On the liability of valuers for negligent misstatement: The Case of Guaranty Trust Bank Kenya Limited v NW Realite Limited [2025] KEHC 12495 (KLR)

Full Case: Guaranty Trust Bank Kenya Limited v NW Realite Limited [2025] KEHC 12495 (KLR)

Facts of the Case:

• In 2014, Guaranty Trust Bank Kenya Ltd engaged the Defendant, NW Realite Ltd, a professional valuer, to conduct a valuation of a Kwale property offered as security for a loan by Micro Mobile Ltd.
• The valuation report provided by NW Realite stated:
• Open Market Value: KShs. 190,000,000
• Mortgage Value: KShs. 150,000,000
• Forced Sale Value: KShs. 142,500,000
• Based on this report, the bank extended an overdraft facility of KShs. 80,000,000 to its client.
• Upon loan default, the bank sought to recover the debt by selling the charged property.
• However, the actual market value turned out to be significantly lower than reported—indicating the valuation was negligent and grossly overstated.
• The bank sued the valuer for professional negligence and sought compensation for the financial loss suffered due to reliance on the faulty valuation.

Legal Issues for determination:

1. Was NW Realite Ltd professionally negligent in the valuation report it issued?
2. Was Guaranty Trust Bank entitled to recover damages for losses suffered due to the negligent valuation?

Court's Holding:

• The Court found NW Realite Ltd liable for professional negligence.
• The Court awarded KShs. 29 million+ in damages to Guaranty Trust Bank, representing part of the financial loss directly caused by the inaccurate valuation.

Court's Reasoning:

• The valuer owed a duty of care to the bank, its client, who was relying on the valuation report to assess the risk of lending.
• The valuation report grossly overstated the market value of the property, without a reasonable or factual basis.
• The Court emphasized that a professional valuer must exercise skill, diligence, and objectivity, particularly when their opinion directly influences major financial decisions.
• The Court rejected the valuer’s defenses that market conditions had changed or that the bank had alternative recourses.
• The damage was reasonably foreseeable, and there was a direct causal link between the inflated valuation and the loss incurred by the bank.

Legal Principles Applied:

• Professional Negligence: A professional owes a duty of care to their client and may be liable for economic loss arising from a breach of that duty.
• Duty of Care in Valuations: Established in Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465, a valuer owes a duty not only to avoid misstatement but to exercise reasonable care.
• Causation and Foreseeability: The loss must be a foreseeable consequence of the negligent act and closely connected to the breach.

Commentary and Analysis:

This case reinforces the legal accountability of professionals, especially in valuation and financial advisory roles. It serves as a cautionary tale for valuers and banks alike:

• For valuers: Courts will not hesitate to hold you liable if you overstate property values without due diligence, especially where financial institutions suffer real economic loss.
• For banks: The ruling emphasizes the importance of independent verification, multiple valuations, or relying on a panel of vetted valuers before disbursing substantial credit.

From a broader legal perspective, the case affirms the expanding scope of liability in tort for pure economic loss, especially in the realm of professional services. The judgment mirrors global common law trends that impose higher standards of care on experts, particularly in sectors like banking, construction, and auditing.

Significance of the case:

• Establishes a strong precedent in Kenyan case law on the liability of valuers for negligent misstatement.
• Encourages more rigorous standards in valuation reporting and due diligence in financial risk assessment.
• May impact the way banks structure their credit risk policies and manage professional liability in lending.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Key Differences between Certificate of Lease and Title Deed in Land ownership

Feature	Certificate of Lease	Title Deed (Certificate of Title)
Tenure Type	Leasehold	Freehold
Ownership Duration	Fixed period (e.g., 99 or 33 years)	Indefinite (perpetual ownership)
Land Ownership	Government (or other entity) owns the land; lessee holds rights for a term	Individual owns the land outright
Document Title	"Certificate of Lease"	"Certificate of Title" (commonly referred to as a "Title Deed")
Common in	Urban areas or land under government authority	Rural areas or land owned by individuals/clans
Renewal?	Yes, lease must be renewed after expiry	Not applicable – ownership is permanent

 

Legal Basis

1. Certificate of Lease
• Issued under the Registered Land Act (now repealed) or Land Registration Act (2012) for leasehold properties.
• The government (or other lessor) retains ultimate ownership.
• Common for land in urban areas where land is leased from county/national government or institutional owners.
2. Title Deed (Certificate of Title)
• Issued under the Land Registration Act or prior statutes for freehold properties.
• The holder has absolute ownership, subject to the law (e.g., planning regulations, public interest).
• More common in rural areas, family-owned land, or land acquired privately with no time limit.

 

Why Some Properties Have One or the Other

1. Nature of the Land Grant

• If the land was alienated (granted) by the government as a lease, the buyer gets a Certificate of Lease.
• If it was alienated as freehold, the owner gets a Title Deed.

2. Urban vs Rural Areas

• Most urban land is under leasehold because it is public land originally allocated by the government.
• Most rural land is freehold, especially ancestral or community land subdivided and registered.

3. Planned Developments

• Apartments/flats or developments on large parcels may be leasehold even if the mother parcel is freehold (e.g., sectional properties).

 

Can a Leasehold Be Converted to Freehold?

Yes, in some cases. A leaseholder can apply to convert to freehold tenure, especially if:

• The land is not reserved for public use.
• The government allows it under Land Act provisions.
• The lease has expired or is about to expire.

However, not all leasehold land is eligible for conversion.

 

Conclusion

• Title Deed = Freehold = Permanent ownership
• Certificate of Lease = Leasehold = Time-limited ownership

The type of document you get depends on how the land was originally classified, who owns the reversionary interest (the ultimate landowner), and where the land is located.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

On employee protections under Kenyan employment law: The Case of Maxton Duke Kibira v Twiga Foods Limited

Maxton Duke Kibira v Twiga Foods Limited Cause No.: 463 of 2019 [2025] KEELRC 2751 (KLR)

Facts of the Case:

• The Claimant, Maxton Duke Kibira, was employed by the Respondent, Twiga Foods Limited, from either February 2015 (as per the Claimant) or May 2016 (as per the Respondent), until his termination on 13 December 2018.
• The Respondent cited poor performance as the reason for termination, alleging:
• Revenue target shortfall (85% vs target of 92%)
• Excessive returns (23% vs acceptable 5%)
• Unbanked revenue exceeding KShs 30,000
• The Claimant disputed the termination, arguing it was unfair and unlawful, and further claimed the employer made arbitrary salary deductions totaling KShs 426,000.
• He sought compensation for unfair dismissal, refund of unlawful deductions, and other remedies.

 

Issues for Determination:

1. Whether the Claimant’s termination was lawful and fair.
2. Whether the Claimant was entitled to compensation and reimbursement of salary deductions.

Holding:

1. The termination was both substantively and procedurally unfair.
2. The Claimant was entitled to compensation and refund of the deducted salary.

 

Court’s Reasoning:

• The Respondent failed to provide:
• A clear job description or performance targets
• Evidence of a performance improvement plan or evaluations
• Notice or hearing as required under Section 41 of the Employment Act
• The alleged salary deductions were unsubstantiated, lacked documentation, and were done without the Claimant’s consent, rendering them unlawful.
• The employer did not meet the legal burden under Sections 43 and 45 to justify the dismissal.

 

Court's Holding:

The Court awarded the Claimant:

• KShs 600,000 – compensation for unfair termination (equivalent to 6 months’ salary)
• KShs 426,000 – refund of unlawful salary deductions
• Interest at court rates from date of judgment until payment in full
• Costs of the suit
• Claims for notice pay and overtime were dismissed for lack of proof

 

Legal Principles Applied:

• Section 41, 43 & 45 – Employment Act (Kenya): Procedural and substantive fairness in termination
• Burden of proof lies on the employer to justify reasons for termination and deductions
• Salary deductions must be lawful, consensual, and properly documented

 

Significance:

• The case reinforces employee protections under Kenyan employment law, especially in cases of alleged poor performance.
• Highlights the necessity for employers to maintain proper documentation, provide fair process, and refrain from unilateral salary deductions.
• Serves as a precedent on what constitutes unfair termination and unlawful deductions.

A Review of Limited Grants under the Kenyan Law

Introduction

Under the Law of Succession Act (Cap 160) of Kenya, only individuals legally authorized through letters of administration or probate are permitted to manage or distribute a deceased person’s estate. Engaging in any action concerning the estate — even for the benefit of the deceased’s dependants — without official court-sanctioned authority amounts to intermeddling, which is prohibited.

However, there are situations where urgent intervention is necessary — for example, when dependants require immediate financial support, a legal matter involving the deceased is pending, or the estate needs urgent safeguarding. In such cases, an individual may apply to the court for a limited grant, allowing them to carry out specific tasks without waiting for full administration to be completed.

In essence, a "grant" is legal confirmation from the court, authorizing a person to act in relation to a deceased’s estate. Below is an overview of the various types of limited grants, as outlined in the Law of Succession Act, with relevant examples from Kenyan case law.

Types of Limited Grants in Kenya

1. Grants Limited as to Purpose

These grants provide narrow authority, allowing a person to carry out specific functions rather than managing the entire estate.

a) Grant Ad Colligenda Bona (To Collect and Preserve Property)

This type of grant is used to collect and protect the estate where there is risk of loss or waste, especially before full probate or letters of administration are issued. It does not permit the grantee to sell or invest estate assets.

In Re Estate of Mary Syokwia Kyalili (eKLR) and Mary Waithera v Ann Ndegwa & Another (eKLR), the court recognized the urgency of issuing such a grant in situations like payment of school fees for minor children — a matter of constitutional importance under Article 53(1)(b) of the Constitution of Kenya, which guarantees a child’s right to education.

In Re Estate of Daniel A. Korir Kipkurui (Deceased), a grant ad colligenda bona was issued to allow the widow to withdraw funds for school fees and child upkeep, reinforcing that children’s rights may justify limited administration in urgent cases.

Similarly, in Re Estate of Mary Wanja Wairimu (Deceased), the court ordered the opening of a joint bank account to preserve and manage rent from the deceased’s property, ensuring income wasn’t lost or misused during the succession process.

b) Grant Ad Litem (For Legal Proceedings)

This grant allows someone to represent the estate in a civil suit — either to pursue a claim or defend one. It is not meant for full estate administration or distribution.

In Re Estate of Jennifer Kusuro Musiwa (Deceased) and Re Estate of Helena Wangechi Njoroge (Deceased), the courts clarified that an ad litem grant is strictly for litigation purposes and not for distributing assets. This is especially useful when the deceased had a pending court case or if the estate must initiate a legal claim.

2. Grants Limited as to Property

a) Administration Pendente Lite

This type of grant is issued while a succession dispute is ongoing. It ensures that the estate is not left unmanaged or wasted during litigation. The administrator has no power to distribute assets but acts under court supervision.

This is particularly common in Kenyan family disputes where multiple parties lay claim to the estate or challenge the validity of a will. It allows for neutral management of the estate until the court resolves the dispute.

b) Grant De Bonis Non (For Unadministered Property)

If an administrator or executor dies or becomes unable to complete the administration of the estate, a new administrator can be appointed to finalize the process. This grant is issued to deal with remaining assets.

In Faith Wanjiku Maganjo v Rebean Muriithi Maganjo (eKLR), the court explained that the new administrator — called the "administrator de bonis non" — is responsible for completing the distribution of any leftover estate.

3. Grants Limited as to Time

These grants apply in situations involving lost, withheld, or unproduced wills:

• Probate of a copy or draft of a lost will may be granted if the original was lost or destroyed unintentionally.
• Probate of a copy where original exists abroad can be granted if the person holding the original (outside Kenya) refuses to hand it over and the estate’s needs require immediate action.
• Administration until will is produced applies when it is believed a will exists but it hasn’t yet been found. The court may allow temporary administration until the document is available.

These grants provide temporary authority, ensuring the estate isn’t neglected due to documentation delays.

Conclusion

In Kenya, navigating succession matters can be complex and time-consuming, especially when probate or letters of administration are delayed. Limited grants provide an essential legal tool to protect and manage the estate during this transitional period.

Whether it’s paying school fees, collecting rent, or handling legal claims, limited grants enable families to meet urgent needs while safeguarding the estate from intermeddlers — individuals who try to benefit unlawfully.

To avoid such risks and ensure your wishes are honoured:

• Engage a lawyer to safely keep your will.
• Inform your family and executor where your will is kept.
• Ensure your legal team can contact your executors promptly upon your passing.

Ultimately, proper estate planning and timely legal intervention using tools such as limited grants can prevent financial distress and protect the dignity of your legacy in line with Kenyan law and cultural priorities.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.