The High Court has set aside a Sh10.8 million legal fee awarded to Kenya Commercial Bank (KCB) and Metropol Credit Reference Bureau in a dispute over credit information supplied about a borrower.
The court found that the costs were based on a pleaded claim value of Sh191 million that included disputed loan figures. It said unproved special damages could not be used to determine the lawsuit’s value, making it wrong for the magistrate to assess the costs based on what the plaintiff sought as special damages.
KCB’s legal bill had been assessed at Sh7.7 million and Metropol’s at Sh3.1 million, but the court ordered both bills to be assessed afresh by a new taxing officer. It said the deleted loan figures and unproved damages could not determine the value of the suit.
The ruling follows a 2023 judgment that dismissed Reuben Kioko’s case against KCB and Metropol and ordered him to pay their costs.
Mr Kioko had sued over credit information he said affected his ability to obtain financing. He sought various declarations, Sh60 million damages, an apology, interest and costs.
He was a fruit and cereal trader who used loans to finance his business. He said he was denied a loan in August 2015 after discovering that his two accounts had been reported to a credit reference bureau.
The judgment shows that he complained to KCB by email on August 21, 2015, identifying the two accounts and asking that the listings be removed. KCB instructed Metropol to delete them, and Metropol confirmed the deletion that day.
The court found that the accounts were cleared within hours, before the lawsuit was filed. It found that Mr Kioko was aware of the listing and that the defendants acted in good faith after the error was brought to their attention.
The court said Mr Kioko continued to face difficulties obtaining credit, but found evidence that other accounts and factors were involved. A later application was declined after a lender cited cash-flow problems, low credit score and an account with default history.
The court rejected his claim for special damages after finding that the financial evidence was presented by a witness who admitted he was not a qualified accountant under the Institute of Certified Public Accountants of Kenya.
“The audit report may have been authentic but it was presented by an unqualified person,” the court said in the judgment.
The court also rejected the defamation claim, finding that the plaintiff did not set out the specific words said to have caused the alleged injury. It concluded that the defendants had exercised their statutory obligations in good faith, with no malice or negligence proved.
Metropol filed a party-and-party bill of costs dated December 10, 2023, while KCB filed its bill dated August 11, 2023. Taxing Officer Christine Menya assessed Metropol’s bill at Sh3.1 million and KCB’s at Sh7.7 million.
Mr Kioko challenged both decisions, arguing that the taxing officer relied on loan exposures of Sh21.9 million and Sh83.1 million. Metropol said the values were contained in the amended plaint and pointed to special damages of Sh32.9 million.
KCB relied on different figures in its submissions, including Sh158,799 in non-performing loans and Sh32.9 million in special damages, saying the total pleaded value was Sh191.7 million.
Justice Joseph Sergon said the taxing officer relied on figures in the amended plaint even though the judgment had established that the two accounts were deleted on August 21, 2015.
“I am convinced that the alleged loan figures were not the plaintiff’s property hence their value cannot be used as the subject matter’s value to calculate costs as against him in favour of the respondents,” he said.
The court said the taxing officer should have considered the record, including the defendants’ responses, rather than relying on the plaintiff’s pleadings alone.
It also found that the Sh32.9 million special damages claim could not be included because the 2023 court had rejected it as unproved.
“The taxing officer therefore fell into an error of principle in aggregating and quantifying total subject value defended in the suit by the respondent by applying the unproven special damages,” he said, setting aside the two taxation decisions.
