https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12138

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT KISUMU** **CIVIL APPEAL NO. E133 OF 2025** **GA INSURANCE (K) LIMITED……..……………………….APPELLANT** **VERSUS** **PETER ANYACH……………………………………………….RESPONDENT** *(Being an appeal from the judgement and decree* *of* *Hon.* *G.N. Barasah Senior Resident Magistrate, delivered* *on 7th May, 2025 in Kisumu CMCC No. E119 of 2022).* **JUDGEMENT** 1. **INTRODUCTION.** 2. This appeal arises from the judgement and decree of **Hon. G.N. Barasah** Senior Resident Magistrate, delivered on 7th May, 2025 in *Kisumu CMCC No. E119 of 2022.* 3. The suit before the trial court was commenced by the Respondent (the Plaintiff before the trial court) against the Appellant (the Defendant before the trial court) vide a plaint dated 30th March, 2022. The Respondent pleaded that he was employed by the Appellant until his resignation on 16th October, 2021, when he served as an Assistant Branch Manager. Upon his resignation, the Appellant issued him with a clearance form indicating that the only outstanding liability attributable to him was Ksh.918,662.50/-. 4. The Respondent further pleaded that, pursuant to an agreement between the parties, the Appellant debited his account and applied the sum of Ksh.918,662.50/- towards settling an outstanding liability owed by First African Insurance to the Appellant by invoking a lien. 5. It was the Respondent’s case that he thereafter engaged First African Insurance, which, by an email dated 1st December, 2021, confirmed that its account had sufficient credit and instructed the Appellant to pass a credit entry to its broker account equivalent to the debit balance and to release the Respondent from the liability of Ksh.918,662.50/-. 6. The Respondent pleaded that, notwithstanding the said instructions and authority from First African Insurance, the Appellant maliciously and without lawful justification refused to release the sum of Ksh.918,662.50/- to him. 7. He averred that despite demand and notice of intention to sue, the Appellant failed to make payment, thereby necessitating the institution of the suit. He consequently prayed for judgement against the Appellant for Ksh.918,662.50/-, interest thereon at the rate of 14% per annum from 1st December, 2021 until payment in full, together with costs of the suit. 8. The Appellant resisted the Respondent’s claim by filing a statement of defence dated 10th May, 2022 in which it pleaded that the suit was incompetent, fatally defective, an abuse of the court process and disclosed no reasonable cause of action against it, and was therefore liable to be struck out. 9. The Appellant admitted that the Respondent had been its employee until his resignation on 16th October, 2021 as an Assistant Branch Manager and further admitted that, upon his resignation, a clearance form was issued indicating a liability of Ksh.918,662.50/-. 10. The Appellant, however, denied that it had unlawfully withheld the said sum or acted in breach of any instructions from First African Insurance. It pleaded that the Respondent had voluntarily resigned after committing various breaches of the company’s processes and procedures which exposed it to the risk of substantial financial loss. 11. It further pleaded that the Respondent acknowledged his liability and expressly agreed, in writing, to liquidate the amount owing to the Appellant. Consequently, the sum of Ksh.918,662.50/- was lawfully forfeited and applied towards settling the Respondent’s admitted liabilities. 12. The Appellant further pleaded that it was unaware of the averment that there was no previous or pending suit over the subject matter and put the Respondent to strict proof thereof. It also denied having been served with any demand or notice of intention to sue and contended that, for that reason, the Respondent was not entitled to an award of costs. 13. While admitting the jurisdiction of the trial court, it denied that the Respondent was entitled to any of the reliefs sought and prayed for dismissal of the suit with costs. 1. The Appellants urge this Court to allow the appeal and set aside the judgement and decree of the trial court. They pray that the judgement and decree be substituted with an order dismissing the Respondent’s claim against them with costs. 2. **THE EVIDENCE BEFORE THE TRIAL COURT.** 3. The Respondent testified as PW1 and adopted the contents of his witness statement dated 30th March, 2022 and told the trial court that he had been employed by the Appellant until his resignation on 16th October, 2021 while serving as an Assistant Branch Manager at its Kisumu Branch. 1. He stated that upon his resignation, he was issued with a clearance form indicating that the only outstanding liability attributable to him was Ksh.918,662.50/-, which the Appellant debited from his account and credited to the account of First African Insurance pursuant to a lien that he had executed in favour of the Appellant. 2. He testified that after the debit was effected, First African Insurance, by an email dated 1st December, 2021, confirmed that its account had sufficient credit and instructed the Appellant to pass the necessary credit entry to its broker account and release him from the liability of Ksh.918,662.50/-. 3. According to the Respondent, despite those instructions and several demands, the Appellant refused to release the money, prompting him to institute the suit to recover the said sum. 4. The Respondent produced the following documents in support of his case: * Demand letter dated 27th January, 2021. * Copies of statement of account. * Copy of letter dated 27th October, 2021. * Copy of letter dated 24th November, 2021. * Copies of correspondence on email. * Copies of payroll receipts. * Copies of journal vouchers. * Copy of employment clearance form. * Copy of sub-ledger. * Copy of certificate of service. * Copy of resignation letter dated 17th September, 2021. * Copy of letter dated 22nd September, 2021. * Copy of transfer letter dated 7th September, 2021. 5. During cross-examination, the Respondent admitted that the sale ledger reflected a balance of Ksh.858,662.50/- and that the employee clearance form showed that he owed the Appellant Ksh.858,662.50/-. 6. He further acknowledged that his payslips for the months of June, July and August, 2021 reflected monthly deductions of Ksh.10,000/- on account of unauthorized premiums. He also admitted receiving a letter dated 22nd September, 2021 requiring him to clear his liabilities and conceded that, by his letter dated 22nd October, 2021 titled “Outstanding Liability of Ksh.858,662.50/-” he acknowledged owing the Appellant that amount and authorized it to recover the same. 7. Upon re-examination, however, the Respondent maintained that the sum of Ksh.858,662.50/- did not represent a personal debt owed by him to the Appellant but arose from transactions undertaken through Pivot/First African Insurance Agency. 8. He stated that he had merely approved credit to clients and that the amount of Ksh.60,000/- had already been recovered through deductions from his salary, hence his claim for reimbursement. 9. The Appellant called **Symon Lariak** as its witness, who testified and told the trial court that he was the Appellant’s Assistant Legal Manager. He adopted his witness statement as his evidence-in-chief and also relied on the documents filed by the Appellant, which were produced as exhibits. 10. The witness testified that the Appellant did not owe the Respondent the sum of Ksh.918,662.50/- as claimed. Instead, the money represented liabilities owed by the Respondent to the Appellant arising from unauthorized premiums. 11. He further stated that by a letter dated 27th October, 2021, the Respondent had undertaken to clear his outstanding liability of Ksh.858,662.50/- after partial recovery had been made and that the clearance form confirmed the Respondent’s indebtedness to the Appellant. 12. The witness produced the following documents in support of the Appellant’s case: * Transfer letter dated 7th September, 2021. * Resignation letter dated 17th September, 2021. * Letter from GA Insurance dated 22nd September, 2021. * Letter by **Peter Anyach** dated 27th October, 2021. * Employee clearance form. * Copy of payslips for June, July and August, 2021. 13. During cross-examination, the witness acknowledged that Pivot Africa Insurance was an insurance agency of the Appellant and that part of the unauthorized premiums had been transacted through that agency. 14. He explained that the Respondent, while serving as Branch Manager, had authority to issue insurance covers and collect premiums but improperly authorized insurance cover for various clients on credit without approval, thereby exposing the Appellant to loss. 15. The witness testified that the cumulative value of the unauthorized premiums processed through Pivot Africa Insurance amounted to Ksh.918,662.50/-. He further admitted that an email dated 1st December, 2021 was received from First African Insurance concerning the disputed amount and conceded that the Appellant did not comply with the instructions contained in that email. 16. Although he maintained that the relevant account did not have sufficient funds to support the requested transfer, the witness acknowledged that the statement of account produced by the Appellant reflected a credit balance of Ksh.1,686,728.04/- as at 8th September, 2021. 17. He also admitted that the Appellant did not respond to the email asserting the availability of sufficient funds. 18. Upon re-examination, the witness maintained that the Respondent’s liability to the Appellant was separate from the account maintained by First African Insurance. 19. He explained that the apparent credit balance in the statement of account was subject to an ongoing reconciliation exercise and that the account was subsequently corrected through journal entries. He further stated that the Respondent had failed to collect the premiums in question, thereby occasioning the loss to the Appellant. 20. **THE TRIAL COURT’S FINDINGS.** 21. In its judgement delivered on 7th May, 2025, the trial court found that the Respondent’s claim arose from an agreement between the parties under which the Respondent’s account was debited by Ksh.918,662.50/- to settle an alleged liability owed to First African Insurance. 1. The trial court reviewed the evidence of both parties and identified the issues for determination as whether the disputed sum had been remitted to First African Insurance as agreed and whether First African Insurance had subsequently confirmed that no amount remained due from the Respondent. 2. The trial court observed that the Respondent maintained that First African Insurance had confirmed it had sufficient funds in its account and had instructed the Appellant to release the Respondent from the liability, whereas the Appellant contended that the Respondent owed it money arising from unauthorized premiums. 3. The trial court noted that no documentary evidence had been produced to substantiate the alleged breaches by the Respondent and further observed that the Appellant had not filed a counterclaim to recover any outstanding debt allegedly owed by the Respondent. 4. The trial court further held that the dispute would have been better determined had First African Insurance been joined as a party to confirm whether it had been paid by the Appellant or whether it still claimed the amount from the Respondent. 5. Nevertheless, it found that the Appellant had failed to produce statements of account or other evidence demonstrating that the sum of Kshx.918,662.50/- had been remitted to First African Insurance on the Respondent’s behalf. It consequently concluded that, in the absence of such proof, the Appellant was obliged to refund the amount to the Respondent. 6. In arriving at its decision, the trial court relied on ***NCBA Bank PLC v Okonya (Civil Appeal No. E116 of 2022) [2024]*** and held that the Respondent had proved his claim. It therefore entered judgement in favour of the Respondent for Ksh.868,662.50/- after deducting Ksh.50,000/-, awarded costs of the suit assessed at Ksh.60,000/- and ordered that the decretal sum would attract interest at court rates from the date of judgement. 7. **GROUNDS OF APPEAL.** 8. The Appellants rely on the following grounds of appeal, as set out in its memorandum of appeal dated 5th June, 2025, in challenging and seeking to set aside the judgement and decree of the trial court: 1. **That the learned Magistrate erred in law and in fact by allowing the Respondent’s claim despite the Respondent having unequivocally admitted in his evidence that he was the one indebted to the Appellant.** 2. **That the learned Magistrate misdirected herself by shifting the burden of proof to the Appellant contrary to the well-established principles of law under *Section 107* and of the *Evidence Act.*** 3. **That the learned Magistrate erred in law by faulting the Appellant for failing to file a counterclaim and using the absence of a counterclaim as a ground for allowing the Respondent’s claim.** 4. **That the learned Magistrate failed to properly evaluate the evidence on record and the admissions made by the Respondent, and thereby arrived at a decision that was against the weight of evidence.** 9. The Appellant proposes that the appeal be allowed, the judgement of the trial court be set aside and be substituted with an order dismissing the Respondent’s claim with costs. The Appellant also seeks for costs of the instant appeal. 10. **DUTY OF THIS COURT.** 11. As this is a first appeal, I am obligated, pursuant to *Section 78* of the *Civil Procedure Act* and as articulated in **Selle v Associated Motor Boat Co. Ltd *[1969] E.A. 123,*** to re-assess, re-analyze and re-evaluate the evidence presented before the trial court and to arrive at my own conclusions, bearing in mind that I neither saw nor heard the witnesses testify. 12. In ***Selle***, **Sir Clement De Lestang**observed that: ***“This Court must consider the evidence, evaluate it itself and draw its own conclusions, though in doing so it should always bear in mind that it neither heard witnesses and should make due allowance in this respect.*** ***However, this Court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he had clearly failed on some point to take account of particular circumstances or probabilities, materially to estimate the evidence or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally.”*** 1. The duty of the first appellate court was also discussed by the Court of Appeal for East Africa in the case of ***Peters v Sunday Post Limited [1958] EA 424*** in which it was held that the appropriate standard of review established in cases of appeal can be stated in three complementary principles: ***“i. First, on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions;*** ***ii. In reconsidering and re-evaluating the evidence, the first appellate court must bear in mind and give due allowance to the fact that the trial court had the advantage of seeing and hearing the witnesses testify before her; and*** ***iii. It is not open to the first appellate court to review the findings of a trial court simply because it would have reached different results if it were hearing the matter for the first time.”*** 1. **THE APPELLANT’S SUBMISSIONS.** 2. In urging the appeal, the Appellant submits that the learned trial Magistrate erred both in law and in fact by entering judgement in favour of the Respondent notwithstanding the Respondent’s own admissions that he was indebted to the Appellant. 1. The Appellant further contends that the trial court improperly shifted the burden of proof to the Appellant contrary to *Sections 107* and *109* of the *Evidence Act,* failed to properly evaluate the evidence on record and wrongly treated the absence of a counterclaim as a basis for allowing the Respondent’s claim. 2. The Appellant submits that, as a first appellate court, this Court is under a duty to re-evaluate the evidence on record and draw its own independent conclusions, while bearing in mind that it neither saw nor heard the witnesses testify. 3. In support of that proposition, reliance is placed on ***Mohamed Athman Kombo v Maua Mohamed [2019] eKLR,*** in which the appellate court reiterated the settled principle that a first appellate court is obliged to re-consider and re-evaluate the evidence afresh and arrive at its own independent conclusions, while giving due allowance to the fact that the trial court had the advantage of seeing and hearing the witnesses. 4. On the merits, the Appellant argues that the Respondent’s own testimony conclusively established that he was indebted to the Appellant. It points to the Respondent’s admissions during cross-examination that he had issued unauthorized premiums amounting to Ksh.918,662.50/-, that deductions had been made from his salary towards offsetting that liability, that upon his resignation he still owed Ksh.858,662.50/-, that he signed the employee clearance form acknowledging the debt and that he executed a written undertaking to liquidate the outstanding balance. 5. It is further submitted that these admissions were corroborated by documentary evidence, including the clearance form, the Respondent’s undertaking and the payslips showing deductions. The Appellant therefore contends that the trial court ignored uncontroverted admissions and documentary evidence, thereby reaching a conclusion inconsistent with the evidence on record. 6. The Appellant further submits that the trial court’s award was internally inconsistent. It argues that whereas the Respondent pleaded for Ksh.918,662.50/-, the trial court awarded Ksh.858,662.50/- after deducting Ksh.60,000/-. According to the Appellant, that deduction corresponded exactly with the amount that had already been recovered from the Respondent’s salary. It is therefore argued that, by making the deduction, the trial court implicitly acknowledged both the existence of the Respondent’s indebtedness and the fact that part of that debt had already been recovered. 7. The Appellant contends that the trial court could not simultaneously recognize the Respondent’s indebtedness while holding that the Appellant was liable to refund the balance, as such reasoning amounted to approbating and reprobating at the same time. It submits that the only proper conclusion was that the Respondent had failed to establish his claim and that the suit ought to have been dismissed. 8. On the issue of the burden of proof, the Appellant submits that the trial court fundamentally misapplied the law by requiring it to prove that the disputed amount had been remitted to First African Insurance. It relies on *Sections 107(1)* and *109* of the *Evidence Act,* arguing that the legal burden of proving the existence of facts giving rise to a legal right lies upon the party asserting those facts and that the burden of proving any particular fact rests upon the person who wishes the court to believe in its existence. 9. The Appellant contends that, since it was the Respondent who alleged that the Appellant owed him Ksh.918,662.50/-, it was incumbent upon the Respondent to prove his entitlement to that sum and not for the Appellant to prove that it had remitted money to a third party. 10. To reinforce that submission, the Appellant relies on ***Kirugi & Another v Kabiya & 3 Others [1987] KLR 347,*** as cited in ***Mutunga Karori Mutokulea v Jadiel Gichuru & Another [2017] KEHC 6185 (KLR),*** where the Court held that the legal burden of proof rests upon the Plaintiff throughout the case and does not shift merely because the Defendant has denied the claim. 11. The Appellant submits that the trial court improperly shifted that burden by requiring it to prove remittance to First African Insurance, thereby confusing the legal burden of proof with the evidential burden. 12. Finally, the Appellant submits that the trial court erred in faulting it for failing to file a counterclaim. It argues that a Defendant is entitled to defeat a Plaintiff’s claim purely on the basis of its defence and is not obliged to file a counterclaim unless it seeks affirmative relief against the Plaintiff. 13. The Appellant places reliance on *Order 7 Rule 7* of the *Civil Procedure Rules,* which provides that a Defendant seeking to rely upon a right of counterclaim must specifically plead it as such. 14. The Appellant submits that it did not seek any monetary or other affirmative relief against the Respondent but merely defended the suit on the basis that the Respondent had failed to prove his claim and was himself indebted to the Appellant. Consequently, it argues that the learned trial Magistrate fell into error by treating the absence of a counterclaim as a justification for allowing an otherwise unproven claim. 15. The Appellant therefore urges this Court to allow the appeal, set aside the judgement of the trial court, dismiss the Respondent’s suit, and award it the costs of both the appeal and the proceedings before the subordinate court. 16. **THE RESPONDENT’S SUBMISSIONS.** 17. On his part, the Respondent submits that the appeal is devoid of merit and that the judgement of the trial court should be upheld. He contends that the Appellant has not challenged the material facts giving rise to the dispute, namely that upon his resignation as Assistant Branch Manager, the Appellant deducted Ksh.918,662.50/- from his terminal dues on account of unauthorized premiums allegedly issued in favour of First African Insurance and retained the amount as security against the broker’s outstanding indebtedness. 18. The Respondent submits that the evidence established that the liability in question arose from First African Insurance’s broker account with the Appellant and that, although he executed an undertaking and a clearance form authorizing the deduction of Ksh.858,662.50/- from his terminal dues, the deduction was solely intended to secure the Appellant against any loss should First African Insurance fail to settle the outstanding premiums. According to the Respondent, once First African Insurance regularized its account, the Appellant had no lawful basis for continuing to retain the deducted amount. 19. The Respondent further submits that, after leaving the Appellant’s employment, he engaged First African Insurance, which, by an email dated 1st December, 2021, unequivocally instructed the Appellant to pass a credit entry to its broker account and release the Respondent from the liability because its account had sufficient credit to stand on its own. 20. He argues that the Appellant neither disputed the contents of that email nor produced any response denying that First African Insurance’s account had sufficient funds to offset the liability. 21. It is therefore submitted that, once the broker confirmed the availability of sufficient funds and directed the Appellant to release the Respondent from liability, the Appellant’s continued retention of the deducted amount became unlawful and amounted to unjust or double enrichment, particularly because the Respondent had no direct cause of action against First African Insurance. 22. The Respondent further relies on the evidence elicited from the Appellant’s witness during cross-examination, wherein the witness admitted that part of the unauthorized premiums had been issued through First African Insurance, that the disputed sum of Ksh.918,662.50/- related to the amount deducted from the Respondent’s terminal dues, that the Appellant did not comply with First African Insurance’s instructions contained in the email of 1st December, 2021, that no response was sent disputing the availability of sufficient funds and that the broker’s account reflected a credit balance of Ksh.1,686,728.04/-. 23. The Respondent contends that these admissions corroborated his case and fully justified the findings reached by the trial court. 24. The Respondent therefore submits that the learned trial Magistrate correctly evaluated the evidence and properly concluded that the Appellant had failed to justify its continued retention of the Respondent’s money after the broker had instructed that the liability be released. 25. He consequently urges this Court to find that the appeal lacks merit and to dismiss it with costs. 26. **ISSUES FOR DETERMINATION.** 27. Having carefully considered the record of appeal, the judgement of the trial court, the grounds of appeal and the rival submissions by the parties, I am of the considered view that the following issues arise for determination: 1. Whether the Respondent proved, on a balance of probabilities, that he was entitled to payment of Ksh.918,662.50/- from the Appellant. 2. Whether the trial court misdirected itself in its appreciation of the evidence and the law, particularly with regard to the burden of proof and the effect of the Appellant’s failure to file a counterclaim. 3. Depending on the foregoing, whether the appeal is merited and what orders should issue as to the appeal and costs. 28. **ANALYSIS AND FINDINGS.** 29. The first issue for me to address is whether the Respondent proved, on a balance of probabilities, that he was entitled to payment of Ksh.918,662.50/- from the Appellant. 30. The starting point is that this was an ordinary civil claim founded on the Respondent’s assertion that the Appellant wrongfully retained Ksh.918,662.50/- deducted from his terminal dues. The legal burden therefore rested upon the Respondent to establish, on a balance of probabilities, the facts giving rise to his entitlement. 31. *Sections 107(1), 108* and *109* of the *Evidence Act* are explicit that whoever desires a court to give judgement in his favour based on the existence of certain facts bears the burden of proving those facts. That burden remains upon the claimant throughout the proceedings, although the evidential burden may shift from time to time depending on the evidence adduced. 32. The Court of Appeal succinctly stated that principle in ***Kirugi & Another v Kabiya & 3 Others [1987] KLR 347,*** where it held that the burden of proof in civil cases lies on the Plaintiff and does not lessen merely because the Defendant has failed to adduce evidence. The Plaintiff must succeed on the strength of his own case and not on the weakness of the defence. 33. In the present case, there is little dispute regarding the background facts. It is common ground that the Respondent was an employee of the Appellant until his resignation on 16th October, 2021. 34. It is equally common ground that, upon his exit, the Appellant retained Ksh.918,662.50/- from his terminal dues on account of unauthorized premiums issued during the Respondent’s tenure. 35. It is further common ground that the Respondent signed both an employee clearance form and a written undertaking acknowledging liability for Ksh.858,662.50/- after deductions amounting to Ksh.60,000/- had already been effected through his salary. 36. The Respondent himself candidly admitted these matters during cross-examination. He acknowledged that the clearance form reflected that he owed the Appellant Ksh.858,662.50/-. He admitted signing the clearance documents. He further admitted that his payslips reflected monthly deductions of Ksh.10,000/- towards the unauthorized premiums and conceded that, by his letter dated 22nd October, 2021 titled “Outstanding Liability of Ksh.858,662.50/-”, he authorized the Appellant to recover the outstanding amount. 37. Admissions made by a party constitute some of the strongest forms of evidence known to law. Unless satisfactorily explained or withdrawn, they ordinarily bind the maker. 38. The Respondent attempted to explain those admissions by stating that the liability was not a personal debt but merely arose because he had approved credit facilities to clients through First African Insurance. While that explanation may explain the genesis of the liability, it did not negate the fact that, as between himself and the Appellant, he had expressly acknowledged liability and authorized recovery thereof. 39. The Respondent’s case was therefore not that the liability never existed. Rather, it was that the liability subsequently ceased to exist after First African Insurance regularized its account and instructed the Appellant to release him from the obligation. The burden consequently rested upon the Respondent to prove that subsequent event. 40. The Respondent principally relied on the email dated 1st December, 2021 from First African Insurance, in which the broker requested the Appellant to pass a credit entry to its account and release the Respondent from the liability because its account allegedly had sufficient credit. The Appellant’s witness admitted receiving that email, admitted that no response was sent disputing its contents and further admitted that one of the statements reflected a credit balance in the broker’s account. 41. While those facts undoubtedly lent support to the Respondent’s case, they did not, in themselves, conclusively establish that the Respondent became entitled to an immediate refund of the deducted money. The email constituted an instruction or request from First African Insurance. It did not, by itself, establish that the Appellant had accepted a substitution of liability, that the reconciliation of the broker’s account had been completed or that the contractual undertaking executed by the Respondent had thereby been discharged. 42. Indeed, the Appellant’s witness maintained that the account was undergoing reconciliation and that subsequent journal entries corrected the apparent credit position. 43. More importantly, no evidence was tendered demonstrating that the Appellant had accepted the broker’s request, released the Respondent from his undertaking or otherwise agreed that the Respondent’s liability had been extinguished. Equally absent was evidence demonstrating that the unauthorized premiums had actually been recovered in full through the broker’s account. The Respondent’s claim therefore rested largely on an inference which, in the face of his own written admissions of liability, was insufficient to discharge the legal burden resting upon him. 44. With respect, the learned trial Magistrate approached the matter from the opposite direction. Instead of asking whether the Respondent had proved his entitlement to the refund, the court asked whether the Appellant had proved that it remitted the money to First African Insurance. That effectively shifted the legal burden from the claimant to the Defendant. 45. The Respondent was not entitled to judgement merely because the Appellant failed to demonstrate remittance. He was first required to establish that the Appellant’s contractual entitlement to retain the money had come to an end. 46. Having independently re-evaluated the evidence, I am unable to agree with the conclusion reached by the trial court. The Respondent did not establish, on a balance of probabilities, that the Appellant became legally obliged to refund the deducted amount. Consequently, the first issue is answered in the negative. 47. The second issue for determination is whether the trial court misdirected itself in its appreciation of the evidence and the law, particularly with regard to the burden of proof and the effect of the Appellant’s failure to file a counterclaim. 48. The Appellant faults the learned trial Magistrate for shifting the burden of proof and for holding against it the fact that it had not filed a counterclaim. Upon examining the impugned judgement, I find considerable merit in both complaints. 49. As already observed, the trial court concluded that because the Appellant had not demonstrated that it had remitted the disputed amount to First African Insurance, it had to refund the Respondent. That reasoning overlooked the elementary principle that it is the Plaintiff who must first establish the facts upon which his claim is founded before any evidential burden can arise on the part of the Defendant. The Appellant was entitled to resist the Respondent’s claim by demonstrating that no right to repayment had arisen. 50. The trial court further observed that the Appellant had not filed a counterclaim against the Respondent for the outstanding liability. With respect, that observation introduced an irrelevant consideration into the determination of the suit. A counterclaim is a cross-suit through which a Defendant seeks affirmative relief against a Plaintiff. Where a Defendant merely seeks dismissal of the Plaintiff's claim, no counterclaim is necessary. 51. *Order 7 Rule 7* of the *Civil Procedure Rules* contemplates a counterclaim only where a Defendant seeks to enforce an independent cause of action against the Plaintiff. The Appellant sought no such relief. It did not ask the trial court to enter judgement against the Respondent for the admitted debt. Instead, it simply asserted that the Respondent had failed to establish any entitlement to repayment. That defence was perfectly competent without a counterclaim. 52. The trial court therefore erred in treating the absence of a counterclaim as strengthening the Respondent’s case. Whether or not the Appellant elected to pursue recovery of the outstanding amount in separate proceedings had no bearing whatsoever on whether the Respondent had proved the claim pleaded in his plaint. 53. Equally problematic was the inconsistency apparent in the trial court's reasoning. While finding in favour of the Respondent, the court nevertheless reduced the amount claimed by deducting Ksh.50,000/- (the record elsewhere suggesting deductions of Ksh.60,000/- already recovered). That deduction implicitly recognized that recoveries had lawfully been made from the Respondent’s dues. 54. However, the judgement contains no coherent explanation reconciling that finding with the conclusion that the Appellant was nevertheless obliged to refund the balance. The reasoning is therefore internally inconsistent and unsupported by a proper analysis of the evidence. 55. I therefore find that the learned trial Magistrate misapprehended both the applicable law on the burden of proof and the legal significance of the Appellant’s defence. The court also failed to properly evaluate the Respondent’s own admissions and the documentary evidence acknowledging liability. The second issue is therefore answered in the affirmative. 56. The third issue for determination is whether the appeal is merited and what orders should issue. 57. Having found that the Respondent failed to establish his claim on a balance of probabilities and that the learned trial Magistrate misdirected herself in both law and fact, it necessarily follows that the judgement of the subordinate court cannot stand. 58. Upon my own independent evaluation of the entire record, I am satisfied that the Respondent did not prove that the Appellant became legally bound to refund the deducted amount merely because First African Insurance requested that he be released from liability. 59. The Respondent’s written acknowledgements of indebtedness remained uncontroverted, and the evidence relied upon to demonstrate the subsequent extinguishment of that liability fell short of the required standard of proof. 60. **DISPOSITION AND ORDERS.** 61. Consequently, the appeal succeeds. The judgement and decree of the trial court delivered on 7th May, 2025 cannot be sustained and are hereby set aside. They are substituted with an order dismissing the Respondent’s suit with costs. 62. As costs ordinarily follow the event under *Section 27* of the *Civil Procedure Act,* and no reason has been shown to depart from that principle, the Appellant shall have the costs of the suit before the subordinate court as well as the costs of this appeal. I assess the costs of this appeal at Ksh.40,000/-. 63. This file is hereby closed. DELIVERED (virtually), DATED & SIGNED this 23rd day of July, 2026. **JOE M. OMIDO** **JUDGE** FOR APPELLANT: **Mr. Oduor.** FOR RESPONDENT: No appearance. COURT ASSISTANTS: **Mr. Ngoge** & **Mr. Juma.**