(Being an appeal from the judgment and decree of Hon. J. W. Mwangi Adjudicator delivered on 6th December 2023 in Milimani Small Claims Court SCCCOM. CLAIM NO. E7456 of 2023)
1. This appeal arises from a judgment of the Small Claims Court (SCC) dated 6th December 2023 in which the court dismissed the appellant’s claim for recovery of KShs 373,950.03 as the outstanding purchase price for goods sold and delivered by the appellant to the respondent between the period 8th October 2015 and 29th September 2017.
2. The case before the SCC was that the claimant through a Statement of Claim dated 28th September 2023 sought for judgment against the respondent for KShs. 373,950.03 plus interest at court rates from the date of filing and costs of the suit. It was the appellant’s case that the respondent who at all material times relevant to the suit was their employee bought several consignments of books on diverse dates between 8th October 2015 and 29th September 2017. The said books were delivered to the respondent’s bookshop and relevant invoices raised against the respondent's account. The appellant further claimed that the respondent maintained an account with the appellant until 29th September 2017 when he made his last payment through deductions from his employment dues with the appellant as he was exiting their service, leaving behind a balance of KShs. 373,950.03 the subject of the claim.
3. In his response dated 11th October 2023, the respondent raised a defence of limitation of time, that the cause of action by the appellant against him, being based on contract, was time barred under section 4(1) of the Limitation of Actions Act (Cap. 22) Laws of Kenya as the six-year period within which this suit ought to have been brought had lapsed by the time the appellant filed its claim. He further denied the claim and averred that the amounts claimed by the appellant were in fact paid and his account settled through recovery of the outstanding sum of KShs 373,950/= from his terminal benefits at the time of clearance with the appellant upon leaving the company when his position was declared redundant.
4. The claim proceeded by way of oral hearing with each party calling one witness.
5. The appellant’s witness CW 1, Dennis Kariuki testified that he was the credit controller of the appellant. He adopted his witness statement dated 22nd September 2023 and produced documents as they appeared in appellant’s list of documents dated 22nd September 2023. Among the documents were a Customer Statement in the name of Samuel Aunda, the respondent, various invoices, orders and a demand letter dated 14th September 2023. In the witness statement, CW 1 averred that the respondent placed orders with the appellant for purchase of various books. He tabulated various dates under a column headed “posting date” beginning from 8th October 2015 to 24th April 2017. The table shows that eight invoices with a total value of KShs 372,843.49 were outstanding payment. I note that this figure is different from that of 373,950.03 made in the statement of claim.
6. CW 1 further averred that a credit period of 30 days from the date of delivery was allowed within which the respondent was required to settle the invoice amount. The respondent had failed and or refused to settle the outstanding amount, the subject of the claim herein.
7. On cross-examination, he stated that the respondent was a salesperson with the appellant and that he who would be given books through his account to sell to customers. He left the appellant’s employment in 2017 with an outstanding balance of KShs 747,900.30 as per the customer statement dated 20th June 2023 produced as exhibit. CW 1 said further that KShs 373,950/= was deducted from his dues at the time of exit and since the same were not sufficient to cover the entire outstanding amount, the balance of KShs 372,843.49, the subject of the claim, remained unpaid. CW 1 conceded that the respondent went through the clearance process with the appellant and KShs. 373,950 was deducted from his dues on account of the books supplied to him as evidenced in the customer statement dated 20th June 2023. CW 1 testified that the respondent still owed the appellant KShs. 372,843/= which they were demanding and which they had been aware was owed. He further testified that the last invoice was issued on 22nd May 2017 and fell due on 12th June 2017. He also said that the appellant had never demanded the balance of the money from the respondent other than the demand letter dated 14th September 2023 sent to him by its advocates.
8. The respondent Samuel Aunda testified as RW 1 and adopted his witness statement dated 11th October 2023. He listed one document, the customer statement dated 20th June 202, in his list of documents dated 11th October 2023. However he did not file a copy of the same. Since it is the same statement relied upon by the appellant, it must be taken to be the one he alluded to in the list.
9. He testified that he was an employee of the claimant in the marketing department. His evidence was that he had an arrangement with the appellant for promotion of its books to teachers who would then buy them from designated bookshops. That he would be issued with samples of the books which he would either issue as free samples or donations, sell them if lucky, or if not, return to the appellant. For the books sold, he would remit the proceeds to the appellant. Where the customer had not paid, the appellant’s system would indicate “credit memo.” Where a customer issued a bouncing cheque, the appellant would deduct the amount due from the respondent’s.
10. He left the appellant’s employment when his position was declared redundant whereupon he went through the full clearance process. That outstanding amounts on the credit memos were calculated and he was found to owe the appellant KShs 373,950 which was deducted from his dues as per the statement of account above. He was then paid all his benefits, including his pension and Sacco dues. He relied on the Customer Statement provided by the appellant to show that indeed that sum was deducted from his dues.
11. He testified that he was deducted what was owed and he never received any demand letter from the appellant but from their advocate through WhatsApp in the year 2023. On re-examination he testified that as he was clearing with the claimant, they went through his account whereof they reconciled the same with some books that had been returned and did a credit memo to that effect which lessened the amount owed. It is after reconciling that a balance of KShs. 373,950/= was left which was deducted from his final dues.
12. Upon analyzing the evidence and considering the law and authorities, the learned Adjudicator concluded that the claim was time barred. He held that having found so, it was not necessary to proceed on the other issues in the claim. Consequently, he dismissed the claim with costs to the respondent thereby eliciting this appeal.
13. The appellant was dissatisfied with the judgment and in the memorandum of appeal dated 15th December 2023 it raised three grounds that:
a. the learned trial Magistrate erred in law and in fact in entirely dismissing the Claimant's claim.
b. the learned Magistrate erred in law and in fact in arriving at a finding that the Claimant's suit is time barred.
c. the learned Magistrate erred in law and in fact in arriving at a decision that the Claimant had not proved their case against the respondent on a balance of probability.
14. The appellant therefore asks this court that the appeal be allowed with costs and the judgement and orders of the trial court delivered on 6th December 2023 be set aside and the claim allowed with costs.
15. The appeal was disposed of by way of written submissions filed by learned counsels for the parties. The same are considered in the analysis that follows.
16. I have considered the grounds set out in the Memorandum of Appeal and the submissions by learned counsels for the parties. The appellant reduced the three grounds above into its issues for determination. The respondent on its part raised one issue for determination, that is, whether the trial court was right in holding that the appellant’s case was time barred. I find the one issue for determination and which is common to both parties is is whether or not the appellant’s claim was time barred as found by the learned trial Adjudicator.
17. As a preliminary issue for guidance to learned counsels for both parties they would wish to note that the SCC is presided over by an Adjudicator and not a magistrate. It is important to bear in mind these seemingly little but very vital provisions of the SCCA in order to appreciate and always have at the back of the mind the spirit behind the creation of this very distinguished court because, otherwise it gets meshed up with the operations of the magistrate’s court and there it loses meaning as a different court. In the Kenyan context, an Adjudicator is indeed a magistrate, with full legal training and an admitted advocate of the High Court. However, while presiding over the SCC he removes the robes of a magistrate and wears the ordinary garment of an Adjudicator who in the spirit of the SCCA should come down to the level of the ordinary man on the streets. The reasons are that the SCC is designed to be simple that is, without the strictures of formal procedure and strict evidentiary rules, fast and accessible. These reasons will come out clearer in the analysis and evaluation of the evidence that follows because the operations of the SCC must be distinguished from those of the magistrate’s court.
18. First, an appeal to this court from the SCC is on points of law only as provided for under section 38 of the SCC Act. So, the first issue for this court to consider is whether the grounds of appeal raised by the appellant are on points of law only. Therefore, the submission by learned counsel for the appellant that this court has to analyze and reassess the evidence on record and reach its own findings as held in the case of Selle vs Associated Motor Boat Company (1969) E.A 123) is misplaced. From the provisions of the Act, it follows that this court cannot proceed with the case by way of a rehearing and re-evaluation of evidence as is the norm in other civil matters as required under the Civil Procedure Act and Rules.
19. Learned counsel for the appellant would do well to refer and be guided by the Court of Appeal’s observation in the case of Independent Electoral and Boundaries Commission & another v Mule & 3 others [2014] KECA 890 (KLR) that:
“Those points in an appeal of the kind before us, being from an election court’s decision, are further circumscribed by Section 85A of the Elections Act which limits appeals to the Court of Appeal to matters of law only. It is therefore quite strange and improper that each of the seventeen grounds, without exception, commences with a standard expression “the judge erred in fact and law” or “the learned Judge erred in law and in fact.” Clearly the drafters of the memorandum did not have the legal provision in active contemplation. Had they done so, they would have found that by invoking factual errors, they were inviting jurisdictional objections to their entire appeal.”
20. Further exposition on this issue of an appeal based on points of law only is found in the case of M’Riungu v. Republic [1983] KLR 455, where the Court of Appeal stated thus:
“where a right of appeal is confined to question of law, an appellate court has loyalty to accept the findings of fact of the lower court(s) and resist the temptation to treat findings of fact as holdings of fact and law and it should not interfere with the decision of the trial court or the first appellate court unless it is apparent that on evidence, no reasonable tribunal could have reached that conclusion, which would be the same as holding that the decision is bad in law”.
21. Going by these decisions, this court proceeds on the basis of the facts as determined by the trial court.
22. Another important feature to bear in mind while considering the appeal is that the SCC Act exempts the court’s proceedings from the rigid application of the standards of evidence applicable in other court proceedings and permits the court to include as evidence any material that it deems credible or trustworthy (emphasis by underlining supplied). It follows from this provision that it is largely upon the Adjudicator to determine the material to rely upon. Section 32 of the Act provides that the strict evidentiary rules applicable in other courts are not wholly applied in the Small Claims Court. It further, provides that the Court may admit as evidence any oral or written testimony, record, or other material even though the same is not admissible as evidence in any other Court under the law of evidence (emphasis supplied). This means the Adjudicator has the discretion to admit any evidence which may be helpful in establishing whether or not the claim is proved. This provision further limits the province of the appellate court to issues of law only as the appellate court would have no means to overturn the findings of fact by the trial court and substitute them with its own findings.
23. Therefore, the submissions by learned counsels based on non-adherence by the trial court of the strict rules of evidence are also found to be misplaced.
24. The issue of considering the facts before the trial court is further limited by the procedure applicable before the SCC which is unlike the procedure before the magistrates’ courts. Section 3 of the SCC Act on the guiding principles of the court provides inter alia that the court shall be guided by the principles of judicial authority prescribed under Article 159(2) of the Constitution and without prejudice to the same, the Court shall adopt such procedures as the Court deems appropriate to ensure fairness of process and simplicity of procedure (emphasis supplied). The fairness of process is further reinforced under Part IV which is the substantive part that deals with procedure. Section 17 of the Act which falls under Part IV, it provides that:
S. 17. Subject to this Act and Rules, the Court shall have control of its own procedure in the determination of claims before it and, in the exercise of that control, the Court shall have regard to the principles of natural justice.
25. Therefore, the principles of natural justice rather than the technical procedural rules under the CPR take centre stage in a SCC hearing. In Justice Amraphael Mbogholi Msagha v. Chief Justice of the Republic of Kenya & 7 Others Nairobi HCMCA No. 1062 of 2004; [2006] 2 KLR 553; [2006] eKLR, the Court, in discussing the rules of natural justice, cited De Smith and Brazier, Constitutional and Administrative Law 6th Edition (Penguin United Kingdom: 1989) (pages 557-558) which states:
“The content of natural justice is therefore flexible and variable. All that is fundamentally demanded of the decision maker is that his decision in its own context be made with due regard for the affected parties’ interests and accordingly be reached without bias and after giving the party or parties a chance to put his or their case....”
26. Indeed, technicality of procedure and strict rules of evidence as apply in the magistrates’ court were excluded so that the Adjudicator could be able to achieve one of the main objectives of the court which is provided under section 34 of the Act on expeditious disposal of cases with quite onerous provisions that:
S. 34 (1) All proceedings before the Court on any particular day so far as is practicable shall be heard and determined on the same day or on a day to day basis until final determination of the matter which shall be within sixty days from the date of filing the claim.
(2) Judgment given in determination of any claim shall be delivered on the same day and in any event, not later than three (3) days from the date of the hearing.
(3) The Court may only adjourn the hearing of any matter under exceptional and unforeseen circumstances which shall be recorded and be limited to a maximum of three adjournments.
27. While proceeding under the CPR and applying the strict rules of evidence, before the magistrate’s court, it is practically impossible to hear and determine every case that comes before it in a day’s sitting. It is only through strict compliance with the provisions of the SCCA with the exclusion of the strict evidentiary rules and technicalities of procedure under the CPR through adoption of a flexible procedure by the learned Adjudicator that this can be achieved. For me, the provisions of the SCCA would best be applied with the court proceeding more through the alternative means of dispute resolution of negotiation, and conciliation between parties with the court’s guidance as well as summary determinations rather than laborious taking of notes from witnesses, analyzing evidence, sifting through pages of lengthy submissions by learned counsels and rendering lengthy judgments. Provided that the rules of natural justice are adhered to in considering a claim, I do not think a judgment of the SCC should be more than two pages long.
28. My thinking therefore is that the responsibility of this court when considering an appeal from the SCC is to consider the legality and reasonableness of the decision of the learned Adjudicator. If this court is satisfied that the law was properly considered and applied and a reasonable evaluation of the facts had, then it will not interfere with the findings and determination of the trial court. The converse would also be true. That where the law was not properly considered and/or applied or where the decision does not seem reasonable from the facts before the court, then this court will interfere. Given the provisions of the SCC Act excluding to a large extent the strict provisions of the law of evidence and the technicalities of procedure under the CPR, I would find that the standard of reasonableness would be that of ordinary man on the street.
29. On the pleadings and evidence on record, the appellant’s case was that the respondent was its employee but its claim was based on recovery of the balance of the purchase price for goods sold and delivered to the respondent by the appellant.
30. On his part, the respondent averred that the claim was statute barred and in the alternative that the same had been settled in full. The respondent gave evidence that there was an arrangement between him and the appellant concerning how he was receiving the books from the appellant and accounting for them which was not a sale to him by the appellant as alleged.
31. The first defence by the respondent was of limitation, that the claim being based on contract, the same was time barred under section 4(1)(a) of the Limitation of Actions Act (Cap. 22) Laws of Kenya (LAA) as the six-year period within which the claim ought to have been brought had lapsed. The section provides that actions founded on contract may not be brought after the end of six years from the date on which the cause of action accrued.
32. The trial court considered this issue and found that, on the basis of the appellant’s assertion that the cause of action was for goods sold and delivered, there was undisputed evidence that the last invoice from the appellant to the respondent was issued on 22nd May 2017 and became due and owing on 12th June 2017, thirty days after the date of issue. On that evidence, it would follow that the cause of action arose on 12th June, 2017.
33. However, the appellant submits, as it did before the trial court, that the respondent operated a running account with it for goods sold and delivered and made payments on the account regardless of any particular invoice pending settlement. That therefore the cause of action accrued and time started running on 30th September 2017 when the respondent made the last payment to the appellant. The appellant relies on section 23(3) of the LAA which provides that:
“Where a right of action has accrued to recover a debt or other liquidated pecuniary claim, or a claim to movable property of a deceased person, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment.”
34. This section received judicial consideration by the Court of Appeal in the case of AFROFREIGHT FORWARDERS LTD v AFRICAN LINER AGENCIES [2009] KECA 128 (KLR) where the Court held thus:
“With due respect to the learned Judge, we think the learned Resident Magistrate was right in reaching the conclusion that time started to run from the date of the letter in which the debt was acknowledged. We have looked at the contents of the letter of 4th July 2000 and in our view the said letter acknowledged the debt. What the respondent was uncertain about was the exact amount which was owing.”
35. Going by the appellant’s plea that the cause of action was for goods sold and delivered, as found by the trial court, then applying the provisions of section 23(3) of the Limitation of Actions Act (Cap 22) and considering the payment made on 29th September 2017, it would follow that the limitation period was reset on all the invoices to start running on that date.
36. I note that the learned Adjudicator relied on the High Court decision in the above case cited as African Linear Agencies Ltd v Afroreight Forwarders Ltd [2006] KEHC 604 (KLR) which was overturned by the Court of Appeal as above. In that case the High Court had wrongly held that there was no acknowledgment of debt at a later date which acknowledgment the Court of Appeal found reset the time when the limitation period begun to run and made the cause of action not to be time barred. The learned Adjudicator did not consider the fact that the payment made on 29th September 2017 reset the limitation period to start running from that time.
37. In the present case, there is no dispute that the respondent made a payment of the outstanding amount on 29th September 2017 when a deduction was made from his dues with the appellant as an employee. Therefore, the payment made on 29th September 2017 revived any claims on the unpaid invoices that would otherwise have been statute barred, unless the trial court found that the claim on each invoice represented a different cause of action in which case time would run for each from the date it was due. He did not make such a finding.
38. Going by the appellant’s plea that the cause of action was for goods sold and delivered, as found by the trial court, then applying the provisions of section 23(3) of the Limitation of Actions Act (Cap 22) and considering the payment made on 29th September 2017, it follows that the limitation period was reset on all the invoices to start running on that date.
39. I therefore find that the decision by the trial court that the claim was statute barred was based on an improper appraisal of the issue of when the cause of action accrued to the appellant. As contended by the appellant, the cause of action accrued on 29th September 2017 when the respondent made payment of the outstanding sum through his employment dues. Therefore, the claim was not statute barred on 22nd September 2023, when the claim was filed in court as six years had not yet elapsed.
40. The learned Adjudicator was therefore in error in the application of the law to the facts on the defence by the respondent that the claim was statute barred. The trial court’s finding on that issue is set aside and substituted with a finding that the claim by the appellant was not statute barred.
41. On the alternative defence tendered by the respondent, the learned trial Adjudicator held that it was not necessary to consider the same in view of his findings that the claim was statute barred. I find that this was a misdirection and therefore an error of law on the part of the trial court not to consider that alternative line of defence just in case its finding on the issue of the claim being statute barred was not correct. This court is therefore bound to consider the issue.
42. The respondent’s evidence in support of that defence was that the books were not given to him as a sale and purchase transaction but for promotional purposes to teachers and book sellers. He would then remit the proceeds of any sales made or deductions would be made from his salary and the remainder of the books, he would return to the appellant.
43. He testified further that on account of that, at the time of his exit from the appellant’s employment he had cleared all the outstanding payments with the appellant and returned the unsold books to his credit, in other words that he had accounted for all the books issued to him as a salesperson for the appellant. His evidence was that reconciliation was done at the time of his exit and for the books that he had returned, credit notes were issued. It was after the reconciliation that the balance due was found to be 373,950/= which was then deducted from his dues and his account settled. He denied the contention by CW 1 that his dues were not sufficient to settle the outstanding sum.
44. Both parties relied on the Customer Statement dated 20th June 2023 to support their respective claims. The question then is, based on the evidence by the parties and considering that the conduct of proceedings before the SCC, adherence to the strict rules of evidence and technicalities of procedure is eschewed, what would an ordinary man on the streets have made of the claim by the appellant against the respondent?
45. I have had a closer look at the Customer Statement in the name of the respondent. There are entries made in the Customer Statement under the columns with sub-headings of “Posting Date”, “Document No.”, “Description,” “Due Date,” “Original Amount,” and “Balance.” The following entries appear severally on various dates under the subheading of Description:
a. Order SO ...;
b. Sal. Ded. or Payroll ded.;
c. Return Order SRO;
d. Receipt on account customer 5165;
e. Unpaid Chq; and
f. Staff debtors recovery.
46. The columns for Original Amount and Balance show entries of various amounts on various dates.
47. The first entry of the transactions shown in the Customer Statement was on 25/9/2015 were: Description, Return Order SRO ...; Original Amount, -5,594.68 and Balance 826,903.95. Against every entry of “Return Order SRO” there is a corresponding negative figure under the column of Original Amount. Each of such entries shows a reduction in the outstanding balance. The respondent explained in his evidence that these “Return Order SRO” entries were for the cost of books returned to the appellant thus the reduction in the balance outstanding.
48. For the entry of “Order SO,” the corresponding Original Amount or cost of the books shows an increase in the balance. The respondent in his evidence explained this to mean that he had taken books worth the amount in the order thus the increase in the balance outstanding.
49. The entries that caused an increase in the balance was for unpaid cheque which again the respondent explained in his evidence.
50. For the entries of “payroll ded.” with the reduced corresponding balance shown, the respondent explained in his evidence to mean payroll deduction of the cost of the books taken from his salary in part settlement of the outstanding sum thereby reducing the balance.
51. For the entries of “Receipt on customer account 5165,” the corresponding entry of original amount is a deduction thereby reducing the balance. The respondent equally explained that these represented books sold and proceeds remitted to the appellant thereby reducing the balance.
52. On 29/09/2017 the statement of account shows an entry of -373,950.00 under the Original Amount column or cost of the books and KShs 373,950.03 for the outstanding balance column. This means the account was evened out on that date.
53. From the foregoing analysis, I find that the respondent’s evidence that he would settle some of the invoices raised through his salary deduction or receipt on account or through books returned unsold was supported by the Customer Statement. Similarly, I find truth in his contention that any balances due to the appellant were calculated and offset through his final dues being deducted on 29th September 2017 as shown in the Customer Statement.
54. The respondent’s evidence was therefore consistent with the evidence in the Customer Statement relied upon by both parties, I find that he was an honest witness whose evidence was reliable..
55. To the contrary, the appellant’s case through its pleadings and evidence that the claim was for goods sold and delivered to the respondent at his bookshop for which he was liable to pay is not consistent with the entries in the Customer Statement. There was no explanation of how an employee could be trading with his employer on an arrangement that the payment for the goods sold would be through deductions from the employee’s salary. That would be against conventional employer/employee engagement. There was also no explanation by the appellant of why so many books would be returned unsold and credit given to the respondent. The Return Orders represented such a huge amount of the transactions that there would be no meaningful business of sale and purchase that was going on between the parties.
56. I therefore find that the only plausible explanation was from the respondent’s evidence that that he was dealing with the appellant as an employee salesperson and not as a purchaser of books on credit to pay later as contended by the appellant. The Customer Statement was simply for accounting purposes for the books he had been issued with as salesperson with the appellant for promotional purposes and then returned. For the few that he sold, he remitted the funds or the money w
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1. This appeal arises from a judgment of the Small Claims Court (SCC) dated 6th December 2023 in which the court dismissed the appellant’s claim for recovery of KShs 373,950.03 as the outstanding purchase price for goods sold and delivered by the appellant to the respondent between the period 8th October 2015 and 29th September 2017.
2. The case before the SCC was that the claimant through a Statement of Claim dated 28th September 2023 sought for judgment against the respondent for KShs. 373,950.03 plus interest at court rates from the date of filing and costs of the suit. It was the appellant’s case that the respondent who at all material times relevant to the suit was their employee bought several consignments of books on diverse dates between 8th October 2015 and 29th September 2017. The said books were delivered to the respondent’s bookshop and relevant invoices raised against the respondent's account. The appellant further claimed that the respondent maintained an account with the appellant until 29th September 2017 when he made his last payment through deductions from his employment dues with the appellant as he was exiting their service, leaving behind a balance of KShs. 373,950.03 the subject of the claim.
3. In his response dated 11th October 2023, the respondent raised a defence of limitation of time, that the cause of action by the appellant against him, being based on contract, was time barred under section 4(1) of the Limitation of Actions Act (Cap. 22) Laws of Kenya as the six-year period within which this suit ought to have been brought had lapsed by the time the appellant filed its claim. He further denied the claim and averred that the amounts claimed by the appellant were in fact paid and his account settled through recovery of the outstanding sum of KShs 373,950/= from his terminal benefits at the time of clearance with the appellant upon leaving the company when his position was declared redundant.
4. The claim proceeded by way of oral hearing with each party calling one witness.
5. The appellant’s witness CW 1, Dennis Kariuki testified that he was the credit controller of the appellant. He adopted his witness statement dated 22nd September 2023 and produced documents as they appeared in appellant’s list of documents dated 22nd September 2023. Among the documents were a Customer Statement in the name of Samuel Aunda, the respondent, various invoices, orders and a demand letter dated 14th September 2023. In the witness statement, CW 1 averred that the respondent placed orders with the appellant for purchase of various books. He tabulated various dates under a column headed “posting date” beginning from 8th October 2015 to 24th April 2017. The table shows that eight invoices with a total value of KShs 372,843.49 were outstanding payment. I note that this figure is different from that of 373,950.03 made in the statement of claim.
6. CW 1 further averred that a credit period of 30 days from the date of delivery was allowed within which the respondent was required to settle the invoice amount. The respondent had failed and or refused to settle the outstanding amount, the subject of the claim herein.
7. On cross-examination, he stated that the respondent was a salesperson with the appellant and that he who would be given books through his account to sell to customers. He left the appellant’s employment in 2017 with an outstanding balance of KShs 747,900.30 as per the customer statement dated 20th June 2023 produced as exhibit. CW 1 said further that KShs 373,950/= was deducted from his dues at the time of exit and since the same were not sufficient to cover the entire outstanding amount, the balance of KShs 372,843.49, the subject of the claim, remained unpaid. CW 1 conceded that the respondent went through the clearance process with the appellant and KShs. 373,950 was deducted from his dues on account of the books supplied to him as evidenced in the customer statement dated 20th June 2023. CW 1 testified that the respondent still owed the appellant KShs. 372,843/= which they were demanding and which they had been aware was owed. He further testified that the last invoice was issued on 22nd May 2017 and fell due on 12th June 2017. He also said that the appellant had never demanded the balance of the money from the respondent other than the demand letter dated 14th September 2023 sent to him by its advocates.
8. The respondent Samuel Aunda testified as RW 1 and adopted his witness statement dated 11th October 2023. He listed one document, the customer statement dated 20th June 202, in his list of documents dated 11th October 2023. However he did not file a copy of the same. Since it is the same statement relied upon by the appellant, it must be taken to be the one he alluded to in the list.
9. He testified that he was an employee of the claimant in the marketing department. His evidence was that he had an arrangement with the appellant for promotion of its books to teachers who would then buy them from designated bookshops. That he would be issued with samples of the books which he would either issue as free samples or donations, sell them if lucky, or if not, return to the appellant. For the books sold, he would remit the proceeds to the appellant. Where the customer had not paid, the appellant’s system would indicate “credit memo.” Where a customer issued a bouncing cheque, the appellant would deduct the amount due from the respondent’s.
10. He left the appellant’s employment when his position was declared redundant whereupon he went through the full clearance process. That outstanding amounts on the credit memos were calculated and he was found to owe the appellant KShs 373,950 which was deducted from his dues as per the statement of account above. He was then paid all his benefits, including his pension and Sacco dues. He relied on the Customer Statement provided by the appellant to show that indeed that sum was deducted from his dues.
11. He testified that he was deducted what was owed and he never received any demand letter from the appellant but from their advocate through WhatsApp in the year 2023. On re-examination he testified that as he was clearing with the claimant, they went through his account whereof they reconciled the same with some books that had been returned and did a credit memo to that effect which lessened the amount owed. It is after reconciling that a balance of KShs. 373,950/= was left which was deducted from his final dues.
12. Upon analyzing the evidence and considering the law and authorities, the learned Adjudicator concluded that the claim was time barred. He held that having found so, it was not necessary to proceed on the other issues in the claim. Consequently, he dismissed the claim with costs to the respondent thereby eliciting this appeal.
13. The appellant was dissatisfied with the judgment and in the memorandum of appeal dated 15th December 2023 it raised three grounds that:
a. the learned trial Magistrate erred in law and in fact in entirely dismissing the Claimant's claim.
b. the learned Magistrate erred in law and in fact in arriving at a finding that the Claimant's suit is time barred.
c. the learned Magistrate erred in law and in fact in arriving at a decision that the Claimant had not proved their case against the respondent on a balance of probability.
14. The appellant therefore asks this court that the appeal be allowed with costs and the judgement and orders of the trial court delivered on 6th December 2023 be set aside and the claim allowed with costs.
15. The appeal was disposed of by way of written submissions filed by learned counsels for the parties. The same are considered in the analysis that follows.
16. I have considered the grounds set out in the Memorandum of Appeal and the submissions by learned counsels for the parties. The appellant reduced the three grounds above into its issues for determination. The respondent on its part raised one issue for determination, that is, whether the trial court was right in holding that the appellant’s case was time barred. I find the one issue for determination and which is common to both parties is is whether or not the appellant’s claim was time barred as found by the learned trial Adjudicator.
17. As a preliminary issue for guidance to learned counsels for both parties they would wish to note that the SCC is presided over by an Adjudicator and not a magistrate. It is important to bear in mind these seemingly little but very vital provisions of the SCCA in order to appreciate and always have at the back of the mind the spirit behind the creation of this very distinguished court because, otherwise it gets meshed up with the operations of the magistrate’s court and there it loses meaning as a different court. In the Kenyan context, an Adjudicator is indeed a magistrate, with full legal training and an admitted advocate of the High Court. However, while presiding over the SCC he removes the robes of a magistrate and wears the ordinary garment of an Adjudicator who in the spirit of the SCCA should come down to the level of the ordinary man on the streets. The reasons are that the SCC is designed to be simple that is, without the strictures of formal procedure and strict evidentiary rules, fast and accessible. These reasons will come out clearer in the analysis and evaluation of the evidence that follows because the operations of the SCC must be distinguished from those of the magistrate’s court.
18. First, an appeal to this court from the SCC is on points of law only as provided for under section 38 of the SCC Act. So, the first issue for this court to consider is whether the grounds of appeal raised by the appellant are on points of law only. Therefore, the submission by learned counsel for the appellant that this court has to analyze and reassess the evidence on record and reach its own findings as held in the case of Selle vs Associated Motor Boat Company (1969) E.A 123) is misplaced. From the provisions of the Act, it follows that this court cannot proceed with the case by way of a rehearing and re-evaluation of evidence as is the norm in other civil matters as required under the Civil Procedure Act and Rules.
19. Learned counsel for the appellant would do well to refer and be guided by the Court of Appeal’s observation in the case of Independent Electoral and Boundaries Commission & another v Mule & 3 others [2014] KECA 890 (KLR) that:
“Those points in an appeal of the kind before us, being from an election court’s decision, are further circumscribed by Section 85A of the Elections Act which limits appeals to the Court of Appeal to matters of law only. It is therefore quite strange and improper that each of the seventeen grounds, without exception, commences with a standard expression “the judge erred in fact and law” or “the learned Judge erred in law and in fact.” Clearly the drafters of the memorandum did not have the legal provision in active contemplation. Had they done so, they would have found that by invoking factual errors, they were inviting jurisdictional objections to their entire appeal.”
20. Further exposition on this issue of an appeal based on points of law only is found in the case of M’Riungu v. Republic [1983] KLR 455, where the Court of Appeal stated thus:
“where a right of appeal is confined to question of law, an appellate court has loyalty to accept the findings of fact of the lower court(s) and resist the temptation to treat findings of fact as holdings of fact and law and it should not interfere with the decision of the trial court or the first appellate court unless it is apparent that on evidence, no reasonable tribunal could have reached that conclusion, which would be the same as holding that the decision is bad in law”.
21. Going by these decisions, this court proceeds on the basis of the facts as determined by the trial court.
22. Another important feature to bear in mind while considering the appeal is that the SCC Act exempts the court’s proceedings from the rigid application of the standards of evidence applicable in other court proceedings and permits the court to include as evidence any material that it deems credible or trustworthy (emphasis by underlining supplied). It follows from this provision that it is largely upon the Adjudicator to determine the material to rely upon. Section 32 of the Act provides that the strict evidentiary rules applicable in other courts are not wholly applied in the Small Claims Court. It further, provides that the Court may admit as evidence any oral or written testimony, record, or other material even though the same is not admissible as evidence in any other Court under the law of evidence (emphasis supplied). This means the Adjudicator has the discretion to admit any evidence which may be helpful in establishing whether or not the claim is proved. This provision further limits the province of the appellate court to issues of law only as the appellate court would have no means to overturn the findings of fact by the trial court and substitute them with its own findings.
23. Therefore, the submissions by learned counsels based on non-adherence by the trial court of the strict rules of evidence are also found to be misplaced.
24. The issue of considering the facts before the trial court is further limited by the procedure applicable before the SCC which is unlike the procedure before the magistrates’ courts. Section 3 of the SCC Act on the guiding principles of the court provides inter alia that the court shall be guided by the principles of judicial authority prescribed under Article 159(2) of the Constitution and without prejudice to the same, the Court shall adopt such procedures as the Court deems appropriate to ensure fairness of process and simplicity of procedure (emphasis supplied). The fairness of process is further reinforced under Part IV which is the substantive part that deals with procedure. Section 17 of the Act which falls under Part IV, it provides that:
S. 17. Subject to this Act and Rules, the Court shall have control of its own procedure in the determination of claims before it and, in the exercise of that control, the Court shall have regard to the principles of natural justice.
25. Therefore, the principles of natural justice rather than the technical procedural rules under the CPR take centre stage in a SCC hearing. In Justice Amraphael Mbogholi Msagha v. Chief Justice of the Republic of Kenya & 7 Others Nairobi HCMCA No. 1062 of 2004; [2006] 2 KLR 553; [2006] eKLR, the Court, in discussing the rules of natural justice, cited De Smith and Brazier, Constitutional and Administrative Law 6th Edition (Penguin United Kingdom: 1989) (pages 557-558) which states:
“The content of natural justice is therefore flexible and variable. All that is fundamentally demanded of the decision maker is that his decision in its own context be made with due regard for the affected parties’ interests and accordingly be reached without bias and after giving the party or parties a chance to put his or their case....”
26. Indeed, technicality of procedure and strict rules of evidence as apply in the magistrates’ court were excluded so that the Adjudicator could be able to achieve one of the main objectives of the court which is provided under section 34 of the Act on expeditious disposal of cases with quite onerous provisions that:
S. 34 (1) All proceedings before the Court on any particular day so far as is practicable shall be heard and determined on the same day or on a day to day basis until final determination of the matter which shall be within sixty days from the date of filing the claim.
(2) Judgment given in determination of any claim shall be delivered on the same day and in any event, not later than three (3) days from the date of the hearing.
(3) The Court may only adjourn the hearing of any matter under exceptional and unforeseen circumstances which shall be recorded and be limited to a maximum of three adjournments.
27. While proceeding under the CPR and applying the strict rules of evidence, before the magistrate’s court, it is practically impossible to hear and determine every case that comes before it in a day’s sitting. It is only through strict compliance with the provisions of the SCCA with the exclusion of the strict evidentiary rules and technicalities of procedure under the CPR through adoption of a flexible procedure by the learned Adjudicator that this can be achieved. For me, the provisions of the SCCA would best be applied with the court proceeding more through the alternative means of dispute resolution of negotiation, and conciliation between parties with the court’s guidance as well as summary determinations rather than laborious taking of notes from witnesses, analyzing evidence, sifting through pages of lengthy submissions by learned counsels and rendering lengthy judgments. Provided that the rules of natural justice are adhered to in considering a claim, I do not think a judgment of the SCC should be more than two pages long.
28. My thinking therefore is that the responsibility of this court when considering an appeal from the SCC is to consider the legality and reasonableness of the decision of the learned Adjudicator. If this court is satisfied that the law was properly considered and applied and a reasonable evaluation of the facts had, then it will not interfere with the findings and determination of the trial court. The converse would also be true. That where the law was not properly considered and/or applied or where the decision does not seem reasonable from the facts before the court, then this court will interfere. Given the provisions of the SCC Act excluding to a large extent the strict provisions of the law of evidence and the technicalities of procedure under the CPR, I would find that the standard of reasonableness would be that of ordinary man on the street.
29. On the pleadings and evidence on record, the appellant’s case was that the respondent was its employee but its claim was based on recovery of the balance of the purchase price for goods sold and delivered to the respondent by the appellant.
30. On his part, the respondent averred that the claim was statute barred and in the alternative that the same had been settled in full. The respondent gave evidence that there was an arrangement between him and the appellant concerning how he was receiving the books from the appellant and accounting for them which was not a sale to him by the appellant as alleged.
31. The first defence by the respondent was of limitation, that the claim being based on contract, the same was time barred under section 4(1)(a) of the Limitation of Actions Act (Cap. 22) Laws of Kenya (LAA) as the six-year period within which the claim ought to have been brought had lapsed. The section provides that actions founded on contract may not be brought after the end of six years from the date on which the cause of action accrued.
32. The trial court considered this issue and found that, on the basis of the appellant’s assertion that the cause of action was for goods sold and delivered, there was undisputed evidence that the last invoice from the appellant to the respondent was issued on 22nd May 2017 and became due and owing on 12th June 2017, thirty days after the date of issue. On that evidence, it would follow that the cause of action arose on 12th June, 2017.
33. However, the appellant submits, as it did before the trial court, that the respondent operated a running account with it for goods sold and delivered and made payments on the account regardless of any particular invoice pending settlement. That therefore the cause of action accrued and time started running on 30th September 2017 when the respondent made the last payment to the appellant. The appellant relies on section 23(3) of the LAA which provides that:
“Where a right of action has accrued to recover a debt or other liquidated pecuniary claim, or a claim to movable property of a deceased person, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment.”
34. This section received judicial consideration by the Court of Appeal in the case of AFROFREIGHT FORWARDERS LTD v AFRICAN LINER AGENCIES [2009] KECA 128 (KLR) where the Court held thus:
“With due respect to the learned Judge, we think the learned Resident Magistrate was right in reaching the conclusion that time started to run from the date of the letter in which the debt was acknowledged. We have looked at the contents of the letter of 4th July 2000 and in our view the said letter acknowledged the debt. What the respondent was uncertain about was the exact amount which was owing.”
35. Going by the appellant’s plea that the cause of action was for goods sold and delivered, as found by the trial court, then applying the provisions of section 23(3) of the Limitation of Actions Act (Cap 22) and considering the payment made on 29th September 2017, it would follow that the limitation period was reset on all the invoices to start running on that date.
36. I note that the learned Adjudicator relied on the High Court decision in the above case cited as African Linear Agencies Ltd v Afroreight Forwarders Ltd [2006] KEHC 604 (KLR) which was overturned by the Court of Appeal as above. In that case the High Court had wrongly held that there was no acknowledgment of debt at a later date which acknowledgment the Court of Appeal found reset the time when the limitation period begun to run and made the cause of action not to be time barred. The learned Adjudicator did not consider the fact that the payment made on 29th September 2017 reset the limitation period to start running from that time.
37. In the present case, there is no dispute that the respondent made a payment of the outstanding amount on 29th September 2017 when a deduction was made from his dues with the appellant as an employee. Therefore, the payment made on 29th September 2017 revived any claims on the unpaid invoices that would otherwise have been statute barred, unless the trial court found that the claim on each invoice represented a different cause of action in which case time would run for each from the date it was due. He did not make such a finding.
38. Going by the appellant’s plea that the cause of action was for goods sold and delivered, as found by the trial court, then applying the provisions of section 23(3) of the Limitation of Actions Act (Cap 22) and considering the payment made on 29th September 2017, it follows that the limitation period was reset on all the invoices to start running on that date.
39. I therefore find that the decision by the trial court that the claim was statute barred was based on an improper appraisal of the issue of when the cause of action accrued to the appellant. As contended by the appellant, the cause of action accrued on 29th September 2017 when the respondent made payment of the outstanding sum through his employment dues. Therefore, the claim was not statute barred on 22nd September 2023, when the claim was filed in court as six years had not yet elapsed.
40. The learned Adjudicator was therefore in error in the application of the law to the facts on the defence by the respondent that the claim was statute barred. The trial court’s finding on that issue is set aside and substituted with a finding that the claim by the appellant was not statute barred.
41. On the alternative defence tendered by the respondent, the learned trial Adjudicator held that it was not necessary to consider the same in view of his findings that the claim was statute barred. I find that this was a misdirection and therefore an error of law on the part of the trial court not to consider that alternative line of defence just in case its finding on the issue of the claim being statute barred was not correct. This court is therefore bound to consider the issue.
42. The respondent’s evidence in support of that defence was that the books were not given to him as a sale and purchase transaction but for promotional purposes to teachers and book sellers. He would then remit the proceeds of any sales made or deductions would be made from his salary and the remainder of the books, he would return to the appellant.
43. He testified further that on account of that, at the time of his exit from the appellant’s employment he had cleared all the outstanding payments with the appellant and returned the unsold books to his credit, in other words that he had accounted for all the books issued to him as a salesperson for the appellant. His evidence was that reconciliation was done at the time of his exit and for the books that he had returned, credit notes were issued. It was after the reconciliation that the balance due was found to be 373,950/= which was then deducted from his dues and his account settled. He denied the contention by CW 1 that his dues were not sufficient to settle the outstanding sum.
44. Both parties relied on the Customer Statement dated 20th June 2023 to support their respective claims. The question then is, based on the evidence by the parties and considering that the conduct of proceedings before the SCC, adherence to the strict rules of evidence and technicalities of procedure is eschewed, what would an ordinary man on the streets have made of the claim by the appellant against the respondent?
45. I have had a closer look at the Customer Statement in the name of the respondent. There are entries made in the Customer Statement under the columns with sub-headings of “Posting Date”, “Document No.”, “Description,” “Due Date,” “Original Amount,” and “Balance.” The following entries appear severally on various dates under the subheading of Description:
a. Order SO ...;
b. Sal. Ded. or Payroll ded.;
c. Return Order SRO;
d. Receipt on account customer 5165;
e. Unpaid Chq; and
f. Staff debtors recovery.
46. The columns for Original Amount and Balance show entries of various amounts on various dates.
47. The first entry of the transactions shown in the Customer Statement was on 25/9/2015 were: Description, Return Order SRO ...; Original Amount, -5,594.68 and Balance 826,903.95. Against every entry of “Return Order SRO” there is a corresponding negative figure under the column of Original Amount. Each of such entries shows a reduction in the outstanding balance. The respondent explained in his evidence that these “Return Order SRO” entries were for the cost of books returned to the appellant thus the reduction in the balance outstanding.
48. For the entry of “Order SO,” the corresponding Original Amount or cost of the books shows an increase in the balance. The respondent in his evidence explained this to mean that he had taken books worth the amount in the order thus the increase in the balance outstanding.
49. The entries that caused an increase in the balance was for unpaid cheque which again the respondent explained in his evidence.
50. For the entries of “payroll ded.” with the reduced corresponding balance shown, the respondent explained in his evidence to mean payroll deduction of the cost of the books taken from his salary in part settlement of the outstanding sum thereby reducing the balance.
51. For the entries of “Receipt on customer account 5165,” the corresponding entry of original amount is a deduction thereby reducing the balance. The respondent equally explained that these represented books sold and proceeds remitted to the appellant thereby reducing the balance.
52. On 29/09/2017 the statement of account shows an entry of -373,950.00 under the Original Amount column or cost of the books and KShs 373,950.03 for the outstanding balance column. This means the account was evened out on that date.
53. From the foregoing analysis, I find that the respondent’s evidence that he would settle some of the invoices raised through his salary deduction or receipt on account or through books returned unsold was supported by the Customer Statement. Similarly, I find truth in his contention that any balances due to the appellant were calculated and offset through his final dues being deducted on 29th September 2017 as shown in the Customer Statement.
54. The respondent’s evidence was therefore consistent with the evidence in the Customer Statement relied upon by both parties, I find that he was an honest witness whose evidence was reliable..
55. To the contrary, the appellant’s case through its pleadings and evidence that the claim was for goods sold and delivered to the respondent at his bookshop for which he was liable to pay is not consistent with the entries in the Customer Statement. There was no explanation of how an employee could be trading with his employer on an arrangement that the payment for the goods sold would be through deductions from the employee’s salary. That would be against conventional employer/employee engagement. There was also no explanation by the appellant of why so many books would be returned unsold and credit given to the respondent. The Return Orders represented such a huge amount of the transactions that there would be no meaningful business of sale and purchase that was going on between the parties.
56. I therefore find that the only plausible explanation was from the respondent’s evidence that that he was dealing with the appellant as an employee salesperson and not as a purchaser of books on credit to pay later as contended by the appellant. The Customer Statement was simply for accounting purposes for the books he had been issued with as salesperson with the appellant for promotional purposes and then returned. For the few that he sold, he remitted the funds or the money w
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