Telcom Kenya Limited as Successor to Kenya Posts & Telecommunications Corporation Under Legal Notice No. 158 of 1999 v Paul Gachanga Ndarua [2012] KECA 19 (KLR)
The bottom line
#Kenya's Court of Appeal ruled you cannot get a judgment for interest without a full trial, reversing a Kshs 53 million award.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the learned Judge erred in striking out the appellant's defence to the amended plaint and entering judgment on admissions on the claim for interest
- 2.Whether there were triable issues as to the respondent's entitlement to, and the rate of, interest on the principal sum where no contract for interest was proved
- 3.Whether the appellant's settlement and payment of the principal sum took the claim out of the one-year limitation period under section 109(b) of the Kenya Posts & Telecommunications Act, such that the Limitation of Actions Act (including section 23) applied
Key legal issues
#Whether the claim for interest disclosed triable issues such that the defence to the amended plaint should not have been struck out
Yes. There was no evidence of a contractual basis for interest, the invoices did not reflect interest, and the rate was not agreed; the denial of liability for interest raised an arguable issue for full hearing.
The interest claim was tabulated in an amended plaint filed over four and a half years after the original plaint. No contract, custom or agreement on interest or its rate was proved, and the invoices carried no interest element. The defence expressly denied liability for interest. These were arguable matters that could only be resolved after full trial with evidence and cross-examination; striking out the defence deprived the appellant of that opportunity.
Whether payment of the principal sum removed the defence of limitation under section 109(b) of the Kenya Posts & Telecommunications Act
This was itself a triable issue that should have been fully heard; the Court declined to determine it.
The appellant argued that the plaint, filed well beyond the one-year limitation period in section 109(b), was time-barred, and that part payment under section 23 of the Limitation of Actions Act could not revive a claim under the later Act. The Court held that whether an admission or settlement of the principal took the claim outside section 109 and engaged the Limitation Act was an arguable issue requiring full hearing.
The principles governing striking out of pleadings
The Court adopted the settled D.T. Dobie principles: the court should be very reluctant to strike out a pleading and should aim at sustaining rather than terminating a suit.
Applying D.T. Dobie & Company (Kenya) Ltd v Muchina and its own decision in Bakari Ali Ogada v Unilever Kenya Ltd, the Court reaffirmed that the striking-out power must be exercised only after considering all facts, without embarking on the merits, and that courts should encourage resolution of disputes on the merits and not easily strike out pleadings unless there is good reason.
Legal principles established
#- The striking-out jurisdiction is to be exercised reluctantly; a suit or defence should only be struck out if it is beyond redemption, and disputes should where possible be heard on their merits
- At common law, interest is payable only where agreed as a matter of contract or in specified circumstances such as custom and usage; the existence, entitlement to and rate of interest on a debt are triable issues requiring a full hearing
- Payment or settlement of the principal debt does not, without more, constitute an admission of liability to pay interest; principal and interest are separate claims
Court orders
#- 1.The appeal is allowed
- 2.The decree of the High Court (Aluoch, J. striking out the defence and entering judgment on admissions for interest of Kshs.53,068,872/45) is set aside
- 3.The suit be remitted to the High Court to be fully heard
- 4.Costs of the appeal and of the High Court to be paid by the respondent to the appellant
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 2863 of 1996
- Jurisdiction invoked
- First appellate jurisdiction under the Constitution over appeals from the High Court (judgment delivered as 'JUDGMENT OF THE COURT'); the judgment does not cite a specific appellate provision
Relief refused
#The respondent's request that the appeal be dismissed and the judgment on admissions for interest be upheld
The Court found triable issues on both the claim for interest and the limitation defence which required a full hearing
Costs
Costs of this appeal and of the High Court to be paid by the respondent to the appellant.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
the court should aim at sustaining rather than terminating a suit. A suit should only be struck out if it is so weak that it is beyond redemption and incurable by amendment.
The courts should not easily strike out pleadings, unless there is a good reason to do so.
the position at common law is that where interest is not agreed as a matter of contract it is not payable except in certain specified circumstances which include custom and usage.
In the event, the appeal is allowed, the decree of the High Court is set aside. Let the suit be fully heard by the High Court. Costs of this appeal and of the High Court to be paid by the respondent to the appellant.
Issues in the judgment
#The judgment renders the Cap reference to the Kenya Posts & Telecommunications Act inconsistently, as Cap 411 in most passages and Cap 419 in counsel's submissions
The respondent's amended plaint contains an apparent typographical error where it states 'The Plaintiff has failed or refused to pay (sic)' immediately after alleging the defendant refused to pay
The quoted prayer in the amended plaint repeats paragraph (d) and inserts a '(d) (a)' alternative, indicating a drafting irregularity in the pleading as reproduced
The coram heading spells the case number as 'CIVIL APPEAL (APPLICATIO) NO. 237 OF 2003', an apparent typographical error for 'APPLICATION'
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Telcom Kenya Limited as Successor to Kenya Posts & Telecommunications Corporation Under Legal Notice No. 158 of 1999 v Paul Gachanga Ndarua [2012] KECA 19 (KLR)", Case Analysis (2012). Civil Appeal (Application) No. 237 of 2003. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2012/19/eng@2012-05-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.