[2016] KEHC 3758 (KLR)
The court determined that the dispute centered on the correct interest rate to be applied to the taxed costs awarded in the lower court. While the respondent's advocate applied a 14% rate, the court clarified that, in the absence of special circumstances or an express order for a higher rate, the prevailing court...
Source-derived case information.
- Citation
- [2016] KEHC 3758 (KLR)
- Parties
- Appellant: Permuga Auto Spares; Appellant: Barclays Bank of Kenya Ltd; Respondent: Margaret Korir Tagi
- Court
- High Court
- Court Station
- High Court at Nakuru
- Jurisdiction
- Kenya
- Case Number
- Civil Appeal 288 of 2010
- Procedural Posture
- Civil Appeal / Ruling on Application for Refund of Overpaid Interest
- Outcome
- Application partially allowed; parties to recalculate dues at 12% interest or appear before Deputy Registrar for assessment.
- Legal Topics
- Interest on Costs, Decretal Sum Calculation, Court Discretion on Interest, Party and Party Costs
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Permuga Auto Spares
Appellant
Barclays Bank of Kenya Ltd
Appellant
Margaret Korir Tagi
Respondent
Procedural Posture
Civil Appeal / Ruling on Application for Refund of Overpaid Interest
Legal Issues
- 1 Whether the respondent's advocates were overpaid due to erroneous application of interest rate on costs.
- 2 What is the correct interest rate to be applied on the taxed costs as per the Civil Procedure Act.
- 3 Whether the appellants are entitled to a refund of the alleged overpaid sum.
Ratio Decidendi
The court determined that the dispute centered on the correct interest rate to be applied to the taxed costs awarded in the lower court. While the respondent's advocate applied a 14% rate, the court clarified that, in the absence of special circumstances or an express order for a higher rate, the prevailing court rate of 12% per annum should apply. The court exercised its discretion under Sections 26(1) and 27(2) of the Civil Procedure Act, finding no justification for a rate above 12%. Both parties were directed to recalculate the amounts due using the 12% rate on the taxed costs of Kshs.178,673/=. If no mutual settlement is reached, the Deputy Registrar is to assess the costs and...
Court Disposition
Application partially allowed; parties to recalculate dues at 12% interest or appear before Deputy Registrar for assessment.
Orders
- Both parties to recalculate the amounts due using 12% interest rate on the taxed costs of Kshs.178,673/=.
- Any overpayment or underpayment to be offset accordingly.
Full Case Text
Judgment text and source record
29 paragraphs
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