Mediheal Hospital has secured a major reprieve after the High Court blocked NCBA Leasing from seizing its medical equipment.
The victory, however, comes with a significant legal caveat: Mediheal still owes money.
Justice Reuben Nyakundi found that Mediheal breached its leasing agreement by failing to pay rentals.
The court also confirmed NCBA Leasing LLP as the owner of the disputed medical equipment.
Yet NCBA Leasing could not lawfully rely on the March 2024 seizure attempt.
The lender failed to prove that crucial termination notices had actually reached Mediheal.
The court consequently declared the March 26, 2024, proclamations irregular and set them aside.
The judgement therefore delivers a striking split decision: Mediheal defeated the enforcement process, but not NCBA Leasing’s underlying rights.
How the Fight Began
The dispute traces back to August 9, 2018, when Mediheal entered a Master Lease Agreement with NIC Leasing LLP.
NIC Leasing later became NCBA Leasing LLP, with twelve lease schedules covering medical equipment supplied between 2018 and 2023.
As the relationship deteriorated, however, unpaid rentals turned the equipment into the centre of an increasingly bitter commercial dispute.
Mediheal initially argued that some of the machines belonged to Jamii Bora Leasing Limited rather than NCBA Leasing.
The court rejected that claim after finding no convincing evidence linking Jamii Bora to the equipment proclaimed in 2024.
There was no supporting witness, lease schedule, invoice, or delivery record establishing such ownership.
NCBA Leasing, meanwhile, produced documents tracing the equipment to its financing arrangements.
The judge therefore found NCBA Leasing to be the owner, while Mediheal held only contractual rights to use the machines.
Then Came KSh28.7 Million
The court was equally clear about the financial side of the dispute.
Under the lease, payment was an essential obligation, and the evidence showed Mediheal’s arrears rising sharply.
A September 6, 2023, demand put the outstanding amount at KSh13.65 million. By November 28, the figure had risen to KSh22.24 million.
By January 30, 2024, NCBA Leasing claimed KSh28.69 million in arrears. A subsequent repossession order sought KSh16.98 million after a set-off for upfront rentals.
Mediheal explained that government scrutiny surrounding kidney transplants had affected patient admissions and hospital operations.
That explanation, however, did not remove its contractual obligation to pay.
The court found a substantial continuing breach of the payment obligation.
It also found evidence that several leased machines were missing, with some reported lost or stolen during later inspections.
The lease required Mediheal to notify the lessor immediately and replace missing equipment, but the hospital failed to demonstrate compliance.
NCBA’s Critical Misstep
NCBA Leasing had ownership, contractual repossession rights, and evidence of unpaid rentals.
Its problem was proving that it had properly ended the lease.
The lender relied on demands issued in September and November 2023, followed by a termination notice dated January 30, 2024.
But the court found no convincing evidence that those notices had actually been served.
There were no transmission reports, delivery receipts, certificates of posting, or courier acknowledgements supporting their delivery.
Nor was there a witness who could establish personal delivery.
The judge distilled the problem into a memorable legal principle: “A lease is not terminated by an unexpressed intention.”
The court consequently found that NCBA Leasing had failed to prove effective termination of the lease.
That finding became crucial because a valid debt does not automatically make every enforcement method lawful.
The Seizure Papers Also Failed
The court then turned its attention to the auctioneer’s actions on March 26, 2024.
Phillips International Auctioneers had issued proclamations against the equipment at Mediheal’s premises.
However, the court found serious defects in the enforcement documents.
The repossession instructions were not issued using the required Sale Form 1, while the Sale Form 2 proclamations contained several omissions.
The auctioneer fees were blank, the total amount due was missing, and details concerning equipment condition and estimated value were inconsistently recorded.
More significantly, the paperwork treated the equipment as though it could be attached and sold to recover a monetary debt.
That approach blurred the difference between repossessing leased equipment and attaching a debtor’s property.
NCBA Leasing was entitled to pursue its own equipment, but it had to follow the lawful repossession process.
The court therefore set aside the proclamations.
What Happens Now?
Mediheal’s victory does not permanently shield the equipment from NCBA Leasing.
The court refused to grant an indefinite injunction that would effectively prevent the owner from recovering its machines.
The relevant lease schedules had also expired by July and August 2025, further weakening Mediheal’s claim to continued possession.
NCBA Leasing can therefore try again, but it must do so lawfully.
It must issue fresh notices, prove proper service, and use the prescribed repossession documentation.
The court declined to award NCBA Leasing the claimed arrears or compensation for missing equipment because it had filed no counterclaim.
The judgement consequently leaves both sides with something.
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Mediheal has stopped an irregular seizure, while NCBA Leasing retains ownership and the right to pursue recovery.
The deeper lesson is straightforward: contractual rights do not permit defective enforcement.
And while a flawed seizure process can be stopped, it does not erase a genuine contractual debt.
For Mediheal, the machines remain in its hands for now.
For NCBA Leasing, the door remains open, but the next attempt must get the law right.
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