(Being an appeal from the Judgment of the Small Claims Court at Milimani, before Honourable Kiongo Kagenyo, delivered on the 22nd July 2024 in SCC COMM No. 3955 of 2023)
1. This appeal arises from the Judgment of the Small Claims Court at Milimani by Hon. Kiongo Kagenyo delivered on the 22 nd July 2024 SCC COMM No. 3955 of 2023 . The suit before the trial court was instituted by Kifedha Limited (hereinafter “the Appellant”) as Plaintiff against AIG Insurance Limited (hereinafter “the 1st Respondent”) and Peter Ngure Munyua (hereinafter “the 2 nd Respondent”) as Defendants.
2. By a Statement of Claim, the Appellants filed a suit against the Respondent herein in the Small Claims Court at Milimani in which the Appellants claimed what it believed was a breach of contract and negligence on the part of the 1 st Respondent in making payments regarding the loss of a motor vehicle registered to the 2 nd Respondent who had secured a loan from it and used said vehicle as collateral.
3. The 1st Respondent responded to the said claim by denying the fact that there was any negligence on its part when it paid the claim to the 2nd Respondent. It highlighted the fact that the Claimant was a stranger to it and that any form of agreement that might have been entered into by the Claimant and the 2nd Respondent was a private treaty to which the 1st Respondent had nothing to do with and that its role was merely to insure an asset of the 2nd Respondent.
4. It further submitted that the claim lodged to it by the 2nd Respondent had been paid to the said individual and that any claim for a debt between the parties should be paid by the said individual. The Appellant on its own motion deemed it fit to withdraw its case against the 2nd Respondent compelling the 1st Respondent to join him as a Co-Respondent. Parties proceeded under section 30 and submitted and the Court rendered its decision dismissing the claim against the 1st Respondent on 22/7/2024.
5. Seven grounds of appeal were filed:
(i) THAT the Honorable Magistrate erred in law by unreasonably deciding without basis, that the Appellants herein failed to prove that they are policy holders together with the 2nd Respondent herein despite the production of the policy cover showing two names as the insured.
(ii) THAT the Honorable trial Magistrate erred in law by erroneously holding that the policy cover had only catered insurance for the suit truck registration number KBR 009P and not the Appellant’s loan of over Ksh.600,000.
(iii) THAT the Honorable trial Magistrate erred in law by failing to take into consideration the obvious evidence that the truck registration KBR 009P bears the names of two parties being the Appellant herein and the 2nd Respondent herein and as such, any payments made should have been made to both parties.
(iv) THAT the Honorable trial Magistrate erred in law by failing without substantial explanation to hold that the 1st Respondent herein was negligent and caused the Appellant herein great loss and damage by only paying one insured and yet the insurance policy cover reads two parties for the accidental loss.
(v) THAT the Honorable trial Magistrate erred in law by erroneously holding that the 1st Respondent herein did not owe any duty of care to the Appellant herein despite the 1st Respondent herein endorsing a policy cover reading the joint names of the Appellant and the 2nd Respondent herein.
(vi) THAT the Honorable trial Magistrate erred by failing to take into consideration the overwhelming and compelling evidence produced by the Appellants herein in their statement of claim, particularly the Joint logbook, the policy cover, the statement of accounts showing the loan due, which evidence if considered would have led to a different outcome.
(vii) THAT the Honorable trial Magistrate erred in law by failing to consider the entire submissions and documentary evidence as filed by the Appellant before arriving at the impugned Judgment.
6. Parties agreed to proceed by way of written submissions with the Appellant filing their written submissions dated 5th August 2025 whilst the 1st Respondent filed theirs dated 10th September 2025 and Supplementary ones dated 10th February 2026.
7. The Appellant noted that it is not in dispute that the insurance policy listed “Peter Ngure Munyua / Kifedha Limited” as the insured. The logbook produced also bears both names as the rightful legal owners of the subject motor vehicle and the 2nd Respondent admitted that the vehicle was collateral for a loan issued by the Appellant.
8. The Appellant cited the case of CIC Insurance Group Limited v Asuku (Suing as the legal representative of the Estate of Linet Kerubo Obiri - Deceased) & another (Civil Appeal 679 of 2021) [2024] KEHC 3076 (KLR) (Civ) (14 March 2024) (Judgment) stated that
“The person “Insured under the policy” is any authorized driver provided he shall as though he were the insured observe the terms of the policy” Therefore if all terms of the policy are observed and the driver is deemed to be the “insured” then the injured person is entitled to the benefit of the judgment and therefore any such judgment ought to be enforced against the insurer. The law envisages a situation where the Insurer is obligated to satisfy a claim by a third party so long as damage can be attributed to the accident vehicle. Such insurer cannot escape liability when the policy is valid and covers the risk which has attached involving the insured vehicle.
9. The Appellant further submits that the 1st Respondent owed a duty of care and or an obligation to both the Appellant and the 2nd Respondent as a result of the jointly registered logbook and the joint policy cover. The failure of the 1st Respondent to notify the Appellant or jointly compensate both insured parties constituted negligence. The Appellant was deprived of its ability to recover its outstanding loan of Ksh.639,743. To buttress this, the Appellant states that Insurable Interest was defined in Anctol vs. Manufacture Life Insurance Company (1899) AC 604, as:-
“That basic requirement of an insurance contract unless waived, that it generally means that the party to the insurance contract who is the insured or policy holder must have a particular relationship with the subject matter with the insurance whether that be ‘a life or property or a liability’ to which he might be exposed. Every insurance contract requires an insurable interest to support it, otherwise it is invalid.”
10. The Appellant also submitted that the trial Court disregarded crucial evidence including the joint logbook, the jointly-issued policy cover, and the Appellant’s statement of accounts, which clearly showed a loan balance due. It further failed to apply the settled principle that where documentary evidence is clear and unambiguous, it should not be ignored.
11. The 1st Respondent submitted that the Small Claims Court Act, specifically Section 38(1), explicitly limits the grounds of appeal from a judgment of the Small Claims Court to “a point of law.” This provision creates a clear distinction between the roles of the two courts: the Small Claims Court is a court of facts, while the High Court is an appellate court for legal principles. It is their contention that all seven grounds of appeal filed by the Appellants are based on the trial magistrate’s evaluation of the evidence and findings of fact, and not on a misinterpretation or misapplication of the law. They further submit that a ground of appeal challenging a court’s failure to take into consideration evidence,” or alleging that the magistrate “erred by unreasonably deciding without basis” on a factual matter, constitutes a factual appeal.
12. Without prejudice to its submission on Jurisdiction, the 1st R espondent also submits that the trial Court correctly found that a policy of insurance with contractual obligations existed specifically between the 1st Respondent and the 2nd Respondent (the Third Party). The Appellant was a stranger to the specific claim process. As the Trial Court noted, the insurance contract was intended to cover risks listed in the policy between the 1st Respondent and the 2nd Respondent not the private loan agreement between the Appellant and the 2nd Respondent.
13. The 1st Respondent further notes that the Appellant only followed up on its collateral long after the accident had occurred and the claim had been settled, showing a lack of due diligence on its part.
14. I note that the Appellant had cited the CIC Insurance Group Limited v Asuku (Suing as the legal representative of the Estate of Linet Kerubo Obiri - Deceased) case which discusses an authorized driver and third-party injury claims. This case law is irrelevant to the dispute at hand. The dispute here is about a financier’s insurable interest and payout for the first-party property loss of the collateral vehicle, not a third-party injury claim.
15. On the basis of the Record of Appeal and the submissions tendered, it is important that the appellate court of first instance reminds itself of its role.
16. Justice Mulwa in Muthoni v Onyuka (Commercial Appeal E318 of 2024) [2025] KEHC 11448 (KLR) (Commercial and Tax) (31 July 2025) stated as follows:
The jurisdiction of this Court in Small Claims Court appeals is thus limited to legal issues only. It is not the function of this Court to reassess the evidence unless it is shown that the trial court’s findings were unsupported by the law, irrational, or perverse (see Maxcure Hospital Ltd v Okello [2023] eKLR).
17. The Memorandum of Appeal consists of certain factual findings which would offend the quotation above and in particular the statutory provisions that state under Section 38(1) of the Small Claims Court Act, 2016,
“A person aggrieved by a decision or order of the Court may appeal against that decision or order to the High Court on matters of law only.”
18. It is now part of legal folklore and trite law that jurisdiction is everything. Anything done without jurisdiction is a nullity, and such a finding operates retrospectively. In the famous case of Owners of the Motor Vessel “Lillian S” vs. Caltex Oil (Kenya) Ltd [1989] eKLR, stated:
“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.”
19. The Supreme Court of Kenya has also stated that jurisdiction can only be conferred on a court by either the Constitution or statute. A court cannot expand its jurisdiction through judicial craft or innovation. See S.K. Macharia and Another v. Kenya Commercial Bank Ltd. & 2 Others.
20. Having anchored myself on the foregoing principles, and upon a consideration of the Record of Appeal and the rival submissions, two issues commend themselves for determination: first, whether the seven grounds set out in the Memorandum of Appeal raise questions of law within the meaning of Section 38(1) of the Small Claims Court Act, 2016; and secondly, whether the Appellant has demonstrated any error of law on the part of the trial court that would warrant interference with its decision.
21. It is well settled that a first appellate court is ordinarily under a duty to re-evaluate the evidence tendered before the trial court and to reach its own independent conclusions, while bearing in mind that it did not have the advantage of seeing or hearing the witnesses; see Selle & Another v Associated Motor Boat Co Ltd [1968] EA 123 . That duty is, however, materially circumscribed in appeals emanating from the Small Claims Court. By the express terms of Section 38(1), this Court does not sit to re-open and re-weigh the factual record, and its mandate is confined to the correction of errors of law. The Appellant’s invitation to revisit the logbook, the joint policy cover and the statement of accounts, and to substitute a fresh assessment of that evidence for that of the trial court, therefore falls outside the jurisdiction conferred upon this Court.
22. Even were the matter to be approached on the footing applicable to findings of fact generally, the threshold for appellate interference remains a high one. In Mwangi v Wambugu [1984] KLR 453 , the Court of Appeal held that an appellate court will not normally disturb a trial court’s finding of fact unless that finding is shown to be based on no evidence, on a misapprehension of the evidence, or on a demonstrably wrong principle. Measured against that standard, the trial magistrate’s conclusion, that the contract of insurance operated as between the 1st Respondent and the 2nd Respondent and that the Appellant’s claim sounded in its private loan arrangement rather than in the policy, was one reasonably open on the material before the court. No misapprehension of the evidence and no error of principle has been demonstrated, and this Court is not entitled to interfere merely because a different conclusion might conceivably have been reached.
23. In insurance law, a financier explicitly named on a policy is a joint insured or a “loss payee.” They are legally never a stranger to the contract. Indemnifying only one party without obtaining a discharge from the joint insured is a standard breach of an insurer's duty of care.
24. I am alive to the force of the proposition that a financier named on a policy is not, in the ordinary case, a stranger to it. That observation, however, goes to the merits of the underlying dispute, which were squarely within the province of the trial court. The Appellant’s true complaint is that the evidence was weighed wrongly, and not that the trial court misdirected itself upon any principle of law. A complaint of that character, however meritorious it may be made to appear, cannot be entertained upon an appeal that lies on points of law alone.
25. In the end, I find that the appeal is without merit. The trial court applied the correct legal principles and properly relied on the evidence before it. No error of law has been demonstrated, and the grounds of appeal are, in substance, challenges to factual findings which are outside the permissible appellate jurisdiction under the Small Claims Court Act
26. Consequently, I make the following orders:
i. The appeal is hereby dismissed.
ii. The judgment and decree of the Small Claims Court in 3955 of 2023 is upheld.
iii. The Appellant shall bear the costs of this appeal and the costs incurred at the Small Claims Court
Dated and Delivered at Nairobi this 18th day of June 2026.
BENARD WAFULA MURUNGA
JUDGE
Delivered on a virtual platform in the presence of:
N/A for Appellants
N/A for Respondents
Kevin Babu - Court Assistant
1. This appeal arises from the Judgment of the Small Claims Court at Milimani by Hon. Kiongo Kagenyo delivered on the 22 nd July 2024 SCC COMM No. 3955 of 2023 . The suit before the trial court was instituted by Kifedha Limited (hereinafter “the Appellant”) as Plaintiff against AIG Insurance Limited (hereinafter “the 1st Respondent”) and Peter Ngure Munyua (hereinafter “the 2 nd Respondent”) as Defendants.
2. By a Statement of Claim, the Appellants filed a suit against the Respondent herein in the Small Claims Court at Milimani in which the Appellants claimed what it believed was a breach of contract and negligence on the part of the 1 st Respondent in making payments regarding the loss of a motor vehicle registered to the 2 nd Respondent who had secured a loan from it and used said vehicle as collateral.
3. The 1st Respondent responded to the said claim by denying the fact that there was any negligence on its part when it paid the claim to the 2nd Respondent. It highlighted the fact that the Claimant was a stranger to it and that any form of agreement that might have been entered into by the Claimant and the 2nd Respondent was a private treaty to which the 1st Respondent had nothing to do with and that its role was merely to insure an asset of the 2nd Respondent.
4. It further submitted that the claim lodged to it by the 2nd Respondent had been paid to the said individual and that any claim for a debt between the parties should be paid by the said individual. The Appellant on its own motion deemed it fit to withdraw its case against the 2nd Respondent compelling the 1st Respondent to join him as a Co-Respondent. Parties proceeded under section 30 and submitted and the Court rendered its decision dismissing the claim against the 1st Respondent on 22/7/2024.
5. Seven grounds of appeal were filed:
(i) THAT the Honorable Magistrate erred in law by unreasonably deciding without basis, that the Appellants herein failed to prove that they are policy holders together with the 2nd Respondent herein despite the production of the policy cover showing two names as the insured.
(ii) THAT the Honorable trial Magistrate erred in law by erroneously holding that the policy cover had only catered insurance for the suit truck registration number KBR 009P and not the Appellant’s loan of over Ksh.600,000.
(iii) THAT the Honorable trial Magistrate erred in law by failing to take into consideration the obvious evidence that the truck registration KBR 009P bears the names of two parties being the Appellant herein and the 2nd Respondent herein and as such, any payments made should have been made to both parties.
(iv) THAT the Honorable trial Magistrate erred in law by failing without substantial explanation to hold that the 1st Respondent herein was negligent and caused the Appellant herein great loss and damage by only paying one insured and yet the insurance policy cover reads two parties for the accidental loss.
(v) THAT the Honorable trial Magistrate erred in law by erroneously holding that the 1st Respondent herein did not owe any duty of care to the Appellant herein despite the 1st Respondent herein endorsing a policy cover reading the joint names of the Appellant and the 2nd Respondent herein.
(vi) THAT the Honorable trial Magistrate erred by failing to take into consideration the overwhelming and compelling evidence produced by the Appellants herein in their statement of claim, particularly the Joint logbook, the policy cover, the statement of accounts showing the loan due, which evidence if considered would have led to a different outcome.
(vii) THAT the Honorable trial Magistrate erred in law by failing to consider the entire submissions and documentary evidence as filed by the Appellant before arriving at the impugned Judgment.
6. Parties agreed to proceed by way of written submissions with the Appellant filing their written submissions dated 5th August 2025 whilst the 1st Respondent filed theirs dated 10th September 2025 and Supplementary ones dated 10th February 2026.
7. The Appellant noted that it is not in dispute that the insurance policy listed “Peter Ngure Munyua / Kifedha Limited” as the insured. The logbook produced also bears both names as the rightful legal owners of the subject motor vehicle and the 2nd Respondent admitted that the vehicle was collateral for a loan issued by the Appellant.
8. The Appellant cited the case of CIC Insurance Group Limited v Asuku (Suing as the legal representative of the Estate of Linet Kerubo Obiri - Deceased) & another (Civil Appeal 679 of 2021) [2024] KEHC 3076 (KLR) (Civ) (14 March 2024) (Judgment) stated that
“The person “Insured under the policy” is any authorized driver provided he shall as though he were the insured observe the terms of the policy” Therefore if all terms of the policy are observed and the driver is deemed to be the “insured” then the injured person is entitled to the benefit of the judgment and therefore any such judgment ought to be enforced against the insurer. The law envisages a situation where the Insurer is obligated to satisfy a claim by a third party so long as damage can be attributed to the accident vehicle. Such insurer cannot escape liability when the policy is valid and covers the risk which has attached involving the insured vehicle.
9. The Appellant further submits that the 1st Respondent owed a duty of care and or an obligation to both the Appellant and the 2nd Respondent as a result of the jointly registered logbook and the joint policy cover. The failure of the 1st Respondent to notify the Appellant or jointly compensate both insured parties constituted negligence. The Appellant was deprived of its ability to recover its outstanding loan of Ksh.639,743. To buttress this, the Appellant states that Insurable Interest was defined in Anctol vs. Manufacture Life Insurance Company (1899) AC 604, as:-
“That basic requirement of an insurance contract unless waived, that it generally means that the party to the insurance contract who is the insured or policy holder must have a particular relationship with the subject matter with the insurance whether that be ‘a life or property or a liability’ to which he might be exposed. Every insurance contract requires an insurable interest to support it, otherwise it is invalid.”
10. The Appellant also submitted that the trial Court disregarded crucial evidence including the joint logbook, the jointly-issued policy cover, and the Appellant’s statement of accounts, which clearly showed a loan balance due. It further failed to apply the settled principle that where documentary evidence is clear and unambiguous, it should not be ignored.
11. The 1st Respondent submitted that the Small Claims Court Act, specifically Section 38(1), explicitly limits the grounds of appeal from a judgment of the Small Claims Court to “a point of law.” This provision creates a clear distinction between the roles of the two courts: the Small Claims Court is a court of facts, while the High Court is an appellate court for legal principles. It is their contention that all seven grounds of appeal filed by the Appellants are based on the trial magistrate’s evaluation of the evidence and findings of fact, and not on a misinterpretation or misapplication of the law. They further submit that a ground of appeal challenging a court’s failure to take into consideration evidence,” or alleging that the magistrate “erred by unreasonably deciding without basis” on a factual matter, constitutes a factual appeal.
12. Without prejudice to its submission on Jurisdiction, the 1st R espondent also submits that the trial Court correctly found that a policy of insurance with contractual obligations existed specifically between the 1st Respondent and the 2nd Respondent (the Third Party). The Appellant was a stranger to the specific claim process. As the Trial Court noted, the insurance contract was intended to cover risks listed in the policy between the 1st Respondent and the 2nd Respondent not the private loan agreement between the Appellant and the 2nd Respondent.
13. The 1st Respondent further notes that the Appellant only followed up on its collateral long after the accident had occurred and the claim had been settled, showing a lack of due diligence on its part.
14. I note that the Appellant had cited the CIC Insurance Group Limited v Asuku (Suing as the legal representative of the Estate of Linet Kerubo Obiri - Deceased) case which discusses an authorized driver and third-party injury claims. This case law is irrelevant to the dispute at hand. The dispute here is about a financier’s insurable interest and payout for the first-party property loss of the collateral vehicle, not a third-party injury claim.
15. On the basis of the Record of Appeal and the submissions tendered, it is important that the appellate court of first instance reminds itself of its role.
16. Justice Mulwa in Muthoni v Onyuka (Commercial Appeal E318 of 2024) [2025] KEHC 11448 (KLR) (Commercial and Tax) (31 July 2025) stated as follows:
The jurisdiction of this Court in Small Claims Court appeals is thus limited to legal issues only. It is not the function of this Court to reassess the evidence unless it is shown that the trial court’s findings were unsupported by the law, irrational, or perverse (see Maxcure Hospital Ltd v Okello [2023] eKLR).
17. The Memorandum of Appeal consists of certain factual findings which would offend the quotation above and in particular the statutory provisions that state under Section 38(1) of the Small Claims Court Act, 2016,
“A person aggrieved by a decision or order of the Court may appeal against that decision or order to the High Court on matters of law only.”
18. It is now part of legal folklore and trite law that jurisdiction is everything. Anything done without jurisdiction is a nullity, and such a finding operates retrospectively. In the famous case of Owners of the Motor Vessel “Lillian S” vs. Caltex Oil (Kenya) Ltd [1989] eKLR, stated:
“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.”
19. The Supreme Court of Kenya has also stated that jurisdiction can only be conferred on a court by either the Constitution or statute. A court cannot expand its jurisdiction through judicial craft or innovation. See S.K. Macharia and Another v. Kenya Commercial Bank Ltd. & 2 Others.
20. Having anchored myself on the foregoing principles, and upon a consideration of the Record of Appeal and the rival submissions, two issues commend themselves for determination: first, whether the seven grounds set out in the Memorandum of Appeal raise questions of law within the meaning of Section 38(1) of the Small Claims Court Act, 2016; and secondly, whether the Appellant has demonstrated any error of law on the part of the trial court that would warrant interference with its decision.
21. It is well settled that a first appellate court is ordinarily under a duty to re-evaluate the evidence tendered before the trial court and to reach its own independent conclusions, while bearing in mind that it did not have the advantage of seeing or hearing the witnesses; see Selle & Another v Associated Motor Boat Co Ltd [1968] EA 123 . That duty is, however, materially circumscribed in appeals emanating from the Small Claims Court. By the express terms of Section 38(1), this Court does not sit to re-open and re-weigh the factual record, and its mandate is confined to the correction of errors of law. The Appellant’s invitation to revisit the logbook, the joint policy cover and the statement of accounts, and to substitute a fresh assessment of that evidence for that of the trial court, therefore falls outside the jurisdiction conferred upon this Court.
22. Even were the matter to be approached on the footing applicable to findings of fact generally, the threshold for appellate interference remains a high one. In Mwangi v Wambugu [1984] KLR 453 , the Court of Appeal held that an appellate court will not normally disturb a trial court’s finding of fact unless that finding is shown to be based on no evidence, on a misapprehension of the evidence, or on a demonstrably wrong principle. Measured against that standard, the trial magistrate’s conclusion, that the contract of insurance operated as between the 1st Respondent and the 2nd Respondent and that the Appellant’s claim sounded in its private loan arrangement rather than in the policy, was one reasonably open on the material before the court. No misapprehension of the evidence and no error of principle has been demonstrated, and this Court is not entitled to interfere merely because a different conclusion might conceivably have been reached.
23. In insurance law, a financier explicitly named on a policy is a joint insured or a “loss payee.” They are legally never a stranger to the contract. Indemnifying only one party without obtaining a discharge from the joint insured is a standard breach of an insurer's duty of care.
24. I am alive to the force of the proposition that a financier named on a policy is not, in the ordinary case, a stranger to it. That observation, however, goes to the merits of the underlying dispute, which were squarely within the province of the trial court. The Appellant’s true complaint is that the evidence was weighed wrongly, and not that the trial court misdirected itself upon any principle of law. A complaint of that character, however meritorious it may be made to appear, cannot be entertained upon an appeal that lies on points of law alone.
25. In the end, I find that the appeal is without merit. The trial court applied the correct legal principles and properly relied on the evidence before it. No error of law has been demonstrated, and the grounds of appeal are, in substance, challenges to factual findings which are outside the permissible appellate jurisdiction under the Small Claims Court Act
26. Consequently, I make the following orders:
i. The appeal is hereby dismissed.
ii. The judgment and decree of the Small Claims Court in 3955 of 2023 is upheld.
iii. The Appellant shall bear the costs of this appeal and the costs incurred at the Small Claims Court
Dated and Delivered at Nairobi this 18th day of June 2026.
BENARD WAFULA MURUNGA
JUDGE
Delivered on a virtual platform in the presence of:
N/A for Appellants
N/A for Respondents
Kevin Babu - Court Assistant