1. On 28th August, 2024,a judgment was entered in Milimani Small Claims Court at Nairobi SCCCOM Claim No. E9414 OF 2023 against the appellant.
2. This precipitated the filing of the Memorandum of appeal dated 8th September 2024 wherein the appellant raises the following grounds;
1) The Learned Adjudicator erred in law and in fact in misinterpreting the provisions of Section 12 of the Small Claims Act No. 2 of 2016 and finding that it had jurisdiction over the matter.
2) The Learned Adjudicator erred in law and in fact by failing to acknowledge that the matter was on rent deposit, which subject the Small Claims court has no jurisdiction.
3) The Learned Adjudicator erred in law and in fact in finding it has jurisdiction over the matter despite the Claimant admitting the cause of action arose from a tenancy.
4) The Learned Adjudicator erred in law and in fact in awarding damages to the claimant while the claimant did not prove damages.
3. It seeks orders that: -
a) The Appeal herein be allowed.
b) The Judgment delivered by Honorable Gillian Simatwo(RM) on August 28, 2024 in Milimani Small Claims Court at Nairobi SCCCOM Claim No. E9414 OF 2023 be set aside.
c) A declaration that the trial court had no jurisdiction to hear and determine the suit as it relates to rent deposit and subsequently dismiss the matter.
d) The Respondent be ordered to pay the costs of the Appeal as well as the costs in the Small Claims Court.
e) The Honorable Court gives any further orders it may deem fit and proper to give.
4. It is the appellant’s submission that there was an agreement with the respondent wherein the respondent was to occupy its apartment in July.
5. The appellant submits that no tenancy agreement was produced to prove that there was a tenancy agreement in existence.
6. The appellant argues that the small claims court lacked jurisdiction to determine the claim in the circumstances.
7. The claimant was to commence tenancy on 1 stJuly 2023.However the Appellant informed the Respondent that the same was not ready for occupation.
8. The Claimant was forced to put up temporary residence in a hotel from 8th July 2023 to 19th July 2023 incurring an expense.
9. The Appellant filed a Response to the Statement of Claim dated 28th May 2024 denying the allegations of the Respondent stating that the claim was anchored on a Tenancy Agreement which was not produced by the Claimant.
10. On or about June July, 2023, the Respondent claimed that she entered into a Tenancy Agreement with the Appellant. The Respondent advanced a total sum of KES. 61 000.00 to the Appellant to secure Apartment 602. The Appellant would, in turn, make it available for the Respondent on July 1, 2023.
11. The Respondent's case was that the Appellant did not grant vacant possession, and in the circumstances, the Respondent was forced to put up temporary residence in a hotel from July 19, 2023 incurring expenses. In response to the Statement of Claim, the Appellant filed a Response to the Statement of Claim dated November 1, 2023 stating that:
a) The Small Claims Court had no jurisdiction to hear and determine the matter because, from the pleadings the claim was anchored in tenancy, a subject matter the Small Claims Court lacked jurisdiction.
b) The Appellant further stated that the parties need to be in a legally binding agreement for there to be a breach and since the Respondent has not provided any Agreement, there cannot be a breach where no enforceable contract exists.
c) The Respondent did not produce to the court any receipts or invoices bearing the name of the Appellant to indicate that the money was sent to the Appellant and the purpose of the money thereof.
d) The Appellant stated that the losses incurred by the Respondent cannot be attributed to the Appellant as the Appellant did not owe the Respondent any duty.
12. It argues that the Small Claims Court erred in finding that it had jurisdiction to hear and determine the matter, as the Supreme Court in Samuel Kamau Macharia & Another vs. Kenya Commercial Bank Limited & 2 Others (20121 eKLR reaffirmed the fundamental nature of jurisdiction in judicial proceedings. Prior to its pronouncement on the limits of judicial jurisdiction, it considered the nature of the appeal and the issues raised concerning its own authority to hear the matter. The Court emphasized the critical importance of jurisdiction, stating as follows:
"A Court's jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second Appellants 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 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law."
13. Section 12(1) of under the Small Claims Court Act, 2016 sets out the specific subject-matter jurisdiction of the Court in the following terms;-
12. Nature of claims and pecuniary jurisdiction
a) Subject to this Act, the rules and any other law, the court has jurisdiction to determine any civil claim relating to —
i. a contract for sale and supply of goods or services;
ii. a contract to money held and received;
iii. liability in tort in respect of loss or damage cause to any property or for the delivery or recovery of moveable property;
iv. compensation for personal injuries; and
v. set-off and counterclaim under any contract.
14. It sis submitted that from the foregoing, it is clear that the Small Claims Court does not possess general civil jurisdiction. Rather, its mandate is narrowly circumscribed to the specific categories of claims set out under Section 12(1) of the Act. Accordingly, any matter falling outside these prescribed heads of claim lies beyond the Court's jurisdictional competence. The assumption of jurisdiction by the Small Claims Court is unlawful and renders the proceedings a nullity ab initio.
15. In Paragraph 3 of the Respondent's Statement of Claim, the Respondent states that she sought tenancy at Glenn Apartment where she advanced a total sum of Kes. 61 000 to secure an Apartment and Paragraph 2 of the Respondent's witness statement the Respondent further states that the purpose of the Kes. 61 000 was a deposit to secure the Apartment and one month's rent.
16. Reliance is placed in the case of Republic v Mandera County Government; Mohamed (Exparte Applicant); Hassan & 3 others (Interested Parties) (Judicial Review EOOI of 2023) [2024] KEHC 1180 (KLR) (31 January 2024) (Ruling) stated as follows:
In general, a Court is bound to entertain proceedinas that fall within its jurisdiction...Jurisdiction is determined on the basis of pleadings and not the substantive merits of_ the case. The South African Constitutional Court [ See In the matter between Vuyile Jackson Gcaba vs Minister for Safety and Security First & Others Case CCT 64/08[20091 ZACC 261 had this to say: -
"Jurisdiction is determined on the basis of the pleadings... and not the substantive merits of the case... In the event of the Court's Jurisdiction being challenged at the outset (in limine), the applicant's pleadings are the determining factor. They contain the legal basis of the claim under which the applicant has chosen to invoke the court's competence. While the pleadings — including in motion proceedings, not only the formal terminology of the notice of motion, but also the contents of the supporting affidavits — must be interpreted to establish what the legal basis of the applicant's claim is, it is not for the court to say that the facts asserted by the applicant would also sustain another claim, cognizable only in another court. If however the pleadings, properly interpreted, establish that the applicant is asserting a claim one that is to be determined exclusively by...{another court}, the High Court would lack jurisdiction... "
17. The suit must be determined solely on the basis of the issues as framed in her pleadings upon which her claim is founded.
18. This position was held in Ogando v Watu Credit Limited & another (Civil Suit E098 of 2022) [20241 KEHC 3074 (KLR) (14 March 2024) (Judgment) where the Court quoted the Tanzanian court in the case of Salim Said Mtomekela Versus Mohamed Abdallah Mohamed Dar-Es-SaIaam Court of Appeal Civil Appeal No. 149 Of 2019(Mugasha. J.A. Kihwelq. J.A. Rumanyika. J.A where it was held as doth:
"Pleading in law means, written presentation by a litigant in a law suit setting forth the facts upon which he/she claims legal relief or challenges the claims of his opponent. It includes claims and counterclaim but not the evidence by which the litigant intends to prove his case ... That said, since the pleading is a basis upon which the claim is found, it is settled law that, parties are bound b! their own pleadings and that any evidence produced by any of the parties which is not supportive or is at variance with what is stated in the pleadings must be ignored.(Emphasis ours)
19. The Small Claims Court erred in disregarding the Respondent's own pleadings, which clearly indicate that the claim relates to tenancy and money paid in lieu of tenancy.
20. It is a fundamental principle of statutory interpretation that words of a statute must be given their plain and ordinary meaning as was posited in the case of Republic vs. Kenya School of Law and another exp Kithinji and another NRB HC JR Misc No 120 of 2018 [20191 eKLR where the court defined rent in the following:
"In my view, the rent has a specific and known meaning which does not extend to a contract for services. To extend the meaning of rent to the rubric of a contract for sale of goods and services would amount to expanding the court's jurisdiction by craft or innovation, a practice the Supreme Court frowned upon in Samuel Kamau Macharia &Another vs. Kenya Commercial Bank Limited & 2 Others [20121 eKL R. "
21. It submits that while the Respondent asserted that the cause of action arose from a breach of an agreement, she simultaneously contended that the sums remitted to the Appellant do not fall within the ambit of a tenancy arrangement.
22. The Small Claims Court failed to interrogate or clarify the nature of the alleged agreement, particularly in light of the Respondent's own admission that the payments made were in the form of rent and deposit, which are characteristic features of a tenancy agreement.
23. Once the pleadings disclosed that the cause of action arose from a tenancy relationship and that the monies allegedly paid to the Respondent constituted rent, the Court ought to have downed its tools for want of jurisdiction.
24. Reliance is placed in the case of Owners of the Motor Vessel "Lilian S" vs. Caltex Oil (Kenya) Limited (19891 KLR 1 :Nyarangi, JA expressed himself as follows:
" jurisdiction is meant the authority which a court has to decide matters that are before it or take cognizance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted and may be extended or restricted by the like means. If no restriction or limit is imposed the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the actions and matters of which the particular court has cognisance, or as to the area over which the jurisdiction shall extend, or it may partake both of these characteristics. If the jurisdiction of an inferior court or tribunal (including an arbitrator) depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it has jurisdiction; but, except where the court or tribunal has been given power to determine conclusively whether the facts exist. Where the court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgement is given...Jurisdiction is everything. Without it, a Court has no power to make one more step. Where a court has no jurisdiction there would be no basis for a continuation of proceedings pending other evidence. A Court of law downs its tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction. "
25. It submits that the Small Claims Court, by hearing and determining the matter usurped the jurisdiction of already established tribunals and courts in legislation that deal with tenancy matters in Kenya.
26. Reliance is placed in Constitutional Petition Number 359 of 2013 - Diana Kethi Kilonzo vs. IEBC and 2 Others , in which it was held that:
"We note that the Constitution allocated certain powers and functions to various bodies and tribunals. It is important that these bodies and tribunals should be given leeway to discharge the mandate bestowed upon them by the Constitution so long as they comply with the Constitution and national legislation. These bodies and institutions should be allowed to grow. The people of Kenya, in passing the Constitution, found it fit that the powers of decision-making be shared by different bodies. The decision of Kenyans must be respected, guarded and enforced. The courts should not cross over to areas which Kenyans specifically reserved for other authorities. "
27. The Respondent's pleadings, by their own admission, reveal that the claim arises from a tenancy arrangement, a subject matter expressly excluded from the jurisdiction of the Small Claims Court under Section 12(1) of the Small Claims Court Act.
28. It submits that the proceedings before the Small Claims Court were a nullity ab initio and to set aside the decision rendered therein for want of jurisdiction.
29. It submits that the Honourable Court erred in law and in fact in finding that the Respondent had proved her case, consequently awarding the Respondent the rent and one month's deposit amounting to KES. 61 000.00 and damages amounting to KES.75 990.00.
30. The award of KES. 61,000.00 as rent and deposit, alongside damages of KES. 75,990.00, was not supported by credible evidence or justified in law.
31. The Respondent did not discharge the burden of proof to the required standard, and the Court overlooked material contradictions and inconsistencies in the Respondent's case.
32. Reliance is placed in the of case of Kinyanjui Kamau v. George Kamau [20151 eKLR, the court held that;
"It is trite law that he who alleges must prove. It was therefore the duty of the plaintiff to prove his case on the balance of probabilities."
33. The Respondent alleged that she had remitted payment to the Appellant in consideration for accommodation. In support of this assertion, she produced an M-Pesa transaction message referencing an account number.
34. However, she failed to establish any evidentiary nexus between the Appellant and the said account.
35. Moreover, there was no cogent evidence adduced to demonstrate that the Appellant had undertaken to deliver vacant possession.
36. It was incumbent upon the Respondent to prove, on a balance of probabilities, that the referenced account was attributable to the Appellant and that the Appellant was under a contractual obligation to grant vacant possession to the Respondents, elements that were not proved.
37. The Appellant expressly denied ever entering into an agreement to provide accommodation to the Respondent and further denied receiving any monies from her.
38. The Honourable Court erred in law by dismissing this position as mere assertions without due consideration of the legal burden of proof.
39. It was not incumbent upon the Appellant to disprove ownership of the alleged account; rather, the burden squarely lay with the Respondent to adduce cogent and credible evidence establishing that the account in question belonged to the Appellant and that there existed a promise or agreement for accommodation.
40. The legal burden and the evidential burden. In the present matter, the legal burden rested squarely upon the Respondent to establish their case to the requisite standard. Pursuant to Section 107 of the Evidence Act, Cap 80 Laws of Kenya, he who alleges must prove.
41. Accordingly, it was incumbent upon the Respondent to adduce sufficient and credible evidence in support of the alleged agreement and the corresponding financial transactions.
42. Section 109 of the Evidence Act reinforces the principle that the burden of proof rests upon the party who would fail if no further evidence were adduced.
43. The provision states:
"The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."
44. The Small Claims Court erred in concluding that the funds were remitted by the Respondent to the Appellant without any cogent evidence.
45. The Appellant unequivocally denied knowing the Respondent or receiving any funds from her.
46. This categorical denial effectively shifted the evidentiary burden to the Respondent to substantiate the alleged remittance.
47. However, the Respondent failed to discharge this burden, having not proved on a balance of probabilities that any monies were indeed sent to, and received by, the Appellant.
48. In this regard, it was the Respondent's duty to produce sufficient evidence to establish the existence of the alleged agreement and the Appellant's receipt of funds.
49. Reliance is placed in the case of Sagala v Sagala (Civil Appeal No. 9 of 2023) [20241 KEHC 5573 (KLR) (9 May 2024), wherein it stated:
"The foregoing provisions bring out what is referred to as the legal burden of proof. That burden remains on the Claimant throughout the case."
50. The Small Claims Court, therefore, erred in shifting this burden, even implicitly, to the Appellant.
51. Damages are founded upon liability, and where liability has not been properly established, any award of damages cannot stand.
52. Reliance is placed in the Court of Appeal in the case of Catholic Diocese of Kisumu vs. Sophia Achieng TeteCivil Appeal No. 284 of 2001 [2004] 2 KLR 55 where the court held:
"It is trite law that the assessment of general damages is at the discretion of the trial court and an appellate court is not justified in substituting a figure of its own for that awarded by the Court below simply because it would have awarded a different figure if it had tried the case at first instance. The appellate court can justifiably interfere with the quantum of damages awarded by the trial court only if it is satisfied that the trial court applied the wrong principles, (as by taking into account some irrelevant factor leaving out of account some relevant one) or misapprehended the evidence and so arrived at a figure so inordinately high or low as to represent an entirely erroneous estimate."(Emphasis ours)
53. In the instant matter is appropriate for appellate interference with the award of damages.
54. The Court's consequential award of rent, deposit, and damages was founded on an erroneous assessment of both the evidence and the applicable legal standards.
55. On the issue of costs,relaince is placed in The Black's Law Dictionary defines costs to mean:
"The expenses of litigation, prosecution or other legal transaction especially those allowed in favour of one party against the other. "
56. Section 27 of the Civil Procedure Act CAP 21 Laws of Kenya, reads:
"27. Costs
Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid: and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order."
57. It submits that this Honourable Court grants costs to the Appellant.
The Respondents’ case;
58. According to the respondent the small claims court had jurisdiction and indeed arrived at legal judgment.
59. She argues that she made out a case through her pleadings and proved that she paid a deposit with the intention of getting into a tenancy agreement with the appellant.
60. She argues that she proved that she spent money in securing alternative accommodation when the appellant delayed in handing over possession of the apartment.
61. It is her case that she paid the deposit for purposes of creating a tenancy agreement with the appellant who in an event does not dispute that they were the owners or the agents of the apartment.
62. The respondent submits that the parties had agreed that they were intending to come up with a tenancy agreement.
63. It is her case that the deposit she paid amounted to a case for money had and received, which forms a cause of action which falls within the jurisdiction of the of the small claims court under Section 12.
64. She argues that the appellant did not tender any documents nor explain why the received the money that they respondent deposited and The judgment of the trial Court should not be disturbed.
Analysis and determination
65. Following other issues for determination;
1) Whether the small Claims court had jurisdiction to hear, and determine the claim for refund of deposit.
2) Who shall be the cost.
66. The jurisdiction of the Small Claims Court, is set out under Section 12 is set out of the Small Claims Court Act which provides as follows:
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.
67. In coming to its determination on the Preliminary Objection, the trial court addressed itself to rent and rent arrears, which was the claim by the Respondent in its Counterclaim. However, the Appellant's claim was for breach of contract, relating to the rent deposit paid by the Appellant to the Respondent.
68. The court has looked at paragraphs 3 and 4 of the statement of claim and noted that the Respondent claim was for a contract relating to money had and received on or about various dates in July 2023 in the sum of Kshs. 61,000/- .
69. At paragraph 4 she pleaded that,”all material times, the Respondent was the registered and beneficial owner, and/or authorized agent of Glenn Apartments at the time of this breach”.
70. On or about June-July, 2023, the Claimant sought for a tenancy at Glenn Apartments.
71. The Claimant advanced a total sum of Kshs. 61,000/= to secure one apartment 602 under the ownership and care of the Respondent.
72. The Respondent would in return make available for possession by the Claimant the said apartment by Ist July 2023.
73. When the time came for the Claimant to take possession and move into the apartment on the designated date, the Respondent informed her that the same was not yet ready for occupation.
74. The Claimant was forced to put up temporary residence in a hotel from 8th July 2023 to 19th July 2023 incurring a total expense of Kshs.75,990/-.
75. On its part the Respondent filed a response in the following lines,The Respondent does not owe the Claimant any money.The Respondent owes the Claimant only a portion of the amount claimed in the Statement of Claim amounting to KShs. .....(state the amount admitted),The Respondent admits the whole of the Claimant's claim,The Respondent has paid to the Claimant all the sum claimed in the Statement of Claim.
76. In opposing the appellants preliminary objection in a point of law that was determined by the trial court,the Respondent submitted that , “We submit that this current dispute does not involve rent but involves a security deposit. There was no rent paid because there was never a tenancy relationship between the Claimant and the Respondent to begin with. We thus submit that deposit in this matter is money held and received before the commencement of tenancy thus this matter falls within the jurisdiction of this Honourable court.”
77. In the submissions during trial the claimant stated
“The Claimant paid the security deposit into the Respondent's account as advised by the caretaker of Glenn Apartments who is an agent of the Respondent. The Claimant has duly provided proof of payment to the Respondent's NCBA Bank Account. The Respondent's denial of liability with respect to holding such funds calls into question the best practices of the Respondent in commercial dealings.”
78. On its part the respondent submitted;
“25. Your Honour, the Claimant has not provided any shred of evidence that the Respondent had entered into any Agreement with the Claimant. There was no offer, acceptance or even consideration. The M-pesa message provided by the Claimant to the court does not bear the name of the Respondent. As a matter of practice, once a person sends money to another bank account, the bank sends a message indicating the account holder's name. The Claimant has not provided that evidence.”
79. The respondent further submitted that;
39. Without prejudice to the foregoing, the Claimant states that she should be compensated for damages suffered during her stay at Waridi Hotel. Your Honour, the Claimant states that the rent and one month's deposit amounts to KES. 61,000.00. The attached invoice amounts to Kes.75,990.00 which contains entries for restaurant and beverage fees which the Claimant never disclosed that the Respondent was to cater for in the pleadings.
Therefore, the Respondent cannot be held liable for the same costs.
40. Further, the Claimant only attached an invoice and not a receipt, and therefore, it is impossible to ascertain who paid for the stay at Waridi Hotel. Further, the alleged stay commenced on July 8, 2023 to July 19 2023 three days after the alleged tenancy was to commence on July 1, 2023. Therefore, this could just be a planned stay that the Claimant wants to attribute to the Respondent over a purported breach.”
80. In the judgment, the trial court made a finding that,
“The Claimant has annexed a list of documents which have been admitted in court as evidence. Among the documents attached is an M-pesa message which shows that the Claimant sent and amount totalling to Kshs 61,000/= to the Respondent. This amount although disputed by the Respondent, remain uncontroverted and unchallenged. There was no explanation for the purpose of the said sum by the Respondent and it therefore follows that the same was meant to secure space in the said agreement. It is therefore not in dispute or doubt that the respondent received and held the said sum.”
81. From the Applicants submissions in support of the appeal, the court notes that the appellant submits that;
“27. The Respondent alleged that she had remitted payment to the Appellant in consideration for accommodation. In support of this assertion, she produced an M-Pesa transaction message referencing an account number. However, she failed to establish any evidentiary nexus between the Appellant and the said account. Moreover, there was no cogent evidence adduced to demonstrate that the Appellant had undertaken to deliver vacant possession. It was incumbent upon the Respondent to prove, on a balance of probabilities, that the referenced account was attributable to the Appellant and that the Appellant was under a contractual obligation to grant vacant possession to the Respondents, elements that were not proved.”
82. Section 38 of the Small Claims Court Act provides thus;
A person aggrieved by the decision or an order of the Court may appeal against that decision or an order to the High Court on matters of law.
83. This court has taken time to bring out the foregoing extracts for the sole purpose of determining whether the record of appeal is incompetent.
84. The record of appeal does not include the Claimant’s Mpesa Statement,the Respondents bank statement and the invoice for Waridi hotel.
85. From the above extracts from the rival submissions and the judgment, it is clear that these documents existed during the trial.
86. This court w
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2. This precipitated the filing of the Memorandum of appeal dated 8th September 2024 wherein the appellant raises the following grounds;
1) The Learned Adjudicator erred in law and in fact in misinterpreting the provisions of Section 12 of the Small Claims Act No. 2 of 2016 and finding that it had jurisdiction over the matter.
2) The Learned Adjudicator erred in law and in fact by failing to acknowledge that the matter was on rent deposit, which subject the Small Claims court has no jurisdiction.
3) The Learned Adjudicator erred in law and in fact in finding it has jurisdiction over the matter despite the Claimant admitting the cause of action arose from a tenancy.
4) The Learned Adjudicator erred in law and in fact in awarding damages to the claimant while the claimant did not prove damages.
3. It seeks orders that: -
a) The Appeal herein be allowed.
b) The Judgment delivered by Honorable Gillian Simatwo(RM) on August 28, 2024 in Milimani Small Claims Court at Nairobi SCCCOM Claim No. E9414 OF 2023 be set aside.
c) A declaration that the trial court had no jurisdiction to hear and determine the suit as it relates to rent deposit and subsequently dismiss the matter.
d) The Respondent be ordered to pay the costs of the Appeal as well as the costs in the Small Claims Court.
e) The Honorable Court gives any further orders it may deem fit and proper to give.
4. It is the appellant’s submission that there was an agreement with the respondent wherein the respondent was to occupy its apartment in July.
5. The appellant submits that no tenancy agreement was produced to prove that there was a tenancy agreement in existence.
6. The appellant argues that the small claims court lacked jurisdiction to determine the claim in the circumstances.
7. The claimant was to commence tenancy on 1 stJuly 2023.However the Appellant informed the Respondent that the same was not ready for occupation.
8. The Claimant was forced to put up temporary residence in a hotel from 8th July 2023 to 19th July 2023 incurring an expense.
9. The Appellant filed a Response to the Statement of Claim dated 28th May 2024 denying the allegations of the Respondent stating that the claim was anchored on a Tenancy Agreement which was not produced by the Claimant.
10. On or about June July, 2023, the Respondent claimed that she entered into a Tenancy Agreement with the Appellant. The Respondent advanced a total sum of KES. 61 000.00 to the Appellant to secure Apartment 602. The Appellant would, in turn, make it available for the Respondent on July 1, 2023.
11. The Respondent's case was that the Appellant did not grant vacant possession, and in the circumstances, the Respondent was forced to put up temporary residence in a hotel from July 19, 2023 incurring expenses. In response to the Statement of Claim, the Appellant filed a Response to the Statement of Claim dated November 1, 2023 stating that:
a) The Small Claims Court had no jurisdiction to hear and determine the matter because, from the pleadings the claim was anchored in tenancy, a subject matter the Small Claims Court lacked jurisdiction.
b) The Appellant further stated that the parties need to be in a legally binding agreement for there to be a breach and since the Respondent has not provided any Agreement, there cannot be a breach where no enforceable contract exists.
c) The Respondent did not produce to the court any receipts or invoices bearing the name of the Appellant to indicate that the money was sent to the Appellant and the purpose of the money thereof.
d) The Appellant stated that the losses incurred by the Respondent cannot be attributed to the Appellant as the Appellant did not owe the Respondent any duty.
12. It argues that the Small Claims Court erred in finding that it had jurisdiction to hear and determine the matter, as the Supreme Court in Samuel Kamau Macharia & Another vs. Kenya Commercial Bank Limited & 2 Others (20121 eKLR reaffirmed the fundamental nature of jurisdiction in judicial proceedings. Prior to its pronouncement on the limits of judicial jurisdiction, it considered the nature of the appeal and the issues raised concerning its own authority to hear the matter. The Court emphasized the critical importance of jurisdiction, stating as follows:
"A Court's jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second Appellants 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 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law."
13. Section 12(1) of under the Small Claims Court Act, 2016 sets out the specific subject-matter jurisdiction of the Court in the following terms;-
12. Nature of claims and pecuniary jurisdiction
a) Subject to this Act, the rules and any other law, the court has jurisdiction to determine any civil claim relating to —
i. a contract for sale and supply of goods or services;
ii. a contract to money held and received;
iii. liability in tort in respect of loss or damage cause to any property or for the delivery or recovery of moveable property;
iv. compensation for personal injuries; and
v. set-off and counterclaim under any contract.
14. It sis submitted that from the foregoing, it is clear that the Small Claims Court does not possess general civil jurisdiction. Rather, its mandate is narrowly circumscribed to the specific categories of claims set out under Section 12(1) of the Act. Accordingly, any matter falling outside these prescribed heads of claim lies beyond the Court's jurisdictional competence. The assumption of jurisdiction by the Small Claims Court is unlawful and renders the proceedings a nullity ab initio.
15. In Paragraph 3 of the Respondent's Statement of Claim, the Respondent states that she sought tenancy at Glenn Apartment where she advanced a total sum of Kes. 61 000 to secure an Apartment and Paragraph 2 of the Respondent's witness statement the Respondent further states that the purpose of the Kes. 61 000 was a deposit to secure the Apartment and one month's rent.
16. Reliance is placed in the case of Republic v Mandera County Government; Mohamed (Exparte Applicant); Hassan & 3 others (Interested Parties) (Judicial Review EOOI of 2023) [2024] KEHC 1180 (KLR) (31 January 2024) (Ruling) stated as follows:
In general, a Court is bound to entertain proceedinas that fall within its jurisdiction...Jurisdiction is determined on the basis of pleadings and not the substantive merits of_ the case. The South African Constitutional Court [ See In the matter between Vuyile Jackson Gcaba vs Minister for Safety and Security First & Others Case CCT 64/08[20091 ZACC 261 had this to say: -
"Jurisdiction is determined on the basis of the pleadings... and not the substantive merits of the case... In the event of the Court's Jurisdiction being challenged at the outset (in limine), the applicant's pleadings are the determining factor. They contain the legal basis of the claim under which the applicant has chosen to invoke the court's competence. While the pleadings — including in motion proceedings, not only the formal terminology of the notice of motion, but also the contents of the supporting affidavits — must be interpreted to establish what the legal basis of the applicant's claim is, it is not for the court to say that the facts asserted by the applicant would also sustain another claim, cognizable only in another court. If however the pleadings, properly interpreted, establish that the applicant is asserting a claim one that is to be determined exclusively by...{another court}, the High Court would lack jurisdiction... "
17. The suit must be determined solely on the basis of the issues as framed in her pleadings upon which her claim is founded.
18. This position was held in Ogando v Watu Credit Limited & another (Civil Suit E098 of 2022) [20241 KEHC 3074 (KLR) (14 March 2024) (Judgment) where the Court quoted the Tanzanian court in the case of Salim Said Mtomekela Versus Mohamed Abdallah Mohamed Dar-Es-SaIaam Court of Appeal Civil Appeal No. 149 Of 2019(Mugasha. J.A. Kihwelq. J.A. Rumanyika. J.A where it was held as doth:
"Pleading in law means, written presentation by a litigant in a law suit setting forth the facts upon which he/she claims legal relief or challenges the claims of his opponent. It includes claims and counterclaim but not the evidence by which the litigant intends to prove his case ... That said, since the pleading is a basis upon which the claim is found, it is settled law that, parties are bound b! their own pleadings and that any evidence produced by any of the parties which is not supportive or is at variance with what is stated in the pleadings must be ignored.(Emphasis ours)
19. The Small Claims Court erred in disregarding the Respondent's own pleadings, which clearly indicate that the claim relates to tenancy and money paid in lieu of tenancy.
20. It is a fundamental principle of statutory interpretation that words of a statute must be given their plain and ordinary meaning as was posited in the case of Republic vs. Kenya School of Law and another exp Kithinji and another NRB HC JR Misc No 120 of 2018 [20191 eKLR where the court defined rent in the following:
"In my view, the rent has a specific and known meaning which does not extend to a contract for services. To extend the meaning of rent to the rubric of a contract for sale of goods and services would amount to expanding the court's jurisdiction by craft or innovation, a practice the Supreme Court frowned upon in Samuel Kamau Macharia &Another vs. Kenya Commercial Bank Limited & 2 Others [20121 eKL R. "
21. It submits that while the Respondent asserted that the cause of action arose from a breach of an agreement, she simultaneously contended that the sums remitted to the Appellant do not fall within the ambit of a tenancy arrangement.
22. The Small Claims Court failed to interrogate or clarify the nature of the alleged agreement, particularly in light of the Respondent's own admission that the payments made were in the form of rent and deposit, which are characteristic features of a tenancy agreement.
23. Once the pleadings disclosed that the cause of action arose from a tenancy relationship and that the monies allegedly paid to the Respondent constituted rent, the Court ought to have downed its tools for want of jurisdiction.
24. Reliance is placed in the case of Owners of the Motor Vessel "Lilian S" vs. Caltex Oil (Kenya) Limited (19891 KLR 1 :Nyarangi, JA expressed himself as follows:
" jurisdiction is meant the authority which a court has to decide matters that are before it or take cognizance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted and may be extended or restricted by the like means. If no restriction or limit is imposed the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the actions and matters of which the particular court has cognisance, or as to the area over which the jurisdiction shall extend, or it may partake both of these characteristics. If the jurisdiction of an inferior court or tribunal (including an arbitrator) depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it has jurisdiction; but, except where the court or tribunal has been given power to determine conclusively whether the facts exist. Where the court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgement is given...Jurisdiction is everything. Without it, a Court has no power to make one more step. Where a court has no jurisdiction there would be no basis for a continuation of proceedings pending other evidence. A Court of law downs its tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction. "
25. It submits that the Small Claims Court, by hearing and determining the matter usurped the jurisdiction of already established tribunals and courts in legislation that deal with tenancy matters in Kenya.
26. Reliance is placed in Constitutional Petition Number 359 of 2013 - Diana Kethi Kilonzo vs. IEBC and 2 Others , in which it was held that:
"We note that the Constitution allocated certain powers and functions to various bodies and tribunals. It is important that these bodies and tribunals should be given leeway to discharge the mandate bestowed upon them by the Constitution so long as they comply with the Constitution and national legislation. These bodies and institutions should be allowed to grow. The people of Kenya, in passing the Constitution, found it fit that the powers of decision-making be shared by different bodies. The decision of Kenyans must be respected, guarded and enforced. The courts should not cross over to areas which Kenyans specifically reserved for other authorities. "
27. The Respondent's pleadings, by their own admission, reveal that the claim arises from a tenancy arrangement, a subject matter expressly excluded from the jurisdiction of the Small Claims Court under Section 12(1) of the Small Claims Court Act.
28. It submits that the proceedings before the Small Claims Court were a nullity ab initio and to set aside the decision rendered therein for want of jurisdiction.
29. It submits that the Honourable Court erred in law and in fact in finding that the Respondent had proved her case, consequently awarding the Respondent the rent and one month's deposit amounting to KES. 61 000.00 and damages amounting to KES.75 990.00.
30. The award of KES. 61,000.00 as rent and deposit, alongside damages of KES. 75,990.00, was not supported by credible evidence or justified in law.
31. The Respondent did not discharge the burden of proof to the required standard, and the Court overlooked material contradictions and inconsistencies in the Respondent's case.
32. Reliance is placed in the of case of Kinyanjui Kamau v. George Kamau [20151 eKLR, the court held that;
"It is trite law that he who alleges must prove. It was therefore the duty of the plaintiff to prove his case on the balance of probabilities."
33. The Respondent alleged that she had remitted payment to the Appellant in consideration for accommodation. In support of this assertion, she produced an M-Pesa transaction message referencing an account number.
34. However, she failed to establish any evidentiary nexus between the Appellant and the said account.
35. Moreover, there was no cogent evidence adduced to demonstrate that the Appellant had undertaken to deliver vacant possession.
36. It was incumbent upon the Respondent to prove, on a balance of probabilities, that the referenced account was attributable to the Appellant and that the Appellant was under a contractual obligation to grant vacant possession to the Respondents, elements that were not proved.
37. The Appellant expressly denied ever entering into an agreement to provide accommodation to the Respondent and further denied receiving any monies from her.
38. The Honourable Court erred in law by dismissing this position as mere assertions without due consideration of the legal burden of proof.
39. It was not incumbent upon the Appellant to disprove ownership of the alleged account; rather, the burden squarely lay with the Respondent to adduce cogent and credible evidence establishing that the account in question belonged to the Appellant and that there existed a promise or agreement for accommodation.
40. The legal burden and the evidential burden. In the present matter, the legal burden rested squarely upon the Respondent to establish their case to the requisite standard. Pursuant to Section 107 of the Evidence Act, Cap 80 Laws of Kenya, he who alleges must prove.
41. Accordingly, it was incumbent upon the Respondent to adduce sufficient and credible evidence in support of the alleged agreement and the corresponding financial transactions.
42. Section 109 of the Evidence Act reinforces the principle that the burden of proof rests upon the party who would fail if no further evidence were adduced.
43. The provision states:
"The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."
44. The Small Claims Court erred in concluding that the funds were remitted by the Respondent to the Appellant without any cogent evidence.
45. The Appellant unequivocally denied knowing the Respondent or receiving any funds from her.
46. This categorical denial effectively shifted the evidentiary burden to the Respondent to substantiate the alleged remittance.
47. However, the Respondent failed to discharge this burden, having not proved on a balance of probabilities that any monies were indeed sent to, and received by, the Appellant.
48. In this regard, it was the Respondent's duty to produce sufficient evidence to establish the existence of the alleged agreement and the Appellant's receipt of funds.
49. Reliance is placed in the case of Sagala v Sagala (Civil Appeal No. 9 of 2023) [20241 KEHC 5573 (KLR) (9 May 2024), wherein it stated:
"The foregoing provisions bring out what is referred to as the legal burden of proof. That burden remains on the Claimant throughout the case."
50. The Small Claims Court, therefore, erred in shifting this burden, even implicitly, to the Appellant.
51. Damages are founded upon liability, and where liability has not been properly established, any award of damages cannot stand.
52. Reliance is placed in the Court of Appeal in the case of Catholic Diocese of Kisumu vs. Sophia Achieng TeteCivil Appeal No. 284 of 2001 [2004] 2 KLR 55 where the court held:
"It is trite law that the assessment of general damages is at the discretion of the trial court and an appellate court is not justified in substituting a figure of its own for that awarded by the Court below simply because it would have awarded a different figure if it had tried the case at first instance. The appellate court can justifiably interfere with the quantum of damages awarded by the trial court only if it is satisfied that the trial court applied the wrong principles, (as by taking into account some irrelevant factor leaving out of account some relevant one) or misapprehended the evidence and so arrived at a figure so inordinately high or low as to represent an entirely erroneous estimate."(Emphasis ours)
53. In the instant matter is appropriate for appellate interference with the award of damages.
54. The Court's consequential award of rent, deposit, and damages was founded on an erroneous assessment of both the evidence and the applicable legal standards.
55. On the issue of costs,relaince is placed in The Black's Law Dictionary defines costs to mean:
"The expenses of litigation, prosecution or other legal transaction especially those allowed in favour of one party against the other. "
56. Section 27 of the Civil Procedure Act CAP 21 Laws of Kenya, reads:
"27. Costs
Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid: and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order."
57. It submits that this Honourable Court grants costs to the Appellant.
The Respondents’ case;
58. According to the respondent the small claims court had jurisdiction and indeed arrived at legal judgment.
59. She argues that she made out a case through her pleadings and proved that she paid a deposit with the intention of getting into a tenancy agreement with the appellant.
60. She argues that she proved that she spent money in securing alternative accommodation when the appellant delayed in handing over possession of the apartment.
61. It is her case that she paid the deposit for purposes of creating a tenancy agreement with the appellant who in an event does not dispute that they were the owners or the agents of the apartment.
62. The respondent submits that the parties had agreed that they were intending to come up with a tenancy agreement.
63. It is her case that the deposit she paid amounted to a case for money had and received, which forms a cause of action which falls within the jurisdiction of the of the small claims court under Section 12.
64. She argues that the appellant did not tender any documents nor explain why the received the money that they respondent deposited and The judgment of the trial Court should not be disturbed.
Analysis and determination
65. Following other issues for determination;
1) Whether the small Claims court had jurisdiction to hear, and determine the claim for refund of deposit.
2) Who shall be the cost.
66. The jurisdiction of the Small Claims Court, is set out under Section 12 is set out of the Small Claims Court Act which provides as follows:
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.
67. In coming to its determination on the Preliminary Objection, the trial court addressed itself to rent and rent arrears, which was the claim by the Respondent in its Counterclaim. However, the Appellant's claim was for breach of contract, relating to the rent deposit paid by the Appellant to the Respondent.
68. The court has looked at paragraphs 3 and 4 of the statement of claim and noted that the Respondent claim was for a contract relating to money had and received on or about various dates in July 2023 in the sum of Kshs. 61,000/- .
69. At paragraph 4 she pleaded that,”all material times, the Respondent was the registered and beneficial owner, and/or authorized agent of Glenn Apartments at the time of this breach”.
70. On or about June-July, 2023, the Claimant sought for a tenancy at Glenn Apartments.
71. The Claimant advanced a total sum of Kshs. 61,000/= to secure one apartment 602 under the ownership and care of the Respondent.
72. The Respondent would in return make available for possession by the Claimant the said apartment by Ist July 2023.
73. When the time came for the Claimant to take possession and move into the apartment on the designated date, the Respondent informed her that the same was not yet ready for occupation.
74. The Claimant was forced to put up temporary residence in a hotel from 8th July 2023 to 19th July 2023 incurring a total expense of Kshs.75,990/-.
75. On its part the Respondent filed a response in the following lines,The Respondent does not owe the Claimant any money.The Respondent owes the Claimant only a portion of the amount claimed in the Statement of Claim amounting to KShs. .....(state the amount admitted),The Respondent admits the whole of the Claimant's claim,The Respondent has paid to the Claimant all the sum claimed in the Statement of Claim.
76. In opposing the appellants preliminary objection in a point of law that was determined by the trial court,the Respondent submitted that , “We submit that this current dispute does not involve rent but involves a security deposit. There was no rent paid because there was never a tenancy relationship between the Claimant and the Respondent to begin with. We thus submit that deposit in this matter is money held and received before the commencement of tenancy thus this matter falls within the jurisdiction of this Honourable court.”
77. In the submissions during trial the claimant stated
“The Claimant paid the security deposit into the Respondent's account as advised by the caretaker of Glenn Apartments who is an agent of the Respondent. The Claimant has duly provided proof of payment to the Respondent's NCBA Bank Account. The Respondent's denial of liability with respect to holding such funds calls into question the best practices of the Respondent in commercial dealings.”
78. On its part the respondent submitted;
“25. Your Honour, the Claimant has not provided any shred of evidence that the Respondent had entered into any Agreement with the Claimant. There was no offer, acceptance or even consideration. The M-pesa message provided by the Claimant to the court does not bear the name of the Respondent. As a matter of practice, once a person sends money to another bank account, the bank sends a message indicating the account holder's name. The Claimant has not provided that evidence.”
79. The respondent further submitted that;
39. Without prejudice to the foregoing, the Claimant states that she should be compensated for damages suffered during her stay at Waridi Hotel. Your Honour, the Claimant states that the rent and one month's deposit amounts to KES. 61,000.00. The attached invoice amounts to Kes.75,990.00 which contains entries for restaurant and beverage fees which the Claimant never disclosed that the Respondent was to cater for in the pleadings.
Therefore, the Respondent cannot be held liable for the same costs.
40. Further, the Claimant only attached an invoice and not a receipt, and therefore, it is impossible to ascertain who paid for the stay at Waridi Hotel. Further, the alleged stay commenced on July 8, 2023 to July 19 2023 three days after the alleged tenancy was to commence on July 1, 2023. Therefore, this could just be a planned stay that the Claimant wants to attribute to the Respondent over a purported breach.”
80. In the judgment, the trial court made a finding that,
“The Claimant has annexed a list of documents which have been admitted in court as evidence. Among the documents attached is an M-pesa message which shows that the Claimant sent and amount totalling to Kshs 61,000/= to the Respondent. This amount although disputed by the Respondent, remain uncontroverted and unchallenged. There was no explanation for the purpose of the said sum by the Respondent and it therefore follows that the same was meant to secure space in the said agreement. It is therefore not in dispute or doubt that the respondent received and held the said sum.”
81. From the Applicants submissions in support of the appeal, the court notes that the appellant submits that;
“27. The Respondent alleged that she had remitted payment to the Appellant in consideration for accommodation. In support of this assertion, she produced an M-Pesa transaction message referencing an account number. However, she failed to establish any evidentiary nexus between the Appellant and the said account. Moreover, there was no cogent evidence adduced to demonstrate that the Appellant had undertaken to deliver vacant possession. It was incumbent upon the Respondent to prove, on a balance of probabilities, that the referenced account was attributable to the Appellant and that the Appellant was under a contractual obligation to grant vacant possession to the Respondents, elements that were not proved.”
82. Section 38 of the Small Claims Court Act provides thus;
A person aggrieved by the decision or an order of the Court may appeal against that decision or an order to the High Court on matters of law.
83. This court has taken time to bring out the foregoing extracts for the sole purpose of determining whether the record of appeal is incompetent.
84. The record of appeal does not include the Claimant’s Mpesa Statement,the Respondents bank statement and the invoice for Waridi hotel.
85. From the above extracts from the rival submissions and the judgment, it is clear that these documents existed during the trial.
86. This court w
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