Shaiyah v Ondego & 3 others (Suing as Trustees of the Agricultural Society of Kenya) (Civil Appeal E337 of 2024) [2026] KEHC 10003 (KLR) (Civ) (9 July 2026) (Judgment)

 **REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL DIVISION** **CIVIL APPEAL NO. E337 OF 2024** **HALIMA SHAIYAH………………………………………………………..APPELLANT** **VERSUS** **DAVID KELI KIILU** **BROWN ONDEGO** **ISAAC NJOGU** **NELSON N. OGOMBE** **(SUING AS TRUSTEES OF THE AGRICULTURAL** **SOCIETY OF KENYA)............................................................................RESPONDENTS** *(Being an appeal from the judgment and decree of Hon. B.M. Cheloti, Principal Magistrate, delivered on 9th February 2024 in the Chief Magistrate's Court at Nairobi, Milimani Commercial Courts, in Civil Suit No. 2383 of 2015)* **JUDGMENT** **Introduction and Background** 1. This is a first appeal from the judgment and decree of Hon. B.M. Cheloti, Principal Magistrate, delivered on 9th February 2024 in Milimani Commercial Courts Civil Suit No. 2383 of 2015. 2. By that judgment, the trial court entered judgment for the Respondents against the Appellant in the sum of Kshs. 300,000/-, struck out the Appellant’s counterclaim dated 8th July 2015 for lack of merit, and made no order as to costs. 3. By a plaint dated 28th April 2015, the Respondents, suing as trustees of the Agricultural Society of Kenya (“the Society”), pleaded that on or about 29th October 2013 the Appellant requested the Society to advance her the sum of Kshs. 300,000/- to defray her personal medical expenses; that the Society cashed a cheque at Kenya Commercial Bank, Kipande Branch, and deposited the money into the Appellant’s account at Standard Chartered Bank of Kenya, Muthaiga Branch; and that the Appellant has since refused, neglected and/or declined to repay it. 4. The Appellant, who at all material times was the elected Chairperson of the Society’s Nairobi Branch, resisted the suit by a statement of defence and counterclaim dated 8th July 2015. She denied ever requesting or applying for the alleged loan or executing any document in respect of it. 5. Her case was that, as a sitting branch chairperson, she was entitled to a medical insurance cover sourced and paid for by the Society of up to Kshs. 1,000,000/- in inpatient treatment; that it was the Society’s responsibility to renew and keep that cover current; that at the material time she was admitted in hospital for surgery when, unbeknown to her, the cover had been allowed to lapse; that her total medical bill came to Kshs. 757,967/-, towards which the Society contributed Kshs. 300,000/-. 6. She therefore counterclaimed Kshs. 457,967/- being the balance she met from her own pocket, together with interest and costs. 7. By their reply to defence and counterclaim dated 13th August 2015, the Respondents joined issue and averred that the Appellant was not covered at the time as she had declined, neglected or refused to fulfil the conditions set out in the cover. 8. At the hearing, PW1, Scolar Chepkoech Koskey, an accounts assistant with the Society in 2013, adopted her witness statement dated 19th July 2022 and produced the Society’s documents as exhibits. In cross-examination she stated that the Appellant had requested an advance and that money was never advanced without someone signing against it; in re-examination, that the advance for the medical bill was made on the instructions of the Chief Executive Officer. 9. PW2, Samuel Otieno, an office messenger and bank agent, testified that he was issued with a cheque for Kshs. 300,000/- drawn in his name which he banked into the Appellant’s account; that the Appellant was admitted in hospital at the material time; that the Society provided medical cover for its employees; and that chairpersons of branches were not employees of the Society. 10. The Appellant, DW1, adopted her witness statement dated 9th March 2022 and produced fifteen exhibits. She testified that she received money from the Society while in hospital and did not know what it was for; that she was later informed that it was a contribution from the Society; and that she never refunded it. 11. In the judgment now impugned, the learned magistrate framed the issues as whether or not the Kshs. 300,000/- was an advance and whether the remedies sought were merited. At paragraph 16 of the judgment she observed: *“I am of the opinion it was vital that Mr. Batram Muthoka would have been a witness in this suit as he would have shed light on the conversation that transpired between himself and the Defendant and the subsequent intended purpose of the Kshs. 300,000/- sent to the Defendant. He would have clarified whether or not the said money had been an advance or whether it was contribution towards the Defendant’s medical bill. In the absence of his testimony, the Court will be guided by the Society’s modus operandi.”* 1. She then held, at paragraph 18, that: *“Sections 107 and 109 of the Evidence [Act] places the onus upon the Defendant to prove that the Kshs. 300,000/- had been contribution towards her medical bills and not an advance. In the absence of such supporting documents, the Court is inclined to find that the Kshs. 300,000/- deposited into the Defendant's bank account was an advance and as such, was recoverable from the Defendant.”* 1. On that basis the trial court declined to delve into the question whether the Appellant was entitled to a medical cover, struck out the counterclaim for lack of merit, and ordered the appellant to repay the Kshs. 300,000/-. 2. Aggrieved, the Appellant preferred this appeal on ten grounds set out in the memorandum of appeal dated 8th March 2024. 3. The grounds compress into five complaints: that the Respondents never proved a legally valid and enforceable loan; that liability was found without the Respondents calling their one material witness; that the burden of proof was shifted to the Appellant; that the counterclaim was neither mapped out as an issue nor determined on its merits but was dismissed offhand, contrary to Article 50(1) of the Constitution; and that on the evidence, the money was the Society’s contribution towards a hospital bill which ought to have been defrayed by an insurance cover the Society negligently allowed to lapse. **The Submissions** 1. For the Appellant, Mbugua Mureithi & Co. Advocates submitted that the burden of proving that the Kshs. 300,000/- was a loan lay on the Respondents and never shifted; that the Respondents’ exhibits were unilateral, internally generated documents none of which bears the Appellant’s signature, and were generated on dates when the Appellant lay in a hospital bed after surgery; that PW1 conceded in cross-examination that the Society never advanced money to borrowers without the borrower signing for it; and that the only person with direct knowledge of the alleged request and its terms, the Society’s Chief Executive Officer Mr. Batram Muthoka, was never called, whereupon the learned magistrate impermissibly filled the void with an assumed modus operandi of which no evidence had been led. 2. Counsel relied on *Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] eKLR* on the ingredients of an enforceable contract, and pointed out that the Society’s own Financial Manual, clause 4.4.4, provided both a repayment window and a right of recovery against a member’s allowances which was never invoked; that no demand was made for over a year; and that the money was first characterised as a debt in a notice displayed at the Society’s Annual General Meeting of 27th February 2015, by which time relations between the parties had soured and litigation was pending. 3. Counsel further submitted that the Respondents’ reliance on *Samuel Kamau Macharia v Kenya Commercial Bank Ltd [2003] eKLR* on unjust enrichment was misplaced, that decision having been reversed on appeal in *Kenya Commercial Bank Limited & another v Samuel Kamau Macharia & 2 others [2008] eKLR*. 4. On the counterclaim, the Appellant submitted that a counterclaim is a suit in its own right which must be determined on its own merits, citing *County Government of Kwale & 2 others v Rahimkhan & 5 others [2023] KECA 308 (KLR)* and *Obora v Rift Valley Railways [2025] KECA 581 (KLR)*; that her entitlement to a medical cover was conceded by PW1 at paragraph 7 of her witness statement and was never controverted in the reply to defence; that the Respondents’ own exhibits 5 and 6 show that the obligation to renew the cover and remit premiums lay with the Society and that the relevant correspondence was addressed to the Society’s CEO and not to her; and that her medical receipts totalling Kshs. 757,967/- were produced without any contest. 5. She urged the Court to allow the appeal, dismiss the suit, and enter judgment on the counterclaim with costs. 6. For the Respondents, Lilan & Koech Associates, LLP supported the judgment. Counsel submitted that a contract need not be in writing and may be implied from conduct, relying on *Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130*; that the Appellant’s acceptance and use of the funds, coupled with the demand for repayment, demonstrated a binding agreement; that the failure to call a material witness is not automatically fatal where other credible evidence exists, citing *Edward Mariga through Stanley Mobisa Mariga v Nathaniel David Schulter & Another [1979] eKLR*; and that the learned magistrate correctly applied the law on the burden of proof, the legal burden remaining constant while the evidential burden shifted once a prima facie case was established, relying on *Muruingu Kanoru Jeremiah v Stephen Ungu M'mwarabua [2015] eKLR*. 7. On the counterclaim, the Respondents submitted that the Appellant proved no contract, policy or legal relationship entitling her to the cover or to indemnity; that renewal of the cover was conditional upon the Appellant undergoing a medical assessment which she failed to undertake; and that promissory estoppel is a shield and not a sword and cannot found a cause of action, citing *Combe v Combe [1951] 2 KB 215* and *Benjamin Ayiro Shiraku v Fozia Mohammed [2012] eKLR*. 8. They urged the Court to dismiss the appeal in its entirety and uphold the trial court’s judgment with costs. **Issues for Determination** 1. Having considered the record of appeal, the grounds of appeal and the rival submissions, two issues fall for determination: 2. **Whether the Respondents proved, on a balance of probabilities, that the Kshs. 300,000/- was a loan or recoverable advance; and** 3. **Whether the learned magistrate erred in striking out the counterclaim and, if so, whether the counterclaim was established on the evidence.** **Analysis and Determination** 1. This being a first appeal, the Court’s mandate is to re-evaluate, re-assess and re-analyse the evidence on the record afresh and reach its own independent conclusions, bearing in mind that it neither saw nor heard the witnesses. In **Selle & another v Associated Motor Boat Co. Ltd [1968] EA 123**, the Court of Appeal for East Africa stated: *“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.”* **(i) Whether the Respondents proved that the Kshs. 300,000/- was a recoverable advance** 1. The starting point is the incidence of the burden of proof. Section 107(1) of the Evidence Act, Cap 80 Laws of Kenya, provides that *“whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist”*, while section 108 places the burden of proof in a suit on *“that person who would fail if no evidence at all were given on either side.”* The Court of Appeal in **Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & another [2005] 1 EA 334** put it thus: *“As a general proposition under section 107(1) of the Evidence Act, Cap 80, the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue.”* 1. Similarly, in **Kirugi and another v Kabiya & 3 others [1987] KLR 347**, the Court of Appeal held that the burden is always on the plaintiff to prove his case on a balance of probabilities. 2. In the present case, receipt of the Kshs. 300,000/- was never in dispute; what divided the parties was the character of that payment. It was the Respondents who asserted the affirmative, that the payment was a loan repayable on demand. That assertion they were bound to prove, and the burden of proving it remained on them throughout the trial. The Appellant’s competing characterisation of the payment as a contribution could only be called into service once a prima facie case of a loan had first been made out. 3. What, then, was the evidence of a loan? The Respondents’ exhibits comprised a cheque drawn in the name of PW2, a cash withdrawal slip, a deposit slip and an internal payment voucher, every one of them a document generated by the Society itself, and none bearing the Appellant’s signature. 4. On the unchallenged evidence, the documents came into existence on 29th and 31st October 2013, when the Appellant lay in a hospital bed at the Aga Khan Hospital following surgery. There was no loan application, no loan agreement, no acknowledgment of debt, and no evidence of any terms as to repayment. The significance of this vacuum is heightened by PW1’s own concession in cross-examination that *“we have never advanced money without them signing anywhere.”* 5. Measured against the Society’s own stated practice, the total absence of the Appellant’s signature on any document was not a neutral circumstance; it told against the very case the Respondents sought to establish. 6. The only person who could have spoken directly to the alleged request and its terms was the Society’s CEO on whose instructions PW1 and PW2 acted. He was not called, and no explanation was offered for his absence. The learned magistrate herself appreciated, at paragraph 16 of the judgment, that his testimony was vital to establishing whether the money was an advance or a contribution. 7. Having made that finding, the trial court was not at liberty to fill the resulting evidentiary void by resort to an assumed “modus operandi” of the Society, of which no evidence whatsoever had been led. A court of law acts upon evidence, not upon conjecture. 8. PW1 and PW2 were mere conduits who executed instructions; their evidence as to the purpose of the payment was, at its highest, hearsay. When the trial court proceeded, at paragraph 18, to invoke sections 107 and 109 of the Evidence Act to demand that the Appellant disprove a loan which the Respondents had not yet proved, it inverted the burden of proof. 9. Section 109 places the burden of proving a particular fact on the person who wishes the court to believe in its existence; the particular fact in issue, that the payment was a loan, was the Respondents’ assertion, not the Appellant’s. 10. Nor could the claim survive scrutiny under the ordinary law of contract. In **Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] eKLR**, the Court of Appeal, citing its earlier decision in**William Muthee Muthami v Bank of Baroda [2014] eKLR,** restated that: *“In the law of contract, the aggrieved party to an agreement must, in addition, prove that there was offer, acceptance and consideration. It is only when those three elements are available that an innocent party can bring a claim against the party in breach.”* 1. No offer, acceptance or agreed terms were established here, whether in writing, orally or by conduct. Indeed, the conduct of the Respondents after the payment is telling. PW1’s own witness statement placed the alleged advance under clause 4.4.4 of the Society’s Financial Manual, which provides that *“Council Members are entitled to advance, not exceeding the aggregate annual allowances. Upon receipt, the Council member shall be required to repay the Society within 6 months from the date of advance… The Society will also have a right to recover the advance from the member’’s allowances in case of default.”* 2. If the payment were truly an advance under that clause, the Appellant fell into default in April 2014 and the Society held a ready self-help remedy against her allowances. It never invoked it. No demand was made for over a year. The money first surfaced as a “debt” in a notice displayed at the entrance of the Society’s Annual General Meeting on 27th February 2015, some sixteen months after the payment, at a time when, on the record, the relationship between the parties had soured, the Appellant had been suspended from her elected office, and litigation between them in High Court Civil Case No. 161 of 2014 was pending. 3. Such equivocal conduct is more consistent with a contribution belatedly re-characterised than with a loan made and pursued in the ordinary course of the Society’s affairs. The Respondents’ invocation of *Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130* does not assist them: before conduct can supply the place of writing, the conduct must unequivocally point to the agreement alleged. This conduct did not. 4. There remains the Respondents’ fallback of unjust enrichment. Both at trial and before this Court, the Respondents leaned on the High Court decision in *Samuel Kamau Macharia v Kenya Commercial Bank Ltd [2003] eKLR*. That decision was, however, reversed by the Court of Appeal in *Kenya Commercial Bank Limited & another v Samuel Kamau Macharia & 2 others [2008] eKLR*, where Tunoi, JA (as he then was), while adopting the classic statement of Lord Wright in *Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32* that: ***“it is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep”*, emphasised the limits of the doctrine:** ***“Restitution is also denied where the benefit was conferred: (i) pursuant to a valid common law, equitable or statutory obligation owed by the claimant to the defendant … (iv) by the claimant acting voluntarily or ‘officiously’… Moreover, I am of the firm view that payment of a just debt and the receipt or acceptance of a valid claim cannot at all constitute unjust enrichment.”*** 1. The Respondents’ difficulty is that their own witness placed the payment squarely within an obligation the Society itself acknowledged. At paragraph 7 of her witness statement, PW1 stated: *“Regarding the medical Insurance cover, I am aware that the Plaintiff was at the material time implementing, through AAR Insurance, an enhanced medical cover inclusive of all staff and Chairmen.”* A payment made towards the hospital bill of a sitting chairperson who, on the Society’s own showing, fell within a cover the Society was implementing, and made while she lay in hospital without any request or acknowledgment from her, bears the hallmarks of a voluntary payment in performance of a perceived obligation. 2. Drawing the threads together on the first issue: the Respondents’ case rested on unsigned unilateral documents, hearsay as to the purpose of the payment, the unexplained absence of the one witness the trial court itself considered vital, and post-payment conduct inconsistent with the existence of a debt. 3. Upon my own re-evaluation of the evidence, the Respondents did not discharge the burden of proving, on a balance of probabilities, that the Kshs. 300,000/- was a loan or recoverable advance. The learned magistrate arrived at the contrary conclusion only by misdirecting herself on the burden of proof and by acting on an assumed modus operandi that was not in evidence. Those findings cannot stand. **(ii) Whether the counterclaim was properly struck out, and whether it was established** 1. A counterclaim is not an appendage of the Plaintiff's suit; it is a suit in its own right. Order 7 rule 13 of the Civil Procedure Rules, 2010 provides that *“if in any case in which the defendant sets up a counterclaim the suit of the plaintiff is stayed, discontinued or dismissed, the counterclaim may nevertheless be proceeded with.”* 2. It is also trite, as held in **Galaxy Paints Co. Ltd v Falcon Guards Ltd [2000] 2 EA 385**, that *the issues for determination in a suit generally flow from the pleadings*. The counterclaim was pleaded, evidence was led on it, and it was addressed in the parties’ submissions; yet at paragraph 13 of the judgment the learned magistrate isolated the Respondents’ claim as the only issue for determination, and at paragraph 19 she expressly declined to “delve into the issue of whether or not the Defendant was entitled to a medical cover” before striking the counterclaim out. 3. That course was impermissible. In **County Government of Kwale & 2 others v Rahimkhan & 5 others [2023] KECA 308 (KLR)**, the Court of Appeal held: *“A counterclaim is a case in its own right, completely different from the plaintiff's case and it will fall or succeed on its own merits; it is a form of cross suit in which the parties transpose roles, whereby the defendant becomes the plaintiff and the plaintiff the defendant…”* 1. and, faulting the striking out of a counterclaim without a hearing on the merits, continued: *“In our view, in the circumstances of this case, it was not open to the learned trial judge to have taken up the issue of striking out the appellants' counterclaim suo moto when none of the parties addressed him on the same. By so doing the learned trial judge was in error and his decision occasioned a miscarriage of justice. It cannot stand.”* 1. The same vice afflicts the judgment under appeal. The Appellant led evidence on her counterclaim; it was incumbent on the trial court to determine it on its merits, to allow it or to dismiss it, rather than to strike it out offhand while expressly declining to consider its substance. The failure to do so denied the appellant a fair hearing of her cross-suit, contrary to Article 50(1) of the Constitution, and occasioned a miscarriage of justice. 2. What, then, is the appropriate course? Section 78(1)(a) of the Civil Procedure Act, Cap 21, empowers this Court, on appeal, to determine a case finally. The dispute has been in the courts since 2015; the evidence on the counterclaim is fully on the record; and remitting the matter for retrial would only visit further delay and expense on parties whose litigation is already a decade old. I shall therefore proceed to determine the counterclaim on the evidence. 3. The Appellant’s entitlement to the medical cover is, in truth, not in serious contest. It was pleaded at paragraph 11 of the defence and counterclaim; the reply to defence joined issue only on whether the Appellant had met the conditions for renewal, not on the entitlement itself; and PW1’s witness statement, at paragraph 7 quoted above, conceded that the cover the Society was implementing through AAR Insurance was inclusive of all staff and chairmen. 4. The Appellant produced her AAR membership card (D. Exh. 1), showing membership from 2nd May 2012 and bearing no expiry date. The Respondents’ argument that only employees of the Society were entitled to medical cover is contradicted by their own witness, and in any event PW2 confirmed that branch chairpersons were not employees, which is precisely why the cover was expressed to extend to chairmen in addition to staff. 5. The remaining question is to whom the lapse of the cover is attributable. The Respondents pleaded that renewal was conditional upon the Appellant undergoing medical tests which she refused or neglected to undertake. He who asserts must prove. The only material relied upon was the Respondents’ supplementary exhibits 5 and 6, an email of 20th February 2013 from one Samuel Kiama of AAR and a letter of 21st March 2013 from Losagi Insurance Brokers Ltd. Both were addressed to the Society’s Chief Executive Officer, not to the Appellant; both disclose that outstanding premium remittances by the Society were themselves an impediment to renewal; and neither was ever shown to have been brought to the Appellant’s attention. 6. No letter, email or oral communication requiring the Appellant to undergo any test was proved. Seven months passed between the brokers’ letter and 28th October 2013, when the Appellant, wheeled into hospital for surgery, learnt for the first time, on a hospital bed, that her cover had lapsed. 7. On this record, the assertion that the Appellant was the author of the lapse is unproved; the evidence points the other way, to the Society, which had procured the cover, dealt exclusively with the insurer and brokers, and controlled the remittance of premiums. 8. The Respondents’ resort to *Combe v Combe [1951] 2 KB 215* – that *“equitable estoppel does not create new causes of action where none existed before; it only prevents a party from insisting on his strict legal rights when it would be unjust to allow him to enforce them”*, is answered shortly. 9. The Appellant does not wield estoppel as a sword. Her claim is not founded on a bare, unperformed promise. The cover existed; it had been procured by the Society and had subsisted from 2012; the Society assumed responsibility for maintaining it for its sitting chairpersons. Having assumed that responsibility, the Society owed the Appellant a duty to exercise reasonable care to renew the cover or, at the very least, to alert her that it had lapsed before she was exposed. It did neither. 10. The breach exposed the Appellant to precisely the loss the cover existed to prevent, and the loss was eminently foreseeable. Duty, breach, causation and damage are all established. 11. As to quantum, the Appellant pleaded her total medical bill of Kshs. 757,967/- as special damages and strictly proved it by receipts (D. Exhs. 2 to 9) which were never challenged in cross-examination or in submissions. 12. The Society contributed Kshs. 300,000/-, leaving a balance of Kshs. 457,967/- which the Appellant met from her own pocket. The counterclaim is proved to that extent. 13. Interest is a matter of discretion under section 26(1) of the Civil Procedure Act, and this being a liquidated sum incurred and pleaded in 2015, the justice of the case is met by awarding interest at court rates from the date the counterclaim was filed. **Disposition** 1. The Appellant has succeeded both in resisting the suit and on her counterclaim. In the result, the appeal succeeds and the following orders issue: a) The appeal is allowed. b) The judgment and decree of Hon. B.M. Cheloti, Principal Magistrate, delivered on 9th February 2024 in Milimani CMCC No. 2383 of 2015 are set aside in their entirety. c) Judgment is entered for the Appellant against the Respondents on the counterclaim in the sum of Kshs. 457,967/-. e) The sum in (c) shall attract interest at court rates from 9th July 2015, the date of filing of the counterclaim, until payment in full. f) The Appellant shall have the costs of this appeal and of the proceedings in the trial court. 1. It is so ordered. **Dated and delivered at Nairobi this 9th Day of July, 2026.** **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_** **BENARD WAFULA MURUNGA** **JUDGE OF THE HIGH COURT** **Delivered on virtual platform in the presence of:** *In the presence of:* *Mbugua Mureithi instructed for the Appellant (N/A)* *Ms Wabwire instructed by Lilan & Koech for the Respondents* *Kevin Babu - Court Assistant*