Lianard Holdings Limited v Kartar Singh Dhupar & Co. Ltd.
The bottom line
#Kenya's Court of Appeal confirmed a contractor could get quick judgment on certified construction payments, but the disputed interest rate had to go to trial.
What this practically means
#Executive summary
#Key legal issues
#Whether partial payment under an interim certificate precludes a dispute over the balance
Yes; partial payment with full knowledge of the alleged defects estops the payer from denying the balance absent adequate explanation.
The Court endorsed the High Court's finding that the appellant made partial payments on certificate number 1 with full knowledge of the alleged issues regarding materials, insurance and performance bonds. A project manager's letter acknowledging the certificate supported the conclusion that the claim under certificate number 1 raised no triable issue, justifying summary judgment on the balance.
Whether the applicable interest rate was determinable on summary judgment
No; the interest rate was a disputed issue requiring evidence and had to be determined at trial.
The respondent claimed a 20% rate while the appellant asserted the contractual rate varied between 14% and 17% depending on N.I.C Bank's prevailing rates. The Court found the applicable rate could not be properly ascertained without evidence being led, set aside the 17% rate, and remitted that question to the High Court for determination after hearing both parties.
Whether the liquidated claims were severable for summary judgment
Yes; the ascertained liquidated claims were severable from the rest of the respondent's claims.
Relying on Trust Bank Limited and Michael Muhindi vs. Investec Bank Limited quoting Gupta v Continental Builders Limited, the Court held that in mixed claims summary judgment may be entered on the liquidated portion only if it is severable. It found the claims under the first interim certificate and the retention sum were ascertained and severable, so summary judgment on them was proper.
Whether the retention sum was payable before a final certificate of practical completion
The Court could not fault summary judgment for the retention sum since it was clearly set out in the first interim certificate.
The appellant argued the retention sum was payable only upon issuance of a final certificate of practical completion. The Court did not decide the broader contractual question but noted the sum of Kshs.4,213,126.95 was clearly set out in the first interim certificate, so entry of summary judgment on it could not be faulted.
Legal principles established
#- A defendant seeking leave to defend need only show a triable issue of fact or law; leave is granted unconditionally unless the defence is a sham.
- Summary judgment may be entered only on a liquidated claim where that claim is severable from other claims in a mixed claim.
- An appellate court may only interfere with the exercise of judicial discretion where the judge misdirected herself and arrived at a wrong decision.
- The basis of summary judgment is that the defendant has no defence; it is reserved for plain and obvious cases.
Court orders
#- 1.Summary judgment in respect of the balance of Kshs.17,918,142.52 under the first interim certificate upheld
- 2.Summary judgment in respect of the retention sum of Kshs.4,213,126.95 upheld
- 3.Summary judgment entered in respect of the interest rate of 17% on the outstanding amount under the first interim certificate set aside
- 4.The learned Judge of the High Court directed to determine the applicable interest rate after hearing both parties
- 5.Each party to bear its own costs
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 250 of 2015
- Jurisdiction invoked
- First appellate jurisdiction over an appeal from the High Court (Court of Appeal, Civil Appeal No. 107 of 2017)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Lianard Holdings Limited v Kartar Singh Dhupar & Co. Ltd.", Case Analysis (2018). Civil Appeal No. 107 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/729/eng@2018-01-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.