Ruling Cites 'Oppressive' Terms

NAIROBI – In a landmark decision with significant implications for Kenya's credit market, the High Court has posthumously vindicated slain lawyer Mathew Kyalo Mbobu, cancelling a Sh69.4 million debt a microfinance lender claimed from his estate. The ruling, delivered on Tuesday, November 4, 2025, by Justice Moses Ado of the Commercial and Tax Division in Nairobi, found the loan's terms to be "unconscionable" and "oppressive."

The court ordered the lender, Hypac Investments Limited, to return a prime property in Nairobi that Mr. Mbobu had surrendered as collateral for a Sh11 million loan taken in January 2021. Justice Ado mandated that the property's title be discharged and retransferred to Mr. Mbobu's estate within 30 days. This judgment was delivered nearly two months after Mr. Mbobu was shot and killed in a drive-by shooting in Nairobi’s Karen area on Tuesday, September 9, 2025.

Anatomy of an 'Unconscionable' Loan

The legal battle stemmed from a loan agreement executed in January 2021. Mr. Mbobu, reportedly facing financial distress exacerbated by the COVID-19 pandemic, borrowed Sh11 million from Hypac Investments. The terms of the six-month loan included a staggering 15% monthly interest and a 5% weekly penalty for late payments. According to court records, this translated into an effective annual interest rate exceeding 400%, a figure the court described as “shocking to the conscience.”

Despite Mr. Mbobu's estate having paid a total of Sh24.6 million—more than double the principal amount—Hypac Investments issued a demand for an additional Sh69.4 million in March 2023, citing compounded interest and penalties. In its defence, the lender argued that Mr. Mbobu was an advocate who willingly executed the agreement and understood its terms, including the transfer of his property as security.

However, Justice Ado rejected this defence, stating, “No reasonable borrower could sustain such oppressive terms.” The court found that the lender had exploited Mr. Mbobu's financial distress.

The 'In Duplum' Rule and Its Impact

Central to the court's reasoning was the application of Kenya's 'in duplum' rule, a legal principle that caps the amount of recoverable interest at a sum not exceeding the principal amount owed when a loan becomes non-performing. The court noted that Mr. Mbobu had repaid at least Sh22 million. Applying the in duplum rule, which would cap the total payable amount at the Sh11 million principal plus a maximum of Sh11 million in interest and fees, Justice Ado declared the loan fully satisfied. “Any claim for interest or penalties beyond the principal sum is unenforceable in law,” the judge ruled.

This application of the rule to a non-bank lender is particularly significant for the Kenyan public. While Section 44A of the Banking Act explicitly applies the rule to deposit-taking institutions, its applicability to microfinance companies and digital lenders has been a grey area with conflicting court precedents. This ruling reinforces judicial scrutiny over the entire credit sector and serves as a stern warning against predatory practices that have left many Kenyans trapped in spiralling debt.

A Posthumous Victory Amidst Other Troubles

The case was filed in 2023 by Mr. Mbobu before his untimely death. His assassination on Magadi Road remains under investigation, with police treating it as a targeted killing. At the time of his death, Mr. Mbobu, a respected law lecturer and former chairman of the Political Parties Disputes Tribunal, was reportedly facing several other legal battles and significant financial pressures from various creditors. While the court declined a request to order a refund for payments made in excess of the Sh22 million threshold due to insufficient evidence, the judgment secures a significant victory for his estate and for consumer rights in Kenya. The ruling underscores the judiciary's increasing willingness to intervene in private contracts deemed contrary to public policy and fairness, offering a new layer of protection for borrowers against exploitative loan terms.