Gulf African Bank Ltd v Mwasahani & another (Civil Appeal E538 of 2025) [2026] KEHC 7194 (KLR) (Civ) (20 May 2026) (Judgment)

Gulf African Bank Ltd v Mwasahani & another (Civil Appeal E538 of 2025) [2026] KEHC 7194 (KLR) (Civ) (20 May 2026) (Judgment) Neutral citation: [2026] KEHC 7194 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E538 of 2025 AN Ongeri, J May 20, 2026 Between Gulf African Bank Limited Appellant and Said Athman Mwasahani 1st Respondent Asfam Consultancy Company Limited 2nd Respondent (Being an appeal from the Ruling of Hon. M.W. Njagi (SPM) in Milimani (MCCC E598 (B) of 2022 delivered on 28th April 2025) Judgment 1.The trial court made an order on 28/4/2025 to the effect that by the time the court took over this matter for hearing on 13/3/2025, the predecessor had made an order on 5/2/2024 that the court had no jurisdiction to award the amount sought. 2.The said order was reiterated on 23/4/2025. 3.The Court further noted that the said order had not been appealed against or reviewed. 4.The trial court further said that it would not sit on appeal over orders of its colleague. 5.The appellant has appealed against the said order on the following grounds:-i.That the learned Magistrate erred in law and fact by failing to consider that the court as a Senior Principal Magistrate had pecuniary jurisdiction over the matter.ii.That the learned Magistrate erred in law and fact by failing to consider that the suit was for the recovery of principal sum of Ksh 14,774,545.32 which is well within the court’s pecuniary limits.iii.That the learned Magistrate erred in law and fact by finding that the suit was for recovery of a sum of Ksh. 24,630,993.32 as opposed to Ksh14,774,545.32.iv.That the learned Magistrate erred in law and fact by failing to find that the total amount recoverable under the Guarantee and indemnity is limited to the principal sum of Ksh.9,856,448.00 only.v.That the learned Magistrate erred in law by failing to evaluate the plaint and evidence on record, thus, arriving at an erroneous finding.vi.That the learned Magistrate erred in law by misapprehending and misapplying the law on loan guarantees, guarantor’s debt obligations and liabilities. 6.The parties filed written submissions as follows; The appellant submitted that the pecuniary jurisdiction of the Magistrates Court in Kenya is governed by Section 7 of the Magistrates' Courts Act and Section 4 of the Civil Procedure Act. 7.The provisions provide that the Magistrate court has pecuniary jurisdiction to hear and determine civil matters where the value of the subject matter does not exceed Kenya Shillings Twenty Million (Kshs. 20,000,000.00) and the Appellant, Gulf African Bank Ltd, filed this suit herein in the Chief Magistrate's Court on the premise that the claim fell squarely within this statutory limit. 8.It was the appellants submission therefore that the trial court erred when it found that the cumulative figure of Kshs. 24,630,993.32 (Prayer (a) + Prayer (b)) formed the basis of the court’s pecuniary jurisdiction. 9.The appellant argued that the calculation overlooked the fundamental principle that the Appellant's claim is for a single, principal debt owed by the 1st Respondent, and the 2nd Respondent's liability is merely secondary and limited by the guarantee. 10.The total sum recoverable from both Respondents, collectively, cannot exceed the principal debt owed by the 1st Respondent. 11.The recoverable sum is Kshs. 14,774,545.32, which is the total outstanding debt owed by the principal borrower, the 1st Respondent which is well below the jurisdictional limit of Kshs. 20,000,000.00 for the Magistrates Court. 12.Thus, the lower court had the requisite pecuniary jurisdiction. 13.The appellant argued that a guarantor's liability is co-extensive with that of the principal debtor, but the creditor cannot recover more than the full extent of the principal debt from both parties combined. 14.The liability of the 2nd Respondent is limited, in this case, to Kshs. 9,856,488.00, which is the guaranteed amount. 15.Suing the principal debtor for the full amount (Kshs. 14,774,545.32) and the guarantor for the guaranteed amount (Kshs. 9,856,488.00) in the same suit does not aggregate the claim for the purpose of establishing the court's jurisdiction. 16.The quantum that determines jurisdiction is the maximum amount the Plaintiff is legally entitled to recover from the Defendants, which is the principal debt of Kshs. 14,774,545.32. 17.By aggregating the distinct, yet related, prayers, the lower court effectively treated the claim as seeking recovery of two independent debts, which is not the case. 18.The claims against the 1st and 2nd Respondents are alternative claims for the same underlying liability, limited to the principal debt. 19.In support the appellant cited KCB Bank Kenya Limited v Charingcross Communication Agency & another [2025] KEHC 12291 (KLR), where the High Court held that while a guarantor generally becomes jointly and severally liable with the principal debtor, such liability is limited to the guaranteed amount. 20.The Court emphasized that the inclusion of an indemnity clause allows the creditor to pursue the guarantor independently, but the total claim recoverable remains the amount of the principal debt or the guaranteed amount, whichever is lower. 21.The Respondents did not file any submissions in this appeal. 22.The issues for determination in this appeal are as follows;i.Whether the trial magistrate erred in finding that the court lacked pecuniary jurisdiction by aggregating the sums claimed against the principal debtor and the guarantor.ii.Whether the total recoverable sum for jurisdictional purposes is the principal debt of Kshs 14,774,545.32 or the aggregate of Kshs 24,630,993.32. 23.The sole issue in this appeal is whether the Magistrates’ Court had pecuniary jurisdiction to hear Milimani MCCC E598(B) of 2022. 24.Under Section 7(1) of the Magistrates’ Courts Act, a Senior Principal Magistrate has jurisdiction where the value of the subject matter does not exceed Kshs 20,000,000. 25.The appellant claimed Kshs 14,774,545.32 from the 1st Respondent as principal debtor and Kshs 9,856,488.00 from the 2nd Respondent as guarantor, sums which total Kshs 24,630,993.32 when added. 26.The trial magistrate held that the aggregate exceeded his jurisdiction, relying on the earlier order of 5 February 2024. 27.Where a creditor sues a principal debtor and a guarantor jointly, the liability is co-extensive since the guarantor’s obligation is secondary and limited to the guaranteed amount, and the creditor cannot recover more than the principal debt from both combined. 28.The test for jurisdiction is the maximum amount the plaintiff is legally entitled to recover, not the arithmetic sum of each prayer. 29.In the current case, the appellant cannot recover Kshs 14,774,545.32 from the 1st Respondent and also recover Kshs 9,856,488.00 from the 2nd Respondent separately. 30.The total decretal sum cannot exceed the principal outstanding debt of Kshs 14,774,545.32. 31.The claim against the 2nd Respondent is an alternative or additional source of recovery for the same debt, capped at the guaranteed amount. 32.Consequently, the “value of the subject matter” for jurisdictional purposes is Kshs 14,774,545.32, which falls below the Kshs 20,000,000 limit. 33.The trial magistrate erred in aggregating the prayers. The finding of lack of jurisdiction is therefore set aside. 34.The appeal is allowed. The ruling of 28 April 2025 is hereby set aside, and the suit (MCCC E598(B) of 2022) is remitted back to the Chief Magistrate’s Court for hearing on merit before a different magistrate. 35.Each party shall bear its own costs of this appeal. 36.Orders to issue accordingly. DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 20TH DAY OF MAY, 2026......................A. N. ONGERIJUDGEIn the presence of:Nadio for the AppellantNo appearance for the RespondentUbah – Court Assistant