The appellant had in the lower court sued the respondent for recovery of Kshs 643,327.00 being amount lost due to negligence of the respondent in allowing people who were not directors of the plaintiff to operate an account in the name of the appellant. The trial Magistrate in judgment delivered on 23-06-2022 awarded the appellant special damages of Kshs 643,327.00 with interest at court rates from the date of the judgment.
The appellant was dissatisfied with the aspect of interest and has brought this appeal citing the following grounds;
The learned Magistrate erred in law and fact in ordering that interest was to accrue on the award for special damages, which stood undisputed, from the date of judgment.
The learned Magistrate erred in law by failing to consider that this was a liquidated claim for the sum of Ksh. 643,327.00 and simple interest thereof should be calculated at the court rate of 14 per cent from 12 th October 2006, when four cheques drawn in favour of the appellant were fraudulently credited into bank account number 11104533 held with the respondent, until payment in full.
The learned Magistrate erred in law and fact in failing to consider the evidence relevant authorities and submissions by the appellant thus arriving at a wrong conclusion with respect to the award of interest on the liquidated claim.
Such other grounds and reasons to be adduced at the hearing hereof.
The appeal was canvassed by way of written submission with the appellant’s being dated 10-08-2023 and the respondent being dated 15-08-2024. The appellant also filed supplementary submissions dated 6-11-2024. I have read the three sets of submissions, the record of appeal and the lower court’s judgment. The only issue in this appeal is the rate and the period of interest.
Whether or not to award interest is a discretionary decision of the trial court. It is trite that an appellate court should not interfere with discretion of the trial court unless it is shown that the decision was injudicious or prejudiced the party complaining in a material way that justifies interference. In this matter, the appellant has submitted that the rate of interest should have been 14 per cent and applied from the date the cause of action arose.
The appellant claims that it was denied use of its money from 12 th October 2006 when the last cheque was drawn in its favour and subsequently withdrawn by fraudsters. The justification for awarding interest is to compensate a party for the loss of use of their money. As much as the same is discretionary, a party has a right to know the reason for being denied what they are reasonably entitled to. The trial Magistrate did not state in her judgment the reason for awarding interest from the date of the judgment and not from the date of filing the suit as it is judicially established.
In my opinion where a party is successful, they can only be denied interest on the decretal sum for good reasons which should be explained. Judicial authorities have established that interest should ordinarily be awarded from the date of judgment for general damages and from the date of filing suit for special damages. Where a court decides to depart from this principial, it must do so for good reasons. I am persuaded by the decision of Justice Majanja in Mary Okelo Ondondi v South Nyanza Sugar Company Ltd (2018) KEHC 1732 (KLR) where he held that;
‘Since the appellants claim is for special damages, the appellant would ordinarily be entitled to interest on that claim from the date of filing suit until payment in full.’
The appellant claims that the interest should have accrued from the date the cause of action arose. I take position that that, such order will be justified where the cause of action is contractual or the circumstances are peculiar which is not the case in this matter. The loss was not as a result of breach of contract but negligence. In a matter where the cause of action is based on negligence, the right to get an award does not accrue until the party sets recovery proceedings in motion in form of filing suit. In this regard, I am inclined to disturb the order on the period of interest by ordering that the same shall be calculated from the date of filing the suit in the trial court.
The appellant’s quest for rate of interest at 14 per cent has not been justified. As stated above, the cause of action was not based on a contract between the parties. Unless the rate of interest is contractual, the court would have no basis for awarding rates higher than the court rates.
In the final analysis, I find that this appeal partially succeeds and I make orders as follows;
The principal decretal sum in Milimani Chief Magistrate’s Court civil case number 4232 of 2011 shall attract interest at court rates from the date of filing the said suit until payment in full.
There shall be no orders as to costs of this appeal.
Dated, signed and delivered at Nairobi this 11 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Kiprop holding brief for Miss Musau for the appellant and in absence of the respondent.
The appellant was dissatisfied with the aspect of interest and has brought this appeal citing the following grounds;
The learned Magistrate erred in law and fact in ordering that interest was to accrue on the award for special damages, which stood undisputed, from the date of judgment.
The learned Magistrate erred in law by failing to consider that this was a liquidated claim for the sum of Ksh. 643,327.00 and simple interest thereof should be calculated at the court rate of 14 per cent from 12 th October 2006, when four cheques drawn in favour of the appellant were fraudulently credited into bank account number 11104533 held with the respondent, until payment in full.
The learned Magistrate erred in law and fact in failing to consider the evidence relevant authorities and submissions by the appellant thus arriving at a wrong conclusion with respect to the award of interest on the liquidated claim.
Such other grounds and reasons to be adduced at the hearing hereof.
The appeal was canvassed by way of written submission with the appellant’s being dated 10-08-2023 and the respondent being dated 15-08-2024. The appellant also filed supplementary submissions dated 6-11-2024. I have read the three sets of submissions, the record of appeal and the lower court’s judgment. The only issue in this appeal is the rate and the period of interest.
Whether or not to award interest is a discretionary decision of the trial court. It is trite that an appellate court should not interfere with discretion of the trial court unless it is shown that the decision was injudicious or prejudiced the party complaining in a material way that justifies interference. In this matter, the appellant has submitted that the rate of interest should have been 14 per cent and applied from the date the cause of action arose.
The appellant claims that it was denied use of its money from 12 th October 2006 when the last cheque was drawn in its favour and subsequently withdrawn by fraudsters. The justification for awarding interest is to compensate a party for the loss of use of their money. As much as the same is discretionary, a party has a right to know the reason for being denied what they are reasonably entitled to. The trial Magistrate did not state in her judgment the reason for awarding interest from the date of the judgment and not from the date of filing the suit as it is judicially established.
In my opinion where a party is successful, they can only be denied interest on the decretal sum for good reasons which should be explained. Judicial authorities have established that interest should ordinarily be awarded from the date of judgment for general damages and from the date of filing suit for special damages. Where a court decides to depart from this principial, it must do so for good reasons. I am persuaded by the decision of Justice Majanja in Mary Okelo Ondondi v South Nyanza Sugar Company Ltd (2018) KEHC 1732 (KLR) where he held that;
‘Since the appellants claim is for special damages, the appellant would ordinarily be entitled to interest on that claim from the date of filing suit until payment in full.’
The appellant claims that the interest should have accrued from the date the cause of action arose. I take position that that, such order will be justified where the cause of action is contractual or the circumstances are peculiar which is not the case in this matter. The loss was not as a result of breach of contract but negligence. In a matter where the cause of action is based on negligence, the right to get an award does not accrue until the party sets recovery proceedings in motion in form of filing suit. In this regard, I am inclined to disturb the order on the period of interest by ordering that the same shall be calculated from the date of filing the suit in the trial court.
The appellant’s quest for rate of interest at 14 per cent has not been justified. As stated above, the cause of action was not based on a contract between the parties. Unless the rate of interest is contractual, the court would have no basis for awarding rates higher than the court rates.
In the final analysis, I find that this appeal partially succeeds and I make orders as follows;
The principal decretal sum in Milimani Chief Magistrate’s Court civil case number 4232 of 2011 shall attract interest at court rates from the date of filing the said suit until payment in full.
There shall be no orders as to costs of this appeal.
Dated, signed and delivered at Nairobi this 11 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Kiprop holding brief for Miss Musau for the appellant and in absence of the respondent.