[2022] KEHC 17043 (KLR)

Rift Valley Products Limited v Plexus Cotton Limited (Civil Suit 16 of 2006) [2022] KEHC 17043 (KLR) (7 October 2022) (Ruling)

Neutral citation: [2022] KEHC 17043 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit 16 of 2006

MN Mwangi, J

October 7, 2022

Between

Rift Valley Products Limited

Plaintiff

and

Plexus Cotton Limited

Defendant

Ruling

1. The defendant herein made an oral application under the provisions of order 21 rule 8(4) of the Civil Procedure Rules on account of a dispute as to the applicable rate of interest following the judgment delivered in the main suit on February 28, 2020 in favour of the plaintiff. Judge PJ Otieno in his judgment made the orders outlined below as against the defendant –i.USD 60,773. 89 being money had and received by the defendant for the use of the plaintiff;ii.USD 3,684. 21 and GB€ 587. 50 being the expenses incurred in tracing the goods lost;iii.Interest at court rates from the date of loss being (sic) till payment in full; andiv.Costs of the suit and interest therein at court rates.

2. The defendant referred to the draft decree drawn by the plaintiff and amended by the defendant in respect of the rate of interest applicable and submitted that the said issue needs to be settled by this court. The defendant’s contention is that the aforesaid interest should be calculated at the rate of 6% whereas, the plaintiff contends that it should be calculated at the rate of 12%.

3. The application was canvassed by way of written submissions. The defendant’s submissions were filed by the law firm of Wanjiku Mohamed Advocates LLP on January 12, 2022 and on April 26, 2020. The plaintiff’s submissions were filed on March 9, 2022 by the law firm of AB Patel & Patel Advocates.

4. Mr Khanna, learned counsel for the defendant relied on the provisions of section 26(2) of the Civil Procedure Act, which is in respect to court interest rates and submitted that unless interest rate is fixed by the court, section 26(1) of the Actdoes not apply. He stated that the court in its judgment did not make an order for interest to be paid at any specific rate other than court rates. He also referred to the plaint herein, and more particularly, the relief sought by the plaintiff in paragraph C, being interest thereon at court rates from the date of receipt of the proceeds of sale of the plaintiff’s 200 bales of cotton by the defendant, and submitted that the decree remains silent with respect to payment of interest.

5. He also submitted that court interest rates vary, thus it is speculative for the plaintiff to presume that the interest rate awarded was 12%. He relied on the case ofBOG Tambach Teachers Training College v Mary Kipchumba[2018] eKLR. He urged that section 26(2) of the Civil Procedure Act applies and that the plaintiff is only entitled to apply an interest rate of 6% under the decree.

6. Mr Khagram, learned counsel for the plaintiff submitted that the judgment of the court was not silent with respect to payment of further interest, since the court in its judgment was categorical in ordering payment of interest at court rates until payment in full. He further submitted that the conventional rate of interest that courts have consequently applied is 12% and not 6% as suggested by the defendant on the basis that there was no numerical rate specified in the judgment.

7. He relied on the case of Alba Petroleum Limited v Total Marketing Kenya Limited [2019] eKLR, where interest was awarded at 14% but the court recognized that court interest rates are at 12%. He also relied on the case ofRJ Varsani Enterprises LTDvPentoville Holdings Ltd[2021] eKLR, where the court considered several decisions which held that court interest rates are at 12%.

8. Mr Khagram expressed the view that the case of BOG Tambach Teachers Training College v Mary Kipchumba (supra) relied on by the defendant’s counsel is not applicable in the circumstances of the case herein.

9. In a rejoinder. Mr Khanna referred to the seven authorities relied on by the plaintiff and submitted that they can be distinguished since the rate of interest therein had already been fixed and ordered to be paid on the principal sum in the decree.

Analysis And Determination. 10. This court has considered the application herein, the written submissions as well as the oral submissions made by counsel for the parties. The defendant contends that the issue for determination by this court is whether section 26(1) or section 26(2) of the Civil Procedure Act is applicable to give effect to the judgment delivered on February 28, 2020. The plaintiff’s counsel on the other hand submitted that the issue for determination is whether the applicable rate of interest at court rates is 12% or 6%.

11. I have gone through the judgment delivered herein by judge PJ Otieno on February 28, 2020 and found that at paragraph 55(c), he awarded the plaintiff interest at court rates from the date of loss until payment in full. The learned judge at paragraph 55(d) of the said judgment also awarded the plaintiff costs of the suit and interest therein at court rates. The issue then that arises for determination is whether the applicable interest at court rates herein is 12% or 6%.

12. The Civil Procedure Act, cap 21 Laws of Kenya provides for interest under section 26 as hereunder-(1)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 principal sum adjudged from the date of the suit to the date of the decree in addition to any interest adjudged on such principal sum 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 date of the decree to the date of payment or to such earlier date as the court thinks fit.(2)Where such a decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 per cent per annum.”

13. The defendant’s counsel submitted that the plaint and the decree arising from the judgment are silent with respect to payment of interest, and as such, section 26(2) of the Civil Procedure Act is applicable. He maintained that the interest rate applicable is 6%. The plaintiff’s counsel submitted that in the judgment delivered on February 28, 2020, the court was categorical in ordering payment of interest at court rates until payment in full. He further submitted that the conventional rate of interest that courts have consequently applied is 12%.

14. In my view, the judgment that was delivered on February 28, 2020, was clear that the award of interest was for the decretal sum together with costs at court rates. I therefore agree with Mr Khagram that the said judgment was not silent with respect to the payment of interest, since the court was very specific that it awarded the plaintiff interest at court rates. In the absence of any ambiguity in the judgment in regard to the interest rate to be applied, 26(2) of the Civil Procedure Act is not applicable.

15. It is my finding that the case of BOG Tambach Teachers Training College v Mary Kipchumba (supra) relied on by the defendant’s counsel in support of their submissions that the applicable interest rate herein is 6% is distinguishable since in the said case, the trial court gave judgment in the various amounts for the respective suits plus costs and interest without indicating any rate of interest.

16. The Court of Appeal in the case ofHighway Furniture Mart Limited v Permanent Secretary Office of the President & another[2006] eKLR held that-“The relief claimed by the appellant was specifically pleaded in paragraph 3 (1) of the plaint “as the principal sum of Shs 11,257,118/= together with interest thereon at court rate from the date of the plaint until payment in full”. The Chief Justice from time to time fixes the ceiling of the court rate interest under section 26 of the Civil Procedure Act. The prevailing court rate is 14% pa which is the rate applied by Okwengu J.”

17. In the case of Alba Petroleum Limited v Total Marketing Kenya Limited (supra) which has been relied on by both counsel herein, the Court of Appeal in determining the interest rate applicable held that-“In the final analysis, this appeal is partially successful on the issue of rate of interest. Guided by case law, the respondent is entitled to the court rate of interest with effect from the date of filing suit. The court rate of interest at the time of the impugned judgment was 14% per annum…” (emphasis added).

18. The Chief Justice issued practice directions to standardize practice and procedures in the High Court on January 11, 2022, at paragraph 38 on review of court Interest Rates, The Chief Justice directed that-“Where a decree is silent with respect to the payment of interest on such aggregate the court shall be deemed to have ordered interest at 14% per annum or as the Chief Justice will direct from time to time”

19. It is therefore evident that there exist conventional court interest rates at any particular time that courts apply. The judgment herein was delivered on February 28, 2020 before the aforementioned directions of January 11, 2022 were issued. This court shall therefore apply the practice directions issued on March 16, 1982 where the then Chief Justice Simpson Ag directed that-“The civil procedure act (cap 21 laws of Kenya) section 26 enables the court to order interest on the principal sum adjudged in a decree both before and after the date of the decree to be paid at such rate as the court deems reasonable. In the absence of any valid reason for ordering a higher or lower rate of interest, the rate of interest should now be 12%.”

20. From the above practice directions, it is apparent that the applicable interest court rates in the judgment delivered on February 28, 2020 by PJ Otieno J is 12%. I therefore hold that shall be the interest rate to be applied in this matter.

It is so ordered.

DATED, SIGNED AND DELIVERED AT MOMBASA ON THIS 7TH DAY OF OCTOBER, 2022. Ruling delivered through Microsoft Teams online Platform.NJOKI MWANGIJUDGEIn the presence of:Mr Khagram for the plaintiffMr Khanna h/b for Ms Wanjiku Mohamed for the defendantMr Oliver Musundi- Court Assistant.