Kenya Commercial Bank Limited & another v Samuel Kamau Macharia & 2 others [2008] KECA 334 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that paying a lawful debt under a voluntarily signed deed is neither economic duress nor unjust enrichment, reversing a Shs.56 million award against the bank.
What this practically means
#Executive summary
#Key legal issues
#Economic duress
The doctrine is recognised in Kenyan law but was not made out on the facts; the respondents executed the Deed voluntarily, through counsel, without protest, and affirmed it by payment.
The court reviewed English and Commonwealth authority (Occidental, North Ocean Shipping, Pao On, Universe Tankships, Dimskal, Barton) and accepted that economic duress can vitiate consent and is a doctrine Kenyan law ought to develop. However, on the facts the respondents were represented by eminent counsel, raised no protest, entered the Deed after negotiation, and affirmed the contract by paying under it without seeking rescission. Mere inequality of bargaining power and the presence of a Permanent Secretary whose intervention the respondents themselves sought did not amount to coercion of the will.
Unjust enrichment / restitution
The doctrine requires enrichment of the defendant at the plaintiff's expense where it would be unjust to retain the benefit; it does not apply where the payment discharges a valid, honest claim for a just debt.
Adopting Fibrosa and Goff & Jones' three-part test, the court held that payment made in performance of a valid obligation, in submission to an honest claim, is not restitutionary. The respondents acknowledged a debt of Shs.101,681,369.94 in the Deed of 17th July 1989, so the appellants received no more than their entitlement and were not unjustly enriched.
Role of the Government / Mr. Letting
The trial judge erred in finding that the Government or Mr. Letting exerted illegitimate pressure; the correspondence shows Macharia himself solicited their intervention.
The court re-evaluated the correspondence and found Macharia repeatedly wrote to Mr. Letting and the President seeking intervention to recover his company, while there was no evidence of threats, harassment or coercion by Mr. Letting, who was not called to testify. Involving the Government, which was not party to the transaction, was at Macharia's initiative and created no duress colore officii.
Effect of the Deed of 17th July 1989
The Deed constituted a binding contract in which the respondents accepted the accounts and absolved the debenture-holders of all claims; the Shs.110 million paid was lawfully due.
The respondents did not produce any agreement or accounts at trial verifying that liability was limited to Shs.54 million; the correspondence shows the proposed Shs.54 million settlement broke down and the counter-offer was withdrawn. The Deed, executed before the respondents' own advocates after negotiation, acknowledged the debt, was affirmed by payment, was never rescinded, and is conclusive between the parties.
Legal principles established
#- Payment of a just debt pursuant to a validly executed deed cannot constitute unjust enrichment.
- Economic duress requires a coercion of the will vitiating consent; commercial pressure alone is insufficient, and the court looks to protest, availability of an alternative course, independent advice and steps to avoid the contract.
- An executed deed acknowledging indebtedness and absolving the counterparties of any claims binds the parties and is not open to contradiction by oral evidence.
- An appellate court interferes with a trial judge's finding of fact only where it is based on no evidence, a misapprehension of the evidence, or wrong principles.
Court orders
#- 1.Judgment of the superior court delivered on 23rd January 2003 set aside
- 2.Nairobi High Court Civil Case No. 1263 of 1992 dismissed with costs to the appellants and the third respondent
- 3.Notice of Cross-Appeal dismissed
- 4.Notice of Grounds of Affirming the Decision dismissed
- 5.Appellants and third respondent awarded costs of the appeal and of the Notices of Cross-Appeal and of the Grounds of Affirming the Decision
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1263 of 1992
- Jurisdiction invoked
- First appellate jurisdiction over the High Court under the Constitution and the Appellate Jurisdiction Act (as a first appeal from the High Court)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- LTI Kisii Safari Inns Ltd & 2 others v Deutsche Investitions-Und Enwicklungsgellschaft (‘Deg’) & others [2011] KECA 1 (KLR)[2011] KECA 1 (KLR)18 Nov 2011followed
Cite this brief
#Cite this brief
Caselaw, "Kenya Commercial Bank Limited & another v Samuel Kamau Macharia & 2 others [2008] KECA 334 (KLR)", Case Analysis (2008). Civil Appeal No. 181 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2008/334/eng@2008-07-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.