Kenya Commercial Bank Ltd v 1.mwanzau Mbaluka 2.lazarus Kitili Vetu
The bottom line
#Kenya's Court of Appeal ruled a bank must formally demand payment from a guarantor before suing them, and courts cannot decide issues nobody pleaded.
What this practically means
#Executive summary
#Key legal issues
#Liability of the guarantor absent proof of formal demand
The appeal against the first respondent guarantor fails because the bank proved default but not the formal demand on the guarantor required by the guarantee.
The guarantee limited the first respondent's liability to Kshs.75,000 and made it conditional on default by the debtor and a demand by the bank. The bank's witness fell short of proving that demand was made, and appellant's counsel conceded the point. Without proof of demand, the guarantor's liability was never established, so the appeal against him lacked any basis.
Trial court deciding unpleaded issues
The trial Judge erred by determining whether a statutory notice under section 74(1) of the Registered Land Act had been issued and served, an issue neither pleaded nor arising from the evidence, thereby introducing a new cause of action; his judgment could not stand.
The respondents' defence challenged only the regularity of the sale and counterclaimed the undervalue; they never challenged the bank's statutory right of sale. Relying on Gandy v Caspair and Nkalubo v Kibirige, the Court held that deciding a suit on matters outside the agreed issues is an error apparent on the face of the record and cannot be invoked to introduce a new cause of action.
Omission of a specific prayer for judgment in the memorandum of appeal
The omission was not fatal; the Court could substitute judgment for the appellant against the second respondent for the full claimed sum with interest.
Although the memorandum of appeal sought only setting aside of the judgment and costs, the Court inferred the intention to obtain judgment, especially as counsel asked for appropriate judgment. The Court exercised its discretion to grant judgment for Kshs.117,237.70 with interest as prayed in the plaint.
Unprosecuted counterclaim
The counterclaim should have been dismissed under Order IXB rule 4 of the Civil Procedure Rules because the respondents failed to attend court to prosecute it.
Neither the respondents nor their counsel attended the trial despite due service, so the counterclaim was not prosecuted. With no prayer for annulment of the sale or refund, the Court dismissed the counterclaim and directed that any refund received by the second respondent be paid over to the first respondent as proceeds of his land.
Legal principles established
#- A trial court commits an error apparent on the face of the record by deciding a suit against a party on matters outside the issues pleaded or arising from the evidence, and such a judgment cannot stand.
- A guarantor's liability arises only upon default by the debtor and upon a formal demand being made on the guarantor in terms of the guarantee; failure to prove demand defeats the claim against the guarantor.
- Omission of a specific prayer in a memorandum of appeal for judgment in terms of the plaint is not fatal where the appeal, by setting aside the judgment below, necessarily seeks that relief.
- A counterclaim that is not prosecuted at the hearing should be dismissed under Order IXB rule 4 of the Civil Procedure Rules.
Court orders
#- 1.Appeal against the first respondent, Mwanzau Mbaluka, dismissed
- 2.Appeal against the second respondent, Lazarus Kitili Vetu, allowed; the judgment in his favour set aside and substituted with judgment for the appellant against him for Kshs.117,237.70 with interest as prayed in the plaint
- 3.Counterclaim dismissed
- 4.Second respondent to pay the appellant's costs of the appeal and of the claim and counterclaim in the court below; no order as to costs against the first respondent
- 5.Second respondent to pay over to the first respondent the Kshs.15,000 or any part thereof he may have received, as it came from the sale of the first respondent's property
- On appeal from
- High Court of Kenya at Machakos
- H.C.C.C. No. 105 of 1993
- Jurisdiction invoked
- First appeal to the Court of Appeal from the decree of the High Court (superior court) under the Constitution and the Appellate Jurisdiction Act (appeal as of right on facts and law)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Rassul N. Mwadzaya v County Government of Kilifi & 1 other[2025] KECA 869 (KLR)23 May 2025
Cite this brief
#Cite this brief
Caselaw, "Kenya Commercial Bank Ltd v 1.mwanzau Mbaluka 2.lazarus Kitili Vetu", Case Analysis (1998). Civil Appeal No. 274 of 1997. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/238/eng@1998-06-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.