The High Court in Eldoret has ordered a local financial institution to pay Sh1.6 million in damages to its client for unlawfully impounding her vehicle and household goods.
Justice Robert Wanada dismissed an application filed by the Kenya Women Finance Trust (KWFT) seeking to overturn a lower court’s order that had awarded Margaret Waithera damages.
While upholding the lower court’s judgment, Justice Wananda noted that Waithera’s vehicle was illegally impounded yet it had not been listed as collateral.
He also noted the bank could not provide the court with a proper inventory showing Waithera’s seized belongings.
The court’s award to Waithera included Sh1,263,400 in damages for her impounded jewelry and Sh730,400 for the vehicle.
The judge directed that Sh384,110 loan balance be offset by the damages awarded to the client.
He added that the client could not be made to settle additional interest and penalties that the bank claimed, noting that accrual of the same arose from the bank’s own actions and omissions.
According to the court papers, Waithera had borrowed Sh600,000 from the microfinance institution in May 2011.
She then started servicing the loan at Sh39,000 per month vide a standing order from the end of May 2011. The loan was for the purposes of expansion of her business to South Sudan.
Waithera later approached KWFT, informing it that she would be in South Sudan longer than anticipated, and requested her Sh39,000 monthly repayment be deducted from the proceeds of her vehicle's matatu business.
She argued that in October 2012, the bank impounded her motor vehicle valued at Sh600,000. At the time, the outstanding loan amount was Sh384,110.
Waithera claimed that the bank never applied the proceeds of the sale to clear the loan. She added that had the motor vehicle been sold, albeit illegally, it would have cleared the loan, and Sh211,200 remain to her credit.
The court heard that knowing that the loan had been fully settled, Waithera had continued with her life, although the illegal impounding of the motor vehicle caused her massive losses in income.
Waithera stated that in November 2013, the bank, through its agents, again proceeded to her residence in Ndalat Estate and impounded her household items, and caused damage to her property.
The bank argued that the loan had remained unserviced and the arrears continued to accumulate due to the interest levied to more than Sh850,000.
Waithera further stated in her court papers that impounding her vehicle and household items was illegal, in breach of contract, unlawful, and amounted to trespass.
The judge noted that by an interlocutory order made by the trial court in May 2014, in the course of the suit, the bank was ordered, pending the hearing and determination of the suit, to return the vehicle to Waithera.
The court noted that the bank failed to follow the payment arrangements it had made with its client and instead seized her vehicle and kept it in a yard unused for two years.