Odera v Absa Bank Kenya PLC [2026] KEHC 13670 (KLR)

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REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION HCCOMM NO. E166 OF 2026 DAVID ANANDA APOLLO ODERA....................................................................PLAINTIFF

VERSUS ABSA BANK KENYA PLC .................................................................................DEFENDANT

RULING 1. This is a Ruling on a Preliminary Objection raised by the Defendant claiming that this suit is statute-barred, and as such, should be struck out.

2. The suit arises from a home loan facility of Kshs.31,100,000/- advanced to the Plaintiff by the Defendant by way of the Letter of Offer dated 30/04/2014, secured by a charge over the property known as L.R. No. 7785/1117, situated within Runda, Kiambu County.

3. The suit was commenced by way of the Plaint dated 19/03/2026 filed through Messrs Khayesi & Khayesi Advocates LLP, in which the Plaintiff prayed, basically, for a declaration that the Defendant breached the loan contract by charging excessive interest. He also sought an order directing the Defendant to refund him a sum of Kshs.19,001,485.22 being the excess interest charged, and also special damages of Kshs.181,200/- being payment he made to experts who recalculated the interest for him.

4. In the Plaint, it was pleaded that the Defendant illegally and unfairly varied the interest rate applicable to the facility and failed to notify the Plaintiff of the variations, and also charged interest and penalties contrary to the Banking Act and the Banking (Amendment) Act, 2016. It was further pleaded that the facility fell into arrears in 2017 upon which the Defendant declared the Plaintiff a defaulter and commenced steps to realize the security, but before the property could be sold at a public auction, the Plaintiff procured a private buyer who purchased the property, and the Defendant's outstanding claim was settled from the sale proceeds on or about 5/03/2020 or 6/03/2020, following which the charge was discharged. It was averred that it was only thereafter, upon engaging forensic auditors that the Plaintiff discovered the overcharge.

5. The Defendant, in response, through Messrs Hamilton Harrison & Mathews Advocates, filed the Statement of Defence dated 7/05/2026. Apart from controverting the substance of the claim on merits on a without prejudice basis, the Defendant also averred that “the Milimani HCCOMM No. E166 of 2026 Page 2 of 9 plaintiff's claim for breach of contract is time barred as it has been brought after the end of six years from the date the alleged cause of action accrued and more than six years from the date the plaintiff either knew or should have discovered the alleged breach of contract".

6. The Defendant then formalized the said challenge by subsequently filing the Notice of Preliminary Objection dated 10/06/2026 in which it was urged that the cause of action, as presented in the Plaint, ought to have been brought by 6/03/2026 at the latest, which is the end of the statutory 6 years period after the Plaintiff knew or ought to have discovered the alleged breach. This argument was premised on the uncontested basis that the loan was fully repaid on or about 6/03/2020.

7. The parties then filed written Submissions on the Preliminary Objection. The Defendant’s Submissions is dated 10/06/2026, while the Plaintiff’s is dated 2/07/2026.

8. In his brief Submissions, the Plaintiff’s Counsel basically reiterated the contention captured above. He however cited authorities in support of his argument.

9. On her part, Counsel for the Defendant presented a lengthy narration containing in some parts, irregularly of course, factual statements not appearing in the pleadings. In summary however, she simply contended that the objection omits consideration on when the cause of action accrued urging that the limitation period did not, as posited by the Defendant, begin to run on the date that the loan was settled, but upon discovery of the overcharge of interest. She thus insisted that the question is when the Plaintiff became aware of the excessive interest charges imposed, not when payment of the loan was completed. She submitted that the claim is not simply for “breach of contract” at large, but a claim founded on the discovery of unlawful overcharging which the Plaintiff could not, without expert forensic analysis, have ascertained, and that time could not begin to run until he was placed in possession of the facts necessary to plead the overcharge which, she urged, occurred only upon receipt of the expert report on 20/04/2020. According to her therefore, the date of accrual of the cause of action was 20/04/2020 being the date of discovery of the overcharge. Counsel also asserted that the challenge raised is not a pure point of law capable of determination without factual inquiry since the question of when the Plaintiff discovered, or with reasonable diligence could have

discovered the overcharge, is a contested question of fact that cannot properly be resolved on a Preliminary Objection. She also distinguished the authorities cited by the Defendant and cited her own in support of her submissions. Milimani HCCOMM No. E166 of 2026 Page 3 of 9 Determination 10. The issues that call for determination may be summarized as follows: i) Whether the challenge raised meets the threshold of a Preliminary Objection. ii) If so, whether this suit is statute-barred.

11. In answering the first issue, it must be recalled that a Preliminary Objection must raise a pure point of law and must not require the ascertainment of any disputed fact. This time-honoured principle was established in the celebrated case of Mukisa Biscuit Manufacturing Co Ltd v West End Distributors Ltd [1969] EA 696, where the Court of Appeal for East Africa held: “A preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation ... A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained, or if what is sought is the exercise of judicial discretion.” 12. As correctly pointed by the Plaintiff’s Counsel therefore, under the Mukisa Biscuit (supra) rule, if a Court must ascertain dates, investigate timelines, or hear testimonies, the plea transitions into a mixed question of law and fact, and cannot be disposed of summarily as a pure point of law.

13. Regarding limitation of time, as was held in the Court of Appeal in the case of Thuranira Karauri Vs Agnes Ncheche [1997] eKLR, it is the position that a defence of limitation of action when correctly raised goes beyond being a mere technicality and hinges on the jurisdiction of the Court A plea of limitation of actions is therefore, in principle, capable of meeting the threshold set out in Mukisa Biscuits, but only where, from a reading of the pleadings, the date from which time runs, and the fact of the suit having been filed outside the resulting period, are not themselves in genuine dispute. Where the accrual date is contested, the objection ceases to be one of pure law, notwithstanding that it is dressed up as one, and falls to be determined at trial, on evidence. I therefore have to closely analyze the challenge raised before making a determination whether the challenge can be determined as a Preliminary Objection. Milimani HCCOMM No. E166 of 2026 Page 4 of 9 14. In making a determination, I note it is not disputed that the cause of action herein is one of breach of contract. It is also not contested that full settlement of the loan was completed on or about 6/03/2020. Regarding the time limitation for a cause of action founded on contract, Section 4(1)(a) of the Act provides as follows: 4(1) The following actions may not be brought after the end of six years from the date on which the cause of action accrued- (a) actions founded on contract; .............................................................................

15. I should also say that Limitation of Actions statutes are important since they promote certainty, and also reduce delays as they encourage aggrieved parties to act timeously in enforcing their rights. They also protect defendants from the perpetual risk of being sued over an indefinite period, and also promote fair trial as they ensure that evidence is dealt with while still fresh.

16. In respect to the Court’s powers to extend time provided for filing a suit, the Court of Appeal in the case of Divecon Vs Samani [1995-1998] 1 EA 48 held that: “No one shall have the right or power to bring after the end of six years from the date on which a cause of action accrued, an action founded on contract. The corollary to this is that no court may or shall have the right or power to entertain what cannot be done namely, an action that is brought in contract six years after the cause of action arose or any application to extend such time for the bringing of the action. A perusal of Part III shows that its provisions do not apply to actions based on contract.” 17. It is therefore the position that the Court’s discretion to extend time does not extend to causes of action of contract.

18. As to when a cause of action accrues, the Court of Appeal in the case of Diana Katumbi Kiio v Reuben Musyoki Muli [2018] KECA 860 (KLR) guided as follows: “17. ........... According to the author in the Journal of International Banking and Financial Law: " What's the Limit" (2007) 11 JIBFL 642:- Milimani HCCOMM No. E166 of 2026 Page 5 of 9 "In contract the cause of action accrues when the breach occurs, but in tort the cause of action accrues when damage is first sustained. The cause of action, whether in tort or contract, arises regardless of whether or not the claimant could have known about the damage.” [Underlining mine] 19. As a general rule therefore, a cause of action founded on contract accrues from the date of the breach complained of, and not on the date when the claimant suffers loss or becomes aware of the breach. Considering that the suit in this case was filed on 19/03/2026, and noting that the loan facility was settled on or about 6/03/2020, applying that rule literally in this case without qualification, it would mean that the suit was filed out of time since the 6 years statutory period would have already lapsed on or about 5/03/2026, about 2 weeks before the suit was filed. On an unqualified application of the ordinary rule, I would have little difficulty finding the suit time-barred.

20. The Plaintiff however argues that in this case, time, for purposes of limitation, only started running upon “discovery” of the excessive interest charge, which, according him, is about 20/04/2026, and not upon full payment. I would have been more receptive to this contention had the Plaintiff expressly brought his suit under the cause of action of “fraud” or “mistake” since Section 26 of the Limitation of Actions Act provides as follows: 26. Extension of limitation period in case of fraud or mistake Where, in the case of an action for which a period of limitation is prescribed, either— (a) the action is based upon the fraud of the defendant or his agent, or of any person through whom he claims or his agent; or (b) the right of action is concealed by the fraud of any such person as aforesaid; or (c) the action is for relief from the consequences of a mistake, the period of limitation does not begin to run until the plaintiff has discovered the fraud or the mistake or could with reasonable diligence have discovered it: .........................................................................................................

21. Section 26 therefore defers running of the limitation period in cases of “fraud”, or “mistake” “until the plaintiff has discovered the fraud or the mistake or could with reasonable Milimani HCCOMM No. E166 of 2026 Page 6 of 9 diligence have discovered it”. In other words, Section 26 provides that where a claim involves dishonesty or an error, time does not begin to run until the Plaintiff discovers the “fraud” or “mistake”, or could have discovered it using reasonable diligence. In such cases therefore, the law pauses the legal "countdown clock" for filing a lawsuit.

22. Section 26(c) was considered by the Court of Appeal and applied in the case of Alba Petroleum Limited v Total Marketing Kenya Limited (Civil Appeal 43 of 2015) which was a claim arising from alleged mischarging or accounting error in a continuing commercial relationship. The Plaintiff claimed that it had supplied the Defendant with 2,500 metric tons of petroleum product in 1991 but, owing to an error in its own internal accounting records, the transaction having been mistakenly booked as a loan to a third party rather than a sale to the Defendant, failed to invoice the Defendant for the same. The omission was allegedly discovered only in 1997, on reconciliation of the Plaintiff's accounts, and suit was then filed in 1999, more than 6 years after supply. When Judgment was later entered in the Plaintiff’s favour the Defendant appealed raising, inter alia, the ground that the suit was time-barred. The Defendant argued that the trial court erred because no relief founded on “mistake” had been explicitly pleaded out. However, the Court of Appeal upon examining the re-amended Plaint, confirmed that the cause of action and statutory postponement of the limitation period were explicitly premised on illegality, “fraud”, and “mistake” discovered in 1997. It is therefore by reason of expressly pleading the “mistake” that the Plaintiff in that case, successfully invoked Section 26(c) of the Limitation of Actions Act.

23. Order 2, Rule 4 lists “matters which must be specifically pleaded”, and stipulates that a party must explicitly plead specific matters such as “fraud”, performance, release, payment, or any fact showing illegality if he intends to rely on such matters to defeat an opponent's claim. Although Order Rule 4 addresses pleadings filed “subsequent to a plaint”, there is no reason why the same logic should not also apply to Plaints. Order 2, Rule 10 also requires that every pleading must contain the necessary particulars of the claim or defence and under sub-rule (1)(a) mandates that a party must provide full particulars of any “misrepresentation, fraud, breach of trust, wilful default, or undue influence” on which he relies.

24. In this case, neither “mistake” or “fraud”, has been expressly pleaded or alleged in the Plaint, and nowhere in the Plaintiff’s response to the Preliminary Objection has any comments on that omission been made, nor has any attempt made to introduce the claims of Milimani HCCOMM No. E166 of 2026 Page 7 of 9 “mistake” or “fraud” into the case. The Plaintiff’s case, as pleaded, and particulars listed in support thereof is, quoted in verbatim, as follows: a. Illegally and unfairly varying the interest rates applied to the Plaintiff's loan account. b. Failure to notify the Plaintiff of the varying interest rates applied on his loan facility over the years which action was prejudicial to the Plaintiff. c. charging exorbitant interest thereby leading to an overcharge in the interest amount and completely failing to adhere to the express terms of the Banking Act and the Banking (Amendment) Act 2016. d. Failing to refund the Plaintiff the difference and or overcharge of Kshs 19,001,485.22 after receiving the demand showing the recalculation. e. Debiting the Plaintiff's account with illegal and unconscionable interest rates and illegal penalty charges.

25. The language employed clearly points to simply an accusation of deliberate wrongdoing and breach of statutory duty, not of a “mistake” of “fraud” or suspected fraud or suspected mistake, for whose consequences relief is sought. No particulars of “fraud”, “mistake” or “concealment” of the kind expected before Section 26(a) or (b) could come into play as none was pleaded either. No attempt or leave to amend the Plaint has also been sought. In the case of Vijay Morjaria v Nansingh Madhusingh Darbar & Another [2000] eKLR, the Court of Appeal affirmed the principle that “fraud” must be specifically pleaded and the specific particulars thereof clearly articulated on the face of the pleadings. The Court stated that, as such, general allegations of deception are insufficient.

26. The case of Odero & another v Ndivo & another (2021) KEHC 289 (KLR), relied on by the Plaintiff does not assist him since a reading thereof reveals that, unlike in this case, “fraud” and “concealment of material facts” had been expressly pleaded in the Plaint. The Court therefore correctly invoked Section 26 of the Limitation of Actions Act to find that time, for purposes of limitation,only began running upon discovery of the fraud. The same cannot be said herein.

27. I agree that that striking out a suit is considered to be a drastic action which a Court should only sparingly resort to. Indeed, the core principle established in the landmark Kenyan case Milimani HCCOMM No. E166 of 2026 Page 8 of 9 of D.T. Dobie & Company (Kenya) Ltd v. Muchina (1982) KLR 1 is that the power to strike out a pleading or dismiss a suit summarily is a drastic, draconian remedy that must be exercised with extreme caution, great circumspection, and only in the clearest of cases. Although I am fully alive to that principle, in this case, I borrow the following words used by my brother L. Naikuni J in the case of Highland Plaza Limited v Ondieki & 6 others [2023] KEELC 17360 (KLR) when striking out a suit dealing with an issue of limitation of actions such as the one herein: “The law is that a statement of claim should not be struck out and the Plaintiff driven from the judgement seat unless the case is unarguable and where the hearing involves the parties in a trial of the action by affidavit, it is not a plain and obvious case on its face. All said and done, taking all the circumstances of this case into consideration, I am fully satisfied that based on the principles of natural Justice, Equity and Conscience, fairness and justice of the case will be attained by terminating this suit at this stage as after all as the Honourable Court has analyzed above. In any

case, the preliminary objection as raised by the 7th Defendant by itself concludes the case. It can never be assisted in whatever way but being halted at this earliest juncture. The suit fails to succeed.” 28. As aforesaid, the Plaintiff argues that in this case, time did not begin to run on the date that the loan was settled, but “upon discovery” of the overcharge of interest, and that the question is therefore when the Plaintiff “became aware” of the excessive interest charges, not when payment of the loan was completed. As I have already found, that line of argument would only have assisted the Plaintiff had he presented his case as one on “fraud” or “mistake” in which case Section 26 of the Limitation of Actions could have been invoked.

29. In the end, my finding is that a Plaintiff seeking to prosecute a breach of contract case cannot successfully invoke the “date of discovery of the breach, or “the date of becoming aware of the breach” argument to circumvent the statutory limitation period unless he has grounded his case on the cause of action of “mistake” or “fraud”. In a case such as this one, the Plaintiff’s act of simply claiming that he only "subsequently discovered" an overpayment on the bank loan is insufficient to save the suit from being time-barred. Where a party relies on “fraud”, “misrepresentation”, or “mistake” in arguing for postponement of the start of a limitation period, the particulars of such mistake must be expressly and specifically particularized in the Plaint. If a Plaintiff fails to do so, the defendant is caught by surprise, which violates the principles of fair trial and standard pleading rules. The Court will therefore look strictly at the face of the pleadings, and if the Plaint presents a standard breach Milimani HCCOMM No. E166 of 2026 Page 9 of 9 of contract claim the Court will reject the suit as time-barred if it is filed outside the standard 6-year limitation period for contractual debts.

30. While concluding, I must caution that although under the provisions of Section 26(c) of the Limitation of Actions Act, where “mistake” or “fraud” is properly pleaded in the Plaint, the limitation period does not begin to run until the Plaintiff discovers the mistake, or could have discovered it with reasonable diligence, the “reasonable diligence” claim will still face a huge hurdle in the case of bank loans since bank statements, interest rates, and loan repayment schedules are readily available to borrowers. A prudent borrower exercising reasonable diligence is consequently expected to monitor his accounts and detect any overpayment dynamically, rather than claiming “subsequent discovery” years down the line. Pleadings must contain all necessary particulars and a Court handling a breach of contract case will take a Plaint at its face value; it will not read “mistake” or “fraud” into a breach of contract suit where the express word and its surrounding facts are not pleaded. If the suit is already filed and faces a Preliminary Objection on limitation of time, the failure to expressly plead “mistake” or “fraud” is fatal to the suit unless leave is sought and granted to amend the Plaint. Final Orders 31. For the above reasons, the Preliminary Objection dated 10/06/2026 succeeds, with the result that this suit is struck out with costs to the Defendant, for being time-barred under the provisions of Section 4(1)(a) of the Limitation of Actions Act. DELIVERED, DATED AND SIGNED AT NAIROBI THIS 18TH DAY OF SEPTEMBER 2026 ........................................ WANANDA JOHN R. ANURO

JUDGE Delivered in the presence of: Mr. Kingara h/b for Ms. Mulindi for the Plaintiff Mr. Mwangi h/b for Mr. Lawson Ondieki for the Defendant Court Assistant: Amos Boso Milimani HCCOMM No. E166 of 2026