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INTRODUCTION
The appellants in this matter were the respondents in the Small Claims Court in Claim No. 1325 of 2023 MAMUKA VALUERS (MANAGEMENT) LIMITED VS. JOSEPH GICHOYA KIMANI and GIMWA HOLDINGS LTD.
The claim by the claimant was for the sum of Kshs. 851,978 as per amended statement of claim dated 22 nd February 2023.
The respondents in answer to the claim filed a counter claims as hereunder:-
1 st respondent in the response to claim he put a counter claim seeking entry of judgment in his favor for the sum of Kshs. 964, 972 and as per the response dated 25 th April 2023.
2 nd respondent by way of a response dated the 6 th March 2023 filed a counter claim for the sum of Kshs. 1, 276, 922.
The Judgment which is the subject of the appeal was delivered on 4 th August 2023 and in it the adjudicator entered judgment for the claimant in the sum of Kshs. 778, 276 plus costs and interests until payment in full.
The appellants aggrieved by the decision have appealed to this court raising the following grounds:-
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while on the contrary, the same was filed on 27th September 2022 at 11:34 AM;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while disregarding the Appellant''s filed Certificate of Service dated 6th October 2022 which evidenced that the Appellant''s pleadings were served upon the Respondent on 28th September 2022. The Appellant''s pleadings therefore could not have been served without being filed;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 after the Respondent settled the Appellant''s outstanding Invoice on 30th September 2022 while on the contrary, the Respondent did not settle the Appellant''s outstanding Invoice until it was served with the Appellant''s pleadings on 28th September 2022;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while both the Appellant and the Respondent had agreed on the undisputed fact that the Appellant''s claim was filed on 27th September 2022;
The court directed parties to the appeal to file submissions in respect of the appeal and each of the parties has complied.
APPELLANT’S CASE.
The appellants submissions dated the 5 th day of July 2024 were filed by Moses Osaro and Co. Advocates for both appellants.
In the submissions counsel for the appellant has raised the issue of jurisdiction of the Small Claims Court in determining the matter, on account of lack of pecuniary jurisdiction.
According to the appellants the 2 nd appellant had raised a Notice of Motion dated 6/3/2023 seeking orders of striking out its name from the claim as well as striking out the entire claim for lack of pecuniary and subject matter jurisdiction.
The Notice of Motion was dismissed.
The appellants have submitted that the adjudicator erred in law by entertaining a dispute that had a counter claim in it for the sum of Kshs. 1, 276, 922 which amount exceeded the pecuniary jurisdiction of the Small claims court.
The appellants further took issue with the adjudicator’s decision for the reason that the subject matter of the dispute was rent arrears and ownership of parcels of land thus by operation of the law the court lacked subject matter jurisdiction to entertain the suit.
Further counsel for the appellants raised the issue of privity of contracts between the 2 nd appellant and the respondents and whether the 2 nd appellant was properly joined in the proceedings. The appellant was indeed aggrieved by the decision of the learned Honorable magistrate allowing the respondents to join him in the proceedings.
Finally, the appellant’s counsel argued that the evidence in support of the counterclaim was not considered by the adjudicator in dismissing the counter claims. The appellants contend that had the magistrate considered the same, he would have arrived at different finding in law.
In support of the grounds of Appeal counsel relied on the case of Owners of Motor Vessel “Lillians” Vs. Caltex Oil (Kenya) Ltd [1989] KLR 1 where the Court of Appeal stated :-
“Where a court takes upon itself to exercise jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgment is given.”
The appellants have urged this court to consider that since Section 12(3) of the Small Claims Court’s Act sets the pecuniary jurisdiction of the Small Claims Court at Kshs. 1,000,000 it is not open for the court to entertain disputes that involve sums in excess of Kshs. 1 Million.
The appellants also contended that the Small Claim’s Court by entertaining a claim involving rent arrears and land ownership overstepped the bounds set for it in law.
Counsel cited the case of Christoersen Vs. Karneet Kaur Selumi t/a The Random Shop (Civil Appeal No. E036 of 2022) [2022] KEHC 14035 (KLR) (Commercial and Tax) (18 October 2022) 2022 KEHC 14035 (KLR) to argue that the Small Claims Court lacks jurisdiction to hear such matters.
The appellants have further urged this court to find that the respondent would not have suffered any prejudice had the court struck out the suit since Section 48 of the Small Claims Court allows a party to file a suit before any other court.
The 2 nd appellant argues that there was no privity of contract between him and the respondent since the contract of service was between the 1 st appellant and the respondent.
As a consequence, the appellants have urged this court to allow the appeal and set aside the judgment.
RESPONDENT’S CASE
The respondent vide submissions dated 30 th September 2024 has urged the court to dismiss the appeal.
On the issue of jurisdiction of the Adjudicator to entertain the claim, the respondent submitted that the lower court pronounced itself on the issue of jurisdiction and proceeded to hear the matter.
The respondent contends that the appellant did not file an interlocutory appeal on the issue of jurisdiction thus they are precluded from raising the matter now.
According to the respondent after that decision by the court the parties entered into a consent on 3 rd May 2023 to appoint certified public accountants to scrutinize the respective accounts. It upon the conclusion of the exercise by the accountants that the respondent argues that the court proceeded to write the judgment condemning the appellants.
The respondent thus argues that the outcome of the process and the judgment by the adjudicator should bind the parties and that this court should not be inclined to interfere with the same.
ANALYSIS AND DETERMINATION
The appeal raises the critical question of jurisdiction.
The appellant has raised basically the issues of pecuniary jurisdiction of the Small Claims Court and the issue of the subject matter jurisdiction.
Once the issue of jurisdiction is raised before a court the matter must be dealt with in limine .
It is important to point out that even though the Lower Court had dealt with the issue of jurisdiction and delivered a Ruling on it, the appellants are not precluded from raising the same before this court.
It matters not that the party that lost the challenge on jurisdiction in the lower court did not file an interlocutory appeal.
It is trite law that the issue of jurisdiction should be raised at the earliest opportunity as was done in this matter but even where that does not happen, a party can still raise the matter on appeal.
The jurisdiction of the Small Claims court is well set out under Section 12 of the Small Claims Courts Act which provides:-
“Nature of claims and pecuniary jurisdiction
(1) Subject to this Act, the Rules and any other law, the Court has jurisdiction to determine any civil claim relating to—
(a) a contract for sale and supply of goods or services;
(b) a contract relating to money held and received;
(c) liability in tort in respect of loss or damage caused to any property or for the delivery or recovery of movable property;
(d) compensation for personal injuries; and
(e) set-off and counterclaim under any contract.
(2) Without prejudice to the generality of subsection (1), the Court may exercise any other civil jurisdiction as may be conferred under any other written law.
(3) The pecuniary jurisdiction of the Court shall be limited to one million shillings.
(4) Without prejudice to subsection (3), the Chief Justice may determine by notice in the Gazette such other pecuniary jurisdiction of the Court as the Chief Justice thinks fit.”
A Small Claims Court cannot entertain a claim for a sum exceeding Kshs. 1 Million shillings. It is the view of this court that once the 2 nd appellant filed a counterclaim claiming a sum in excess of Ksh 1,000 000 shillings, the court should have deeply reflected on the issue of jurisdiction since there was no way it could consider the claimants claim separate from the defence and counterclaim by the 2 nd appellant.
The respondent vide his amended statement of Claim dated 22 nd February 2023 sought a judgment for the sum of Kshs. 851,978 but in the statement of claim made an important statement:-
“By filing this claim, I (the claimant) hereby waive and forfeit the recovery of all sums in excess of Kshs. 1,000,000 excluding costs and interest.”
It is clear that even the respondent was alive to the pecuniary jurisdiction of the court . The option open in law to the respondent when the 2 nd appellant lodged a counterclaim together with the defense claiming a figure in excess of Ksh 1million was to move the court to strike out the counterclaim for want of jurisdiction but that did not happen. The court similarly did not seize the opportunity to do so when the notice of motion was presented. The court having failed to decisively deal with the matter it behooves this court to determine the question.
The 1 st appellant prayed for an award of Kshs. 964,972 and the 2 nd appellant sought an award for the sum of Kshs. 1, 276, 922 by way of counterclaim.
It is clear that the issue of pecuniary jurisdiction was central and still remains central to the decision that this court is bound to make.
The claimants claim lay within the pecuniary limit set out under Section 12 of the Small Claims Court Act. However, the counterclaim by the 2 nd appellant was beyond the pecuniary jurisdiction of the court.
The law in counter claims was spelt out by the court in Ocean Engineering Works Ltd & another v SBM Bank of Kenya Ltd (Civil Appeal 112 of 2021) [2024] KEELC 4724 (KLR) (5 June 2024) (Ruling)
“A Counter - Claim is considered a standalone suit against the Plaintiff and can be filed along with the Defendant’s defense to the original claim.”
Sir Dinshah Fardunji Mulla The Code of Civil Procedure , 18 th Edn, 2011 at Page 1928 states;- “ A counterclaim has the effect of a cross suit but only one final judgment is to be pronounced in the suit on the original claim of the plaintiff and the counterclaim of the defendant .’’
It follows therefore that a court seized of a matter where the original claim and the counterclaim cannot be determined together without arrogating itself jurisdiction that it does not have must down its tools as soon as that fact is brought to its attention. It is a complete waste of precious judicial time to purport to hear a matter without jurisdiction.
It is should have bothered the court what would be the effect of its judgment if it were to dismiss the original claim and find in favor of the second appellant whose claim was beyond the court’s pecuniary jurisdiction. The judgment would be a nullity.
It is settled law that jurisdiction cannot be conferred by consent of parties. The respondent seems to suggest that since the appellants agreed to appoint auditors to undertake the process of reconciliation of accounts, by implication the appellants acquiesced to the court’s jurisdiction. With tremendous respect to counsel for the respondent that cannot be so . See Equity Bank Ltd Vs Bruce Mutie Mutuku T/A Diani Tour and Travel (2016)eKLR.
In Macharia and Another Vs Kenya Commercial Bank Limited and 2 others (Application 2 of 2011) {2012} KESC 8 (KLR) (23 October 2012 ) (Ruling) the supreme court held that ;-
‘’A courts jurisdiction flows either from the constitution or legislation. Thus, courts of law can only exercise jurisdiction conferred by the constitution or other written law. It cannot arrogate itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second respondents in his submission that the issue as to whether a court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the court cannot entertain any proceedings. This court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission (Applicant), Constitutional Application Number 2 of 2021 . where the Constitution exhaustively provides for the jurisdiction of a court of law, the court must operate within the constitutional limits.
45. The pronouncement of the supreme court above leaves no doubt that once the Constitution or a statute confers jurisdiction to a court, that court must at all times act within the confines of that jurisdiction and resist the temptation to exceed it.
46. The pecuniary jurisdiction of the Small Claims Court is set at Ksh 1 million and no more. The adjudicator in this matter proceeded with the same without jurisdiction thus the judgment rendered remains a nullity, the Appeal is hereby allowed and the judgment is hereby set aside with costs to the appellants.
It is so ordered.
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INTRODUCTION
The appellants in this matter were the respondents in the Small Claims Court in Claim No. 1325 of 2023 MAMUKA VALUERS (MANAGEMENT) LIMITED VS. JOSEPH GICHOYA KIMANI and GIMWA HOLDINGS LTD.
The claim by the claimant was for the sum of Kshs. 851,978 as per amended statement of claim dated 22 nd February 2023.
The respondents in answer to the claim filed a counter claims as hereunder:-
1 st respondent in the response to claim he put a counter claim seeking entry of judgment in his favor for the sum of Kshs. 964, 972 and as per the response dated 25 th April 2023.
2 nd respondent by way of a response dated the 6 th March 2023 filed a counter claim for the sum of Kshs. 1, 276, 922.
The Judgment which is the subject of the appeal was delivered on 4 th August 2023 and in it the adjudicator entered judgment for the claimant in the sum of Kshs. 778, 276 plus costs and interests until payment in full.
The appellants aggrieved by the decision have appealed to this court raising the following grounds:-
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while on the contrary, the same was filed on 27th September 2022 at 11:34 AM;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while disregarding the Appellant''s filed Certificate of Service dated 6th October 2022 which evidenced that the Appellant''s pleadings were served upon the Respondent on 28th September 2022. The Appellant''s pleadings therefore could not have been served without being filed;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 after the Respondent settled the Appellant''s outstanding Invoice on 30th September 2022 while on the contrary, the Respondent did not settle the Appellant''s outstanding Invoice until it was served with the Appellant''s pleadings on 28th September 2022;
The Honorable Magistrate determined that the Appellant''s claim was filed on 7th October 2022 while both the Appellant and the Respondent had agreed on the undisputed fact that the Appellant''s claim was filed on 27th September 2022;
The court directed parties to the appeal to file submissions in respect of the appeal and each of the parties has complied.
APPELLANT’S CASE.
The appellants submissions dated the 5 th day of July 2024 were filed by Moses Osaro and Co. Advocates for both appellants.
In the submissions counsel for the appellant has raised the issue of jurisdiction of the Small Claims Court in determining the matter, on account of lack of pecuniary jurisdiction.
According to the appellants the 2 nd appellant had raised a Notice of Motion dated 6/3/2023 seeking orders of striking out its name from the claim as well as striking out the entire claim for lack of pecuniary and subject matter jurisdiction.
The Notice of Motion was dismissed.
The appellants have submitted that the adjudicator erred in law by entertaining a dispute that had a counter claim in it for the sum of Kshs. 1, 276, 922 which amount exceeded the pecuniary jurisdiction of the Small claims court.
The appellants further took issue with the adjudicator’s decision for the reason that the subject matter of the dispute was rent arrears and ownership of parcels of land thus by operation of the law the court lacked subject matter jurisdiction to entertain the suit.
Further counsel for the appellants raised the issue of privity of contracts between the 2 nd appellant and the respondents and whether the 2 nd appellant was properly joined in the proceedings. The appellant was indeed aggrieved by the decision of the learned Honorable magistrate allowing the respondents to join him in the proceedings.
Finally, the appellant’s counsel argued that the evidence in support of the counterclaim was not considered by the adjudicator in dismissing the counter claims. The appellants contend that had the magistrate considered the same, he would have arrived at different finding in law.
In support of the grounds of Appeal counsel relied on the case of Owners of Motor Vessel “Lillians” Vs. Caltex Oil (Kenya) Ltd [1989] KLR 1 where the Court of Appeal stated :-
“Where a court takes upon itself to exercise jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgment is given.”
The appellants have urged this court to consider that since Section 12(3) of the Small Claims Court’s Act sets the pecuniary jurisdiction of the Small Claims Court at Kshs. 1,000,000 it is not open for the court to entertain disputes that involve sums in excess of Kshs. 1 Million.
The appellants also contended that the Small Claim’s Court by entertaining a claim involving rent arrears and land ownership overstepped the bounds set for it in law.
Counsel cited the case of Christoersen Vs. Karneet Kaur Selumi t/a The Random Shop (Civil Appeal No. E036 of 2022) [2022] KEHC 14035 (KLR) (Commercial and Tax) (18 October 2022) 2022 KEHC 14035 (KLR) to argue that the Small Claims Court lacks jurisdiction to hear such matters.
The appellants have further urged this court to find that the respondent would not have suffered any prejudice had the court struck out the suit since Section 48 of the Small Claims Court allows a party to file a suit before any other court.
The 2 nd appellant argues that there was no privity of contract between him and the respondent since the contract of service was between the 1 st appellant and the respondent.
As a consequence, the appellants have urged this court to allow the appeal and set aside the judgment.
RESPONDENT’S CASE
The respondent vide submissions dated 30 th September 2024 has urged the court to dismiss the appeal.
On the issue of jurisdiction of the Adjudicator to entertain the claim, the respondent submitted that the lower court pronounced itself on the issue of jurisdiction and proceeded to hear the matter.
The respondent contends that the appellant did not file an interlocutory appeal on the issue of jurisdiction thus they are precluded from raising the matter now.
According to the respondent after that decision by the court the parties entered into a consent on 3 rd May 2023 to appoint certified public accountants to scrutinize the respective accounts. It upon the conclusion of the exercise by the accountants that the respondent argues that the court proceeded to write the judgment condemning the appellants.
The respondent thus argues that the outcome of the process and the judgment by the adjudicator should bind the parties and that this court should not be inclined to interfere with the same.
ANALYSIS AND DETERMINATION
The appeal raises the critical question of jurisdiction.
The appellant has raised basically the issues of pecuniary jurisdiction of the Small Claims Court and the issue of the subject matter jurisdiction.
Once the issue of jurisdiction is raised before a court the matter must be dealt with in limine .
It is important to point out that even though the Lower Court had dealt with the issue of jurisdiction and delivered a Ruling on it, the appellants are not precluded from raising the same before this court.
It matters not that the party that lost the challenge on jurisdiction in the lower court did not file an interlocutory appeal.
It is trite law that the issue of jurisdiction should be raised at the earliest opportunity as was done in this matter but even where that does not happen, a party can still raise the matter on appeal.
The jurisdiction of the Small Claims court is well set out under Section 12 of the Small Claims Courts Act which provides:-
“Nature of claims and pecuniary jurisdiction
(1) Subject to this Act, the Rules and any other law, the Court has jurisdiction to determine any civil claim relating to—
(a) a contract for sale and supply of goods or services;
(b) a contract relating to money held and received;
(c) liability in tort in respect of loss or damage caused to any property or for the delivery or recovery of movable property;
(d) compensation for personal injuries; and
(e) set-off and counterclaim under any contract.
(2) Without prejudice to the generality of subsection (1), the Court may exercise any other civil jurisdiction as may be conferred under any other written law.
(3) The pecuniary jurisdiction of the Court shall be limited to one million shillings.
(4) Without prejudice to subsection (3), the Chief Justice may determine by notice in the Gazette such other pecuniary jurisdiction of the Court as the Chief Justice thinks fit.”
A Small Claims Court cannot entertain a claim for a sum exceeding Kshs. 1 Million shillings. It is the view of this court that once the 2 nd appellant filed a counterclaim claiming a sum in excess of Ksh 1,000 000 shillings, the court should have deeply reflected on the issue of jurisdiction since there was no way it could consider the claimants claim separate from the defence and counterclaim by the 2 nd appellant.
The respondent vide his amended statement of Claim dated 22 nd February 2023 sought a judgment for the sum of Kshs. 851,978 but in the statement of claim made an important statement:-
“By filing this claim, I (the claimant) hereby waive and forfeit the recovery of all sums in excess of Kshs. 1,000,000 excluding costs and interest.”
It is clear that even the respondent was alive to the pecuniary jurisdiction of the court . The option open in law to the respondent when the 2 nd appellant lodged a counterclaim together with the defense claiming a figure in excess of Ksh 1million was to move the court to strike out the counterclaim for want of jurisdiction but that did not happen. The court similarly did not seize the opportunity to do so when the notice of motion was presented. The court having failed to decisively deal with the matter it behooves this court to determine the question.
The 1 st appellant prayed for an award of Kshs. 964,972 and the 2 nd appellant sought an award for the sum of Kshs. 1, 276, 922 by way of counterclaim.
It is clear that the issue of pecuniary jurisdiction was central and still remains central to the decision that this court is bound to make.
The claimants claim lay within the pecuniary limit set out under Section 12 of the Small Claims Court Act. However, the counterclaim by the 2 nd appellant was beyond the pecuniary jurisdiction of the court.
The law in counter claims was spelt out by the court in Ocean Engineering Works Ltd & another v SBM Bank of Kenya Ltd (Civil Appeal 112 of 2021) [2024] KEELC 4724 (KLR) (5 June 2024) (Ruling)
“A Counter - Claim is considered a standalone suit against the Plaintiff and can be filed along with the Defendant’s defense to the original claim.”
Sir Dinshah Fardunji Mulla The Code of Civil Procedure , 18 th Edn, 2011 at Page 1928 states;- “ A counterclaim has the effect of a cross suit but only one final judgment is to be pronounced in the suit on the original claim of the plaintiff and the counterclaim of the defendant .’’
It follows therefore that a court seized of a matter where the original claim and the counterclaim cannot be determined together without arrogating itself jurisdiction that it does not have must down its tools as soon as that fact is brought to its attention. It is a complete waste of precious judicial time to purport to hear a matter without jurisdiction.
It is should have bothered the court what would be the effect of its judgment if it were to dismiss the original claim and find in favor of the second appellant whose claim was beyond the court’s pecuniary jurisdiction. The judgment would be a nullity.
It is settled law that jurisdiction cannot be conferred by consent of parties. The respondent seems to suggest that since the appellants agreed to appoint auditors to undertake the process of reconciliation of accounts, by implication the appellants acquiesced to the court’s jurisdiction. With tremendous respect to counsel for the respondent that cannot be so . See Equity Bank Ltd Vs Bruce Mutie Mutuku T/A Diani Tour and Travel (2016)eKLR.
In Macharia and Another Vs Kenya Commercial Bank Limited and 2 others (Application 2 of 2011) {2012} KESC 8 (KLR) (23 October 2012 ) (Ruling) the supreme court held that ;-
‘’A courts jurisdiction flows either from the constitution or legislation. Thus, courts of law can only exercise jurisdiction conferred by the constitution or other written law. It cannot arrogate itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second respondents in his submission that the issue as to whether a court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the court cannot entertain any proceedings. This court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission (Applicant), Constitutional Application Number 2 of 2021 . where the Constitution exhaustively provides for the jurisdiction of a court of law, the court must operate within the constitutional limits.
45. The pronouncement of the supreme court above leaves no doubt that once the Constitution or a statute confers jurisdiction to a court, that court must at all times act within the confines of that jurisdiction and resist the temptation to exceed it.
46. The pecuniary jurisdiction of the Small Claims Court is set at Ksh 1 million and no more. The adjudicator in this matter proceeded with the same without jurisdiction thus the judgment rendered remains a nullity, the Appeal is hereby allowed and the judgment is hereby set aside with costs to the appellants.
It is so ordered.
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