Background
1. The Appellant filed this appeal by way of an Amended Memorandum of Appeal dated 6/6/2023 challenging the trial Court’s decision to grant the respondent Bank the sum of Kshs. 500,000/= together with interest and costs of the suit.
2. The appellant prays that its appeal be allowed and that the Judgment dated 10/3/2023 in Nairobi SCCCOMM No. E5952 of 2022 be set aside and substituted with an Order allowing the appellant’s Counterclaim and Set-off dated 31/10/2022. The applicant further prays for the costs of the suit and the appeal. The appeal is sought on the following grounds:
i. THAT the trial Magistrate erred in law and fact by misdirecting herself on the evidence placed before her and consequently making a wrong and erroneous decision to dismiss the Appellant's Counterclaim.
ii. THAT the trial magistrate erred in law and fact by failing to consider the pleadings by parties which clearly showed that the Respondent owed the Appellant unpaid legal fees thus arriving at an erroneous conclusion.
iii. THAT the trial magistrate erred in law and fact in failing to appreciate that the legal fees requested to be paid by the Appellant was calculated as per Clause 3(f) and 5(b) of the debt collection agreement between parties thus arriving at an erroneous conclusion.
iv. THAT the trial magistrate erred in law and fact in failing to appreciate that the Appellant had through its Counterclaim stated the exact amount of fees owed to him thus arriving at an erroneous conclusion.
v. THAT the trial magistrate erred in law and fact by misdirecting herself on the application of Order 7 Rule 3 of the Civil Procedure Rules, 2010 thus arriving at an erroneous conclusion.
vi. THAT the trial magistrate erred in law and fact by failing to consider the witness statement of Daisy Nyabate Onkoba thus arriving at a wrong conclusion.
vii. THAT the trial magistrate erred in law and fact by failing to consider the email correspondence between parties that clearly showed that the Respondent owed the Appellant unpaid legal fees thus arriving at an erroneous conclusion.
viii. THAT the trial magistrate erred in law and fact in failing to find that the Appellant had met the standard of proof which is on a balance of probabilities in prosecuting its counterclaim thus arriving at an erroneous conclusion.
ix. THAT the trial magistrate erred in law and fact in failing to find that the Appellant had discharged its burden of proof in prosecuting its counterclaim thus arriving at an erroneous conclusion.
x. THAT the Learned Magistrate erred in law and in fact by failing to consider the Appellant's submissions and in doing so arrived at a wrong decision.
xi. THAT the Learned Magistrate erred in law by delivering its judgment outside the mandatory stipulated statutorily timelines of Section 34(1) of the Small Claims Court Act.
xii. THAT the Learned Magistrate erred in law by delivering its judgment/decision without jurisdiction rendering the judgment/decision a nullity in law.
3. The background to the appeal is that on 8/6/2020, the appellant approached the respondent (the Bank) for an overdraft facility of Kshs. 500,000/= which was granted on the condition that it would be repaid at the end of 3 months. The appellant defaulted, prompting the Bank to file a claim before the Small Claims Court. The Court allowed the Bank’s claim and awarded it Kshs. 500,000/= together with costs of the suit and interest.
Analysis and determination
4. Having considered the record of appeal, the pleadings, responses, submissions and authorities presented, two broad issues present themselves for determination:
i. Whether the trial court had jurisdiction at the time of delivery of the impugned judgment; and
ii. Whether the trial court erred by Order 7 Rule 3 of the Civil Procedure Rules 2010 and by finding that the appellant had failed to discharge its burden of proof.
5. The appellant contends that the Learned Magistrate erred in law by delivering its judgment outside the stipulated timelines of Section 34(1) of the Small Claims Court Act (SCCA). As such, the appellant contends that by so doing the judgment was a nullity in law. However, in its submissions, the appellant conceded that the Small Claims Court has jurisdiction to hear and determine matters beyond the 60-day statutory limit.
6. Indeed, the Court in Crown Beverages Limited V MFI Document Solutions Limited, [2023] KEHC 58 (KLR) considered the effect of section 34(2) of the SCCA. The said provision requires that proceedings should be concluded within 60 days of filing of the claim and the judgment delivered within 3 days of the hearing. The court held that section 34(2) is directory and not mandatory noting that it is not the intention of the SCCA to invalidate any proceedings that violate the statutory timelines. This ground of appeal therefore fails on that account.
7. The second issue is whether the trial court erred in finding that the appellant had failed to discharge its burden of proof.
8. In an appeal from the Small Claims Court, such as this, this court’s jurisdiction is limited to questions of law only, by dint of section 38(1) of the SCCA. This means that the court’s mandate as to matters of fact is limited as was discussed by the Court of Appeal in Mercy Kirito Mutegi V Beatrice Nkatha Nyaga & 2 Others, [2013] eKLR. The court held as follows:
“We are nonetheless conscious that our jurisdiction is only limited to determination of points of law and thus, our concern regarding the issues that dealt on facts will be limited to our duty of re- evaluation of the Judge’s conclusions; and if the conclusions are erroneous; that is, not supported by evidence and the law; the matter becomes a point of law.”
9. Against this background, the appellant submits that although the legal and evidential burden of proof lay with the respondent, it failed to produce any Credit Agreement within the meaning of the Consumer Protection Act, No. 46 of 2012. The appellant also submits that the Learned Magistrate erred by not taking into consideration and appreciating its evidence which showed that the respondent owed it unpaid legal fees.
10. The appellant further contends that the trial magistrate erred in law and fact by misdirecting herself on the application of Order 7 Rule 3 of the Civil Procedure Rules, 2010 thus arriving at an erroneous conclusion. Order 7 Rule 3 of the Civil Procedure Rules, 2010 provides that:
“A defendant in a suit may set-off, or set-up by way of counterclaim against the claims of the plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and whether it is for a liquidated or unliquidated amount, and such setoff or counterclaim shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit, both on the original and on the cross-claim; but the Court may on the application of the plaintiff before trial, if in the opinion of the court such set-off or counterclaim cannot be conveniently disposed of in the pending suit, or ought not to be allowed, refuse permission to defendant to avail himself thereof.”
11. On its part, the respondent argued that the trial court was right in dismissing the appellant’s counterclaim on the basis that there was no proof that the respondent owed the appellant legal fees for debt collection services offered pursuant to a Debt Collection Agreement.
12. Section 107 of the Evidence Act is clear on the obligation to discharge the burden of proof and which party bears that burden. It provides as follows:
“(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”
13. The record confirms that through a loan application dated 8/6/2020, the appellant applied for an overdraft facility for Kshs. 500,000/- from Jamii Bora Bank (now Kingdom Bank Limited). Through a letter dated 8/9/2020, the appellant confirmed that it was enjoying the overdraft facility due on 9/9/2020 and requested an extension of the facility for three months. There are statements of account which were produced to prove the respondent’s case.
14. Likewise, despite claiming the amount of Kshs. 757,536/= by way of counterclaim, there is no evidence on the record to show that the respondent owed the appellant this amount by way of debt collection fees. The Respondent produced its statement of account showing that it had settled invoices received on 10/5/2019, 30/7/2019 and 20/11/2019 and a breakdown of the dates of settlement of each invoice raised.
15. Just like the trial court noted, the fact that the appellant had been appointed to the respondent’s panel in light of the Debt Collection Agreement was not sufficient to prove the counterclaim. It is therefore my finding that the trial court was correct to dismiss the appellant’s counterclaim based on insufficient proof.
Disposition
16. Accordingly, I find that this appeal has no merit. It is hereby dismissed with costs assessed at Kshs. 40,000/= only.
Orders accordingly.