https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11667

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPELLATE DIVISION** **CIVIL APPEAL NO.E521 OF 2024** **KENNEDY WANINGU sued as official of** **ALLELUIA MINISTRIES INTERNATIONAL..……..………APPELLANT** **VERSUS** **UNICORE LIMITED…………….…….……………….……RESPONDENT** **JUDGMENT** **INTRODUCTION** 1. This appeal arises from the judgment of Hon. G. Simatwo, Adjudicator, in Milimani SCCCOMM No. E3846 of 2024 wherein the learned Adjudicator entered judgment in favor of the Respondent against the Appellant for the sum of KShs. 816,375, contractual interest at the rate of 15% per month from 10th April 2022, interest at court rate and costs. 2. The learned Adjudicator, however, directed that the aggregate amount recoverable, comprising the principal sum and contractual interest, should not exceed KShs. 1,000,000, being the pecuniary jurisdiction of the Small Claims Court. 3. Aggrieved by the judgment, the Appellant lodged the present appeal vide a Memorandum of Appeal dated 24th March 2024. 4. The Respondent, though substantially successful before the trial court, was dissatisfied with the limitation placed upon the contractual interest and lodged an Amended Cross-Appeal dated 26th April 2024 challenging the capping of the total award at KShs. 1,000,000. 5. The Court is therefore called upon to determine both the appeal against the finding of indebtedness and the cross-appeal relating to contractual interest and the pecuniary jurisdiction of the Small Claims Court. **THE APPEAL** 1. The Appellant raised seven grounds of appeal which, in substance, fault the learned Adjudicator for disregarding evidence of payments allegedly made to the Respondent. 2. In particular, the Appellant contends that it produced evidence relating to twenty-six (26) cheques issued to the Respondent; that the Respondent challenged only seven (7) of those cheques; and that the remaining nineteen (19) cheques were not disputed and ought therefore to have been taken into account in determining the balance, if any, due to the Respondent. 3. The Appellant consequently contends that the learned Adjudicator erred in finding that the entire sum of KShs. 816,375 remained outstanding without giving due consideration to the said payments and without adequately addressing the merits of its defence. **THE CROSS-APPEAL** 1. The Respondent's cross-appeal is confined to the learned Adjudicator's direction that the contractual interest together with the principal sum could not exceed KShs. 1,000,000. 2. The Respondent's position is that the principal claim of KShs. 816,375 was within the pecuniary jurisdiction of the Small Claims Court and that interest accruing thereon pursuant to the parties' contract ought not to have been capped merely because the accumulated principal and interest would exceed KShs. 1,000,000. 3. The Respondent therefore urges this Court to uphold the principal judgment but set aside the limitation imposed upon contractual interest. 4. Both the appeal and the Amended cross appeal were canvassed by way of written submissions. **APPELLANT’S CASE** 1. As at the time of writing this judgment the appellant had not filed its submissions. **RESPONDENTS CASE** 1. The respondent filed their submissions dated 22/09/2025 in which they regurgitated their lower court submissions and maintained that all the payments made had been made into the various 3 contracts between it and the appellant and that the only outstanding balance was for the contract dated 6th May 2021. They stated that each specific contract had a specific monthly installment i.e contract dated 6th May 2021, installments were for 100,000/=, contract dated 10th May 2021, installments were for kshs, 40,000/= and contract dated 21st May 2021 installments were for 97,600/= per month. The appellant mixed up those cheques issued from the last two contracts and claimed they were made for the first contract which was not the case as each been banked into its own rightful account and acknowledged. They relied on several authorities to support their case. **ISSUES FOR DETERMINATION** 1. Having considered the record, the grounds of appeal, the amended cross-appeal and the respondent’s submissions as filed, I discern the following issues for determination: 2. ***Whether the grounds raised in the main appeal fall within the appellate jurisdiction of this Court under section 38 of the Small Claims Court Act;*** 3. ***Whether the learned Adjudicator erred in law in her treatment of the evidence relating to the twenty-six cheques and, in particular, the nineteen allegedly unchallenged cheques;*** 4. ***Whether the learned Adjudicator erred in finding that KShs. 816,375 remained owing to the Respondent;*** 5. ***Whether the Small Claims Court was entitled to cap the aggregate amount recoverable as principal and contractual interest at KShs. 1,000,000; and*** 6. ***What orders should issue on the appeal and cross-appeal.*** **JURISDICTION OF THIS COURT ON APPEAL** 1. Before considering the evidence concerning the cheques, this Court must first address the scope of its appellate jurisdiction. 2. Section 38(1) of the Small Claims Court Act provides that: ***"A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law."*** 1. Subsection (2) further provides that the decision of the High Court on such an appeal shall be final. 2. The jurisdiction of this Court is therefore materially narrower than its jurisdiction in an ordinary first appeal from a subordinate court. This Court is not at liberty to conduct an unrestricted rehearing of factual disputes merely because a party is dissatisfied with the conclusions reached by the Adjudicator. 3. The distinction between a question of fact and a question of law was discussed by the Supreme Court in ***Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others* [2014] eKLR**. The Court recognized that a question of law may arise where the issue concerns the construction of a statute, the legal effect of established facts, or where a factual conclusion is unsupported by evidence or is unreasonable or perverse. 4. Similarly, in ***Zacharia Okoth Obado v Edward Akong'o Oyugi & 2 Others [2014] eKLR,*** the Supreme Court explained that a question of law concerns the correct application of the law to established facts whereas a question of fact ordinarily requires an appellate court to reconsider the truth or falsity of disputed facts or recalibrate the probative value of evidence. 5. It follows that this Court cannot, under the guise of an appeal on a point of law, reopen the entire evidentiary contest concerning the twenty-six cheques and substitute its own view merely because another conclusion might have been possible. 6. Nevertheless, where it is demonstrated that the trial court disregarded material and undisputed evidence, applied an incorrect burden of proof, reached a conclusion unsupported by any evidence, or drew from established facts a conclusion that no reasonable tribunal properly directing itself could reach, an error of law may arise. 7. I shall consider the Appellant's grounds within those limits. **THE CHEQUES AND ALLEGED PAYMENTS** 1. The central complaint by the Appellant is that the learned Adjudicator failed to accord due consideration to twenty-six cheques produced in evidence. 2. According to the Appellant, the Respondent disputed only seven of the cheques. The Appellant consequently argues that the remaining nineteen cheques ought to have been treated as payments made towards liquidation of the debt. 3. The question that arises is whether production of a cheque, without more, necessarily establishes payment. 4. A cheque is a bill of exchange drawn upon a banker and payable on demand. Its issuance is evidence of a transaction, but the legal effect to be attached to it depends upon the purpose for which it was issued and whether payment under the cheque was ultimately effected. 5. In ***Paresh Bhimsi Bhatia v Mrs Nita Jayesh Pattni, Civil Appeal No. 199 of 2003***, the Court of Appeal, in considering sections 55 and 73 of the Bills of Exchange Act, recognised the legal obligation assumed by the drawer of a cheque upon due presentation. 6. More importantly for present purposes, the existence of a cheque is not in every case synonymous with proof that the underlying debt was discharged. Where payment is disputed, the party asserting discharge must place before the Court sufficient evidence from which payment can reasonably be inferred. The Appellant herein failed to provide any bank statement or additional cheques to show that he had indeed paid cleared payment in all the three contracts. 7. Sections 107, 108 and 109 of the Evidence Act embody the general principle that he who alleges must prove. The Court of Appeal in ***Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & Another* [2005] 1 EA 334** explained that although the legal burden rests upon the party asserting the affirmative, an evidential burden may shift depending upon the evidence placed before the Court. 8. The Respondent bore the initial legal burden of proving the debt claimed. Once the underlying indebtedness was established, however, the assertion that the debt had subsequently been extinguished or reduced through particular payments was a matter which the Appellant was required to establish to the requisite civil standard. 9. In that regard, there is an important distinction between proof that a cheque was issued and proof that the cheque was honored and its proceeds received by the creditor. 10. The Court of Appeal recently considered documentary proof of payment in ***Pravinchandra Jamnadas Kakad v Habayaweza Mawazo Anne (Suing as the Legal Representative of the Estate of Lucas Oluoch Mumia) [2025] KECA 1757 (KLR),*** where copies of cheques read together with the relevant bank statements were held to constitute sufficient evidence of amounts paid. 11. The Court must further distinguish between a failure to challenge the existence or issuance of a cheque and an admission that the cheque was honored. Those are separate propositions. 12. The Appellant's grounds, as framed, invite this Court principally to reassess the probative value of the twenty-six cheques and arrive at a different factual conclusion from that of the learned Adjudicator. 13. Such an exercise would ordinarily fall outside the jurisdiction conferred upon this Court by section 38(1) of the Small Claims Court Act. 14. I have nevertheless considered whether the impugned conclusion was so unsupported by the evidence, or whether the Adjudicator applied such an erroneous legal test to the evidence, as to convert the complaint into a question of law. 15. Upon considering the record, I am not persuaded that the Appellant has established such an error. 16. The Appellant was required, having asserted payment, to establish that the sums represented by the cheques had in fact been received by the Respondent for the specific contract for screen 1 and not for the other two subsequent contracts or otherwise discharged the indebtedness. The mere production of copies of cheques, without corresponding evidence demonstrating clearance or receipt where payment remained in issue, did not necessarily discharge that evidential burden. 17. Consequently, the fact that the Respondent specifically challenged seven cheques did not automatically constitute an admission that the remaining nineteen had been honored. An admission must be clear and unequivocal and cannot readily be inferred merely from the absence of a specific challenge to every individual document. 18. I therefore find no error of law demonstrated in the Adjudicator's conclusion that the Appellant had not proved that the debt of KShs. 816,375 had been discharged. 19. Grounds 1 to 7 of the appeal consequently fail. **THE CROSS-APPEAL: CONTRACTUAL INTEREST** 1. I now turn to the more substantial question raised by the cross-appeal. 2. The learned Adjudicator awarded contractual interest at the rate of 15% per month from 10th April 2022 but directed that the aggregate of the principal sum and contractual interest should not exceed KShs. 1,000,000. 3. There are two distinct questions involved. First, whether the contractual rate itself was enforceable. Second, assuming that it was enforceable, whether the jurisdictional ceiling of the Small Claims Court limited the aggregate monetary award. 4. As regards the first question, courts generally respect the freedom of parties to contract. 5. In ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another* [2001] eKLR**, the Court of Appeal reiterated the principle that a court cannot rewrite a contract for parties and that parties are ordinarily bound by the terms of their bargain unless a recognized legal ground exists for intervention. 6. Similarly, in ***Ajay Indravadan Shah v Guilders International Bank Ltd* [2002] 1 EA 269**, the Court of Appeal held that where parties have agreed upon a contractual rate of interest, the Court will ordinarily give effect to that rate unless the rate is shown to be illegal, unconscionable or fraudulent. 7. Accordingly, the mere fact that the contractual rate of 15% per month is high does not, without an appropriate legal and evidential foundation challenging the clause, entitle the Court to substitute a different bargain. 8. The trial court evidently found the contractual provision binding and awarded interest in accordance with it. There is no appeal before me specifically challenging the validity or enforceability of the contractual rate itself. 9. The question is therefore whether the learned Adjudicator was correct in holding that recovery of that contractual interest had to cease once the aggregate award reached KShs. 1,000,000. **PECUNIARY JURISDICTION OF THE SMALL CLAIMS COURT** 1. Section 12(3) of the Small Claims Court Act provides in mandatory terms that: ***"The pecuniary jurisdiction of the Court shall be limited to one million shillings."*** 1. The statutory ceiling is jurisdictional. It is not merely procedural. Jurisdiction is conferred by the Constitution or statute and cannot be expanded by agreement, waiver or acquiescence of the parties. The classic statement remains that. Tn ***Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd [1989] KLR 1*** that jurisdiction is fundamental and a court cannot take another step once it determines that it lacks jurisdiction. 2. The question, however, is whether the statutory ceiling applies only to the principal sum claimed at the time of institution of proceedings or to the total monetary award made by the Small Claims Court. 3. This question has received judicial consideration.In ***Ng'ang'a v Gitahi, Civil Appeal E272 of 2022 [2024] KEHC 1078 (KLR)***, the High Court considered a claim involving contractual interest where the principal and accrued contractual interest exceeded the Small Claims Court's pecuniary limit. The Court held that although the contractual interest was recoverable, the total amount recoverable as principal and interest was limited to KShs. 1,000,000 by section 12(3) of the Small Claims Court Act. 4. That decision is directly relevant to the question presently before this Court. The statutory language does not qualify the KShs. 1,000,000 ceiling by stating that it applies exclusively to principal sums while permitting unlimited contractual interest over and above that amount. 5. Had Parliament intended interest to be excluded from the prescribed pecuniary limit, it could expressly have so provided. The Court cannot read into section 12(3) words which the Legislature did not enact. 6. There is an additional jurisdictional consideration. If contractual interest accruing before or after judgment could without limit be added to an award of the Small Claims Court, a claim instituted for a sum within the statutory ceiling could ultimately result in an award several times greater than the jurisdiction Parliament conferred upon that Court. If the 15% monthly penalty is broken down into a standard commercial daily rate (15% ÷ 30 days = **0.5% per day**) In this case the amount that had accrued as at the time of filing this claim on the 29/5/23 was:- **Principal**: KShs. 816,375 **Accrued Penalty (408 days x 0.5%)**: KShs. 1,665,405 **Total Amount Owing**: **KShs. 2,481,780** 1. That would effectively enlarge the monetary jurisdiction of the Small Claims Court by private contract. 2. Parties cannot by stipulating a high rate of interest confer upon a court a pecuniary jurisdiction which Parliament withheld from it. 3. The Respondent's contractual entitlement to interest and the Court's jurisdiction to award it are therefore separate questions. A contractual right may exist between the parties, but its enforcement in a particular forum remains subject to the jurisdiction conferred upon that forum by law. The Respondent was well aware of this limit before subjecting itself to the court’s jurisdiction. 4. The decision in ***Francis v Nairobi South Hospital Limited*, Civil Appeal E462 of 2025 [2026] KEHC 1897 (KLR)**, although dealing with a waiver of sums exceeding the prescribed limit, similarly underscores that the jurisdiction of the Small Claims Court remains circumscribed by section 12(3). 5. I am therefore persuaded by the reasoning in ***Ng'ang'a v Gitahi*** that the aggregate monetary award capable of enforcement pursuant to a judgment of the Small Claims Court cannot exceed the statutory pecuniary limit. 6. It follows that although the learned Adjudicator was entitled to recognise and apply the contractual rate of interest, she equally had a duty to ensure that the decree issued by the Court remained within its statutory pecuniary jurisdiction. 7. The learned Adjudicator therefore committed no error of law in directing that the aggregate of the principal sum and contractual interest should not exceed KShs. 1,000,000. 8. The Respondent's amended cross-appeal consequently fails. **AN OBSERVATION ON THE EFFECT OF THE INTEREST CLAUSE** 1. Before leaving this issue, it is useful to clarify the effect of this finding. The Court is not rewriting the parties' contract or holding that the contractual rate of 15% per month is necessarily invalid. Rather, the Court is recognizing the distinction between a contractual obligation and the jurisdiction of the forum invoked to enforce that obligation. 2. The Respondent elected to pursue its claim before the Small Claims Court, a statutory court whose pecuniary jurisdiction is expressly limited to KShs. 1,000,000. Having invoked that jurisdiction, the Respondent cannot simultaneously insist that the Court issue a decree whose monetary value exceeds the statutory limit. 3. The jurisdictional limitation arises from statute and prevails over the parties' private contractual arrangements. **DISPOSITION** 1. In the result, I find that the Appellant has failed to demonstrate an error of law warranting interference with the learned Adjudicator's finding that the sum of KShs. 816,375 was due and owing to the Respondent. 2. To the extent that the grounds of appeal seek a fresh evaluation of the probative value of the twenty-six cheques and a substitution of this Court's factual conclusions for those of the trial court, they fall outside the appellate jurisdiction conferred by section 38(1) of the Small Claims Court Act. 3. Insofar as the grounds can be construed as alleging an error of law arising from the treatment of the evidence, I find that no such error has been demonstrated. The production of the cheques did not, without proof that the disputed sums were actually paid, necessarily establish discharge of the debt. 4. On the cross-appeal, I find that although the Respondent was entitled to the contractual interest awarded by the trial court, enforcement of that entitlement through the Small Claims Court remained subject to the pecuniary jurisdiction prescribed by section 12(3) of the Small Claims Court Act. 5. The learned Adjudicator was therefore correct in limiting the aggregate amount recoverable under the decree to KShs. 1,000,000. 6. Consequently, the following orders issue: 7. ***The Appellant's appeal is hereby dismissed.*** 8. ***The Respondent's Amended Cross-Appeal dated 26th April 2024 is hereby dismissed.*** 9. ***The judgment of Hon. G. Simatwo in Milimani SCCCOMM No. E3846 of 2024 awarding the Respondent KShs. 816,375 together with contractual interest at 15% per month from 10th April 2022 is hereby upheld, subject to the aggregate amount recoverable as principal and contractual interest not exceeding KShs. 1,000,000.*** 10. ***In view of the fact that both the appeal and cross-appeal have failed, each party shall bear its own costs of the appeal and cross-appeal.*** 11. Orders accordingly. **DATED, SIGNED AND DELIVERED AT NAIROBI THIS 28TH DAY OF JULY 2026.** **HON. L.P.KASSAN JUDGE**