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Court of AppealDismissedCivil Appeal 52 of 2005· [2006] KECA 190 (KLR)

Highway Furniture Mart Limited v Permanent Secretary Office of The President & another [2006] KECA 190 (KLR)

Court of Appeal of Kenya
9 June 2006
ROR. S. C. OmoloEOE. O. O'KubasuEGE. M. Githinji
3,620 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed courts can void a decree that adds interest never awarded in the judgment, even years later and on the court's own motion.

What this practically means

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Executive summary

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The appellant, Highway Furniture Mart Limited, obtained an exparte judgment from Juma J on 16th December 1998 against the Government for a balance of Shs.9,296,132 with costs and interest as prayed in the plaint. The plaint had mentioned 36% interest in the body but prayed only for interest at court rate. The decrees subsequently drawn included over Shs.30 million as interest at 36% from 1990, swelling the decretal sum to over Shs.48 million. Six years later the Attorney General sought review, alleging error apparent on the face of the judgment. Okwengu J dismissed the review, finding no error in the judgment, but suo motto invoked the court's inherent jurisdiction under Section 3A of the Civil Procedure Act and set aside the decree, ordering a fresh decree to be drawn in accordance with the judgment. The appellant appealed on three grounds, principally that the judge lacked jurisdiction to act suo motto after dismissing the application and had become functus officio. The Court of Appeal dismissed the appeal. It held that the 36% interest was neither prayed for, nor proved, nor awarded; that pre-suit interest is a matter of substantive law requiring contractual or other legal foundation absent here; and that a decree not conforming to the judgment is a nullity which the court may set aside ex debito justitiae, the judge not sitting on appeal over the judgment nor being functus officio. Costs were awarded to the respondent.

Key legal issues

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01

Whether the High Court's judgment of 16th December 1998 awarded interest at 36% per annum

Holding

The judgment did not award 36% interest; the rate was pleaded but not prayed for as relief, not proved in evidence, and could not be implied into a terse judgment.

Reasoning

The plaint's prayer was for interest at court rate, then 14%. The Managing Director gave no evidence justifying 36%. A claim of over Shs.30 million exceeding the principal threefold could not have been awarded without reasons. Okwengu J correctly construed Juma J's judgment as not awarding 36%.

p. 5
02

Whether pre-judgment interest at 36% was maintainable in law

Holding

Interest for the period prior to institution of suit is governed by substantive law and was not maintainable as there was no contractual stipulation, mercantile usage, statutory right or course of dealing.

Reasoning

Section 26(1) of the Civil Procedure Act, in pari materia with section 34 of the Indian Code of Civil Procedure, does not apply to interest prior to suit. Such interest is claimable only on agreement, mercantile usage (pleaded and proved), statute or implied course of dealing. The building contract provided no interest and none was proved.

p. 6
03

Whether the superior court had jurisdiction to set aside the decree suo motto after dismissing the review application

Holding

The court had inherent jurisdiction under Section 3A to set aside a decree that was a nullity because it did not conform to the judgment; the judge did not sit on appeal over Juma J and left the judgment intact.

Reasoning

The judge found no error in the judgment and dismissed review, but the decree included over Shs.30 million never awarded. A decree not in conformity with the judgment is liable to be set aside; the court is not functus officio in such circumstances and may act ex debito justitiae to prevent unjust enrichment at the expense of the respondent and public funds.

p. 6

Legal principles established

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  • A decree must agree with the judgment; a decree not in conformity with the judgment is a nullity and liable to be set aside, and a party cannot suffer for errors committed by the court.
  • The award of interest for any period prior to the filing of the suit is a matter of substantive law, not procedure, and must be founded on agreement, mercantile usage, statute or course of dealing.
  • A court is functus officio only where the decree conforms with the judgment; where the decree is a nullity the court retains inherent jurisdiction to set it aside, even suo motto.
  • Interest above the court rate claimed for a period before suit must be pleaded and proved as a substantive right; it is not awarded by implication.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal to the respondent
On appeal from
High Court of Kenya at Nyeri
H.C.C.C. No. 42 of 1998
Jurisdiction invoked
First appeal to the Court of Appeal against a ruling of the High Court (ruling on review/inherent jurisdiction under Section 3A of the Civil Procedure Act)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Highway Furniture Mart Limited v Permanent Secretary Office of The President & another [2006] KECA 190 (KLR)", Case Analysis (2006). Civil Appeal 52 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/190/eng@2006-06-09

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