JUDGMENT
1. The Appellant, aggrieved by the decision of the Adjudicator, Hon. B. A. Luova, in Machakos Small Claims Court Case No. SCCCOM/E073/2025 on 12 th June 2025, preferred the present appeal.
2. In the Memorandum of Appeal dated 4 th July 2025, the Appellant’s appeal is premised on grounds that:
a. The Learned Adjudicator erred in law by dismissing the Appellant’s claim despite the fact that the Appellant had tendered credible, cogent and watertight evidence to prove her claim.
b. The Learned Adjudicator erred in law by dismissing the Appellant’s claim even though her analysis and evaluation of the documentary evidence tendered favoured a disposition in favour of the Appellant.
c. The Learned Adjudicator erred in law by failing to invoke and apply the power donated to her by Section 26 (1) of the Small Claims Act No 2 of 2016
d. The Learned Adjudicator erred in law by delivering a judgment that was not only contradictory but also violated the appellant’s right to a fair hearing as enshrined in Article 50 of the Constitution of Kenya.
3. The background of the case, briefly, is that by a Statement of Claim dated 10/02/2025 and filed on 12/02/2025, the Claimant instituted a claim seeking:
a. Judgment in the sum of Kshs. 159,750
b. Costs of the claim
c. Interest on the amount and costs
4. The Appellant claimed that on 18/11/20204, the Appellant advanced the Respondent a loan of Kshs. 250,000 and by a written agreement of even date, the parties executed the contract.
5. The Appellant stated that the parties agreed that the said amount was to be repaid within a month from the date of advancement, with interest at 25% per month.
6. The Appellant further stated that the Respondent paid Kshs 131,750, leaving a balance of Kshs 159,750, necessitating the institution of the claim.
7. The Respondent, in her response dated 27/02/2025, denied the claim in totality.
8. The Respondent averred that although she had applied for a loan of Kshs. 250,000 on 18/11/2024, she only received Kshs. 187,500 on 14/10/2024 and was therefore not indebted to the Appellant for the full amount claimed.
9. The Respondent further averred that she paid Kshs 64,500 on 16/11/2024 and Kshs 30,000 on 14/12/2024, leaving an outstanding balance of Kshs 93,000/-, and averred that the Appellant was unlawfully engaged in the business of lending money at interest, which amounted to banking business contrary to the law.
10. The Respondent further contended that since the Appellant was allegedly conducting banking business without the requisite license, the loan agreement was illegal and therefore unenforceable.
11. The Respondent counterclaimed that the amount advanced was non-refundable as the Appellant's business was illegal and the Appellant was operating without the requisite license.
12. The matter proceeded by way of documents as permitted under the Small Claims Court Act.
13. The Learned Adjudicator, upon considering the evidence tendered, found that the loan application form dated 18/11/2024 showed that the Respondent had applied for Kshs. 250,000.
14. The Learned Adjudicator further found that in the loan acknowledgement form, the Respondent had acknowledged receipt of Kshs. 200,000.
15. The Claimant’s counsel submitted and relied on Section 97(1) of the Evidence Act, which provides that where the terms of a contract have been reduced into the form of a document, no evidence shall be given in proof of the terms of such contract except the document itself or secondary evidence of its contents where admissible under the Act.
16. The Respondent, however, contended that the loan amount in the agreement was never disbursed to her by the Claimant. The Respondent indicated that Kshs. 187,500 was received by her from Florence Mwende, the Claimant’s director, on 16/10/2024 and not on 18/11/2024 from the Claimant as alleged by the documentary evidence adduced.
17. The Learned Adjudicator relied on the decision in Mohamed Adan Molly v Linksoft (K) Ltd & Another [2013] KECA 262 (KLR) and observed that a limited liability company is a legal entity separate from its shareholders and directors and has full capacity and ability to sue and be sued.
18. The Learned Adjudicator found that Florence Mwende and Amka Credit Limited were separate legal entities which could sue and be sued in their own capacities. The screenshots produced by the Respondent confirmed that the Respondent received money from Florence Mwende.
19. The Learned Adjudicator noted that from the verifying affidavit and the witness statement accompanying the Statement of Claim, Florence Mwende was the director of the Claimant.
20. The Learned Adjudicator observed that since companies work through human beings, the money sent by the Claimant to the Respondent might have been done through its director. However, the court held that it could not speculate.
21. The Learned Adjudicator consequently found that for the Claimant to have locus standi to sue the Respondent, it ought to have proved the nexus between the Claimant and Florence Mwende.
22. The Learned Adjudicator found that no CR12 had been filed and consequently held that no nexus had been established between the Claimant and Florence Mwende. The Learned Adjudicator therefore found that the company had no capacity to sue on behalf of Florence Mwende.
23. On whether the claim had been proved, the Learned Adjudicator, flowing from the above finding, found that the claim had not been substantiated and therefore the same failed.
24. On whether the counterclaim had been proved, the Learned Adjudicator found that, having found that the Claimant had no legal capacity to sue on behalf of its director, Florence Mwende, the issues raised in the counterclaim did not arise and therefore the same failed.
25. Consequently, the claim was dismissed with no orders as to costs.
26. The appeal was canvassed by way of written submissions.
27. At the outset, the Appellant submitted that the appeal was merited and proposed to merge Grounds 1 and 2 and argue them as one ground, and to combine Grounds 2 and 4 and argue them as one ground.
28. The Appellant submitted that its claim before the subordinate court proceeded by way of documents in terms of Section 30 of the Small Claims Court Act No. 2 of 2016.
29. In support of its claim, the Appellant tendered documentary exhibits whose authenticity was not challenged by the Respondent.
30. The Appellant submitted that having proved that it lent money to the Respondent and the Respondent having admitted the said fact, it behoved the trial Court to enter judgment in favour of the Appellant.
31. The Appellant submitted that the Loan Application Form duly executed by the Respondent without coercion or undue influence was a crucial piece of evidence which the Respondent wholly failed to rebut.
32. The Appellant further submitted that the said documentary exhibit together with the Personal Loan Agreement and Acknowledgement of Debt Form dated 18/11/2024 were admissible in evidence in terms of Section 97(1) of the Evidence Act.
33. The Appellant submitted that it was not in dispute that it was a body corporate with power to sue and be sued. It was submitted that a company such as the Appellant can only run its affairs through physical persons such as directors.
34. The Appellant submitted that the Learned Adjudicator acknowledged in her judgment that Florence Mwende was the Appellant’s director and further held that the money sent to the Respondent was possibly sent by the Appellant’s director.
35. The Appellant submitted that despite finding and holding that Florence Mwende was the Appellant’s director, the Learned Adjudicator nevertheless dismissed the Appellant’s claim, which amounted to a misdirection on a point of law.
36. The Appellant submitted that having discharged its burden of proof in terms of Section 107 of the Evidence Act, it deserved judgment in its favour.
37. The Appellant further submitted that the question of the Appellant’s capacity to sue was a creation of the trial Court and that all its documentary exhibits bore its letterhead, which was a clear indication that it was the Appellant suing in its own name.
38. The Appellant submitted that the trial Court therefore erred in law by rejecting its claim despite the existence of abundant evidence on record demonstrating the nexus between the Appellant and its director, Florence Mwende.
39. The Appellant urged the Court to set aside the trial Court’s findings on capacity to sue and substitute the same with a finding that the Appellant was possessed of capacity to sue as it did.
40. The Appellant further submitted that the trial Court violated Section 26 of the Small Claims Court Act by failing to enter judgment in favour of the Appellant despite the Respondent having admitted part of the claim.
41. The Appellant submitted that the said admission was contained in paragraph 5 of the Response to Claim as well as in the Respondent’s Witness Statement dated 27/02/2025.
42. The Appellant submitted that the Respondent admitted receiving Kshs. 187,500 and further admitted making payments of Kshs. 64,500 and Kshs. 30,000, leaving a balance which remained unpaid.
43. The Appellant submitted that the trial Court's failure to enter judgment for the admitted sum amounted to a misdirection on a point of law.
44. The Appellant further submitted that the Learned Adjudicator’s omission to find for the Appellant violated its right to a fair hearing as guaranteed under Article 50(1) of the Constitution of Kenya.
45. The Appellant therefore urged the Court to find merit in the appeal and grant the orders sought.
46. The Respondent neither filed nor served any submissions in opposition to the appeal
47. Having considered the Memorandum of Appeal, the record of appeal and the submissions by the Appellant, I believe that the following issues arise for determination:
48. Whether the Learned Adjudicator erred in law and fact in finding that the Appellant had failed to establish that the loan advanced to the Respondent was advanced by the Appellant and was consequently recoverable by the Appellant; Whether the Learned Adjudicator erred in law by failing to give effect to any admission of the claim made by the Respondent pursuant to section 26 of the Small Claims Court Act; Whether the proceedings before the Learned Adjudicator resulted in a violation of the Appellant's right to a fair hearing under Article 50(1) of the Constitution;
49. Since it is an appeal from the Small Claims Court, a consideration of the Court’s appellate jurisdiction is apt.
50. Section 38 of the Small Claims Court Act provides that a person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.
51. Being an appeal from the Small Claims Court, it is circumscribed by section 38 of the Small Claims Court Act to matters of law only.
52. In Otieno Ragot and Company Advocates vs National Bank of Kenya Limited (2020) eKLR, the court observed that.
‘…This is a second appeal. I am alive to my duty as a second appellate court to determine matters of law only unless it is shown that the courts below considered matters they should not have considered, or they failed to consider matters they should have considered, or, looking at the entire decision, it is perverse.
53. In Twaher Abdulkarim Mohammed vs Independent Electoral and Boundaries Commission & 2 others (2014) eKLR, the Court held that a decision is erroneous in law if it is one to which no reasonable tribunal properly directing itself could have arrived at. This means that the decision must disclose an erroneous exposition of the law, including the duty to properly analyze the evidence led.
54. I have examined the Appellant’s Memorandum of Appeal, wherein it is alleged that the court did not properly analyze the evidence, thereby arriving at an erroneous decision in law. To my mind, that discloses a point of law that properly grounds the appeal.
55. As an appellate court, I have the duty to reconsider the evidence, but in this instance, without the caution of bearing in mind that I did not hear the witnesses directly since the proceedings before the subordinate court proceeded under section 30 of the Small Claims Court Act.
56. I will start with the issue of whether the alleged debt was owed to Amka Credit or to Florence Mwende personally; having gone through the pleadings in the court below, I am not persuaded that this was an issue that arose from the pleadings and that it was one that the subordinate court was called upon to determine as arising from the pleadings.
57. The issue arose for the first time in the Respondent’s written submissions in response to the Appellant’s submissions. I therefore hold the view that the subordinate court ought not to have determined the case purely on account of that issue alone as it did.
58. The Learned Adjudicator fell into error by treating the issue as one of the Appellant's capacity to sue on behalf of Florence Mwende. The Appellant did not purport to sue on behalf of Florence Mwende; it sued in its own name. The real question was whether the evidence established that Florence Mwende acted on behalf of the Appellant in disbursing the loan. That issue ought to have been determined from the totality of the evidence.
59. I have considered the loan application, the loan agreement, the acknowledgment, the screenshots adduced by the Respondent, the company letterhead, the witness statement by the Appellant, the Respondent’s witness statement and Florence Mwende’s undisputed position as director of the Appellant; from the totality of the evidence availed in the subordinate court, I entertain no doubt and indeed enter the verdict that the totality of the evidence established the fact that Florence Mwende acted on behalf of the Appellant in disbursing the loan.
60. The other issue is on the alleged admission by the Respondent. At paragraph 5 of her response to the claim before the subordinate court dated 27 th February 2025, the Respondent expressly admits to owing the Appellant KShs 93,000; she reiterates the same in her witness statement dated 27 th February 2025.
61. Section 26 of the Small Claims Court Act provides that, if the Respondent admits only part of the claimant’s case, the Court must record that admission as an order in favour of the claimant.
62. The Learned Adjudicator had no reason not to comply with the said provision and record the admission in favour of the Appellant.
63. I am mindful that the Respondent counterclaimed that the amount advanced was non-refundable because the Appellant’s business was illegal. Since the counterclaim was dismissed and the Respondent did not appeal the dismissal, I cannot consider the same in the present case.
64. On the Appellant’s claim, I find that the Respondent’s evidence was more probable, particularly considering the screenshots which demonstrated the exact amounts disbursed and refunded. I also noted the discrepancies between the amounts indicated in the application form, the acknowledgment, and the screenshots of the money transfers.
65. On interest payable, I do not doubt that, as evidenced by the totality of the documents adduced by both parties, the Respondent contracted to pay interest on the money advanced to her, as that was an express term of the agreement between the parties.
66. The contractual interest rate is 25% per month, which translates to a 300% annual rate, to my mind, is not a genuine commercial rate but a punitive and unconscionable rate designed to punish default rather than compensate for delayed payment.
67. I find that the agreed default interest of 30% per month is so oppressive, extortionate, or unconscionable as to justify judicial interference.
68. In the circumstances, I decline to enforce the said interest rate.
69. The next issue is whether the proceedings before the Learned Adjudicator violated the Appellant’s constitutional rights under Article 50 of the Constitution.
70. I have gone through the record of appeal, including the record of the proceedings. I cannot perceive any violation of the Appellant’s rights; the fact that the subordinate court made a finding that the Appellant does not agree with cannot amount to a violation of the constitutional rights of the Appellant. I find that the ground of the appeal is lacking in merit.
71. In light of my findings aforestated, I find that the Appellant’s appeal is merited and I therefore order as follows;
That the Appeal succeeds
A. The decision of the Hon. Adjudicator in Machakos (SCCCOM) Small Claims Court No. E073 of 2025 delivered on 12 th June 2025 is hereby set aside and substituted with an order allowing the Appellant’s claim at Kshs 93,000/-
B. The Respondent shall pay interest on Kshs 93, 000/- at Court rates from the date of institution of the claim at the subordinate court till payment in full.
C. The Appellant shall have the costs of the Appeal.
Dated, signed and delivered via Microsoft Teams at Mombasa this 17 th day of September 2026
In the presence of;
Hamisi C/A
Ngolya for the Appellant
N/A for the Respondent
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1. The Appellant, aggrieved by the decision of the Adjudicator, Hon. B. A. Luova, in Machakos Small Claims Court Case No. SCCCOM/E073/2025 on 12 th June 2025, preferred the present appeal.
2. In the Memorandum of Appeal dated 4 th July 2025, the Appellant’s appeal is premised on grounds that:
a. The Learned Adjudicator erred in law by dismissing the Appellant’s claim despite the fact that the Appellant had tendered credible, cogent and watertight evidence to prove her claim.
b. The Learned Adjudicator erred in law by dismissing the Appellant’s claim even though her analysis and evaluation of the documentary evidence tendered favoured a disposition in favour of the Appellant.
c. The Learned Adjudicator erred in law by failing to invoke and apply the power donated to her by Section 26 (1) of the Small Claims Act No 2 of 2016
d. The Learned Adjudicator erred in law by delivering a judgment that was not only contradictory but also violated the appellant’s right to a fair hearing as enshrined in Article 50 of the Constitution of Kenya.
3. The background of the case, briefly, is that by a Statement of Claim dated 10/02/2025 and filed on 12/02/2025, the Claimant instituted a claim seeking:
a. Judgment in the sum of Kshs. 159,750
b. Costs of the claim
c. Interest on the amount and costs
4. The Appellant claimed that on 18/11/20204, the Appellant advanced the Respondent a loan of Kshs. 250,000 and by a written agreement of even date, the parties executed the contract.
5. The Appellant stated that the parties agreed that the said amount was to be repaid within a month from the date of advancement, with interest at 25% per month.
6. The Appellant further stated that the Respondent paid Kshs 131,750, leaving a balance of Kshs 159,750, necessitating the institution of the claim.
7. The Respondent, in her response dated 27/02/2025, denied the claim in totality.
8. The Respondent averred that although she had applied for a loan of Kshs. 250,000 on 18/11/2024, she only received Kshs. 187,500 on 14/10/2024 and was therefore not indebted to the Appellant for the full amount claimed.
9. The Respondent further averred that she paid Kshs 64,500 on 16/11/2024 and Kshs 30,000 on 14/12/2024, leaving an outstanding balance of Kshs 93,000/-, and averred that the Appellant was unlawfully engaged in the business of lending money at interest, which amounted to banking business contrary to the law.
10. The Respondent further contended that since the Appellant was allegedly conducting banking business without the requisite license, the loan agreement was illegal and therefore unenforceable.
11. The Respondent counterclaimed that the amount advanced was non-refundable as the Appellant's business was illegal and the Appellant was operating without the requisite license.
12. The matter proceeded by way of documents as permitted under the Small Claims Court Act.
13. The Learned Adjudicator, upon considering the evidence tendered, found that the loan application form dated 18/11/2024 showed that the Respondent had applied for Kshs. 250,000.
14. The Learned Adjudicator further found that in the loan acknowledgement form, the Respondent had acknowledged receipt of Kshs. 200,000.
15. The Claimant’s counsel submitted and relied on Section 97(1) of the Evidence Act, which provides that where the terms of a contract have been reduced into the form of a document, no evidence shall be given in proof of the terms of such contract except the document itself or secondary evidence of its contents where admissible under the Act.
16. The Respondent, however, contended that the loan amount in the agreement was never disbursed to her by the Claimant. The Respondent indicated that Kshs. 187,500 was received by her from Florence Mwende, the Claimant’s director, on 16/10/2024 and not on 18/11/2024 from the Claimant as alleged by the documentary evidence adduced.
17. The Learned Adjudicator relied on the decision in Mohamed Adan Molly v Linksoft (K) Ltd & Another [2013] KECA 262 (KLR) and observed that a limited liability company is a legal entity separate from its shareholders and directors and has full capacity and ability to sue and be sued.
18. The Learned Adjudicator found that Florence Mwende and Amka Credit Limited were separate legal entities which could sue and be sued in their own capacities. The screenshots produced by the Respondent confirmed that the Respondent received money from Florence Mwende.
19. The Learned Adjudicator noted that from the verifying affidavit and the witness statement accompanying the Statement of Claim, Florence Mwende was the director of the Claimant.
20. The Learned Adjudicator observed that since companies work through human beings, the money sent by the Claimant to the Respondent might have been done through its director. However, the court held that it could not speculate.
21. The Learned Adjudicator consequently found that for the Claimant to have locus standi to sue the Respondent, it ought to have proved the nexus between the Claimant and Florence Mwende.
22. The Learned Adjudicator found that no CR12 had been filed and consequently held that no nexus had been established between the Claimant and Florence Mwende. The Learned Adjudicator therefore found that the company had no capacity to sue on behalf of Florence Mwende.
23. On whether the claim had been proved, the Learned Adjudicator, flowing from the above finding, found that the claim had not been substantiated and therefore the same failed.
24. On whether the counterclaim had been proved, the Learned Adjudicator found that, having found that the Claimant had no legal capacity to sue on behalf of its director, Florence Mwende, the issues raised in the counterclaim did not arise and therefore the same failed.
25. Consequently, the claim was dismissed with no orders as to costs.
26. The appeal was canvassed by way of written submissions.
27. At the outset, the Appellant submitted that the appeal was merited and proposed to merge Grounds 1 and 2 and argue them as one ground, and to combine Grounds 2 and 4 and argue them as one ground.
28. The Appellant submitted that its claim before the subordinate court proceeded by way of documents in terms of Section 30 of the Small Claims Court Act No. 2 of 2016.
29. In support of its claim, the Appellant tendered documentary exhibits whose authenticity was not challenged by the Respondent.
30. The Appellant submitted that having proved that it lent money to the Respondent and the Respondent having admitted the said fact, it behoved the trial Court to enter judgment in favour of the Appellant.
31. The Appellant submitted that the Loan Application Form duly executed by the Respondent without coercion or undue influence was a crucial piece of evidence which the Respondent wholly failed to rebut.
32. The Appellant further submitted that the said documentary exhibit together with the Personal Loan Agreement and Acknowledgement of Debt Form dated 18/11/2024 were admissible in evidence in terms of Section 97(1) of the Evidence Act.
33. The Appellant submitted that it was not in dispute that it was a body corporate with power to sue and be sued. It was submitted that a company such as the Appellant can only run its affairs through physical persons such as directors.
34. The Appellant submitted that the Learned Adjudicator acknowledged in her judgment that Florence Mwende was the Appellant’s director and further held that the money sent to the Respondent was possibly sent by the Appellant’s director.
35. The Appellant submitted that despite finding and holding that Florence Mwende was the Appellant’s director, the Learned Adjudicator nevertheless dismissed the Appellant’s claim, which amounted to a misdirection on a point of law.
36. The Appellant submitted that having discharged its burden of proof in terms of Section 107 of the Evidence Act, it deserved judgment in its favour.
37. The Appellant further submitted that the question of the Appellant’s capacity to sue was a creation of the trial Court and that all its documentary exhibits bore its letterhead, which was a clear indication that it was the Appellant suing in its own name.
38. The Appellant submitted that the trial Court therefore erred in law by rejecting its claim despite the existence of abundant evidence on record demonstrating the nexus between the Appellant and its director, Florence Mwende.
39. The Appellant urged the Court to set aside the trial Court’s findings on capacity to sue and substitute the same with a finding that the Appellant was possessed of capacity to sue as it did.
40. The Appellant further submitted that the trial Court violated Section 26 of the Small Claims Court Act by failing to enter judgment in favour of the Appellant despite the Respondent having admitted part of the claim.
41. The Appellant submitted that the said admission was contained in paragraph 5 of the Response to Claim as well as in the Respondent’s Witness Statement dated 27/02/2025.
42. The Appellant submitted that the Respondent admitted receiving Kshs. 187,500 and further admitted making payments of Kshs. 64,500 and Kshs. 30,000, leaving a balance which remained unpaid.
43. The Appellant submitted that the trial Court's failure to enter judgment for the admitted sum amounted to a misdirection on a point of law.
44. The Appellant further submitted that the Learned Adjudicator’s omission to find for the Appellant violated its right to a fair hearing as guaranteed under Article 50(1) of the Constitution of Kenya.
45. The Appellant therefore urged the Court to find merit in the appeal and grant the orders sought.
46. The Respondent neither filed nor served any submissions in opposition to the appeal
47. Having considered the Memorandum of Appeal, the record of appeal and the submissions by the Appellant, I believe that the following issues arise for determination:
48. Whether the Learned Adjudicator erred in law and fact in finding that the Appellant had failed to establish that the loan advanced to the Respondent was advanced by the Appellant and was consequently recoverable by the Appellant; Whether the Learned Adjudicator erred in law by failing to give effect to any admission of the claim made by the Respondent pursuant to section 26 of the Small Claims Court Act; Whether the proceedings before the Learned Adjudicator resulted in a violation of the Appellant's right to a fair hearing under Article 50(1) of the Constitution;
49. Since it is an appeal from the Small Claims Court, a consideration of the Court’s appellate jurisdiction is apt.
50. Section 38 of the Small Claims Court Act provides that a person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.
51. Being an appeal from the Small Claims Court, it is circumscribed by section 38 of the Small Claims Court Act to matters of law only.
52. In Otieno Ragot and Company Advocates vs National Bank of Kenya Limited (2020) eKLR, the court observed that.
‘…This is a second appeal. I am alive to my duty as a second appellate court to determine matters of law only unless it is shown that the courts below considered matters they should not have considered, or they failed to consider matters they should have considered, or, looking at the entire decision, it is perverse.
53. In Twaher Abdulkarim Mohammed vs Independent Electoral and Boundaries Commission & 2 others (2014) eKLR, the Court held that a decision is erroneous in law if it is one to which no reasonable tribunal properly directing itself could have arrived at. This means that the decision must disclose an erroneous exposition of the law, including the duty to properly analyze the evidence led.
54. I have examined the Appellant’s Memorandum of Appeal, wherein it is alleged that the court did not properly analyze the evidence, thereby arriving at an erroneous decision in law. To my mind, that discloses a point of law that properly grounds the appeal.
55. As an appellate court, I have the duty to reconsider the evidence, but in this instance, without the caution of bearing in mind that I did not hear the witnesses directly since the proceedings before the subordinate court proceeded under section 30 of the Small Claims Court Act.
56. I will start with the issue of whether the alleged debt was owed to Amka Credit or to Florence Mwende personally; having gone through the pleadings in the court below, I am not persuaded that this was an issue that arose from the pleadings and that it was one that the subordinate court was called upon to determine as arising from the pleadings.
57. The issue arose for the first time in the Respondent’s written submissions in response to the Appellant’s submissions. I therefore hold the view that the subordinate court ought not to have determined the case purely on account of that issue alone as it did.
58. The Learned Adjudicator fell into error by treating the issue as one of the Appellant's capacity to sue on behalf of Florence Mwende. The Appellant did not purport to sue on behalf of Florence Mwende; it sued in its own name. The real question was whether the evidence established that Florence Mwende acted on behalf of the Appellant in disbursing the loan. That issue ought to have been determined from the totality of the evidence.
59. I have considered the loan application, the loan agreement, the acknowledgment, the screenshots adduced by the Respondent, the company letterhead, the witness statement by the Appellant, the Respondent’s witness statement and Florence Mwende’s undisputed position as director of the Appellant; from the totality of the evidence availed in the subordinate court, I entertain no doubt and indeed enter the verdict that the totality of the evidence established the fact that Florence Mwende acted on behalf of the Appellant in disbursing the loan.
60. The other issue is on the alleged admission by the Respondent. At paragraph 5 of her response to the claim before the subordinate court dated 27 th February 2025, the Respondent expressly admits to owing the Appellant KShs 93,000; she reiterates the same in her witness statement dated 27 th February 2025.
61. Section 26 of the Small Claims Court Act provides that, if the Respondent admits only part of the claimant’s case, the Court must record that admission as an order in favour of the claimant.
62. The Learned Adjudicator had no reason not to comply with the said provision and record the admission in favour of the Appellant.
63. I am mindful that the Respondent counterclaimed that the amount advanced was non-refundable because the Appellant’s business was illegal. Since the counterclaim was dismissed and the Respondent did not appeal the dismissal, I cannot consider the same in the present case.
64. On the Appellant’s claim, I find that the Respondent’s evidence was more probable, particularly considering the screenshots which demonstrated the exact amounts disbursed and refunded. I also noted the discrepancies between the amounts indicated in the application form, the acknowledgment, and the screenshots of the money transfers.
65. On interest payable, I do not doubt that, as evidenced by the totality of the documents adduced by both parties, the Respondent contracted to pay interest on the money advanced to her, as that was an express term of the agreement between the parties.
66. The contractual interest rate is 25% per month, which translates to a 300% annual rate, to my mind, is not a genuine commercial rate but a punitive and unconscionable rate designed to punish default rather than compensate for delayed payment.
67. I find that the agreed default interest of 30% per month is so oppressive, extortionate, or unconscionable as to justify judicial interference.
68. In the circumstances, I decline to enforce the said interest rate.
69. The next issue is whether the proceedings before the Learned Adjudicator violated the Appellant’s constitutional rights under Article 50 of the Constitution.
70. I have gone through the record of appeal, including the record of the proceedings. I cannot perceive any violation of the Appellant’s rights; the fact that the subordinate court made a finding that the Appellant does not agree with cannot amount to a violation of the constitutional rights of the Appellant. I find that the ground of the appeal is lacking in merit.
71. In light of my findings aforestated, I find that the Appellant’s appeal is merited and I therefore order as follows;
That the Appeal succeeds
A. The decision of the Hon. Adjudicator in Machakos (SCCCOM) Small Claims Court No. E073 of 2025 delivered on 12 th June 2025 is hereby set aside and substituted with an order allowing the Appellant’s claim at Kshs 93,000/-
B. The Respondent shall pay interest on Kshs 93, 000/- at Court rates from the date of institution of the claim at the subordinate court till payment in full.
C. The Appellant shall have the costs of the Appeal.
Dated, signed and delivered via Microsoft Teams at Mombasa this 17 th day of September 2026
In the presence of;
Hamisi C/A
Ngolya for the Appellant
N/A for the Respondent
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