The Court of Appeal of Kenya has delivered a decisive ruling in a long-running financial dispute, dismissing an appeal by Josiah Kiprotich Magut and affirming that he remains liable to repay over KSh27.6 million to the National Bank of Kenya.
The judgment, delivered on March 19, 2026, brings to a close a case that has spanned decades and sheds light on the legal weight of banking relationships, loan agreements, and borrower obligations in Kenya.
At the heart of the dispute was a fundamental question: whether a valid banker-customer relationship existed between Magut and the National Bank of Kenya, and whether the bank had sufficiently proven that the borrower defaulted on financial facilities extended to him.
The court found overwhelming evidence that such a relationship did indeed exist. Records showed that Magut not only operated a bank account with the institution but also executed multiple charge documents, securing loans with his properties.
These actions, the court held, were clear indicators of a formal banking relationship, dismissing the appellant’s argument that no such relationship had been proven.
The case traces back to financial facilities extended to Magut in the 1990s. According to evidence presented, the bank advanced several loans and overdraft facilities, supported by property securities. Among them were two charges over properties in Uasin Gishu, securing sums of KSh300,000 and KSh150,000 respectively, with high interest rates reflecting the lending environment of the time.
In addition, the bank granted an overdraft facility of KSh1.3 million and later extended a term loan of over KSh1.2 million to support the purchase of residential property. These transactions were formalised through agreements and supported by documentation, all of which were presented in court through the testimony of the bank’s accounts manager.
Despite receiving these facilities, the borrower failed to meet repayment obligations. Evidence showed repeated attempts by the bank to recover the debt, including issuing statutory notices and engaging legal channels. At one point, Magut even proposed a settlement of KSh20 million as full and final payment, which the bank accepted. However, he failed to honour this agreement, further compounding the dispute.
As a result of continued default, the bank exercised its statutory power of sale, auctioning the charged properties in 2004. However, the proceeds from the sale were insufficient to clear the outstanding debt, leaving a substantial balance that formed the basis of the lawsuit.
In the High Court, the bank successfully argued that the borrower was in breach of contract and owed KSh27,697,707.35, plus interest at 22% per annum. The court ruled in favour of the bank, prompting Magut to file an appeal challenging the decision on multiple grounds.
One of the key arguments raised on appeal was that the bank had failed to properly produce documentary evidence during the trial. Magut’s legal team contended that documents relied upon by the bank were not formally introduced as exhibits and therefore lacked evidentiary value.
However, the Court of Appeal rejected this argument, noting that the documents had indeed been produced through the bank’s witness and that the appellant had ample opportunity to challenge them during cross-examination but failed to do so. The judges emphasized that procedural objections raised after the fact could not override the substance of evidence already admitted and considered during trial.
The appellate court also addressed the broader issue of whether the bank had proven its case on a balance of probabilities.
It found that the evidence presented—including loan agreements, correspondence, and repayment proposals—was both credible and unchallenged. Importantly, the appellant did not present any evidence or witnesses to counter the bank’s claims.
In a strongly worded conclusion, the judges stated that the appeal amounted to “a desperate attempt to clutch on straws,” underscoring their view that the case lacked merit.
They reaffirmed the principle that courts cannot rewrite contracts freely entered into by parties, unless exceptional circumstances such as fraud or coercion are proven—none of which were demonstrated in this case.
The ruling reinforces a critical legal principle in commercial law: borrowers are bound by the terms of their agreements and must honour their obligations. It also highlights the importance of diligence during trial proceedings, particularly in challenging evidence when it is presented.
For the banking sector, the decision is significant. It affirms the enforceability of loan agreements and the validity of recovery mechanisms such as property auctions when borrowers default. It also underscores the judiciary’s support for contractual certainty, a key pillar in financial systems.
For borrowers, the case serves as a cautionary tale about the long-term consequences of defaulting on loans and failing to engage meaningfully in legal proceedings. The fact that the dispute dates back to the 1990s illustrates how financial obligations can persist over decades if not properly resolved.
Ultimately, the Court of Appeal’s decision brings finality to a protracted legal battle, reaffirming the National Bank of Kenya’s claim and closing the door on the appellant’s challenge.
With the appeal dismissed and costs awarded to the bank, the judgment stands as a clear statement on accountability, contractual obligation, and the rule of law in Kenya’s financial landscape.
