https://new.kenyalaw.org/akn/ke/judgment/scc/2026/167

Lungaho v Nyamiobo (Claim E779 of 2026) [2026] SCC 167 (KLR) (17 July 2026) (Judgment) Neutral citation: [2026] SCC 167 (KLR) Republic of Kenya In the Milimani Small Claims Court Claim E779 of 2026 GW Kiamah, RM July 17, 2026 Between Linda Lungaho Claimant and Richard Nyamiobo Respondent Judgment 1.The claimant instituted this claim vide the statement of claim dated 1/1/2026 seeking judgment against the respondent for Kshs. 510,000/= on the basis she sent the respondent a friendly loan of Kshs. 500,000/= payable within a small period but a balance of Kshs. 490,000/= remained due as well as debt collection costs of Kshs. 20,000/= incurred by the claimant. 2.The respondent filed a response dated 29/1/2026 and admitted receiving the sum of Kshs. 500,000/= on 10/8/2024. He however denied that the same was a friendly loan, but instead payment for agency services rendered by Twinkle World Agency Limited to the claimant for a project in Naivasha between 7 - 10th October 2024. That the respondent was a director of the company and never acted in his personal capacity. That no debt existed and the claimant was attempting to unlawfully recover funds paid for services she had consumed. That the company had its own legal personality and the respondent could not be sued personally for a claim arising from the company’s commercial transactions. 3.The claim proceeded under Section 30 of The Small Claims Court Act and the claimant filed submissions dated 22/6/2026 whereas the respondent’s were dated 10/6/2026 and 11/2/2026. I have considered the submissions on record as well as the pleadings and documents before this court. The main issue for determination is whether the funds were sent to the respondent as a friendly loan, or payment for professional services. 4.The standard of proof in civil claims is on a balance of probabilities. See the Court of Appeal in Mumbi M'Nabea v David M. Wachira [2016] eKLR. 5.Sections 107, 108 and 109 of the Evidence Act, Chapter 80 of the Laws of Kenya places the burden of proof of a fact on the person who wishes the court to believe in the existence of such fact. 6.It was not in dispute that the respondent received the sum of Kshs. 500,000/= from the claimant. The issue in dispute was whether the same was a payment for services rendered, or a personal debt on the part of the respondent. 7.Though the claimant pleaded that the payment was a friendly loan advanced to the respondent, I do note that beyond proof of the transfer of funds, there was no loan agreement, acknowledgement of debt, repayment schedule, promise to repay, or any other documentary evidence demonstrating that the parties intended the payment to operate as a loan. 8.On the other hand, the respondent produced documentary evidence showing that there existed a professional engagement relating to the Giving Tuesday Project in Naivasha scheduled to take place from 7th to 10th October 2024. The correspondence produced by the parties demonstrates discussions concerning the project and the logistical arrangements associated with its implementation. 9.The respondent further produced a quotation issued by Twinkle World Agency Limited in the sum of Kshs. 750,000/= which expressly reflected a deposit of Kshs. 500,000/=. The amount reflected as the deposit corresponds with the amount that forms the subject of these proceedings. 10.The respondent further produced evidence indicating delivery of services in relation to the project. The materials on record include documentation relating to the Giving Tuesday event and other project-related logistics. The claimant herself produced documents related to the same project, including an agreement identifying her as a consultant and flight tickets relating to guests attending the event. 11.Rather than displacing the respondent's case, the claimant's own documents corresponded to the existence of a professional and commercial relationship connected to the Naivasha project. 12.I do note that the claimant subsequently filed further correspondence which indicated a demand for repayment. However, while the messages contain references to payment demands, there was no evidence establishing that the relevant telephone number was registered in the respondent’s name to establish that the demand was being made by the claimant to the respondent. I further note that there were registration records produced to identify the respondent as the user of the number from which the alleged acknowledgements or requests originated. As such, there was nothing to support the conclusion that the correspondence was made to the respondent. 13.Even then, such correspondence did not establish that the sum of Kshs. 500,000/= constituted a personal loan as opposed to funds paid in the course of the party’s professional dealings. 14.In the circumstances, I do find that the evidence before court overwhelmingly demonstrates the existence of a commercial arrangement connected to the Giving Tuesday Project and involving Twinkle World Agency Limited. The documentation produced consistently links the payment to the project and reflects the company as the service provider. The claimant did not produce evidence showing that the respondent assumed personal liability separate and distinct from that of the company. 15.I say so noting that it is trite that a limited liability company possesses a legal personality separate from its directors and shareholders. In the absence of evidence of fraud, personal guarantees, or circumstances justifying the lifting of the corporate veil, a director cannot ordinarily be held personally liable for obligations arising from contracts entered into by the company. 16.Having considered all the evidence placed before the court, I find that the claimant has failed to prove, on a balance of probabilities, that the payment of Kshs. 500,000/= was a friendly loan advanced to the respondent personally. The evidence before court instead supports the respondent’s position that the funds were paid as part of a commercial transaction involving Twinkle World Agency Limited and the Giving Tuesday Project in Naivasha. 17.Consequently, the respondent cannot be held personally liable for the amount claimed. In any case, there was evidence demonstrating that the services were delivered and as it is, the claimant has not formed any basis for a claim against the respondent’s company. 18.As such, I do find and hold that the claim lacks merit. Consequently, the same is dismissed. 19.The respondent is granted costs of the claim assessed at Kshs. 30,000/=. 20.The same shall become payable after the lapse of 30 days and such period shall act as stay of execution.It is so decreed. DATED AND DELIVERED AT NAIROBI VIA CTS THIS 17TH DAY OF JULY 2026HON. GLADYS W. KIAMAHRESIDENT MAGISTRATE/ADJUDICATOR