( Being an appeal from the Ruling of Hon. M. Jacob Punga, delivered on 28th July 2026, in Siaya Small Claims Court Case No. SCCCOMM/E215/2026)
JUDGEMENT
1. This is an appeal from the ruling of the Small Claims Court at Siaya (Hon. M. Jacob Punga RM) delivered on 28th July 2026. The trial court dismissed the Appellant's Preliminary Objection which challenged its jurisdiction to hear the claim in Siaya SCCCOMM No. E215 of 2026.
2. The Appellant being aggrieved by the said ruling, lodged the instant appeal vide a Memorandum of Appeal dated 30th July 2026 raising the following grounds:
i. The learned Magistrate erred in law and fact in failing to determine the issue of jurisdiction raised and hence went out of his way by arrogating to himself a jurisdiction he doesn't have in law.
ii. The learned Magistrate erred in law and in fact by going against the law and established judicial authorities thereby arriving at an absurd determination.
3. This being the first Appellate court, its duty is to re-evaluate the record of the lower court and subject it to an independent analysis so as to reach its own conclusion as to whether or not to uphold the decision of the trial court. See Selle vs Associated Motor boat Co. Ltd [1968] EA 123.
4. The underlying transaction stems from a sale of land agreement dated 7th May 2025 between the Respondent (as Vendor) and the Appellant (as Purchaser) in respect of Land Parcel No. SIAYA/BARDING/4459 measuring approximately 0.17 Ha for an agreed purchase price of Kshs. 900,000/=.
5. The Respondent filed a Statement of Claim in the Small Claims Court at Siaya (SCCCOMM No. E215 of 2026) asserting that the land was duly transferred and registered in the Appellant’s name and vacant possession delivered. However, the Appellant failed to settle the outstanding balance of Kshs. 400,000/=. The Respondent consequently prayed for judgment in the sum of Kshs. 400,000/= plus Kshs. 270,000/= being 30% contractual liquidated damages for breach pursuant to Clause 11 of the agreement totaling Kshs. 670,000/=.
6. Upon being served, the Appellant filed a Response to Statement of Claim and raised a Preliminary Objection asserting that the suit touched on a land transaction and was strictly excluded from the jurisdiction of the Small Claims Court by virtue of Sections 12(1) and 13(5) of the Small Claims Court Act 2016.
7. In a ruling delivered on 28th July 2026, the learned Adjudicator (Hon. J. P. Mkala RM) dismissed the Preliminary Objection with costs holding that the claim before the court was purely a commercial contract action for recovery of money (unpaid purchase price and damages for breach) and did not involve any dispute as to title to or possession of land.
8. The Appeal was canvassed by way of written submissions.
9. By a Memorandum of Appeal dated 28th July 2026, counsel for the Appellant challenged the ruling of the trial court wherein the Small Claims Court asserted jurisdiction to determine the underlying suit. Counsel contended that the trial court erred in assuming jurisdiction under Section 12(1) of the Small Claims Court Act while ignoring the express statutory exclusions contained under Section 13(5) of the same Act.
10. Counsel drew the court's attention to Section 13(5) of the Small Claims Court Act which explicitly bars claims where the cause of action is founded upon defamation, libel, slander, malicious prosecution, employment and labour relations or disputes over title to or possession of land .
11. Counsel further analyzed Section 12(1) of the Small Claims Court Act noting that while the court is vested with jurisdiction over claims relating to contracts for sale and supply of goods or services, money held and received, tortious liability concerning movable property, personal injury compensation and counterclaims under contract, these provisions must be construed narrowly and in harmony with land laws.
12. Counsel framed the primary question for determination as follows: Does the mere fact that a claim is framed on its face as one for the recovery of money automatically empower the Small Claims Court to handle the dispute under Section 12(1) of the Small Claims Court Act? To answer this in the negative, counsel relied on a series of superior court decisions: Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR): Counsel highlighted the holding of Magare, J., that contractual disputes under Section 12(1)(b) must strictly relate to straightforward contracts for money held and received. The court in Palms Resort emphasized that determining whether a refund is due under an agreement requires interpreting rights arising out of property law which falls outside the mandate of the Small Claims Court. Home Seekers Limited & Another v Macharia [2024] KEHC 5277 (KLR): Counsel noted the court's finding that where a dispute touches on tenancy or property rights, it carries legal ramifications reserved for specialized forums. The court affirmed the rule of thumb that if the High Court lacks jurisdiction over a specialized land matter, the Small Claims Court similarly cannot entertain it nor is there a statutory avenue to appeal from the Small Claims Court directly to the Environment and Land Court. Maworks Investment Company Limited v Mwilitsa [2024] KEHC 10525 (KLR): Counsel referenced paragraphs 12 through 17 of the judgment arguing that Section 12 of the Small Claims Court Act does not operate in isolation or oust the jurisdiction of specialized tribunals established under dedicated land statutes (such as the Land Registration Act, Land Act, Rent Restriction Act and the Landlord and Tenant Act). Counsel emphasized that Section 12(1) limits property disputes solely to movable property. Consequently, once a suit requires a court to inquire into contractual obligations, rights of occupation or breaches arising from land transactions, the Small Claims Court immediately lacks subject-matter jurisdiction.
13. Addressing the Respondent’s reliance at the trial court on Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC 14405 (KLR ), counsel urged the High Court to distinguish that authority. Citing Akinyi & 4 Others v Kenya Medical Research Institute [KEMRI] & Another [2023] KEELRC 2060 (KLR) , counsel submitted that when faced with conflicting superior court decisions, courts and litigants must examine constitutional and statutory provisions directly to determine if the facts are distinguishable.
14. On the threshold question of jurisdiction, counsel cited the Supreme Court precedent in Samuel Kamau Macharia v Kenya Commercial Bank & 2 others (SCK Application No. 2 of 2011) [2012] eKLR , reiterating that a court's jurisdiction flows exclusively from the Constitution or written statute. A court cannot arrogate jurisdiction to itself beyond statutory limits nor expand its jurisdiction through judicial innovation.
15. In applying these principles to the present dispute, counsel submitted that the primary transaction between the parties was a land sale agreement between a vendor and a purchaser in which mutual breaches of contract were alleged. Counsel asserted that the exchange of funds between the parties did not convert a land sale transaction into a simple contract for "money held and received" under Section 12(1)(b).
16. Counsel argued that should the suit proceed to trial, the court would inevitably be required to evaluate contractual obligations concerning a parcel of land thereby exceeding its statutory limits. Furthermore, under Section 38 of the Small Claims Court Act, appeals lie exclusively to the High Court and not the Environment and Land Court; thus, if the High Court lacks jurisdiction over land sales, the Small Claims Court cannot act as a court of first instance for such matters.
17. Counsel for the Appellant concluded by praying that the High Court find the Small Claims Court devoid of jurisdiction, allow the appeal and award costs to the Appellant.
18. The Respondent submitted that the issue in dispute was a single question of jurisdiction: whether the Small Claims Court has jurisdiction to hear and determine a case involving moneys owed under a land sale agreement. He noted that the Appellant claimed under sections 13(5) and 12(1) of the Small Claims Court Act that the Court lacked jurisdiction to hear and determine the claim, further arguing that every dispute arising from a land sale agreement falls under the exclusive jurisdiction of the Environment and Land Court. The Respondent respectfully submitted that this was not the correct reading of sections 13(5) and 12(1) of the Small Claims Court Act.
19. The Respondent noted that the High Court had had occasion to determine the Jurisdiction of the Small Claims Court with respect to disputes arising from land sale agreements. He cited Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR), where the High Court held that in considering whether a court has jurisdiction to hear and determine a claim, the said court must first apply the 'pre-dominant issue test' to the contents of the statement of claim to ascertain what the pleadings seek to achieve.
20. The Respondent submitted that Section 12(1)(b) of the Small Claims Court Act ONLY deprives the Small Claims Court of jurisdiction to hear and determine disputes involving the disposition of an interest in land. He asserted that the drafters of section 13(5) of the Small Claims Court Act were very particular when they singled out 'disputes over title to or possession of land' as being the only disputes beyond the reach of the Small Claims Court. He argued that if Parliament had intended that every dispute arising from a land sale agreement should be beyond the jurisdiction of the Small Claims Court, nothing would have stopped it from saying so. Hence, if the pre-dominant issue in the statement of claim involves disposition of an interest in land, it would be correct to argue that the Court lacks jurisdiction to hear and determine the claim; however, that was not the case here.
21. The Respondent affirmed that he neither sought title to land nor possession of land as his claim was purely about money owed to him by the Appellant. The dominant purpose in his claim was the recovery of the balance of the purchase price. From the prayers in the Statement of Claim, the Respondent had neither an interest in the title to land nor an interest in possession of SIAYA/BARDING/4459 as it was all about money. Hence, he argued that the claim herein is categorized as a commercial-contractual issue and not a claim on an interest in land and cannot be characterized as a claim for an interest in land.
22. The Respondent cited the persuasive decision of the High Court in Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR), where the High Court held that:
"In addressing the salient issue on whether the trial Court was endowed with jurisdiction to entertain the lower Court suit, this Court will draw guidance from the decision of the Court of Appeal in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR wherein the Court in addressing a preliminary jurisdictional question, applied the "Pre-dominant issue test", (as submitted by the Respondent herein) in determining which court, between the Environment and Land Court and the High Court had the jurisdiction to entertain a dispute arising from a charge executed in favor of a bank... Applying my mind to the above dicta, it can be garnered from the Respondent's case before the lower Court that the dispute was essentially predicated on a contract in respect of the Agreement for sale of the suit Property wherein the Respondent essentially sort to recoup the sums he had paid out to Appellant. The same can further be construed from the body of the claim and reliefs sought for before the trial Court, the gist of which this Court had earlier set out in this judgment. The above of which seems to fall within the jurisdiction of the Small Claims Court Act by dint of Section 12(1)(b) of the Act notwithstanding the purpose for which the monies were received. That said, aside the fact that the Agreement concerned the sale of the suit property, the Respondent's claims did not appertain disposition of interest in suit property. The Appellant's feeble invitation to interlink the cause of action to the Respondent's claim to disposition of interest in land therefore cannot sustain."
23. The Respondent submitted that it was thus not true that every suit founded on a land sale agreement automatically falls under the jurisdiction of the Environment and Land Court. He stated that the prayers sought in the pleadings determine the appropriate court with jurisdiction to grant them. In the present case, he maintained that the prayers sought were squarely within the jurisdiction of the Small Claims Court to consider and grant as the dominant issue in the statement of claim was money owed to the Respondent rather than the disposition of an interest in land.
24. The Respondent argued that the three authorities relied on by the Appellant in support of his appeal were simply inapplicable to the appeal, as the facts of those cases were clearly distinguishable. He submitted that the first case relied upon by the Appellant is Palms Resort Limited v Qureshi 2 Others (Civil Appeal E167 of 2022) 2023 KEHC 23644 (KLR) wherein he stated that at paragraph 25 and 26 of the judgement, the court admitted that the facts of the case are not about money but rights arising from a lease agreement. He cited the second case relied upon by Appellant; Home Seekers Limited another v Macharia (Civil Appeal E115 OF 2023) 2024 KEHC 5277 (KLR) wherein he submitted that the court was of the view that the case relates to the rights and obligations under a tenancy agreement.
25. The respondent submitted on the third authority relied upon by Appellant, Maworks Investment Company Limited v Mwilitsa (Civil Appeal E686 of 2022) 2024 KEHC 10525 (KLR) wherein the court stated that -:
‘‘The suit at the primary court had been initiated by the respondent against the appellant for a sum of Kshs. 180,000.00 being allegedly a deposit made by the respondent to the appellant for hotel space that was immediately closed in compliance with Government directives to combat the Covid-19 pandemic. The appellant had filed a response pleading that the money was indeed paid as part deposit and part rent based on a lease agreement, whereupon the respondent took possession and commenced a restaurant business which he subsequently terminated without notice. The appellant denied that the arrangement was frustrated by Government containment efforts and averred that part of the money was spent as rent for the period of occupation while the deposit component covered the rent for the remainder of the period.’’
26. The Respondent stated that the three courts above were right to hold as they did because the three cases related to disposition in land. They were disputes over title to land and possession of land. The authorities are therefore distinguishable from Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR) which is a dispute over money owed to the claimant. The facts in Okal v Awiti are similar to those in this case.
27. For the reasons above, the Respondent prayed that this court finds that the Small Claims Court has jurisdiction to hear and determine the claim herein. He humbly prayed that this Appeal be dismissed with costs to the Respondent.
28. I have considered the record of appeal and rival submissions tendered by both parties. I find the singular issue for determination is whether the lower Court had jurisdiction to determine the claim as pleaded by the Claimant/Respondent in the lower court.
29. Being an appeal from the Small Claims Court, this Court's jurisdiction is circumscribed by Section 38 of the Small Claims Court Act, which limits appeals to matters of law only. As held in Ngunjiri v Gachiri & another [2024] KEHC 12401 (KLR):
"Being an appeal from the Small Claims Court, the duty of the court is circumscribed under section 38 of the Small Claims Court Act. The duty of the court is to defer to the findings of fact of the adjudicator and analyse the matter for issues of law. The issues of law are either due to the subject matter or the finding of law by the court. An appeal of the instant nature was on points of law. It could be pure points of law or mixed points of law. The court could not delve into issues of fact. ’’
30. This Court shall therefore confines itself to considering whether the trial court erred in law in its determination on jurisdiction.
31. A careful perusal of the Statement of Claim filed before the Small Claims Court reveals that the Claimant/Respondent sought judgment for Kshs. 400,000/- being the outstanding balance of the purchase price for land parcel SIAYA/BARDING/4459; and Kshs. 270,000/- being 30% of the purchase price for breach of clause 11 of the Sale of Land Agreement.
32. Critically, the claim as pleaded does not seek the recovery of the land itself nor does it dispute the title to or possession of the land. The Respondent's claim is solely for money being the balance of the purchase price and a contractual penalty for breach of contract. The sale of land transaction was already completed. The title was transferred to the Appellant and he took possession of the land. The dispute is therefore post-transfer and relates to the alleged non-payment of the full purchase price.
33. Jurisdiction is fundamental to the judicial process. As famously enunciated by the Court of Appeal in the locus classicus Owners of the Motor Vessel "Lilian S" v Caltex Oil (Kenya) Ltd [1989] KLR 1:
"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 the continuation of the proceedings."
34. A preliminary objection must be capable of being handled by looking at the pleadings and the law only and without calling for evidence or facts outside the pleadings of the parties. In Independent Electoral & Boundaries Commission v Cheperenger & 2 others (2015) KESC 2 (KLR), the Supreme Court of Kenya held that; “It is quite clear that a preliminary objection should be founded upon a settled and crisp point of law, to the intent that its application to undisputed facts, leads to but one conclusion: that the facts are incompatible with that point of law."
35. A court's jurisdiction is conferred exclusively by the Constitution or by statute. The statutory jurisdiction of the Small Claims Court is governed by Section 12(1) of the Small Claims Court Act, No. 2 of 2016 which provides as follows:
-Section 12(1) of the Small Claims Court Act provides that 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.
-Section 13(5) of the Act ousts the Court's jurisdiction in claims whose cause of action is founded upon a dispute over title to or possession of land.
36. In the instant case, the jurisdiction of the Small Claims Court is defined by Section 12 of the Small Claims Court Act and limited by Section 13 of the same Act. This Court finds the analysis of Magare, J. in Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR) instructive. The learned Judge stated that the jurisdiction of the Small Claims Court is circumscribed and there is no room for playing outside Section 12 of the Act. He further noted that disputes over contracts under Section 12(1)(b) must relate only to contracts relating to money held and received.
37. To determine whether the Small Claims Court has jurisdiction, I find it necessary to apply the "Predominant Issue Test" as was adopted by the Court of Appeal in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR and subsequently applied by the High Court in Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC 14405 (KLR)
38. The Court in Okal v Awiti had to determine whether a claim for recoupment of money paid under a land sale agreement fell within the jurisdiction of the Small Claims Court. It held that upon applying the "Pre-dominant issue test," the claim was essentially predicated on a contract in respect of the agreement for sale, where the respondent sought to recoup the sums he had paid out to the appellant. The court found this to fall within the jurisdiction of the Small Claims Court by dint of Section 12(1)(b ), notwithstanding the purpose for which the monies were received and held that aside from the fact the agreement concerned the sale of the suit property, the respondent's claims did not appertain to disposition of interest in the suit property.
39. I find the reasoning in Okal v Awiti to be highly persuasive and directly on point with the facts of this case. In the present case, the official search certificate attached to the Statement of Claim reveals that Land Parcel No. SIAYA/BARDING/4459 was successfully transferred and registered in the name of the Appellant, JAMES OUMA ANYANGO on 27th May 2025. The Respondent does not seek cancellation of title, re-transfer or rectification of the register. The Respondent admits that the Appellant took full possession and occupation of the property upon transfer. Neither party is seeking eviction, vacant possession or orders regarding physical control of the land. The Respondent's prayers in the Statement of Claim are exclusively monetary: Kshs 400,000/- representing unpaid balance of the purchase price and Kshs 270,000/- as liquidated damages under Clause 11 of the contract. The predominant issue is the recovery of money owed under a contract not the validity of the ownership or possession of the land. The prayers sought are squarely within the jurisdiction of the Small Claims Court which is empowered to handle contracts relating to money held and received.
40. I find that the trial court correctly analyzed the claim and found that it was not a dispute over title to or possession of land. In its ruling, the trial court stated:
"A perusal of the Claim shows that the Claimant seeks payment of the purchase price and damages for breach of contract. At no point does the claim dispute title to and possession of the land."
41. I am in complete agreement with the trial court's analysis. The claim before the Small Claims Court is a claim for a debt arising from a completed land transaction and not a dispute over title to or possession of land. As such, it falls squarely within the jurisdiction of the Small Claims Court under Section 12(1)(a) and (b) of the Act.
42. The Appellant cannot have his cake and eat it. The court notes the peculiar position taken by the Appellant. He has already received the land, had title transferred to his name and taken possession of the suit property. He now seeks to argue that the court has no jurisdiction to hear the claim for the unpaid balance.
43. The Appellant has already obtained the land. He cannot now argue that the court has no jurisdiction to determine the claim for the balance of the purchase price simply because the transaction involved land. To hold otherwise would be to allow the Appellant to benefit from his own inconsistent position which would be an affront to justice.
44. The decisions relied upon by the Appellant namely Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR): , Home Seekers Limited & Another v Macharia [2024] KEHC 5277 (KLR): and Maworks Investment Company Limited v Mwilitsa [2024] KEHC 10525 (KLR): are readily distinguishable. Those authorities concerned tenancy, leasehold rights and landlord-tenant relationships. Landlord-tenant disputes are governed by specialized legislative regimes (such as the Rent Restriction Act and the Landlord and Tenant Act) which confer exclusive jurisdiction upon statutory tribunals. In contrast, a claim for unpaid balance of money owed under a simple contract of sale where property title has already passed contains no statutory reservation to a specialized tribunal.
45. I find that the learned trial magistrate properly directed himself on the law and correctly concluded that the Preliminary Objection lacked merit. The trial court did not arrogate to itself jurisdiction it did not have. On the contrary, it properly exercised the jurisdiction conferred upon it by Section 12 of the Small Claims Court Act.
46. In light of the foregoing, I find that the appeal is devoid of merit and is dismissed with costs to the Respondent.
It is so ordered.
Dated and delivered virtually at Eldoret, this 11 th day of August 2026
D.KEMEI
JUDGE
In the presence of:
M/s Onsongo for Okello…………..for the Appellant
Paul Mboya Waringa…………………. Respondent
Kevin………………………………..Court Assistant
SIAYA CIVIL APPEAL E008 OF 2026 JUDGEMENT26SIAYA CIVIL APPEAL E008 OF 2026 JUDGEMENT26 SIAYA CIVIL APPEAL E008 OF 2026 JUDGEMENT26SIAYA CIVIL APPEAL E008 OF 2026 JUDGEMENT26
JUDGEMENT
1. This is an appeal from the ruling of the Small Claims Court at Siaya (Hon. M. Jacob Punga RM) delivered on 28th July 2026. The trial court dismissed the Appellant's Preliminary Objection which challenged its jurisdiction to hear the claim in Siaya SCCCOMM No. E215 of 2026.
2. The Appellant being aggrieved by the said ruling, lodged the instant appeal vide a Memorandum of Appeal dated 30th July 2026 raising the following grounds:
i. The learned Magistrate erred in law and fact in failing to determine the issue of jurisdiction raised and hence went out of his way by arrogating to himself a jurisdiction he doesn't have in law.
ii. The learned Magistrate erred in law and in fact by going against the law and established judicial authorities thereby arriving at an absurd determination.
3. This being the first Appellate court, its duty is to re-evaluate the record of the lower court and subject it to an independent analysis so as to reach its own conclusion as to whether or not to uphold the decision of the trial court. See Selle vs Associated Motor boat Co. Ltd [1968] EA 123.
4. The underlying transaction stems from a sale of land agreement dated 7th May 2025 between the Respondent (as Vendor) and the Appellant (as Purchaser) in respect of Land Parcel No. SIAYA/BARDING/4459 measuring approximately 0.17 Ha for an agreed purchase price of Kshs. 900,000/=.
5. The Respondent filed a Statement of Claim in the Small Claims Court at Siaya (SCCCOMM No. E215 of 2026) asserting that the land was duly transferred and registered in the Appellant’s name and vacant possession delivered. However, the Appellant failed to settle the outstanding balance of Kshs. 400,000/=. The Respondent consequently prayed for judgment in the sum of Kshs. 400,000/= plus Kshs. 270,000/= being 30% contractual liquidated damages for breach pursuant to Clause 11 of the agreement totaling Kshs. 670,000/=.
6. Upon being served, the Appellant filed a Response to Statement of Claim and raised a Preliminary Objection asserting that the suit touched on a land transaction and was strictly excluded from the jurisdiction of the Small Claims Court by virtue of Sections 12(1) and 13(5) of the Small Claims Court Act 2016.
7. In a ruling delivered on 28th July 2026, the learned Adjudicator (Hon. J. P. Mkala RM) dismissed the Preliminary Objection with costs holding that the claim before the court was purely a commercial contract action for recovery of money (unpaid purchase price and damages for breach) and did not involve any dispute as to title to or possession of land.
8. The Appeal was canvassed by way of written submissions.
9. By a Memorandum of Appeal dated 28th July 2026, counsel for the Appellant challenged the ruling of the trial court wherein the Small Claims Court asserted jurisdiction to determine the underlying suit. Counsel contended that the trial court erred in assuming jurisdiction under Section 12(1) of the Small Claims Court Act while ignoring the express statutory exclusions contained under Section 13(5) of the same Act.
10. Counsel drew the court's attention to Section 13(5) of the Small Claims Court Act which explicitly bars claims where the cause of action is founded upon defamation, libel, slander, malicious prosecution, employment and labour relations or disputes over title to or possession of land .
11. Counsel further analyzed Section 12(1) of the Small Claims Court Act noting that while the court is vested with jurisdiction over claims relating to contracts for sale and supply of goods or services, money held and received, tortious liability concerning movable property, personal injury compensation and counterclaims under contract, these provisions must be construed narrowly and in harmony with land laws.
12. Counsel framed the primary question for determination as follows: Does the mere fact that a claim is framed on its face as one for the recovery of money automatically empower the Small Claims Court to handle the dispute under Section 12(1) of the Small Claims Court Act? To answer this in the negative, counsel relied on a series of superior court decisions: Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR): Counsel highlighted the holding of Magare, J., that contractual disputes under Section 12(1)(b) must strictly relate to straightforward contracts for money held and received. The court in Palms Resort emphasized that determining whether a refund is due under an agreement requires interpreting rights arising out of property law which falls outside the mandate of the Small Claims Court. Home Seekers Limited & Another v Macharia [2024] KEHC 5277 (KLR): Counsel noted the court's finding that where a dispute touches on tenancy or property rights, it carries legal ramifications reserved for specialized forums. The court affirmed the rule of thumb that if the High Court lacks jurisdiction over a specialized land matter, the Small Claims Court similarly cannot entertain it nor is there a statutory avenue to appeal from the Small Claims Court directly to the Environment and Land Court. Maworks Investment Company Limited v Mwilitsa [2024] KEHC 10525 (KLR): Counsel referenced paragraphs 12 through 17 of the judgment arguing that Section 12 of the Small Claims Court Act does not operate in isolation or oust the jurisdiction of specialized tribunals established under dedicated land statutes (such as the Land Registration Act, Land Act, Rent Restriction Act and the Landlord and Tenant Act). Counsel emphasized that Section 12(1) limits property disputes solely to movable property. Consequently, once a suit requires a court to inquire into contractual obligations, rights of occupation or breaches arising from land transactions, the Small Claims Court immediately lacks subject-matter jurisdiction.
13. Addressing the Respondent’s reliance at the trial court on Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC 14405 (KLR ), counsel urged the High Court to distinguish that authority. Citing Akinyi & 4 Others v Kenya Medical Research Institute [KEMRI] & Another [2023] KEELRC 2060 (KLR) , counsel submitted that when faced with conflicting superior court decisions, courts and litigants must examine constitutional and statutory provisions directly to determine if the facts are distinguishable.
14. On the threshold question of jurisdiction, counsel cited the Supreme Court precedent in Samuel Kamau Macharia v Kenya Commercial Bank & 2 others (SCK Application No. 2 of 2011) [2012] eKLR , reiterating that a court's jurisdiction flows exclusively from the Constitution or written statute. A court cannot arrogate jurisdiction to itself beyond statutory limits nor expand its jurisdiction through judicial innovation.
15. In applying these principles to the present dispute, counsel submitted that the primary transaction between the parties was a land sale agreement between a vendor and a purchaser in which mutual breaches of contract were alleged. Counsel asserted that the exchange of funds between the parties did not convert a land sale transaction into a simple contract for "money held and received" under Section 12(1)(b).
16. Counsel argued that should the suit proceed to trial, the court would inevitably be required to evaluate contractual obligations concerning a parcel of land thereby exceeding its statutory limits. Furthermore, under Section 38 of the Small Claims Court Act, appeals lie exclusively to the High Court and not the Environment and Land Court; thus, if the High Court lacks jurisdiction over land sales, the Small Claims Court cannot act as a court of first instance for such matters.
17. Counsel for the Appellant concluded by praying that the High Court find the Small Claims Court devoid of jurisdiction, allow the appeal and award costs to the Appellant.
18. The Respondent submitted that the issue in dispute was a single question of jurisdiction: whether the Small Claims Court has jurisdiction to hear and determine a case involving moneys owed under a land sale agreement. He noted that the Appellant claimed under sections 13(5) and 12(1) of the Small Claims Court Act that the Court lacked jurisdiction to hear and determine the claim, further arguing that every dispute arising from a land sale agreement falls under the exclusive jurisdiction of the Environment and Land Court. The Respondent respectfully submitted that this was not the correct reading of sections 13(5) and 12(1) of the Small Claims Court Act.
19. The Respondent noted that the High Court had had occasion to determine the Jurisdiction of the Small Claims Court with respect to disputes arising from land sale agreements. He cited Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR), where the High Court held that in considering whether a court has jurisdiction to hear and determine a claim, the said court must first apply the 'pre-dominant issue test' to the contents of the statement of claim to ascertain what the pleadings seek to achieve.
20. The Respondent submitted that Section 12(1)(b) of the Small Claims Court Act ONLY deprives the Small Claims Court of jurisdiction to hear and determine disputes involving the disposition of an interest in land. He asserted that the drafters of section 13(5) of the Small Claims Court Act were very particular when they singled out 'disputes over title to or possession of land' as being the only disputes beyond the reach of the Small Claims Court. He argued that if Parliament had intended that every dispute arising from a land sale agreement should be beyond the jurisdiction of the Small Claims Court, nothing would have stopped it from saying so. Hence, if the pre-dominant issue in the statement of claim involves disposition of an interest in land, it would be correct to argue that the Court lacks jurisdiction to hear and determine the claim; however, that was not the case here.
21. The Respondent affirmed that he neither sought title to land nor possession of land as his claim was purely about money owed to him by the Appellant. The dominant purpose in his claim was the recovery of the balance of the purchase price. From the prayers in the Statement of Claim, the Respondent had neither an interest in the title to land nor an interest in possession of SIAYA/BARDING/4459 as it was all about money. Hence, he argued that the claim herein is categorized as a commercial-contractual issue and not a claim on an interest in land and cannot be characterized as a claim for an interest in land.
22. The Respondent cited the persuasive decision of the High Court in Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR), where the High Court held that:
"In addressing the salient issue on whether the trial Court was endowed with jurisdiction to entertain the lower Court suit, this Court will draw guidance from the decision of the Court of Appeal in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR wherein the Court in addressing a preliminary jurisdictional question, applied the "Pre-dominant issue test", (as submitted by the Respondent herein) in determining which court, between the Environment and Land Court and the High Court had the jurisdiction to entertain a dispute arising from a charge executed in favor of a bank... Applying my mind to the above dicta, it can be garnered from the Respondent's case before the lower Court that the dispute was essentially predicated on a contract in respect of the Agreement for sale of the suit Property wherein the Respondent essentially sort to recoup the sums he had paid out to Appellant. The same can further be construed from the body of the claim and reliefs sought for before the trial Court, the gist of which this Court had earlier set out in this judgment. The above of which seems to fall within the jurisdiction of the Small Claims Court Act by dint of Section 12(1)(b) of the Act notwithstanding the purpose for which the monies were received. That said, aside the fact that the Agreement concerned the sale of the suit property, the Respondent's claims did not appertain disposition of interest in suit property. The Appellant's feeble invitation to interlink the cause of action to the Respondent's claim to disposition of interest in land therefore cannot sustain."
23. The Respondent submitted that it was thus not true that every suit founded on a land sale agreement automatically falls under the jurisdiction of the Environment and Land Court. He stated that the prayers sought in the pleadings determine the appropriate court with jurisdiction to grant them. In the present case, he maintained that the prayers sought were squarely within the jurisdiction of the Small Claims Court to consider and grant as the dominant issue in the statement of claim was money owed to the Respondent rather than the disposition of an interest in land.
24. The Respondent argued that the three authorities relied on by the Appellant in support of his appeal were simply inapplicable to the appeal, as the facts of those cases were clearly distinguishable. He submitted that the first case relied upon by the Appellant is Palms Resort Limited v Qureshi 2 Others (Civil Appeal E167 of 2022) 2023 KEHC 23644 (KLR) wherein he stated that at paragraph 25 and 26 of the judgement, the court admitted that the facts of the case are not about money but rights arising from a lease agreement. He cited the second case relied upon by Appellant; Home Seekers Limited another v Macharia (Civil Appeal E115 OF 2023) 2024 KEHC 5277 (KLR) wherein he submitted that the court was of the view that the case relates to the rights and obligations under a tenancy agreement.
25. The respondent submitted on the third authority relied upon by Appellant, Maworks Investment Company Limited v Mwilitsa (Civil Appeal E686 of 2022) 2024 KEHC 10525 (KLR) wherein the court stated that -:
‘‘The suit at the primary court had been initiated by the respondent against the appellant for a sum of Kshs. 180,000.00 being allegedly a deposit made by the respondent to the appellant for hotel space that was immediately closed in compliance with Government directives to combat the Covid-19 pandemic. The appellant had filed a response pleading that the money was indeed paid as part deposit and part rent based on a lease agreement, whereupon the respondent took possession and commenced a restaurant business which he subsequently terminated without notice. The appellant denied that the arrangement was frustrated by Government containment efforts and averred that part of the money was spent as rent for the period of occupation while the deposit component covered the rent for the remainder of the period.’’
26. The Respondent stated that the three courts above were right to hold as they did because the three cases related to disposition in land. They were disputes over title to land and possession of land. The authorities are therefore distinguishable from Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC14405(KLR) which is a dispute over money owed to the claimant. The facts in Okal v Awiti are similar to those in this case.
27. For the reasons above, the Respondent prayed that this court finds that the Small Claims Court has jurisdiction to hear and determine the claim herein. He humbly prayed that this Appeal be dismissed with costs to the Respondent.
28. I have considered the record of appeal and rival submissions tendered by both parties. I find the singular issue for determination is whether the lower Court had jurisdiction to determine the claim as pleaded by the Claimant/Respondent in the lower court.
29. Being an appeal from the Small Claims Court, this Court's jurisdiction is circumscribed by Section 38 of the Small Claims Court Act, which limits appeals to matters of law only. As held in Ngunjiri v Gachiri & another [2024] KEHC 12401 (KLR):
"Being an appeal from the Small Claims Court, the duty of the court is circumscribed under section 38 of the Small Claims Court Act. The duty of the court is to defer to the findings of fact of the adjudicator and analyse the matter for issues of law. The issues of law are either due to the subject matter or the finding of law by the court. An appeal of the instant nature was on points of law. It could be pure points of law or mixed points of law. The court could not delve into issues of fact. ’’
30. This Court shall therefore confines itself to considering whether the trial court erred in law in its determination on jurisdiction.
31. A careful perusal of the Statement of Claim filed before the Small Claims Court reveals that the Claimant/Respondent sought judgment for Kshs. 400,000/- being the outstanding balance of the purchase price for land parcel SIAYA/BARDING/4459; and Kshs. 270,000/- being 30% of the purchase price for breach of clause 11 of the Sale of Land Agreement.
32. Critically, the claim as pleaded does not seek the recovery of the land itself nor does it dispute the title to or possession of the land. The Respondent's claim is solely for money being the balance of the purchase price and a contractual penalty for breach of contract. The sale of land transaction was already completed. The title was transferred to the Appellant and he took possession of the land. The dispute is therefore post-transfer and relates to the alleged non-payment of the full purchase price.
33. Jurisdiction is fundamental to the judicial process. As famously enunciated by the Court of Appeal in the locus classicus Owners of the Motor Vessel "Lilian S" v Caltex Oil (Kenya) Ltd [1989] KLR 1:
"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 the continuation of the proceedings."
34. A preliminary objection must be capable of being handled by looking at the pleadings and the law only and without calling for evidence or facts outside the pleadings of the parties. In Independent Electoral & Boundaries Commission v Cheperenger & 2 others (2015) KESC 2 (KLR), the Supreme Court of Kenya held that; “It is quite clear that a preliminary objection should be founded upon a settled and crisp point of law, to the intent that its application to undisputed facts, leads to but one conclusion: that the facts are incompatible with that point of law."
35. A court's jurisdiction is conferred exclusively by the Constitution or by statute. The statutory jurisdiction of the Small Claims Court is governed by Section 12(1) of the Small Claims Court Act, No. 2 of 2016 which provides as follows:
-Section 12(1) of the Small Claims Court Act provides that 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.
-Section 13(5) of the Act ousts the Court's jurisdiction in claims whose cause of action is founded upon a dispute over title to or possession of land.
36. In the instant case, the jurisdiction of the Small Claims Court is defined by Section 12 of the Small Claims Court Act and limited by Section 13 of the same Act. This Court finds the analysis of Magare, J. in Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR) instructive. The learned Judge stated that the jurisdiction of the Small Claims Court is circumscribed and there is no room for playing outside Section 12 of the Act. He further noted that disputes over contracts under Section 12(1)(b) must relate only to contracts relating to money held and received.
37. To determine whether the Small Claims Court has jurisdiction, I find it necessary to apply the "Predominant Issue Test" as was adopted by the Court of Appeal in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR and subsequently applied by the High Court in Okal v Awiti (Civil Appeal E937 of 2023) [2024] KEHC 14405 (KLR)
38. The Court in Okal v Awiti had to determine whether a claim for recoupment of money paid under a land sale agreement fell within the jurisdiction of the Small Claims Court. It held that upon applying the "Pre-dominant issue test," the claim was essentially predicated on a contract in respect of the agreement for sale, where the respondent sought to recoup the sums he had paid out to the appellant. The court found this to fall within the jurisdiction of the Small Claims Court by dint of Section 12(1)(b ), notwithstanding the purpose for which the monies were received and held that aside from the fact the agreement concerned the sale of the suit property, the respondent's claims did not appertain to disposition of interest in the suit property.
39. I find the reasoning in Okal v Awiti to be highly persuasive and directly on point with the facts of this case. In the present case, the official search certificate attached to the Statement of Claim reveals that Land Parcel No. SIAYA/BARDING/4459 was successfully transferred and registered in the name of the Appellant, JAMES OUMA ANYANGO on 27th May 2025. The Respondent does not seek cancellation of title, re-transfer or rectification of the register. The Respondent admits that the Appellant took full possession and occupation of the property upon transfer. Neither party is seeking eviction, vacant possession or orders regarding physical control of the land. The Respondent's prayers in the Statement of Claim are exclusively monetary: Kshs 400,000/- representing unpaid balance of the purchase price and Kshs 270,000/- as liquidated damages under Clause 11 of the contract. The predominant issue is the recovery of money owed under a contract not the validity of the ownership or possession of the land. The prayers sought are squarely within the jurisdiction of the Small Claims Court which is empowered to handle contracts relating to money held and received.
40. I find that the trial court correctly analyzed the claim and found that it was not a dispute over title to or possession of land. In its ruling, the trial court stated:
"A perusal of the Claim shows that the Claimant seeks payment of the purchase price and damages for breach of contract. At no point does the claim dispute title to and possession of the land."
41. I am in complete agreement with the trial court's analysis. The claim before the Small Claims Court is a claim for a debt arising from a completed land transaction and not a dispute over title to or possession of land. As such, it falls squarely within the jurisdiction of the Small Claims Court under Section 12(1)(a) and (b) of the Act.
42. The Appellant cannot have his cake and eat it. The court notes the peculiar position taken by the Appellant. He has already received the land, had title transferred to his name and taken possession of the suit property. He now seeks to argue that the court has no jurisdiction to hear the claim for the unpaid balance.
43. The Appellant has already obtained the land. He cannot now argue that the court has no jurisdiction to determine the claim for the balance of the purchase price simply because the transaction involved land. To hold otherwise would be to allow the Appellant to benefit from his own inconsistent position which would be an affront to justice.
44. The decisions relied upon by the Appellant namely Palms Resort Limited v Qureshi & 2 others (Civil Appeal E167 of 2022) [2023] KEHC 23644 (KLR): , Home Seekers Limited & Another v Macharia [2024] KEHC 5277 (KLR): and Maworks Investment Company Limited v Mwilitsa [2024] KEHC 10525 (KLR): are readily distinguishable. Those authorities concerned tenancy, leasehold rights and landlord-tenant relationships. Landlord-tenant disputes are governed by specialized legislative regimes (such as the Rent Restriction Act and the Landlord and Tenant Act) which confer exclusive jurisdiction upon statutory tribunals. In contrast, a claim for unpaid balance of money owed under a simple contract of sale where property title has already passed contains no statutory reservation to a specialized tribunal.
45. I find that the learned trial magistrate properly directed himself on the law and correctly concluded that the Preliminary Objection lacked merit. The trial court did not arrogate to itself jurisdiction it did not have. On the contrary, it properly exercised the jurisdiction conferred upon it by Section 12 of the Small Claims Court Act.
46. In light of the foregoing, I find that the appeal is devoid of merit and is dismissed with costs to the Respondent.
It is so ordered.
Dated and delivered virtually at Eldoret, this 11 th day of August 2026
D.KEMEI
JUDGE
In the presence of:
M/s Onsongo for Okello…………..for the Appellant
Paul Mboya Waringa…………………. Respondent
Kevin………………………………..Court Assistant
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