Supreme Court dismisses banks' appeal against class-action suit

Standard Chartered Bank Kenya CEO Lamin Manjang. Banks suffered a major setback in a class-action lawsuit that could see them pay their customers billions in refunds for account charges levied since 1989 after the Supreme Court dismissed an appeal lodged by their umbrella body over charges that were never approved by the finance minister. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

In Summary

• The suit was filed by Ms Rose Florence Wanjiru at the High Court in 2003 seeking a Sh38,960 refund from Standard Chartered Bank that she said was illegally levied.
• The law states that “no institution shall increase its rate of banking or other charges except with the prior approval of the minister.”
• The Supreme Court Judges on Thursday said that the Kenya Bankers Association’s claim that the High Court’s permission should have been sought before it can be sued on behalf of the 43 banks which are its members, was an afterthought without merit.

By ABIUD OCHIENG
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Banks suffered a major setback in a class-action lawsuit that could see them pay their customers billions in refunds for account charges levied since 1989.

Supreme Court Judges Kalpana Rawal, Philip Tunoi, Mohamed Ibrahim, Smokin Wanjala and Njoki Ndung’u on Thursday dismissed a plea by the bankers’ umbrella organisation, which was challenging a case brought against it on behalf of all banks.

The suit was filed by Ms Rose Florence Wanjiru at the High Court in 2003 seeking a Sh38,960 refund from Standard Chartered Bank that she said was illegally levied.

She said the bank had not obtained approval from the minister of finance to levy the charges as required by law.

JOINT SUIT

In June last year, the court allowed Ms Wanjiru’s request through lawyer Gichuki Waigwa, to invite, through newspaper advertisements, bank customers affected in a similar way to join her suit.

The Supreme Court Judges on Thursday said that the Kenya Bankers Association’s claim that the High Court’s permission should have been sought before it can be sued on behalf of the 43 banks which are its members, was an afterthought without merit.

“The issue had not been raised in the High Court and was, therefore, not the subject for determination in the High Court or Court of Appeal,” said the judges.

The judges also said the association had failed to demonstrate that its case was a matter of public interest.

PRIOR APPROVAL

The High Court will therefore make a determination on whether the 43 commercial banks will refund billions of shillings to customers.

The law states that “no institution shall increase its rate of banking or other charges except with the prior approval of the minister.”

In August, High Court judge Francis Gikonyo allowed 185 customers and institutions to be enjoined in the case.

Justice Gikonyo said the court had considered their joinder because even though each party had a separate contract with a particular bank, the question was the alleged violation of Section 44 of the Banking Act.

He said bank customers, as well as lenders, with the same interest, may apply to be enjoined.

The case will be mentioned on November 18. The court is also expected to rule on the case filed by Ms Wanjiru, to cater for the enjoined parties and their claims.