A high-value property in Kololo purchased at a value of UGX 1.2 billion has become the subject of a legal showdown between businesswoman Olive Zaitun Kigongo, her co-administrator Alison Gallagher, the wife of deceased Cedric Ndilima Babu and Kenya Commercial Bank (KCB).
The condominium unit at Plot 1, Fumu Lane, was acquired through a combined investment of $125,000 (UGX 447.4 million) contributed by the late Babu and a $200,000 (UGX 716 million) mortgage advanced by KCB. Together, the contributions brought the purchase price to roughly UGX 1.2 billion.
Now, the Commercial Division High Court must determine who bears responsibility for a lapsed mortgage protection insurance policy that Kigongo, mother of deceased Babu and Alison Gallagher (widow) say should have cleared the remaining loan balance following Babu’s death.
The insurance obligation
Court documents show that the mortgage facility was issued in June 2023 to finance the purchase of the Kololo condominium, with KCB releasing $200,000 loan after Babu met all pre-disbursement conditions, including enrollment in a group mortgage protection insurance scheme arranged through the bank’s bancassurance arm.
At the heart of the dispute is Clause 7.17 of the facility letter, which Kigongo and Alison Gallagher say, it required that all insurance renewals be handled through KCB Bancassurance.
The clause, the duo say, further stated that if the borrower failed to renew the policy within seven working days of its expiry, the bank would automatically renew it at the borrower’s cost.
They argue that this provision created a binding duty on KCB to ensure uninterrupted insurance cover throughout the life of the mortgage.
The insurance policy was issued in November 2023, due to delays in disbursement pending proof of coverage. The premium was prorated so that renewals would fall due every August.
Illness, death and expired policy
Babu continued to service the mortgage and associated insurance payments until April 2025, when he suffered a cardiac illness, before passing in May of the same year.
Following his death, Kigongo and Alison Gallagher say they were shocked to learn that the mortgage protection policy had expired and had not been renewed.
They contend that KCB later attempted to secure an ex gratia settlement from Jubilee Insurance, but the insurer declined the request because the policy had long lapsed.
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Foreclosure looms
After the insurer declined payment, KCB issued demand and default notices in October 2025, signaling its intention to foreclose on the Kololo property to recover an outstanding balance of $182,710 (UGX 654 million).
Kigongo and Alison Gallagher maintain that the threatened foreclosure is unjustified, arguing that had the insurance policy remained active as required under the mortgage agreement, the insurer would have fully settled the outstanding loan upon Babu’s death.
They note that the policy benefits included full repayment of the mortgage in the event of death, in addition to funeral and critical illness cover.
They want court to declare that KCB breached the contract and acted negligently, an injunction blocking the foreclosure, an order writing off the outstanding balance, return of the property title, as well as damages and legal costs.
KCB pushes back
However, in its defence, KCB denies any wrongdoing, arguing that the responsibility to maintain and renew the insurance policy lay squarely with the borrower.
While acknowledging that it had the discretion to renew the policy at the borrower’s expense, KCB maintains that this discretion did not amount to a mandatory obligation.
KCB also says Babu had failed to provide funds for or renew the group mortgage protection policy since August 2024 until his demise, noting that the policy had already lapsed before Babu fell ill.
It also maintains that its attempt to obtain an ex gratia payment from Jubilee was simply an act of goodwill and should not be interpreted as an admission of liability.
The bank, through a counterclaim, is seeking recovery of the outstanding loan, accrued interest, damages, and an order authorising the sale of the Kololo property and vacant possession.
