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ELCPartially AllowedMalindi ELC (unspecified number in judgment)· [2020] KEELC 1179 (KLR)

Gitonga Kithinji Muriuki v Eleonora Cozzi & another [2020] KEELC 1179 (KLR)

Environment and Land Court
2 October 2020
JOJ.O. Olola
1,843 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court refused a lender's claim for 10% interest because it wasn't in the written loan agreement, awarding only Kshs 2.6 million.

What this practically means

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Executive summary

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The Plaintiff, an advocate, sued the two Defendants claiming Kshs 12,800,000/- being a Kshs 2,000,000/- loan advanced on 29th February 2012 to the 1st Defendant (principal shareholder of the 2nd Defendant) repayable in 20 days with Kshs 600,000/- commission, plus a further Kshs 150,000/- loan and alleged interest of 10%, secured by the title deed to Kilifi/Jimba/670 and a post-dated cheque of Kshs 2,600,000/-. The Defendants denied advancing of any loan and any interest, contended the title was deposited for the Plaintiff to sell and transfer, and counterclaimed for declarations that the Plaintiff was in wrongful possession of the title documents and that he release them. By a Notice of Motion dated 2nd December 2016 the Plaintiff sought to strike out the defence and enter judgment for the full claim; by a Ruling delivered on 19th September 2017 judgment was entered for Kshs 2,600,000/- (the admitted sum under the cheque), with the balance proceeding to full hearing. At trial only the Plaintiff testified; the Defendants called no evidence. The court held that the written Lending Agreement, prepared by the Plaintiff's own firm, provided only for Kshs 600,000/- commission and no 5% or 10% interest, and that any verbal understanding could not alter the written agreement. The balance of the claim and the prayer for sale of the property were dismissed. The judgment of 19th September 2017 was re-affirmed; Kshs 2,600,000/- with interest at court rates was granted, the Plaintiff was to return the title documents upon settlement of the decretal sum, and the Plaintiff received the costs of the suit and Counterclaim.

Key legal issues

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01

Whether interest of 5% or 10% not contained in the written Lending Agreement was recoverable

Holding

Not recoverable; the written agreement provided only for a commission of Kshs 600,000/- payable with the principal of Kshs 2,000,000/-.

Reasoning

The Lending Agreement, drafted by the Plaintiff's own law firm, made no provision for 5% or 10% interest. The Plaintiff conceded in cross-examination that the interest arose from a later verbal understanding, which the Defendants denied. A verbal arrangement cannot alter a written agreement, and a party drafting the agreement had every opportunity to include the interest term. The balance of the claim was therefore not proved to the required standard.

p. 3
02

The status of the title deed for Kilifi/Jimba/670 given as security

Holding

The title was deposited with the lawyers as additional security only for payment of Kshs 2,600,000/-, not as security for the inflated claim including interest, and no sale order was warranted.

Reasoning

Clause 4 of the Lending Agreement provided that Title No. 670 Kilifi Jimba be deposited with the lawyers as an additional security to be kept safe until full payment of Kshs 2,600,000/-. Since judgment was already entered for that sum, the prayer for sale of the property to recover Kshs 12,800,000/- was dismissed, with the Plaintiff to return the documents upon settlement of the decretal sum.

p. 3

Legal principles established

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  • A verbal arrangement cannot be used to alter or add to the terms of a written agreement, particularly one prepared by the party alleging the additional term.
  • Interest not provided for in the written agreement cannot be recovered as claimed.

Court orders

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  1. 1.Judgment entered for the Plaintiff on 19th September 2017 re-affirmed; Kshs 2,600,000/- granted as the sum due under Prayer (a) of the suit with interest at court rates
  2. 2.Prayer (b) of the suit (sale of Kilifi/Jimba/670 by public auction) dismissed in its entirety
  3. 3.The Plaintiff to return the Defendants' title documents for Kilifi/Jimba/670 upon settlement of the decretal sum
  4. 4.Plaintiff awarded the costs of the suit and of the Counterclaim
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court (Malindi) over a suit whose primary prayer concerns land parcel Kilifi/Jimba/670

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Gitonga Kithinji Muriuki v Eleonora Cozzi & another [2020] KEELC 1179 (KLR)", Case Analysis (2020). Malindi ELC (unspecified number in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1179/eng@2020-10-02

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.