Omega Chemical Industries Ltd & another v Barclays Bank of Kenya Ltd [2007] KECA 153 (KLR)
The bottom line
#Kenya's Court of Appeal cut Omega Chemical's KSh 1.8 million claim against Barclays to the KSh 509,692 currency loss it actually proved.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the bank was liable for the exchange loss suffered by Omega due to the delayed debiting of its account (not re-opened for lack of a cross-appeal)
- 2.Whether the appellants proved the claim of Shs.1,815,787/15 (the exchange loss of Shs.509,692/60 plus interest and penalties)
- 3.Whether the claim of Shs.56,914/15 for delay in forwarding two insurance claims was maintainable
- 4.Whether the 2nd appellant had locus standi in the suit
Key legal issues
#Effect of failure to file a cross-appeal on the bank's liability for exchange loss
The court could not re-open the issue of the bank's liability for the exchange loss because the bank did not file a cross-appeal against the trial Judge's finding of liability.
Rule 90(1) of the Court of Appeal Rules required the bank to file a Notice of cross-appeal if it wanted any part of the superior court's decision reversed. The trial Judge had found in favour of Omega on liability for the exchange loss. By not cross-appealing, the bank denied the Court of Appeal the chance to verify that finding, so the finding stands whether correct or otherwise.
Proof of the enlarged claim of Shs.1,815,787/15
Only the exchange loss of Shs.509,692/60 was sufficiently proved; the balance (interest and penalties) was not proved, so judgment was entered for the proved sum with interest at court rates from filing.
The trial Judge had found the bank liable for the exchange loss but declined judgment because the actual loss was not proved. On appeal, the court held the base loss of Shs.509,692/60 was proved and admitted, but the 27% interest rate applied in the appellant's own schedule had no concrete evidential support, and interest for 51 months could not be charged to the bank where the appellants themselves had not repaid the overdraft.
Maintainability of the insurance-delay claim of Shs.56,914/15
The claim failed for want of proof of computation and payment, absence of any established legal basis in contract or tort, and failure to prove the bank was solely to blame for the delay.
The claim concerned the bank's delay in forwarding two burglary-policy claims of Shs.155,722/95 whose proceeds were payable to the bank. The court found no evidence of how the interest claim was computed or paid, no demonstrated legal relationship giving rise to liability for delay, and contested evidence on responsibility for the delay.
Locus standi of the 2nd appellant
The 2nd appellant, a distinct legal entity from the company and joined only to seek an injunction over discharged security, had no locus standi and his suit was properly dismissed.
The transactions giving rise to both causes of action were between the bank and the first appellant company. The 2nd appellant was joined only because he wanted an injunction restraining the bank from selling his property charged as security; the charge had been discharged by the hearing and he did not pursue the claim.
Legal principles established
#- A respondent who wishes any part of a lower court's decision to be reversed must file a cross-appeal; absent a cross-appeal, an appellate court lacks jurisdiction to re-open findings that operated in the appellant's favour, and those findings stand whether correct or otherwise.
- A plaintiff must prove its monetary claim to the required standard; a court cannot conjure up interest rates and calculations on the plaintiff's behalf.
- On the letter of credit agreement, the applicable exchange rate is the rate at the date of payment to the supplier by the correspondent bank, so exchange loss from delayed debiting falls on the bank.
Court orders
#- 1.Appeal allowed to the extent that the judgment of the superior court dismissing the claim for Kshs.1,815,787/15 in its entirety is set aside
- 2.Judgment entered for the 1st appellant against the respondent for Shs.509,692/60 with interest at court rates from the date of filing the suit until payment in full
- 3.Half of the costs of the appeal and half of the costs in the superior court awarded to the 1st appellant
- 4.The 2nd appellant's appeal dismissed with costs to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1247 of 1996
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (appeal from the judgment and decree of the High Court); Rule 90(1) of the Court of Appeal Rules on cross-appeals
Relief refused
#Claim for interest and penalties inflating the loss of Shs.509,692/60 to Shs.1,815,787/15 (the difference beyond the proved exchange loss)
Not supported by concrete evidence of the loan, payment, interest rate or penalty calculations
Claim of Shs.56,914/15 for delay in forwarding two insurance claims
Not maintainable: no proof of computation or payment, no established legal basis in contract or tort, and no proof the bank was solely to blame for the delay
2nd appellant's claim and injunction to restrain the bank from realizing his property as security
The transactions were with the 1st appellant, a distinct legal entity; the charge had been discharged and the claim not pursued, so the 2nd appellant had no locus standi
Costs
Half of the costs of the appeal and half of the costs in the superior court awarded to the 1st appellant; the 2nd appellant's appeal dismissed with costs to the respondent.
Quotable passages
#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, we allow the appeal to the extent that we set aside the judgment of the superior court dismissing the claim for Kshs.1,815,787/15 in its entirety and in substitution therefor, enter judgment for the first appellant against the respondent for Shs.509,692/60 with interest at court rates from date of filing the suit until payment in full.
It follows therefore that we lack jurisdiction to re-open the issue of liability of the bank for the exchange loss incurred by Omega and that the findings of the superior court whether correct or otherwise must stand.
However, it was admitted that Omega infact incurred exchange loss. In our view, the loss of Shs.509,692/60 was sufficiently proved and 1st appellant was entitled to judgment for that sum with interest at court rates from the date of filing the suit.
It would be wrong to penalize the bank for default by appellants to pay the overdraft on the due date.
Thus the 2nd appellant had no locus standi in the suit and his suit was properly dismissed by the superior court.
Issues in the judgment
#The judgment is internally inconsistent about the date of the High Court decision: the heading states the judgment was dated 24th July 2001 while the body of the judgment states 24th July 2002.
The judgment inconsistently records the claimed total as Shs.1,875,787/15 in one passage and Shs.1,815,787/15 elsewhere, and at one point Kshs.1,855,787/15 (as quoted from the trial judgment).
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Omega Chemical Industries Ltd & another v Barclays Bank of Kenya Ltd [2007] KECA 153 (KLR)", Case Analysis (2007). Civil Appeal 276 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/153/eng@2007-12-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.