Richard Cheptirge & another v Kenya Commercial Bank Limited [2017] KEELC 59 (KLR)
The bottom line
#A Kenyan court blocked KCB from collecting a 23-year-old debt, voided the inflated interest, and ordered the return of the family's charged land titles.
What this practically means
#Executive summary
#Key legal issues
#Whether the amount claimed by the bank is justifiable
The amount claimed was unconscionable, oppressive, unjustifiable and illegal because the bank unilaterally varied the interest rate without the chargor's consent as required under the charge instrument
The court noted the figures fluctuated between Kshs 1,300,000 and over Kshs 5.4 million, that the bank was not forthcoming with the exact amount payable, and that it consolidated two accounts attracting different interest rates, negating the contract terms. Equitable intervention was warranted to relieve the plaintiff from the oppressive bargain.
Whether the in duplum rule applies
It is just and equitable for the court to intervene applying the in duplum principle given the length of time and the bank's six failed attempts to sell the charged property
Although the bank argued the rule could not apply because there was a judgment against the plaintiff, the court held that having regard to the circumstances - the years of accruing interest and six unsuccessful auction attempts - equitable intervention was justified to stop interest loading beyond what is recoverable.
Whether execution of the 1994 judgment is statute barred
Yes; 23 years had elapsed since judgment and 16 years since the last execution attempt in 2001, so recovery of the judgment debt and interest is statute barred under section 4(4) of the Limitation of Actions Act
Judgment was entered on 25th April 1994 and the last execution step was the Notice to Show Cause of 3rd April 2001, when the magistrate found the principal repaid and declined to commit the plaintiff to civil jail. Twelve years for actions on judgments and six years for arrears of interest had both expired, so the judgment and interest had 'suffered death by operation of the law'.
Whether the charged property is matrimonial property under the new land laws
No; the Matrimonial Property Act and new land law regime do not apply because the charges were created long before they came into force
The loans were secured by charges in 1984 and 1989, before the Land Registration Act, 2012 and the Matrimonial Property Act came into force. The court therefore declined to apply sections 93 of the Land Registration Act and 12(3) of the Matrimonial Property Act, though the injunction still protected the parcels.
Whether the plaintiffs are entitled to the reliefs sought
The plaintiffs proved their case on a balance of probabilities and judgment was entered as prayed in the plaint
Having found the claim unconscionable and the 1994 judgment statute barred, the court found the plaintiffs had proved their case and granted the declaration, discharge of charge, reissue of titles by the District Land Registrar Kericho in default, permanent injunction and costs against the defendant.
Legal principles established
#- A judgment may not be executed after twelve years from the date of delivery; execution outside that period is statute barred under section 4(4) of the Limitation of Actions Act
- A court may, in its equitable jurisdiction, set aside a bank bargain that is harsh, unconscionable and oppressive, or where the lender unilaterally imposes additional terms such as varying interest without the chargor's consent
- The in duplum rule under section 44A of the Banking Act limits recovery on a non-performing loan and courts will apply it where a bank's conduct is oppressive
Court orders
#- 1.The defendant shall not make any further attempts to recover any amount from the 1st Plaintiff pursuant to the judgment in Nairobi CMCC No 11368 as such action is statute barred
- 2.The defendant shall forthwith and not later than 30 days from the date hereof execute and hand over to the 1st Plaintiff an appropriate instrument of discharge of charge in respect of land parcels No. KERICHO/CHEBORGE/117, KERICHO/CHEBORGE/358 and KERICHO/CHEMANER/1131
- 3.In default of execution of the instruments, the District Land Registrar Kericho shall reissue the same to the 1st Plaintiff within 30 days
- 4.A permanent injunction restraining the defendant, its servants, employees or agents from selling, alienating, dealing with or in any way interfering with the land parcels known as KERICHO/CHEBORGE/117, KERICHO/CHEBORGE/358 and KERICHO/CHEMANER/1131
- 5.The costs of the suit to be borne by the defendant
- Jurisdiction invoked
- Original civil jurisdiction of the High Court over the plaint seeking declarations, discharge of charge and injunction
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Richard Cheptirge & another v Kenya Commercial Bank Limited [2017] KEELC 59 (KLR)", Case Analysis (2017). Kericho HCCC No. 8 of 2013 (Plaint dated 25th September 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/59/eng@2017-11-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.