The Supreme Court has cleared the way for a woman to be paid Sh52.7 million by Housing Finance Corporation for irregular charges and penalties on a Sh3 million loan she took 22 years ago.
The apex court judges ruled that there was no constitutional question to be considered in the banks’ appeal against rulings in favour of Scholastica Nyaguthii.
Nyaguthii took the Sh3 million loan from Housing Finance in 1998. She charged her two properties, one of which was at Muthithi Gardens in Kiambu.
Two years later, she was retrenched. Unable to meet her obligations on the loan repayment, she asked the bank to sell one of her houses.
The bank sold it for Sh3.5 million and took the money as part of her repayment for the loan. When she still couldn’t service the loan, the bank sold the house at Muthithi Gardens for Sh16 million to recover the remainder of the loan.
She moved to the High Court, saying the house was undervalued by half its actual worth of Sh32 million. Nyaguthii also argued that the bank had imposed high interest rates on the loan that made it difficult for her to repay.
She said that even after she moved to the US, her family was harassed by the officers of the bank, who placed the house for sale, yet she had already overpaid her loan.
Nyaguthii told the court that by 2010, she had paid Sh8.4 million, but Housing Finance was still demanding an additional Sh7.3 million from her.
The High Court ruled in her favour saying there was no justification in any society that one borrows Sh3 million and pays Sh18 million.”
Justice Eric Ogola ruled that HF levied irregular charges on the loan and that it was only legally allowed to demand a maximum of Sh6 million going by the in duplum rule.