank was indicative that the sale was illegal as the property was not valued but sold at a throwaway price.

In the case filed in April 2017, he sought for a declaration that the bank’s exercise of its statutory power at sale was illegal.

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