Bettal Services Limited v Cross Continent Ventures Limited [2020] eKLR Case Summary

Court
High Court at Nairobi (Milimani Law Courts)
Category
Civil
Judge(s)
J. Kamau
Judgment Date
October 28, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3

Case Brief: Bettal Services Limited v Cross Continent Ventures Limited [2020] eKLR


1. Case Information:
- Name of the Case: Bettal Services Limited v. Cross Continent Ventures Limited
- Case Number: Civil Case No. 371 of 2015
- Court: High Court of Kenya at Nairobi, Milimani Law Courts
- Date Delivered: 28th October 2020
- Category of Law: Civil
- Judge(s): J. Kamau
- Country: Kenya

2. Questions Presented:
The court was tasked with resolving several key legal issues:
1. Whether the Plaintiff advanced a sum of Kshs 1,984,997/= to the Defendant at a 15% interest rate until payment in full.
2. The terms of the Agreement between the parties.
3. Whether there was a variation of the Agreement and its terms.
4. If the Defendant breached the terms of the Agreement.
5. The amount the Plaintiff was entitled to if a breach occurred.
6. Who should pay the costs of the suit.

3. Facts of the Case:
The Plaintiff, Bettal Services Limited, claimed that it advanced Kshs 1,984,997/= to the Defendant, Cross Continent Ventures Limited, at a monthly interest rate of 15%. An Agreement was made on 12th September 2014, stipulating that the Defendant would pay Kshs 4,500,000/=. However, the Defendant only paid Kshs 1,600,000/= and subsequently reverted to the original agreement. The Defendant's Managing Director, Hellen J. Kemboi, testified that the Plaintiff had no authority from the Central Bank of Kenya to charge such high interest rates and claimed the postdated cheques issued were meant to settle the loan.

4. Procedural History:
The Plaintiff filed its suit on 4th November 2015, and the Defendant entered an appearance on 8th March 2016. The Defendant filed a Statement of Defence on 17th March 2016, followed by the Plaintiff's Reply to Defence on 30th March 2016. Throughout the proceedings, both parties filed various witness statements and written submissions, culminating in the court's judgment based on these submissions.

5. Analysis:
- Rules: The court considered relevant statutes, including the Banking Act Cap 488, which regulates interest rates on loans, particularly provisions limiting what can be recovered on non-performing loans.
- Case Law: The court cited several cases, including *Veleo (K) Ltd v Barclays Bank of Kenya Ltd* and *Housing Finance Company of Kenya Limited v Scholarstica Nyaguthii Muturi*, which emphasized the importance of adhering to contractual terms regarding interest and the in duplum rule, which prevents interest from exceeding the principal amount.
- Application: The court found that the Defendant had indeed entered into a valid agreement with the Plaintiff. It ruled that the Defendant breached this agreement by failing to make the required payments. However, the court determined that the Plaintiff's claim for Kshs 9,334,166/= was unconscionable due to excessive interest claims and lack of proper documentation supporting the claimed interest amounts. Ultimately, the court concluded that the Plaintiff was entitled to Kshs 384,997/= plus interest.

6. Conclusion:
The court ruled in favor of the Plaintiff for Kshs 384,997/=, acknowledging that while the Defendant breached the agreement, the Plaintiff's claim for excessive interest was unjustified. This decision underscores the necessity for lenders to adhere to regulatory limits on interest rates and the importance of clear documentation in loan agreements.

7. Dissent:
There were no dissenting opinions noted in the judgment.

8. Summary:
The High Court of Kenya partially granted the Plaintiff's claim, awarding Kshs 384,997/=, while emphasizing the need for compliance with interest rate regulations and the importance of substantiating claims in civil litigation. This case highlights the balance between enforcing contractual obligations and protecting borrowers from exploitative lending practices.

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