Assia Pharmaceuticals Ltd V Kenya Alliance Insurance Co. Ltd (Civil Case  Of 1999)  KEHC 19 (KLR) (Commercial And Tax) (21 July 2021) (Ruling)
|Civil Case 1605 of 1999||21 Jul 2021|
High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)
Assia Pharmaceuticals Ltd v Kenya Alliance Insurance Co. Ltd
Assia Pharmaceuticals Ltd v Kenya Alliance Insurance Co. Ltd (Civil Case 1605 of 1999)  KEHC 19 (KLR) (Commercial and Tax) (21 July 2021) (Ruling)
An application for recovery of interest on a court judgment/decree cannot be made after lapse of six years from the date on which the interest became due
By an application, the applicant sought an order that the respondents directors be summoned for purposes of being cross-examined under oath so as to determine means and assets of satisfying the judgment/decree issued in the instant case on June 2, 2004 and to produce the defendant's books of accounts and other documentary evidence. The applicant stated that the examination of the directors was necessary to determine the mode of execution of the courts decree. The applicant further stated that on August 13, 2014, the defendant made a part payment of Kshs. 7,507, 243 being part of the accrued interest but had failed to pay the outstanding sum and interest amounting to Kshs. 22,446,656.57.
The respondent filed grounds of opposition stating that the move to cross-examine its directors was pre-mature because the alleged indebtedness was based on an erroneous calculation not agreed by the parties or done by the court. The respondent stated that the applicant no-longer existed as an entity and therefore it was incapable of prosecuting the instant case. The respondent further claimed that the respondents appeal was heard and decided and the principal amount of Kshs. 7,507,243 was paid. Further, no notice to show cause had ever been issued upon the respondent; hence, the current application was premature and bad in law.
The respondent submitted that the decree was extracted 15 years prior to the filing of the instant application which was an application in the nature of execution, hence, it ought to have been preceded by a notice to show cause. Further, the respondent argued that the interest covered a period of over 16 years, hence it was statute bared by section 4(4) of the Limitation of Actions Act which provided that no arrears of interest in respect of a judgment debt could be recovered after the expiration of six years from the date on which the interest became due.
- What was the limitation period for recovering interest on court judgments?
- Whether an application for recovery of interest on a court judgment could be made after the lapse of six years from the date on which the interest became due.
Relevant provisions of the law
Limitation of Actions Act, Cap 22 Laws of Kenya
(4) An action may not be brought upon a judgment after the end of twelve years from the date on which the judgment was delivered, or (where the judgment or a subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods) the date of the default in making the payment or delivery in question, and no arrears of interest in respect of a judgment debt may be recovered after the expiration of six years from the date on which the interest became due.
- The law of limitation was founded upon maxims such as interest reipublicae ut sit finis litium which meant that litigation had to come to an end in the interest of society as a whole, and vigilantibus non dormientibus jura subveniunt which meant that the law assisted those that were vigilant with their rights, and not those that slept thereupon. The law of limitation identified the need for limiting litigation by striking a balance between the interests of the State and the litigant.
- The last part of section 4(4) of the Limitation of Actions Act provided that no arrears of interest in respect of a judgment debt could be recovered after the expiration of six years from the date on which the interest became due. The judgment was dated June 2, 2004, which was 17 years ago. From the applicants own admission, the last payment was made on August 13, 2014. Even though the applicant was not clear, the sum of Kshs. 7,507,243 was in respect of the principal sum. Without providing a clear tabulation as to how the amount being claimed was arrived at, the applicant stated that the amount of Kshs. 24,023,177.60 being pursued comprised of accrued interests.
- From a reading of section 4(4) of the Limitation of Actions Act, recovery of interest on a court judgment could not be recovered after the expiry of 6 years. When the Limitation of Actions Act or any other statute prescribed a period of limitation for initiating legal proceedings, any legal action had to be brought within such prescribed period. As it was imperative to give finality to administrative as well as judicial decisions in the interests of justice, no court or tribunal could entertain any petition/suit/application made after the expiry of the limitation period, unless sufficient cause for delay had been proved by the petitioner/plaintiff/applicant. Therefore, those who slept over their rights had no right to agitate for them after the lapse of the prescribed period.
- The Limitation of Actions Act provided the limitation periods for different claims. Regarding claims for interests on court judgments, it provided six years from the date the interest became due for actions relating to arrears of interest with regard to a judgment debt. The word action in section 4(4) of the Limitation of Actions Act had been judicially construed to include execution proceedings. The use of the word may meant that that provision was not couched in mandatory terms.
- The periods of limitation prescribed by the Limitation of Actions Act were not absolute as they were subject to extension in cases where a party demonstrated sufficient cause for the extension. Despite that clear position of the law, and notwithstanding the fact that the respondent in its grounds of opposition filed on June 2, 2020 cited section 4(4) of the Limitation of Actions Act, the applicant never took cue from the objection to cure the defect by seeking an extension from the court. Instead, it opted to prosecute its application which had been pending in court since 2019.
- The applicants application being a mode of execution, to recover outstanding interest and therefore an action within section 4(4) of the Limitation of Actions Act was being brought 17 years after the delivery of the judgment and about 7 years after the respondent paid the sum of Kshs. 7,507,243. If the court was to compute time from the date of the last payment which according to the applicant was on August 13, 2014, then, over 6 years had since lapsed.