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JudgmentMOMENTUM CREDIT LIMITED VS BOOKER ODERA AWENDHO12 min read

MOMENTUM CREDIT LIMITED VS BOOKER ODERA AWENDHO

High Court at Milimani High Court · · J. Chigiti (SC)

1. The Appellant , had filed a claim in Milimani Small Claim Court being Commercial case No. E 3330 of 2023seeking recovery of Kshs. 306,878/= for the outstanding balance of a loan facility advanced to the Respondent pursuant to a duly executed Loan Application Agreement dated 10th December 2020.
2. The Appellant submits that the learned trial magistrate fundamentally misdirected himself by failing to evaluate and appreciate the material evidence placed before the court given that The Appellant's claim was grounded on documentary evidence that remained unchallenged and uncontroverted.
3. The Respondent neither filed a Response nor appeared before the court to contest the claim.
4. The trial court dismissed the claim without any legal or factual justification, thereby denying the Appellant the benefit of a valid contractual enforcement mechanism.
5. The Appellant’s position is that the trial court failed to give due weight to the legal effect of a duly executed loan agreement and statutory declaration, which were explicit on the terms of repayment, penalties, and consequences of default.
6. It submits that the trial court ignored the evidential significance of these documents, which were produced as exhibits and clearly demonstrated the existence of a valid contract, a breach by the Respondent, and quantifiable loss suffered by the Appellant.
7. It further submits that The trial court, in this instance, failed to discharge this judicial duty, and its approach was not only injudicious but also prejudicial to the Appellant’s legitimate expectation of a fair hearing and due process.
8. The Appellant contends that the learned trial magistrate erred by failing to apply settled legal principles relating to formation and enforcement of contracts. The law recognizes that once parties voluntarily enter into a binding agreement supported by consideration and clear terms, the same must be enforced unless successfully challenged on legally recognized grounds such as fraud, duress, or misrepresentation which were not even alleged, let alone proved, in this case.
9. The dismissal of the Appellant’s claim despite clear and cogent evidence of breach of contract goes against the objectives of the Small Claims Court Act, which include expeditious, accessible, and just determination of civil claims of a monetary nature.

10. The Appellant also submits that the trial court failed to record or provide proper reasons for the dismissal of the claim, leaving the Appellant in uncertainty as to which facts or legal principles were applied.

11. In the premises, the Appellant seeks to persuade this Court to find that the trial court’s ruling was not only erroneous in its findings but also unjust in its outcome. The Appellant prays that this Court will carefully re-evaluate the uncontroverted evidence on record, correct the errors of the trial court, and render judgment in favour of the Appellant as prayed in the initial claim, with interest and costs.
12. The foregoing prompted the Appellant to file an application to review and set aside the judgment through the application that was dismissed 1st March 2024.
13. That precipitated the filing of the Memorandum of Appeal dated 14th March 2024 that forms the subject of this judgment. The appellant prays for orders that:-
1) The appeal be allowed.
2) The Ruling delivered on 1st March 2024 and decree emanating from it in the Milimani Small Claim Commercial Case No E3330 be set aside.
3) This Honourable Court do grant orders that it deems fit for the ends of justice to be met.
4) The Appeal be allowed with Costs.
14. In the Memorandum of Appeal it raises the grounds namely that :-
1) The Learned trial magistrate erred in law and fact and misdirected himself by dismissing Claimant’s case.
2) The Learned trial magistrate erred in law and fact and misdirected himself by failing to consider crucial evidence that was in the record and could have made the Honourable rule otherwise.
3) The Learned trial magistrate erred in law and fact and misdirected himself by failing to analyse evidence adduced by the Claimant/Applicant which if this Honourable court had correctly analysed it would have ruled in favour of the Claimant/Applicant.
4) The Learned trial magistrate erred in law and fact and misdirected himself by failing to consider the fact that the Claimant had extended a loan and had failed from repossessing the collateral and/or disposing of it, despite the Respondent's failure to make the agreed instalment payments
5) The Learned trial magistrate erred in law and fact and misdirected himself by failing to rule that the Loan Agreement signed by the Respondent was valid and enforceable hence the Respondent was under obligation to repay the loan extended to her.
6) The Learned trial magistrate erred in law and fact and misdirected himself by failing to consider the applicable case law availed by the Claimant.
15. The appeal is unopposed.
Analysis and determination:
16. The court finds the following to be the issues for determination:
a. Whether the court has jurisdiction.
b. Whether the appeal has merit.
c. Who shall bear the costs.

Whether the court has jurisdiction.
17. In the case of Samuel Kamau Macharia & Another v. Kenya commercial Bank & 2 Others, Application No. 2 of 2011 [2012] eKLR, the supreme court pronounced itself on jurisdiction thus [paragraph 68]: “(68) A Court's jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that, which is conferred upon it by law. We agree with counsel for the first and second Jurisdiction to entertain a matter before it, is not one of mere procedural Court cannot entertain any proceedings. This Court dealt with the question of jurisdiction extensively in, Commission (Applicant), Constitutional Application Number 2 of 2011. Where they cannot expand its jurisdiction must operate within the constitutional limits. It confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, court or tribunal by statute law." (Emphasis provided) where it quoted with approval the oft cited case of Owners of Motor Vessel 'Lillian S' v Caltex In Re The Matter of the Interim Independent Electoral Commission where the Court stated: - "[29] Assumption of jurisdiction by Courts in Kenya is a subject regulated by the Constitution, by statute law, and by principles laid out in judicial precedent. The classic decision in this regard is the Court of Appeal decision in Owners of Motor Vessel 'Lillian S' v. Caltex Oil (Kenya) Limited [1989] KLR 1, which bears the following passage (Nyarangi,JA at p.14): “I think that it is reasonably plain that a question of jurisdiction ought to be raised at the earliest opportunity and the Court seized of the matter is then obliged to decide the issue right away on the material before it. Jurisdiction is everything. Without it, a Court has no power to make one more step."(underlining supplied) [30] The Lillian 'S' case establishes that jurisdiction flows from the law, and the Recipient-Court is to apply the same, with any limitations embodied therein. Such a Court may not arrogate to itself jurisdiction through the craft of interpretation, or by way of endeavours to discern or interpret the intentions of Parliament, where the wording of legislation is clear and there is no ambiguity. In the case of the Supreme Court, Court of Appeal and High Court, their respective jurisdictions are donated by the Constitution."
18. The issue of jurisdiction is dealt with from a two pronged perspective. In dealing with the first limb the court notes that the appellant invited this Court to carefully re-evaluate the uncontroverted evidence on record, correct the errors of the trial court, and render judgment in favour of the Appellant as prayed in the initial claim.
19. The court has looked at the record of appeal and in particular the loan agreement dated 26.11.2020.The Appellant case rests on this agreement. However in reevaluating the evidence the court has noted that Clause 18 of this agreement ousters the Small Claims Court jurisdiction. It stipulates that all disputes shall be referred to arbitration and that the arbitration Award would be final. The adjudicator clearly bypassed that clause.
20. The issue of jurisdiction can be raised suo motu by the court at any stage. It is this court’s finding that the adjudicator acted illegally and in want of jurisdiction rendering the judgment an illegality. With this finding alone, the appeal cannot succeed.

21. On the second limb of the issue of jurisdiction the court will interrogate whether the record of appeal is complete.

22. Order 42Rule 13(4) of the Civil Procedure Rules provides as follows,

Before allowing the appeal to go for hearing the judge shall be satisfied that the following documents are on the court record, and that such of them as are not in the possession of either party have been served on that party, that is to say-
a.the memorandum of appeal;
b.the pleadings;
c.the notes of the trial magistrate made at the hearing;
d.the transcript of any official shorthand, typist notes electronic recording or palantypist notes made at the hearing;
e.all affidavits, maps and other documents whatsoever put in evidence before the magistrate;
f.the judgment, order or decree appealed from, and, where appropriate, the order (if any) giving leave to appeal:
Provided that—
(ii)the judge may dispense with the production of any document or part of a document which is not relevant, other than those specified in paragraphs (a), (b) and (f).
23. The Court may however dispense with the production of any document it deems irrelevant. Notably, the production of the memorandum of appeal, the pleadings and the decision appealed against may not be dispensed with.
24. In the instant case, some of the critical documents are missing from the record.

25. Upon perusing the appellant’s submissions, the court has established that a judgment exists.

26. The Appellant submits that the learned trial magistrate fundamentally misdirected himself by failing to evaluate and appreciate the material evidence placed before the court given that The Appellant's claim was grounded on documentary evidence that remained unchallenged and uncontroverted.

27. It submits that The Respondent neither filed a Response nor appeared before the court to contest the claim.The trial court dismissed the claim without any legal or factual justification, thereby denying the Appellant the benefit of a valid contractual enforcement mechanism.

28. The Appellant’s position is that the trial court failed to give due weight to the legal effect of a duly executed loan agreement and statutory declaration, which were explicit on the terms of repayment, penalties, and consequences of default.

29. It submitted that the trial court ignored the evidential significance of these documents, which were produced as exhibits and clearly demonstrated the existence of a valid contract, a breach by the Respondent, and quantifiable loss suffered by the Appellant.

30. The dismissal of the Appellant’s claim despite clear and cogent evidence of breach of contract goes against the objectives of the Small Claims Court Act, which include expeditious, accessible, and just determination of civil claims of a monetary nature per the Appellant.

31. In the premises, the Appellant sought to persuade this Honourable Court to find that the trial court’s ruling was not only erroneous in its findings but also unjust in its outcome.

32. The Appellant prays that this Court will carefully re-evaluate the uncontroverted evidence on record, correct the errors of the trial court, and render judgment in favour of the Appellant as prayed in the initial claim, with interest and costs.

33. From the index to the record of appeal, the Appellant listed the documents that form the record of appeal. There is judgment, decree. It did not include the order that flows from the impugned ruling.

34. Being a first appeal, this Court is called upon to re-assess and analyse the evidence on record being mindful that it neither saw nor heard the witnesses testify. (See Selle v Associated Motor Boat Co. [1968] EA 123).
35. The court is left ill equipped and unable to do any logical reassessment and analysis of evidence as expected by the Appellant as advanced in the submissions within the Selle (Supra) principles in the circumstances as called for by the Appellant.

36. This Court did not dispense with the production of the missing critical documents. The Appellant did not seek leave to file a supplementary record to cure the gap or the lapse.

37. In failing to include the aforementioned documents as part of the record, the court is left without jurisdiction and I so hold.

38. In so finding I am guided by the case of Hamida Yaroi Shek Nuri v Faith Tumaini Kombe & 2 others [2019] eKLR, where the Supreme Court considered an application for striking out the record of appeal which did not contain the record of proceedings before the Court of Appeal and stated:
(22)Under Rule 33(4), the contents of a Record of Appeal (from a court or tribunal in its appellate jurisdiction) contains the following documents from the first appellate court: the certificate, if any, certifying that the matter is of general public importance; the memorandum of appeal; the record of proceedings; and the certified decree or order. This Court has timely reiterated that under Rule 33(6) a document omitted may be filed in a Supplementary Record without leave of the Court with fifteen days of filing of the Record of Appeal; and subsequently with leave of the Court, the same document may be filed.
(23)It therefore emerges that failure to include the ‘record of proceedings of the court of Appeal” in the Record of Appeal does not automatically render the appeal filed before this Court fatal. For if the law contemplates that such an omitted document may be filed later, the same law cannot be said to render a Record of Appeal with that omission outrightly fatal. However we hasten to add that where a required document lacks in the Record of Appeal, devoid of a sufficient explanation for the omission, is a ground for the striking out of that Record of Appeal.
39. In the case of Bwana Mohamed Bwana v Silvano Buko Bonaya & 2 others [2015] eKLR the Supreme Court considering the incompleteness of a record of appeal stated and held that without a record of appeal a Court cannot determine the appeal cause before it. Thus, if the requisite bundle of documents is omitted, the appeal is incompetent and defective, for failing the requirements of the law. A Court cannot exercise its adjudicatory powers conferred by law, or the Constitution, where an appeal is incompetent. An incompetent appeal divests a Court of the jurisdiction to consider factual or legal controversies embodied in the relevant issues.
Determination:
40.Faced with an incomplete record, the appeal before this court is incompetent and defective. The Court is thus divested of the jurisdiction to consider the issues placed before it, as the conditions set by law have not been met.
41.The other issues fall by the wayside.
Costs;
42.In Joseph Oduor Anode v. Kenya Red Cross Society, Nairobi High Court Civil Suit No. 66 of 2009; [2012] eKLROdunga, J. thus observed:
“…whereas this Court has the discretion when awarding costs, that discretion must, as usual, be exercised judicially. The first point of reference, with respect to the exercise of discretion is the guiding principles provided under the law. In matters of costs, the general rule as adumbrated in the aforesaid statute [the Civil Procedure Act] is that costs follow the event unless the court is satisfied otherwise. That satisfaction must, however, be patent on record. In other words, where the Court decides not to follow the general principle, the Court is enjoined to give reasons for not doing so.In my view it is the failure to follow the general principle without reasons that would amount to arbitrary exercise of discretion …” [emphasis supplied].
The appellant shall shoulder costs.
Order:
The Appeal is hereby struck out with costs.
    MOMENTUM CREDIT LIMITED VS BOOKER ODERA AWENDHO MOMENTUM CREDIT LIMITED VS BOOKER ODERA AWENDHO