1. I have considered the Notice of Preliminary Objection dated 17th February, 2021, the submissions in support and opposition to the same, and the applicable law.
2. The basis of the objection is that this court has no jurisdiction to deal with the present matter because the same falls afoul of section 4 of the Limitations of Actions Act.
3. An objection on the ground of jurisdiction is ordinarily a pure point of law subject to the test in the case of Mukisa Biscuit Manufacturing Co. Ltd -vs- West End Distributors Ltd (1969) EA 696, where the court held as follows:
“so far as I am aware, a preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of the pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the Court, or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration”
4. In support of the said objection, the Applicant submitted that the Plaintiff advanced to the Defendant a loan facility by way of a letter of offer dated 24th February, 2011, and that therefore, the cause of action arose in the year 2011.
5. He contended that the Plaintiff failed to seek an extension of time under the said Limitation of Actions Act, and accordingly, Counsel was of the view that the suit is time barred.
6. On the other hand, the Plaintiff submitted that the provisions of the Limitation of Actions Act is qualified by Section 23 (3) which is instructive on when a cause of action on a liquidated claim arises, and provides that:
“Where a right of action has accrued to recover a debt or other liquidated pecuniary claim, or a claim to movable property of a deceased person, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment:
Provided that a payment of a part of the rent or interest due at any time does not extend the period for claiming the remainder then due, but a payment of interest is treated as a payment in respect of the principal debt.” (Emphasis mine)
7. The Plaintiff therefore submitted, that determination of time of limitation of actions in a claim for liquidated pecuniary i.e. recovery of loan debts by Banks is calculated from the date the defaulting borrower makes his/her last payment, or from the last time that a payment of interest is debited from the account of the borrower.
8. Counsel relied on the decision of the court in Rahman Shire v. Thabiti Finance Co. Limited CA (Nrb) No. 76/2000 (as cited with approval in Telkom Kenya Limited v Kenya Railways Corporation [2018] eKLR) where the Court of Appeal stressed that the effect of partial repayment of a debt is to give rise to “fresh accrual of the right of action” in computation of limitation, and stated that:
“[These words] leave no doubt that the legislature intended that any acknowledgement or part payment not only extends the limitation period but also revives an otherwise statute-barred action falling within that provision.”
9. Based on the above it is evident to me that when a debtor pays interest on the principal amount, a new cause of action arises at that point.
10. The above position was also affirmed in Co-Operative Bank of Kenya Limited V Pius Kimaiyo Langat [2012] eKLR, where the court stated:
“It should be recalled that in normal circumstances, if a bank lends money to its customer, the bank’s right to recover the loan is not barred by limitation, some six years after the money was lent. Ordinarily, loans attract interest, for it is by charging such interest that lenders are able to remain in business. Now, whenever interest is debited to the customer’s account in accordance with the agreement between the lender and the said customer, a new cause of action accrues.”
11. According to the Plaintiff the last payment was made, and the last interest was debited on 31 May, 2017. Counsel pointed out that the suit was filed on 11th November, 2020, which is within the 6- year limitation period provided under the Limitation of Actions Act.
12. Having considered the above, it is evident to me that the issues raised in the Preliminary Objection raise matter of facts, and not law, that need to be proved by the production and interrogation of evidence.
13. This is especially so, because I am not persuaded by Defendant’s argument that the cause of action arose from the date of the letter of offer. This position is not tenable. Ordinarily a cause of action arises after breach of an agreement and not before. Prior to any breach of the same, there simply is no cause of action.
14. Additionally, guided by the law as set out above, I am persuaded that in matters such as the present one, the cause of action arises from the date of default after the last payment to the Bank, or last date upon which interest is debited from the borrowers account. I ask myself, what was that date? To ascertain the same, is a question of fact, and the appropriate date is an issue in contestation between the parties.
15. On the above point, I reiterate that based on the test set out in Mukisa Biscuits (supra) a Preliminary Objection must first, raise a point of law based on ascertained facts and not on evidence:
“In the words of Sir Charles Newbold P, at page 701,
...A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.” (emphasis mine)
16. Based on the reasons above, I find that the Preliminary Objection dated 17th February, 2021 is without merit and the same is dismissed with costs.