1. The respondent, then a claimant, filed a statement of claim dated 22nd April 2025 in the Small Claims Court vide which he sought Kes 468,330/- on account of an alleged breach of a sale agreement dated 5th July 2024. The respondent alleged that he sold his business, called California Lounge, situated at Plot No 1722 (Original No 11161/2, Section 1 Mainland North), for a consideration of Kes 468,330, and was issued with a postdated cheque No 00391 by the appellant. The said cheque, he averred, was dishonoured upon presentation. He stated that the agreement provided for payment of monthly interest of 20% of the consideration if the cheque did not clear. He therefore sought the said amount with interest as aforesaid.
2. In the statement of response dated 9th June 2025, the appellant denied owing the amount claimed. He averred that his indebtedness was only Kes 290,830/-. Accordingly, he prayed that Judgement be entered for the respondent for the said amount. In the witness statement he filed, he acknowledged that he did, in fact, enter into a sale agreement for the business in the amount he claimed. He, however, stated that contrary to his representation, the respondent had no licence, as a result of which he had to incur an expense of Kes 177,500/- to procure it. He averred that he was ready to pay the agreed sum less the licence fee, leaving the sum payable as Kes 290,830/-.
3. In a terse judgment dated 30th June 2025, the learned adjudicator found that the business was sold on an “as is basis and that the appellant, then the respondent, ought to have undertaken due diligence. Accordingly, he entered Judgment for Kes 477,135/30 being the principal sum plus interest of Kes 7,805/30. He made no orders as to costs.
4. Being aggrieved, the appellant filed the instant appeal. The appeal raises 2 grounds of appeal, to wit:-
1. That the trial magistrate erred in law in failing to find that the appellant and the respondent were bound by the terms of the sale agreement dated 5th July 2025; and
2. That the trial magistrate erred in law in failing to find that the respondent had not proved his case on a balance of probabilities.
5. The appellant therefore sought the dismissal of the claimant’s case in the court below and costs of the appeal.
6. The appeal was canvassed by way of written submissions. I shall give a précis of each party’s submissions below:
7. The submissions of the appellant are dated 12th February 2026. The appellant contended that clauses 2 and 3 of the sale agreement required the respondent to clear all outstanding county debts relating to the business, and that the appellant would continue using the subsisting licence upon taking over until its expiry. Upon taking over the business, the appellant, to his utter surprise, discovered that no valid licence existed and was thus forced to incur additional expenses.
8. Counsel for the appellant contended that the question as to whether a magistrate properly exercised his discretion was a question of law. He relied on the decision of the court in Peter Gichuki Kingara v IEBC & 2 Others [2014] eKLR. It was urged that by failing to properly evaluate the evidence and by reaching a conclusion unsupported by any evidence, the learned adjudicator made an error of law.
9. It was urged that parties are bound by their own pleadings. In the case before the court below, it was contended that the agreement was clear on liability. It was also urged that the respondent did not discharge his burden of proof. Accordingly, it was urged that this court set aside the judgment of the court below with costs or alternatively enter judgment in the admitted sum of Kes 290,830/-.
10. The submissions of the respondent are dated 3rd March 2026. Counsel for the respondent stated that the appellant conceded the validity and binding nature of the agreement. It was contended that there was no requirement for a valid licence, nor any indication that its absence was a deal-breaker.
11. Counsel contended that the appellant sought to rewrite the contract by imputing terms which had not been agreed. It was urged that doing so would go against the parole evidence rule. Reliance was placed on the case of Fidelity Commercial Bank Ltd v Kenya Grange Vehicle Industries Ltd [2020] eKLR.
12. This is an appeal against the decision of the Small Claims Court under Section 38 of the Small Claims Court Act. The High Court may only consider an appeal arising from issues of law. I agree with counsel that issues regarding the proper exercise of discretion are questions of law.
13. Did the learned magistrate properly evaluate the evidence? Was there a proper exercise of discretion?
14. In Mbogo & another v Shah [1968] EA 93, the court held that:-
“That this court will not interfere with the exercise of judicial discretion by an inferior court unless it is satisfied that its decision is clearly wrong, because it has misdirected itself or because it has acted on matters on which it should not have acted or because it has failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion.”
15. Whereas paragraph 2 of the sale agreement stated that the “vendor shall clear any county debt with regard to the business”, I am not convinced that it was shown that any county debt existed which hadn’t been cleared at the time of execution of the agreement. Paragraph 3 of the sale agreement did not indicate when the “current trade licences” would expire. Further, at paragraph 7, it was clearly indicated that the business was sold on an “as is where is basis”, which, in my view, meant that the appellant should have conducted due diligence.
16. It is instructive that at paragraph 5 of the agreement, the handover date was 4th July 2024. The cheque was returned unpaid on 12th September 2024, more than 2 months later.
17. I agree with counsel for the respondent that to accept the explanation given by the appellant would offend the rule against parole evidence and that that would be impermissible (see Fidelity Commercial Bank Ltd case).
18. In my view, the appeal has no merit. The same is dismissed with costs.
19. It is so ordered.
Dated and signed at Nairobi this 3rd day of July 2026.
2. In the statement of response dated 9th June 2025, the appellant denied owing the amount claimed. He averred that his indebtedness was only Kes 290,830/-. Accordingly, he prayed that Judgement be entered for the respondent for the said amount. In the witness statement he filed, he acknowledged that he did, in fact, enter into a sale agreement for the business in the amount he claimed. He, however, stated that contrary to his representation, the respondent had no licence, as a result of which he had to incur an expense of Kes 177,500/- to procure it. He averred that he was ready to pay the agreed sum less the licence fee, leaving the sum payable as Kes 290,830/-.
3. In a terse judgment dated 30th June 2025, the learned adjudicator found that the business was sold on an “as is basis and that the appellant, then the respondent, ought to have undertaken due diligence. Accordingly, he entered Judgment for Kes 477,135/30 being the principal sum plus interest of Kes 7,805/30. He made no orders as to costs.
4. Being aggrieved, the appellant filed the instant appeal. The appeal raises 2 grounds of appeal, to wit:-
1. That the trial magistrate erred in law in failing to find that the appellant and the respondent were bound by the terms of the sale agreement dated 5th July 2025; and
2. That the trial magistrate erred in law in failing to find that the respondent had not proved his case on a balance of probabilities.
5. The appellant therefore sought the dismissal of the claimant’s case in the court below and costs of the appeal.
6. The appeal was canvassed by way of written submissions. I shall give a précis of each party’s submissions below:
7. The submissions of the appellant are dated 12th February 2026. The appellant contended that clauses 2 and 3 of the sale agreement required the respondent to clear all outstanding county debts relating to the business, and that the appellant would continue using the subsisting licence upon taking over until its expiry. Upon taking over the business, the appellant, to his utter surprise, discovered that no valid licence existed and was thus forced to incur additional expenses.
8. Counsel for the appellant contended that the question as to whether a magistrate properly exercised his discretion was a question of law. He relied on the decision of the court in Peter Gichuki Kingara v IEBC & 2 Others [2014] eKLR. It was urged that by failing to properly evaluate the evidence and by reaching a conclusion unsupported by any evidence, the learned adjudicator made an error of law.
9. It was urged that parties are bound by their own pleadings. In the case before the court below, it was contended that the agreement was clear on liability. It was also urged that the respondent did not discharge his burden of proof. Accordingly, it was urged that this court set aside the judgment of the court below with costs or alternatively enter judgment in the admitted sum of Kes 290,830/-.
10. The submissions of the respondent are dated 3rd March 2026. Counsel for the respondent stated that the appellant conceded the validity and binding nature of the agreement. It was contended that there was no requirement for a valid licence, nor any indication that its absence was a deal-breaker.
11. Counsel contended that the appellant sought to rewrite the contract by imputing terms which had not been agreed. It was urged that doing so would go against the parole evidence rule. Reliance was placed on the case of Fidelity Commercial Bank Ltd v Kenya Grange Vehicle Industries Ltd [2020] eKLR.
12. This is an appeal against the decision of the Small Claims Court under Section 38 of the Small Claims Court Act. The High Court may only consider an appeal arising from issues of law. I agree with counsel that issues regarding the proper exercise of discretion are questions of law.
13. Did the learned magistrate properly evaluate the evidence? Was there a proper exercise of discretion?
14. In Mbogo & another v Shah [1968] EA 93, the court held that:-
“That this court will not interfere with the exercise of judicial discretion by an inferior court unless it is satisfied that its decision is clearly wrong, because it has misdirected itself or because it has acted on matters on which it should not have acted or because it has failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion.”
15. Whereas paragraph 2 of the sale agreement stated that the “vendor shall clear any county debt with regard to the business”, I am not convinced that it was shown that any county debt existed which hadn’t been cleared at the time of execution of the agreement. Paragraph 3 of the sale agreement did not indicate when the “current trade licences” would expire. Further, at paragraph 7, it was clearly indicated that the business was sold on an “as is where is basis”, which, in my view, meant that the appellant should have conducted due diligence.
16. It is instructive that at paragraph 5 of the agreement, the handover date was 4th July 2024. The cheque was returned unpaid on 12th September 2024, more than 2 months later.
17. I agree with counsel for the respondent that to accept the explanation given by the appellant would offend the rule against parole evidence and that that would be impermissible (see Fidelity Commercial Bank Ltd case).
18. In my view, the appeal has no merit. The same is dismissed with costs.
19. It is so ordered.
Dated and signed at Nairobi this 3rd day of July 2026.