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Court of AppealDismissedCivil Appeal No. 56 of 2016

Kenya Commercial Bank v Isaac Ingati Abong’ & Another [2020] KECA 792 (KLR)

Court of Appeal of Kenya
3 April 2020
2,928 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that pension money already deposited into a deceased person's bank account belongs to their estate, not the pension scheme.

What this practically means

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Executive summary

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The respondents, administrators and beneficiaries of the estate of Alice Oriedo Akeng'o, obtained a High Court order requiring Kenya Commercial Bank and the administrator of the KCB Staff Pension Fund to disclose and pay monies due to dependants under the Trust Deed. The bank appealed on 16 grounds, contending among other things that pension funds do not form part of a deceased's estate under Section 36A of the Retirement Benefits Act, that the High Court lacked jurisdiction, that the Scheme was a distinct legal entity, and that orders could not issue against the administrator personally. Writing the judgment of the court, Kiage JA held that the appeal proceeded on a misapprehension: the respondents claimed money already disbursed into the deceased's account, not benefits still accruing from the Scheme. Section 36A addresses monies payable or accruing to beneficiaries, not funds already paid out. Since the account held Kshs. 2,111,447.35 at the deceased's death, those funds were her free property under Section 3 of the Law of Succession Act. The court identified a lacuna - neither the RBA nor the Trust Deed provides that death automatically lapses the pension contract - so the bank had no legal right to debit the account. Following its own decision in the Ombogo case on the meaning of 'free property', the court held the beneficiaries entitled to the money, to be distributed under the LSA rather than the Trust Deed and Rules. The order against the administrator was properly addressed to his office. The court varied the High Court orders accordingly but dismissed the appeal in its entirety with costs. The judgment was delivered under Rule 32(3), Odek JA having died before signing it.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the pension money already deposited into the deceased's account formed part of the deceased's estate.
  2. 2.Whether the learned judge erred by issuing the orders against the administrator of the Scheme.

Key legal issues

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01

Whether money paid into the deceased's account before her death formed part of her estate

Holding

It did; Section 36A of the RBA covers only monies still accruing or payable to beneficiaries, not funds already disbursed.

Reasoning

The respondents were not claiming benefits from the Scheme but money already in the deceased's account at her death. The authorities relied on by the bank concerned funds still within the Scheme's control. The undisputed balance of Kshs. 2,111,447.35 stood in the deceased's account at her death, so the funds were her free property as defined in Section 3 of the LSA and her beneficiaries were entitled to them.

p. 3
02

Whether the bank could debit the account on the ground that pension entitlement lapsed at death

Holding

No; neither the RBA nor the Trust Deed and Rules provide that death automatically lapses the payment, so the debit lacked legal basis.

Reasoning

The court identified a legal lacuna: no provision in the RBA or the Trust Deed and Rules states that the death of a pensioner automatically lapses the contract. Without such a provision the bank, on behalf of the Scheme, had no legal right to debit the deceased's account, and the funds could only be categorised as part of her estate.

p. 3
03

Whether orders could properly issue against the administrator of the Scheme

Holding

Yes; the order was addressed to his office, not his personal capacity.

Reasoning

The administrator is an appointee of the trustees who run the Scheme for the benefit of the appellant. The order directed the office rather than the individual, so the objection that adverse orders were made against a person unheard or in a personal capacity did not succeed.

p. 4

Legal principles established

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  • Pension monies already disbursed into a deceased pensioner's account before death are no longer governed by the Scheme's rules or the Retirement Benefits Act but form part of the deceased's free estate distributable under the Law of Succession Act.

Court orders

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  1. 1.Appeal dismissed in entirety with costs
  2. 2.Money subject of the appeal to be credited back into the deceased's account and administered by the respondents in accordance with the Law of Succession Act, not the Trust Deed and Rules
  3. 3.Orders of the High Court altered to the extent that distribution shall be under the LSA rather than the Trust Deed and Rules

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority

Wrote the judgment

OD
majority
On appeal from
High Court of Kenya at Kakamega
Succession Cause No. 151 of 2009
Jurisdiction invoked
First appeal from the High Court sitting in succession matters under the Law of Succession Act (Section 47 of the LSA invoked below); appeal to the Court of Appeal under the Court of Appeal Rules.

Relief refused

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Appellant's prayer to set aside the High Court ruling

The court found the money in the deceased's account formed part of her estate and the administrator was properly ordered in his official capacity

p. 4

Costs

Appeal dismissed with costs (costs to the respondents).

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the result, this appeal fails in entirety and I would dismiss it with costs.
p. 4Disposition
As Asike Makhandia, JA agrees, it is so ordered.
p. 4Final orders
Therefore the said funds were no longer bound by the rules and regulations of the Scheme or the RBA. The funds were the property of and formed part of the estate of the deceased
p. 3Pension funds as part of the estate
The same should not be distributed in accordance to the Trust Deed and Rules but must be deposited back into the account and the respondents will administer it in accordance to the LSA.
p. 4Mode of distribution
It would seem to me that, however, herein lies the legal lacuna since the RBA and the Trust Deed and Rules do not have a provision clearly stating that the death of a pensioner automatically lapses the contract.
p. 3Legal lacuna on lapse at death

Issues in the judgment

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material

Bench listed as three judges but the judgment states Odek JA died before signing it, so only two judges signed; the panel composition and unanimity are therefore not fully verifiable from the judgment itself.

minor

Judgment uses first person singular ('I have considered the record') without a heading identifying the author, though Kiage JA's signature block and Makhandia JA's concurrence indicate authorship.

minor

Respondent's name appears as 'Caroline Ayoti Ariedo' in the title but 'Carolyne Ayoti Oriedo' in the body of the judgment.

minor

Deceased's name inconsistently rendered as 'Alice Oriedo Akeng'o' and 'ALICE ORIEDO AKONG'O' in the High Court orders.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kenya Commercial Bank v Isaac Ingati Abong’ & Another [2020] KECA 792 (KLR)", Case Analysis (2020). Civil Appeal No. 56 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/792/eng@2020-04-03

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.