Savings And Loan Kenya Limited v Onyancha Bw’omote [2016] KECA 716 (KLR)
The bottom line
#Kenya's Court of Appeal ruled a bank can recover money under-collected due to its own clerical mistake, though interest was limited.
What this practically means
#Executive summary
#Key legal issues
#Whether the appellant's erroneous advice as to the balance due was a mistake of fact or of law
The appellant's failure to check the second loan account, resulting in its receiving less money than it was owed, was a mistake of fact, not of law
The court found the appellant's staff either were unaware of, or forgot, the second account when advising the balance. The mistake concerned the existence of accounts and the quantum of the unpaid balance rather than any question of law, and was made in a genuine belief that the figure advised was correct.
Whether the mistaken omission was recoverable despite the discharge of the charge and the respondent's subsequent dealing with the property
The principal sum in the second loan account remained recoverable because the discharge resulted from the appellant's mistake and the respondent was unjustly enriched, but recovery was limited to the principal and interest only to the date of discharge
The court held the respondent benefited by not paying money he owed in the second account and by receiving the discharge before full indebtedness was discharged. The respondent knew of the second account from continuing bank statements. Equity, however, forbade making the respondent bear interest that accrued only because of the appellant's mistake.
Whether the High Court was right to apply estoppel against the appellant
The High Court's estoppel finding was displaced; the appellant's own negligence did not amount to the misrepresentation or breach of duty needed to found an estoppel
Relying on Halsbury's Laws of England and United Overseas Bank v Jiwani, the court held that mere negligence of the payer is no bar to recovery; an estoppel requires breach of duty or misrepresentation that misled the payee into changing position, and the mere impossibility of restoration is not a bar.
Legal principles established
#- The party claiming money paid by mistake bears the burden of showing that the payment was due to a mistake of fact, on a balance of probabilities
- Money paid under a mistake of fact is prima facie recoverable where the payer did not intend the payee to have the money, no good consideration was given, and the payee has not in good faith changed position
- Mere negligence on the part of the payer is not a bar to recovery of money paid by mistake; only breach of duty or misrepresentation causing the payee to change position can found an estoppel
- The fact that the payee cannot be restored to his original position is not of itself a bar to recovery of money paid under a mistake
Court orders
#- 1.Appeal allowed and the High Court judgment set aside
- 2.Judgment entered for the appellant that the respondent shall pay the sum of Shs.678,628.40 plus interest at 26% per annum for the period only between 11th May 1999 and 31st May 1999 when the security was discharged
- 3.Interest at court rates on the judgment sum (Shs.688,296/=) from the date of the judgment until full payment
- 4.Each party to pay its own costs of the appeal
- 5.Costs of the High Court to be paid by the appellant to the respondent as per the order of the trial judge
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 212 of 2002
- Jurisdiction invoked
- First appeal to the Court of Appeal from the High Court under the Constitution and the Appellate Jurisdiction Act
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (3)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kenya Bureau of Standards v New Italycor Limited[2020] KEHC 2482 (KLR)27 May 2020
- Postal Corporation of Kenya & Another v Aineah Likumba & 11 Others [2017] KECA 127 (KLR)[2017] KECA 127 (KLR)8 Dec 2017
- Priscilla Jeruto Kisoso v Kiporot Ole Totona & 3 others [2017] KEELC 3168 (KLR)[2017] KEELC 3168 (KLR)16 Mar 2017distinguished
Cite this brief
#Cite this brief
Caselaw, "Savings And Loan Kenya Limited v Onyancha Bw’omote [2016] KECA 716 (KLR)", Case Analysis (2016). Civil Appeal No. 70 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/716/eng@2016-03-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.