- On 28th February 2020, the court (Tuiyott J., as he was then) delivered judgment in this matter where it allowed the Plaintiff’s prayer seeking “An order that the Defendant do render true and proper, complete and accurate accounts of the payments made and an order that any amount paid in excess of the lawful indebtedness be refunded to the Plaintiff.” The court then stated that once the accounts are prepared, then it can consider the Plaintiff’s prayer that seeks a declaration that he be discharged from his financial obligation under the charge and the chattels mortgage and that the Defendant be compelled to discharge and release the title on Land Reference Number Nyeri/Warazo/124 and all the moveable assets thereon unconditionally.
- The Defendant has prepared and filed the statement of account dated 12th April
2021 for the period between 3rd February 2004 and 31st July 2021 in which statement the Defendant claims that a sum of Kshs.1,831,680.00/= remains owing by the Plaintiff. In response to this statement, the Plaintiff filed Grounds of Opposition dated 23rd February 2022 and an affidavit sworn on 9th June 2022 by WILFRED ABINCHA ONONO, the Managing Consultant of Interest Rates Advisory Center (IRAC). The court heard oral submissions from the parties’ respective counsel on this issue and having considered the same, I take the following views on the matter.
- First, whereas the Plaintiff has stated that the Statement of Account was not filed within 60 days as was ordered by the court and thus ought to be struck out, I find no prejudice or injustice in determining the merits of the said statement as the parties have had an opportunity to respond and submit on the same as such a determination will bring closure to this matter. Second, at Para. 51 of the Judgment, the court held that in making the statement of accounts, “…the Defendant must pay heed to all observations made by this Court which includes, but are not be limited to:-
a) That the first instalment was due on 28th February 2005.
b) That the Defendant was at liberty to charge compound interest at 10% per annum on any sum that was outstanding after an instalment was due.
- In the judgment, the observed that there was fairly strong evidence that there
was default on the first repayment due on 28th February 2005. On this date, the Plaintiff ought to have paid Kshs.178,200.00/= (14,850.00 x 12) but had only paid Kshs.49,700.00/= and that once there was default then the Defendant was entitled to charge compound interest at 10% on the sum that remained unpaid. From the Statement of Account, it is clear that there was no credit payment made by the Plaintiff as at that repayment date which settles the position that the Plaintiff was indebted to the Defendant on this date and the latter was entitled to charge compound interest at 10% per annum on this sum that remained outstanding. It is this reason that made the court reject WILFRED ABINCHA ONONO’S recalculation report dated 21st June 2012 as the Report did not factor in the compound interest when there was default.
- I see that Mr. ONONO has prepared another report and this time, he is challenging the Defendant’s instant statement of account. He states that the Defendant has overcharged interest and that the Plaintiff is not indebted to the Defendant but that he had paid Kshs.639,983.49/= in excess and that the Defendant ought to refund this sum. However, I note that he has still applied a flat interest rate of 10% throughout the recalculation period and he has not factored in the compound interest when the Plaintiff was at default. Therefore, the report and conclusions therein are flawed as it neither factors in the Plaintiff’s true indebtedness nor does it factor the compounded interest that the Defendant
was entitled to charge upon default.
- Third, whereas I note that the Plaintiff laments that the court did not give due regard to Mabeya J.’s ruling of 3rd December 2012 on the difference between loan fees and late fees, the court, at Para.33 of the judgement has already pronounced itself on the issue by stating that this was a tentative view and there was no final determination of the legality or otherwise of the late fee. I reiterate what Tuiyot J., (as he was then) stated therein that a provisional finding made in determination of an interlocutory application does not bind a trial Court when making a final determination and that Mabeya J., was clear that the final call on the matter would be made by the Court after the trial. As the court has already rendered itself on the issue, any dissatisfaction by the Plaintiff can only be determined on appeal.
- Fourth, while it is true that the parties presented two different analyses over the same loan account, the court proposed the filing of the present statement of account by the Defendant to settle the issue and to determine whether the Plaintiff is truly indebted to it. Thus, the Plaintiff cannot seek to dwell on the differences of the previous reports when the Defendant has prepared a new one as ordered by the court. Fifth, as the present statement demonstrates the indebtedness and as the court held that if there was default, then the Defendant would be entitled to seek a reimbursement of costs properly and reasonable incurred in its effort to recover the debt, I see no fault in the Defendant seeking costs such as Legal, Inspection, Foreclosure and Auctioneer fees as the same were properly incurred and the Plaintiff was in default. Further, as the debt amount remains unpaid, it follows that interest on the arrears continues to apply and the debt continues to balloon. It is a misapprehension for the Plaintiff to think that the interest due on the outstanding debt will cease to apply because the court ordered a filing of accounts. The said interest on the unpaid sums continue to apply until the outstanding debt is repaid in full and there was no fault in preparing accounts up to 31st July 2021 as this presented the latest status of the Plaintiff’s loan account.
CONCLUSION AND DISPOSITION
- For the above reasons, I find that prayer (e) of the Plaintiff’s plaint that sought his discharge from the facilities with the Defendant cannot be granted as he remains indebted as per the statement of account dated 12th April 2021. With that, the final orders of the court are that the Plaintiff’s suit fails in its entirety and is hereby struck out with costs being awarded to the Defendant. It is so ordered.
DATED, SIGNED AND DELIVERED VIRTUALLY at NAIROBI this 5TH DAY OF FEBRUARY 20251
………………………………..
J.W.W. MONG’ARE
JUDGE
In the Presence of:-
- Mr. Kariuki for the Plaintiff/Applicant.
- Mr. Mainga for the Defendant/Respondent.
- Amos- Court Assistant