Mwenda v Meru Highlands Dairy Ltd (Civil Appeal E108 of 2023) [2026] KEHC 8431 (KLR) (5 June 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MERU** **CIVIL APPEAL NO. E108 OF 2023** **ERIC MWENDA ………………. APPELLANT** **Versus** **MERU HIGHLANDS DAIRY LIMITED ……………. RESPONDENT** **JUDGEMENT** **Introduction** 1. This appeal arises out of the judgement of the court in Meru Small Claims Court Case No. E163 of 2023 delivered on 22/06/2023 in which the trial magistrate awarded the Respondent Meru Highlands Dairy Limited Kshs. 1,163,290.50/= and entered judgement at a sum of Kshs. 1,000,000/= against the Appellant. 2. The Respondent was the Plaintiff in the suit and it had sued the Appellant in that matter for payment of Kshs. 1,163,290.50/= being monies owed after the Respondent has supplied products to the Appellant on 29/04/2020. 3. Dissatisfied with the judgement of the trial court, the Appellant filed the present appeal vide a memorandum of appeal dated 11/07/2023 with the following listed grounds; 1. The Learned Magistrate erred in Law and fact in finding that it was the willful duty of the Respondent to collect the proceeds of sale. 2. The Learned Magistrate erred in Law and fact in finding that the discrepancies in the statements was the Responsibility of the Appellant and no one else. 3. The Learned Magistrate erred in Law and fact in awarding the claim in its entirety ignoring the evidence by the Appellant. 4. The Learned Magistrate erred in Law and fact in her application and interpretation of the law regarding the suit. 5. The Learned Magistrate erred in Law and fact in failing to consider and/or disregarding the Appellants’ evidence, submissions and case law cited. 6. The Learned Magistrate Ruling was biased in favour of the Respondent against the Appellant, is full of errors, against the weight of evidence and a travesty of justice. 4. The Appellant asked the court to allow the appeal and set aside the judgement/decree of the trial court delivered on 22/06/2023 in in its entirety. 5. The appeal was canvassed by way of written submissions. **Appellant’s submissions** 1. The Appellant in his written submissions dated 21st November 2025, claims that the trial court's judgment delivered on 22nd June 2023, awarding the Respondent Kshs. 1,000,000 plus costs and interest was erroneous and against the weight of evidence. He contends that the trial magistrate completely disregarded vital documentary evidence, failed to properly evaluate the oral evidence adduced at trial, and erroneously imposed a contractual duty onto the Appellant that did not exist within his employment contract. 2. On whether it was the duty of the Appellant to collect the proceeds of sale and whether the statement discrepancies were attributable to him, the Appellant submitted that the trial court erred in law and fact by adopting the Respondent's unsupported claim regarding collection duties. He argued that his role as an employee was strictly limited to sales and distribution, whereas the obligation to follow up and collect debts from credit customers squarely rested with the Respondent's Credit and Finance Department. Furthermore, he maintained that parties are bound by the terms of their contract, and because he was verbally terminated in December 2020 and had duly submitted the full list of debtor customers upon his exit, he possessed neither the mandate nor the legal authority to collect any monies. To buttress his position, he relied on the judicial decisions in ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR*** and ***Fina Bank Limited vs Spares & Industries Limited (Civil Appeal No 51 of 2000).*** 3. On whether the Respondent had proved its case against the Appellant, he submitted that the burden of proof regarding the alleged financial discrepancies squarely lay with the Respondent, who failed to discharge it. He argued that the trial magistrate blatantly disregarded pivotal evidence placed before her, including the Appellant's employment contract and the written submissions highlighting the core issues for determination. Additionally, he pointed out that the Respondent's sole witness under cross-examination directly contradicted his own written statement by denying that he was a director of the company. 4. The Appellant prayed for the appellate court to rectify these errors, set aside the lower court's judgment in its entirety, and enter judgment as prayed for in the Appellant's counterclaim. **Respondent’s submissions** 1. In its written submissions dated 27th November, 2025, the Respondent argued that the Appellant failed to satisfy the requisite standard of proof to support his appeal against the judgment of the Small Claims Court. The Respondent further argued that the Appellant breached his contractual and agency duties by failing to remit sales proceeds. 2. On whether the Appellant had a duty to collect proceeds of sales and whether the Respondent is entitled to the amount claimed in its entirety, the Respondent submitted that a contractual and agency relationship existed between the parties, which legally obligated the Appellant, as a salesman, to collect and remit milk sales proceeds. To support the definition of this relationship, the Respondent relied on ***Lucy Nungari Ngigi & 4 others v National Bank of Kenya Limited & another [2015] eKLR***. 3. The Respondent further argued that customer statements from 30th July, 2022, proved the Appellant defaulted on payments totaling Kshs. 1,163,290.50. It contended that the Appellant’s claims regarding customer collections were entirely unsubstantiated by evidence, citing ***SYT v TA [2019] eKLR*** to show that unproven pleadings remain mere statements of fact. Additionally, the Respondent maintained that the Appellant could not shift the collection burden, having failed to institute third-party proceedings under Order 1, Rule 15 of the Civil Procedure Rules. 4. On whether the Small Claims Court had jurisdiction over the Appellant's counterclaim The Respondent submitted that the Appellant’s counterclaim for Kshs. 78,613 regarding unlawful termination, underpayment, and denied leave was void *ab initio*. It argued that Section 13(5) of the Small Claims Court Act categorically excludes employment and labor relations from its jurisdiction. To buttress the position the Respondent relied on the decision of ***Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd [1989] eKLR*.** **Analysis and determination** 1. This is the first appeal. My duty as the 1st appellate court is to re-evaluate and re- examine the evidence in the trial court and come to my own findings and conclusions, but in doing so, to have in mind that I neither heard nor saw the witnesses testify. 2. Having considered the grounds of appeal herein as well as the submissions filed by the Appellant, the only issues that present themselves for this court’s determination are: 1. Whether the trial court erred in law and fact by finding that the Appellant had a duty to collect and remit the proceeds of sales, and consequently, whether the Respondent is entitled to recover the sum of Kshs. 1,163,290.50 for breach of contract. 2. Whether the trial court had jurisdiction to hear and determine the Appellant’s counterclaim. ***Whether the trial court erred in law and fact by finding that the Appellant had a duty to collect and remit the proceeds of sales, and consequently, whether the Respondent is entitled to recover the sum of Kshs. 1,163,290.50 for breach of contract.*** 1. In its written submissions, the Appellant argued that the trial court erred by imposing a duty on him that did not exist in the employment contract. The Respondent on the other hand argued that an agency relationship existed between the parties obligating the Appellant to collect and remit the proceeds of sale. 2. The starting point of this analysis is the nature of the relationship between the parties and the duties that flowed therefrom. It is not disputed that the Appellant was employed by the Respondent as a sales representative/salesman from 20/05/2019 until his verbal termination in December 2020. I have looked at the record of appeal and it reveals that during cross examination, the Appellant acknowledged: **"I was a sales representative who sells milk on behalf of the Claimant in Nyambene and Garissa route."** He further stated that he was paid a salary, this is supported by the employment contract dated 20/05/2029, that he produced as part of his documents before the trial court. He further stated that he would sell the milk to customers both in cash and on credit, and that before one is loaded, he must have done reconciliation and paid the entire sum up. 3. The Appellant's principal contention is that his role was limited to sales and distribution, and that the Respondent's Credit and Finance Department bore the responsibility for debt collection. In support, he relied on ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR***, where the court held that parties are bound by the written terms of their contract. I have looked at the contract of employment signed by the Appellant on 20/05/2019 and its terms are not express as to the role of the Appellant being limited to sale and distribution only. The Appellant's admission in cross-examination that "before one is loaded, I must have done reconciliation and paid the entire sum up" is wholly inconsistent with a role limited to mere sales and distribution. 4. I note that this admission establishes that the Appellant's standard procedure included financial reconciliation and remittance of monies which are of an agent collecting on behalf of a principal. 5. The Court in [***Susan Murila & another (COTU) v Richard Kipkoech Langat & another [2019] KEELRC 29 (KLR)***](https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/29/eng%402019-12-20) stated that *“A court or tribunal must consider whether or not the words of the* written *contract represent the true intentions or expectations of the parties (and therefore their implied agreement and contractual obligations), not only* at *the inception of the contract but at any later stage where the evidence shows that the parties have expressly or impliedly varied the agreement* *between* *them.”* In the present case therefore, I find that the Appellant’s scope of work not only extended to sale and distribution but also to the collection and remittance of proceeds of sale. 6. The Appellant further argued that he submitted all debtor names and contacts to the Respondent's Credit and Finance Department upon his departure in December 2020, and that the responsibility to recover from those debtors then shifted to the Respondent. The Appellant did not produce evidence to support this claim. The Respondent's statement of account showed a running balance owed of Kshs. 1,163,290.50. The trial court noted that the statement itself was produced in evidence and was not effectively refuted by the Appellant. The Appellant's assertion that "the money is owed by the Claimant's various customers" without producing any independent evidence such as receipts, delivery notes, or reconciliation sheets to show that all proceeds were indeed remitted or that customers alone remained the debtors, is insufficient to displace the Respondent's documentary evidence. 7. I am therefore satisfied that the trial court was correct in finding that the Appellant had a duty to collect and remit the proceeds of sales in his capacity as a sales representative/agent of the Respondent. I find no error in the trial court's finding on the first issue. ***Whether the trial court had jurisdiction to hear and determine the Appellant’s counterclaim.*** 1. The Appellant filed a counterclaim seeking Kshs. 78,613/= in respect of unpaid salary, underpayment, and leave days that he claims were denied to him during the period of his employment with the Respondent. The Respondent argued, and the trial court appears to have implicitly accepted, that the counterclaim, touching as it does on employment and labour relations, fell outside the jurisdiction of the Small Claims Court. 2. The jurisdiction of the Small Claims Court is conferred by the Small Claims Court Act, No. 2 of 2016. Section 12 thereof sets out the pecuniary jurisdiction of the court. Section 13 of the Act, delineates matters over which the Small Claims Court has no jurisdiction. Section 13(5) categorically provides that the Small Claims Court shall have no jurisdiction over matters relating to employment and labour relations. 3. Based on the above legal provision, I find that the counterclaim as framed before the Small Claims Court was incompetent for want of jurisdiction and is accordingly struck out. This does not prevent the Appellant from pursuing his employment grievances before the appropriate forum, namely the Employment and Labour Relations Court, should he elect to do so. **Disposition** 1. Based on the reasons given, the arguments by the Appellant do not stand. The upshot is that the appeal is unmerited and is accordingly dismissed with costs. It is so ordered. Right of appeal 30 days. Dated, signed and virtually delivered via TEAMS on this 5th day of June, 2026. **Hon. Roseline A. Oganyo, Mrs.** **Judge.** In the presence of; - Court Assistant…Sana Counsel for Appellant…No appearances Counsel for Respondent…Mr. Omariba