https://new.kenyalaw.org/akn/ke/judgment/scc/2026/163

Akoth v Owino (Claim E1087 of 2026) [2026] SCC 163 (KLR) (17 July 2026) (Judgment) Neutral citation: [2026] SCC 163 (KLR) Republic of Kenya In the Milimani Small Claims Court Claim E1087 of 2026 GW Kiamah, RM July 17, 2026 Between Robinah Ochieng Akoth Claimant and Nerry Ochieng Owino Respondent Judgment 1.The claimant instituted this claim vide statement of claim dated 20/1/2026 seeking judgment against the respondent for Kshs. 260,000/=, collection charges of Kshs. 20,000/=, costs of the suit and interest. It was on the basis that the respondent borrowed Kshs. 200,000/= from the claimant and the same was to be repaid with an interest of Kshs. 60,000/=, the total being payable in 4 monthly instalments of Kshs. 65,000/=. That the respondent failed to pay as agreed despite reminders and demand. 2.The respondent filed a response dated 3/2/2026 and admitted borrowing the loan of Kshs. 200,000/=. The respondent however denied signing the agreement relied upon by the claimant and it was averred that the claimant was not registered to lend out loans with interest charges. 3.The claim proceeded under Section 30 of The Small Claims Court Act and the claimant filed submissions dated 7/5/2026. The respondent’s were not on record. 4.I have seen and considered those submissions alongside the pleadings and evidence before court. The main issue for determination is whether the claimant has proven that the claim as against the respondent. 5.The standard of proof in civil claims is on a balance of probabilities. See the Court of Appeal in Mumbi M'Nabea v David M.Wachira [2016] eKLR. 6.Sections 107, 108 and 109 of the Evidence Act, Chapter 80 of the Laws of Kenya places the burden of proof of a fact on the person who wishes the court to believe in the existence of such fact. 7.It was not denied that the respondent took out a loan of Kshs. 200,000/=. Indeed, there was an unequivocal admission of that amount. 8.As regards the claim for interest of Kshs. 60,000/=, I do note that the agreement produced by the claimant was not executed by either party and was thus not binding on the respondent. More importantly, the loan advanced was Kshs. 200,000/= and attracted interest of Kshs. 15,000 per month was applied, translating to a monthly interest rate of approximately 7.5%, and annual rate of 90%. 9.I do note that the application of such terms over time would lead to a rapid and disproportionate escalation of the debt beyond the principal sum advanced. Such rates are capable of producing a debt that bears no reasonable relationship to the amount borrowed and would result in an oppressive burden upon the borrower.Although the contractual charge does not exceed the principal advanced, the Court finds that the implied annualized rate of approximately 90% is excessive and unconscionable in the circumstances of this case. 10.I say so noting that the rationale underlying the in duplum rule is to guard against the excessive accumulation of interest and charges and to prevent a lender from recovering amounts that are grossly disproportionate to the principal debt. In the circumstances of this case, enforcement of the impugned interest would offend the principles of fairness, equity and good conscience that guide the Court in the enforcement of contractual obligations. 11.Even where parties are generally bound by the terms of their contract, this Court retains discretion to decline enforcement of terms that result in unjust, oppressive, or unconscionable outcomes. In the circumstances, the Court finds the claimed interest, even if proven, would be disproportionate and inequitable. The Court therefore declines to enforce the implied interest rate thus the claim for Kshs. 60,000/= is not awardable. The collection costs of Kshs. 20,000/= are also denied noting that such costs are ordinarily recovered by way of an award for costs of the claim. 12.In the end, I find that the claim is partly successful. As such, I hereby order as follows: -1.Judgment is hereby entered in favour of the claimant as against the respondent for the sum of Kshs. 200,000/= being the balance on the principle loan amount.2.The total amount shall attract interest at court rates from the date of filing suit until payment in full.3.The claimant is awarded costs assessed at Kshs. 20,000/= 13.The respondent is awarded 30 days stay of execution. It is so decreed. DATED AND DELIVERED AT NAIROBI VIA CTS THIS 17TH DAY OF JULY 2026HON. GLADYS .W. KIAMAHRESIDENT MAGISTRATE/ADJUDICATOR