Permuga Auto Spares & Barclays Bank of Kenya Ltd v Margaret Korir Tagi [2016] KEHC 3758 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAKURU

CIVIL APPEAL NUMBER 288 OF 2010

1.  PERMUGA AUTO SPARES.............................................1ST APPELLANT

2.  BARCLAYS BANK OF KENYA LTD.................................2ND APPELLANT

VERSUS

MARGARET KORIR TAGI..........................................................RESPONDENT

(AN APPEAL FROM THE JUDGMENT OF THE CHIEF MAGISTRATE'S COURT AT

NAKURU CASE NO 822 OF 2007 DELIVERED  ON 14. 10. 2010)

RULING

1. By an application dated 13th  January 2016 the appellants sought an order for  refund  of Kshs.194,545/=  from  the firm  of Karen Wanderi  & Co. Advocates being an amount allegedly unlawfully obtained by the advocates when it was not awarded.  It is  sought that the said sum be paid with  interest  at court rates from  the 11th   November 2015 to the applicants.

The grounds upon which the application is made is that the trial court did not award party and party costs in the sum of Kshs.178,673/= or did not order payment of Kshs.1,040,725/= with interest at 14% per annum.

2. Jackson Omwenga  Advocate swore  the  affidavit  in support  of  the application.

In a nutshell,  the applicant  states  that the respondents  Advocates, were erroneously paid a sum of Kshs.194,545/= over and above the decretal sum.

That the said sum is derived from an erroneous application of interest on the decretal sum at 14% per annum instead of 12% per annum as provided in the Civil Procedure Act.

Karen Wanderi Advocate swore a replying affidavit on the 11th  April 2016. She confirms that  this court did not award costs on the appeal but on the lower court, costs were awarded to the respondents. She calculated the interest on costs (in the trial court) at 14% from 14th  October 2010 to 11th November 2015, that came to Kshs.119,150/=.   She contends that her calculation gives her an overpayment of Kshs.60,420/= that the respondent is ready to refund to the applicants.

4. In appears that the dispute  between the parties  is  purely  calculation  of interest.   While the applicant applies 12% interest rate as the court rate, the Respondent applies 14% rate.

Section27 (2) of the Civil Procedure Act states:

“Thecourtor Judge  may give interest on costs  at any  rate   not  exceeding   fourteen  per  cent   per annum,  and such  interest shall  be added to  the costs and shall be recoverable as such.”

Section26(1)of the Act states:

“Where and  in  so   far  as  a  decree is  for  the payment of money, the court  may, in the decree, order interest at  such  rate  as  the  court  deems reasonable to be paid on the principle sum adjudged from the date of the suit to the date of the  decree in addition to any interest adjourned

on such  principal for any period before the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the decree to the date of payment or to   such  earlier date as  the court thinks fit.”

5. The court has discretion to order interest rates higher than the 12%  cap especially in commercial disputes, where, for instance, an order for payment is given but the Judgment debtor takes inordinately too long a period  to pay.   In such circumstances,  in its  discretion,  the court may order interest  equivalent  to prevailing  Bank rates as opposed to court rates. See Veleo (K) Ltd ­vs­ Barclays Bank of Kenya Limited– (2013) eKLR.

6. As to court rates, ordinarily, simple interest is applied unless for special reasons to be recorded, the expressly orders that compound interest be applied. When a court orders interest  to be paid at court rates it is assumed to be the prevailing interest rates. The current prevailing court rates is 12% per annum.

There being no special circumstances to warrant increament of the rates 12% per annum shall be applied in the calculation of interest in this case.

7. That having  been the main dispute  that gave rise  to different decretal sums, I direct that both parties do recalculate the amounts due to each other using the 12% rate of interest on the taxed costs in the trial court in the sum of Kshs.178,673/= and offset whatever is paid by the Decree holder.  This will bring an end to the dispute.

If the parties shall not mutually come to an amicable settlement, I direct that they appear before the Deputy Registrar of the court who will assess the costs, with direction on interest rates as stated above.

Dated, signed and delivered in open court this 21st    day of July 2016.

JANETMULWAJUDGE