[2022] KEHC 9800 (KLR)

Madison Insurance Company Ltd v Mung’ot (Civil Appeal 215 of 2020) [2022] KEHC 9800 (KLR) (Civ) (14 July 2022) (Judgment)

Neutral citation: [2022] KEHC 9800 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 215 of 2020

JN Mulwa, J

July 14, 2022

Between

Madison Insurance Company Ltd

Appellant

and

Sungura Boniface Mung’ot

Respondent

(Being an Appeal against the Ruling of the Hon. Senior Principal Magistrate Hon. G. A. Mmasi, (SPM) delivered on 5th may, 2020 in the Chief Magistrate’s Court at Nairobi Milimani commercial Courts in the Civil Suit No. 1271 of 2017)

Judgment

Background 1. Judgment in the trial court; CMCC No. 1271 of 2017 was delivered on the 19/9/2019. A decree was drawn as follows;“that judgment be and is hereby entered for the plaintiff against the defendant as follows:a)Delivery of the Plaintiff’s Annual statementsb)Delivery of the Plaintiff’s returnsc)Damages in the sum of Kshs.1,435,681. 91d)Interest on (c) above at court rates.e)Costs of the suit.

2. In the particulars of the Decree issued on the 13/11/2019, the principal amount stated at (c) above was stated to accrue interest at 12% from 2/3/2017 to 16/9/2019, and calculated to Kshs. 439,908. 67 making a total of Kshs. 1,875,590. 58. Costs were also assessed at Kshs. 211,045. 00.

3. The Appellant, Madison Insurance Company Limited was dissatisfied with the Decree as drawn and applied for an order of Review by an application dated 16/12/2019, sought orders:“that the Honourable court be pleased to rectify its judgment to specify and to reflect that the interest on the award of damages for the sum of Kshs. 1,435,681. 91 began to accrue from the date of judgment; on the matter that the court was silent on when interest would be effective.

4. The grounds of the appeal are stated in the Memorandum of Appeal dated 21/5/2020. These grounds may be narrowed down to the question as to whether the interest ordered upon the damages of Kshs.1,435,681. 91 were so done on a liquidated or ascertainable claim, or upon damages as assessed by the court. This question would ultimately determine the effective date when such interest would start to accrue, which is the main dispute in this appeal.

5. Both parties have filed written submissions on the above questions. The Appellant is represented by Kibatia & Co. Advocates, while the Respondent is represented by Kilonzo & Co. Advocates.

The Appellant’s case and submissions 6. The submissions are dated 27/4/2022. It is noted that the Appellant has since paid the decretal sum in full less the interest as calculated by the Deputy Registrar of the court, pending determination of this appeal on the question as to which date the interest would accrue.

7. It is it’s contention that interest ought to accrue from the date of judgment and citing the case Mukisa Biscuits Manufacturing Company Limited vs West End Distributors Limited [1970] EA 469, submits that;“As damages were assessed by the court, interest ought to accrue from date of the judgment, on the argument that the plaintiff was not kept away from his monies because none would have been ascertainable at the time of institution of the suit.”

8. It is further submitted that the amount that was ascertained was a sum of Kshs. 703,700/= as having been paid to the Appellant as a return on his investment over a period of time, and therefore the lump sum was not ascertainable and was assessed by the court.

9. The Appellant further submits that the matter of the impugned ruling was properly before the court by the application for Review, and that the issue of interest cannot form a basis of an appeal. And therefore, the trial court erred in both law and fact by dismissing the Review application.

The Respondent’s case and submissions. 10. The submissions are dated 6/6/2022, and premised on two issues; whether the trial magistrate was erroneous in failing to find an error apparent on the face of the judgment dated 19/9/2019; and whether the trial magistrate erred in its determination that it was functus officio.

11. Towards the above, it is submitted that there was no error at the face of the judgment and that the Appellant failed to meet conditions stated under Order 45 of the Civil Procedure RulesIt is also submitted that the appeal is only in respect of the dismissal of the Appellant’s application for Review, but not on the ruling dated 5/5/2020 that dismissed the application for review.

12. The Respondent further submits that the computation of interest is at the discretion of the court citing Section 26(1) of the Civil Procedure Act; and that the court was indeed functus officio save for the matter of interest.

13. The Respondent has thus urged the court to find that the appeal is frivolous as it faults the trial court’s decision which has already been satisfied save for interest and therefore has no chances of success.

14. Issues for determination1)Whether the trial magistrate erred in law and fact in finding that there was no error on the face of the record and dismissing the application dated 16/12/2019 by the ruling dated 5/5/2020. 2)Whether the damages awarded by the trial court were liquidated or general damages.3)What date would interest accrue as a result of a breach of contract, and more specifically on issue number (2) above.These issues are interrelated and will thus be canvassed simultaneously.

Analysis and Determination 15. The conditions upon which an application for Review may be made are provided under Section 80 of the Civil Procedure Act, and Order 45 Rule (1) of the Rules that:a)Discovery of new and important matter or evidence which after the exercise of the diligence, was not within the knowledge of the applicant or could not be produced by him at the time when the decree was passed or the order made or;b)On account of some mistake or error apparent on the face of the record,c)For any other sufficient reason desires to obtain a review of the decree or order may apply for review of judgment to the court which passed the decree or made the order without unreasonable delay.

16. The Appellant in the application dated 16/12/2019 sought an order at prayer 4:“that the Honourable court be pleased to rectify its judgment to specify and to reflect that the interest of the award of damages for the sum of Kshs. 1,435,681. 91 begins to accrue from the date of judgment.”The application is premised on provisions of 1A, 1B, 3A & 80 of the Civil Procedure Act; Order 45 Rule 1, 2 and 3A of the Civil Procedure Rules and Article 159(2) (d) of the Constitution of Kenya, 2010.

17. Provisions of Order 45 of the Civil Procedure Rules are clear on the conditions to be met for an application for review to be successful;(a)discovery of a new and important matter,(b)Mistake or error apparent on the face of the record,(c)Any other sufficient reason.I have looked at the plaint filed on the 2/3/2017. The plaintiff (now Respondent) sought:a)………….b)…………c)Damages in the sum of Kshs. 1,435,681. 91d)Interest on (c) above at commercial rates.e)Any other or further relief as this honourable court deems fit to grant.

18. The suit arose from a contract entered into between the parties, under a financial plan policy No. 14666381 for 5 years. He contributed monies towards premiums in instalments form January 2010 upto February 2011 in different amounts, at different periods all totaling to Kshs. 703,700/= for the five (5) years period.To that extent then, the money the Respondent had contributed by the end of the 5 years period was Kshs. 703,700. 00. The dispute is not on the judgment sum of Kshs. 1,435,681. 91 but on the trial court’s silence on the date when interest at court rates would begin to accrue.

19. I have considered the judgment delivered on the 19/9/2019 – see paragraph 1(c) and (d). The judgment is factually silent as to when the interest would start accruing on the damages awarded at (c) thereon.As a legal principle, special damages that are pleaded and proved ought to accrue interest at court rates, or any other rates as may be pleaded from date of filing the suit. Section 26(1) of the Civil Procedure Act is explicit that;“where and in so far as decree is for payment of money, the court may, in the decree, order interest at such rate, as the court deems reasonable to be paid on the principal sum adjudged on sum principal sum for any period before the institution of the suit, with further interest as sum rate as the court deems reasonable on the aggregate so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit.”

20. The above principle was well explained in the case PremLata vs Peter Musa Mbiyu [1965] EA 592, that an award of interest on the principal sum is generally to compensate a plaintiff for the deprivation of any money or specific goods through the wrongful act of a defendant. See also Emmanuel Kuria Wa Gathoni vs the Commissioner of Police & another [2018] e KLR.

21. On when damages are to be assessed by the court, the right to those damages does not accrue until they are assessed by the court – see also Dipak Emporium vs Bond’s Clothing [1973] EA 553 and Francis Jospeh Kamau Khatha vs Housing Finance Co. of Kenya Ltd [1015] eKLR.Section 26(2) of the Act provides:“where such a decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 percent per annum”

22. When the effective date of interest is not pleaded as is the case in this instant appeal, provisions of Section 26(1) and (2) come into play. However, when the court is silent on the effective date for interest to start accruing, Judge Kasango J. in Directline Assurance Co. Ltd vs Jeremiah Wachira Icharia [2016] eKLR held that there is no discretion that can be exercised in silence.Section 3A of the Civil Procedure Act provides that;“nothing in this Act shall limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.”

23. Both the superior courts and the subordinate courts have same discretion donated under Section 3A of the Act. The Appellant contends that, reading from the record of Appeal Page 12, the Respondent had contributed as his premiums in the Policy a sum of Kshs. 703,700. It has not been denied that the said amount is what he had indeed contributed.One would then wish to ask, when the trial court awarded a sum of Kshs. 1,435,681. 91, where did it come from? There is really no magic on this. In my considered view, it must have been the interest that had accrued on the Respondent’s contribution in the sum of Kshs. 703,700/= as compensatory damages to the Respondent for the five years period, in terms of the parties agreement.This is clearly pleaded in the Amended Plaint dated 22/11/2018 at paragraph 10 wherein he pleads that he had paid a total sum of Kshs. 703,700/= as the Capital sum; and at paragraph 11 that according to the policy schedule, the plaintiff was to receive 14% of the capital sum and fund value amounting to Kshs. 1,435,691. 91/= at the end of the 5 years.

24. It is therefore clear in my mind that the sum awarded to the Respondent by the trial court was well thought of, and ascertained as the Respondent’s contributions as policy premiums plus interest for the 5 year period; meaning that the interest of 14% as agreed by the parties was incorporated in the pleaded damages of Kshs. 1,435,961. 91 in the amended plaint and therefore a special damage.Guided by the decision Dipak Emporium vs Bond’s Clothing and Francis Joseph Kamau Ichatha vs HFCK(Supra). I find that the said sum of Kshs. 1,435,681. 91 was duly ascertained at the time of filing the suit and the trial court needed not to assess the said sum as it was specifically pleaded. All the court needed to do was to have the same proved, as a special damage though not specifically stated as a special damage, but by implication.

25. To that extent then, the trial court, in its silence on the matter of effective date of accrual of interest on the said sum was an error that the court ought to have rectified to state the date of accrual of interest.In the case National Bank of Kenya Limited VS Ndungu Njau [1997] e KLR, the court rendered that:“A review may be granted whenever the court considers that it is necessary to correct an apparent error or omission on the part of the court. The error or omission must be self-evident and should not require an elaborate argument to be established…”By the above, it is evident that there was necessity for the trial court to rectify its silence and state when interest ought to accrue on the special damages in the sum of Kshs. 1,435,681. 91.

26. Whether the trial court was functus officio in regard to the application for review?At paragraph 5 of the Notice of Motion application dated 16/12/2019, the applicant sought an order that:“(5)that the honourable court be pleased to order a recalculation of the interest sums due from the Defendant/Applicant bearing in mind that the decretal sum has already been settled.”

27. On the issue, the Appellant did not offer or tender any submissions. On the other hand, the Respondent by its submissions at paragraphs 25, 26 and 27 it stated that the appeal herein is an attempt to change or veto the already established legal principle that once a court is functus officio it becomes powerless and cannot make determination on the merit of matters so determined by the judgment.

28. This is anchored under the law; save that post-judgment applications like the one for Review or setting aside of judgment may be entertained.

29. In Raila Odinga vs IEBC & 3 others Petition No. 5 of 2013, the Supreme court rendered that“the functus officio doctrine is one of the mechanisms by means of which the law gives expression to the principle of finality. According to this doctrine, a person who is vested with adjudicative or decision making powers may, as a general rule, exercise those powers only once in relation to the same matter… the (principle) is that once such decision has been given, it is (subject to any right of appeal to a superior body or functionary) final and conclusive. Such a decision cannot be reviewed or varied by the same maker.”

30. To that extent then, the trial court was in error when it declined an invitation by the Applicant/Defendant in the application dated 16/12/2019 by its ruling dated 5/5/2020 to render itself on the date the interest due from the Defendant (now Appellant) would accrue.

31. It is noted that the decretal sum of Kshs. 1,435,681. 91 is already paid, a fact acknowledged by both the Appellant and the Respondent. Having been paid, and by my findings above, there is no further interest payable by the Appellant, having held that the amount of Kshs. 1,435,681. 91 incorporated interest prior to the Judgment and up to the date of filing of the suit. In my considered view, the interest envisaged under Order (d) in the judgment was post- judgment. The decretal sum having been paid upon the delivery of the Judgment, I find and hold that the sum of Kshs. 1,435,681. 91 was ascertained and therefore a special damage. The court needed not to assess the same.

32. Section 26(1) of the Civil Procedure Act provides that interest may be ordered on any principle sum before filing of the suit, with further interest at rates the court may deem fit and reasonable from the date of the decree to the date of payment.However, as a general principle of law, a special damage, once proved to the satisfaction of the court, as is in this appeal, the principle sum attracts interest at court rates, if silent on the rates, at 6%, from the date of filing of the suit, until payment in full – see Section 26(2) and Section 3A of the Act.

33. I therefore hold that the trial court was in error when it failed to pronounce itself on when the interest would accrue on the principle sum, being from the date of filing of the suit.Accordingly, the decretal sum of Kshs. 1,435,681. 91 shall attract interest at 6% per annum from the date of filing of the suit by the Amended Plaint, being the 22/11/2018, until payment in full.The appeal therefore succeeds. Circumstances dictate that each party shall bear own costs of the appeal.

DATED SIGNED AND DELIVERED THIS 14TH DAY OF JULY 2022. J.N. MULWAJUDGE