By Andrew Kariuki |
A court in Nairobi has delivered a landmark judgment in favour of slain advocate Mathew Kyalo Mbobu, nullifying a loan agreement that carried what it described as predatory and unconscionable interest rates, and directing the immediate return of his property to his estate.
In a decision hailed as a victory for fairness in financial dealings, Justice Moses Ado found that Hypac Investments Limited had extended to Mbobu a Ksh11 million loan under terms so punitive they amounted to exploitation.
The agreement charged 15 percent monthly interest on a flat rate basis, compounded with a 5 percent weekly penalty for delayed payments–a structure that when calculated annually, translated to an interest rate exceeding 400 percent.
“The interest rate is undeniably excessive and manifestly oppressive, a figure that no reasonable borrower could sustain and one that stands in open defiance of equity and fairness,” ruled Justice Ado.
The court heard that Mbobu, a respected advocate, had secured the loan in January 2021 while facing financial strain brought about by the COVID-19 pandemic. By the time of his death, he had repaid ksh22 million, twice the principal amount borrowed.
Invoking the in rule, which caps recoverable interest at a sum equal to the principal, the judge declared that the debt had been fully settled and that any further demand for interest or penalties was illegal and unenforceable.
“Any claim for interest or penalties beyond the principal sum is unenforceable in law,” the judgment affirmed.
Justice Ado directed Hypac Investments Limited and Family Bank Limited, the institution holding the charged title, to discharge and retransfer the property to Mbobu’s estate within 30 days. In the event of noncompliance, the Deputy Registrar was instructed to execute all transfer documents on behalf of the parties.
The decision closes one of the pending legal disputes surrounding the late lawyer, who was gunned down in September along Magadi Road, Nairobi, in what investigators described as a targeted execution.
According to police reports, Mbobu was ambushed around 5:40 p.m. by two armed assailants on motorcycles who opened fire on his vehicle before fleeing. A post-mortem later revealed he had suffered eight gunshot wounds, leading to massive bleeding and fatal internal injuries.
Mbobu, known among peers for his diligence and pursuit of justice, was regarded as one of the promising figures in Kenya’s legal fraternity. His death sent shockwaves through the profession, prompting renewed calls for accountability and deeper scrutiny into cases involving rogue lending practices.
The ruling not only restores property to his estate but also sets a precedent against predatory lending and exploitative interest rates, marking a significant moment in Kenya’s jurisprudence on financial fairness.
