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ELRCAllowedNot stated in the judgment (one of 8 related appeals identified only by reference to Chuka CMCC No. 66 of 2004)· [2024] KEELRC 2816 (KLR)

Njeru v Meru South Farmers Cooperative Soceity Union Limited (Employment and Labour Relations Appeal 2A of 2024) [2024] KEELRC 2816 (KLR)

Employment and Labour Relations Court
14 November 2024
OMONESMUS N MAKAU
2,236 words in judgment
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The bottom line

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What this practically means

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Executive summary

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This was a first appeal to the Employment and Labour Relations Court at Nyeri (Onesmus N Makau, J) against a ruling of Hon Gandani (CM) in Chuka CMCC No. 66 of 2004, delivered on 9th November 2022, fixing the interest rate applicable to a decretal sum and costs where the trial judgment of 24th June 2009 (awarding Kshs. 260,0005.20 plus costs and interest) had not specified a rate. The trial court had fixed interest at 6% per annum under sections 26(2) and 27(2) of the Civil Procedure Act. The appellant contended for 14% per annum on both the decretal sum and costs; the respondent maintained 6% and argued the funds in the escrow account were already earning interest. The court, applying Selle v Associated Motor Boat Company Ltd as its first-appeal mandate, held that section 26(1) contemplates two levels of interest: the court rate on the principal from filing suit to decree, whose default is 12% per annum per Practice Notice No. 1 of 1982, and further interest from decree to payment in full, deemed at 6% per annum under section 26(2) where the decree is silent. The trial court erred in collapsing the two into a single 6% rate. On costs, the court held that section 27(2)'s 14% ceiling is the default rate on costs where none is specified, since Parliament deliberately separated costs from decrees. The court allowed the appeal, set aside the ruling of 9th November 2022, substituted the differentiated rates (12%, 6% and 14%), awarded the appellant the costs of the appeal, and directed that the judgment apply to seven other related appeals identified in its order of 24th July 2024.

Key legal issues

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01

Applicable interest rate on the decretal sum where the trial judgment is silent

Holding

Interest on the principal from filing suit to decree is 12% per annum (default court rate per Practice Notice No. 1 of 1982); further interest from decree to payment in full is 6% per annum under section 26(2). The trial court erred in applying only the 6% rate.

Reasoning

Section 26(1) of the Civil Procedure Act contemplates two levels of interest: court-ordered interest on the principal from suit to decree, and further interest from decree to payment. The 6% in section 26(2) is a deeming provision applying only to the second level. The Practice Notice by Chief Justice Simpson sets 12% as the default court rate for the first level where no rate is specified. The lower court conflated the two levels.

p. 4
02

Interest rate applicable on costs of the suit where the trial court is silent

Holding

The 14% rate under section 27(2) is the default rate on costs; the trial court erred in applying section 26(2)'s 6% to costs.

Reasoning

Section 27(2) empowers the court to give interest on costs at up to 14% per annum but is silent on a default rate. Parliament separated interest on decrees (section 26) from interest on costs (section 27), so section 26(2)'s 6% cannot be imported into costs. The court inferred legislative intent that 14% is the default rate on costs from the date of filing suit.

p. 4

Legal principles established

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  • Where the trial court fails to specify the interest rate on the principal sum from filing suit to the date of the decree, the default rate is 12% per annum under the Practice Notice Number 1 of 1982.
  • Where a decree is silent on further interest from the date of the decree to payment, interest is deemed ordered at 6% per annum under section 26(2) of the Civil Procedure Act.
  • The 14% rate in section 27(2) of the Civil Procedure Act is the default rate of interest on costs where the trial court fails to specify a rate.

Court orders

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  1. 1.The ruling in Chuka CMCC No.66 of 2004 delivered on 9th November 2022 is set aside
  2. 2.12% interest on the decreed sum from date of filing to the date of the decree
  3. 3.6% interest on the decreed sum from the date of the decree until payment in full
  4. 4.14% interest on the costs of the suit from the date of filing suit until payment in full
  5. 5.Costs of the appeal awarded to the appellant
  6. 6.The judgment to apply to all the other 7 appeals indicated in the court's order of 24th July 2024
On appeal from
Magistrates' Court, Chuka
CMCC No. 66 of 2004 (ruling of 9th November 2022)
Jurisdiction invoked
First appeal transferred from the High Court to the Employment and Labour Relations Court; appeal against the trial court's ruling on interest rates

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, "Njeru v Meru South Farmers Cooperative Soceity Union Limited (Employment and Labour Relations Appeal 2A of 2024) [2024] KEELRC 2816 (KLR)", Case Analysis (2024). Not stated in the judgment (one of 8 related appeals identified only by reference to Chuka CMCC No. 66 of 2004). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2816/eng@2024-11-14

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