Matrix Wealth Limited v Kioko (Commercial Appeal E036 of 2024) [2026] KEHC 10218 (KLR) (9 July 2026) (Judgment)

Matrix Wealth Limited v Kioko (Commercial Appeal E036 of 2024) [2026] KEHC 10218 (KLR) (9 July 2026) (Judgment) Neutral citation: [2026] KEHC 10218 (KLR) Republic of Kenya In the High Court at Thika Commercial Appeal E036 of 2024 BW Murunga, J July 9, 2026 Between Matrix Wealth Limited Appellant and Stephen Kioko Respondent (Being an appeal against the Judgment and Decree of Hon. M. Kamau, Resident Magistrate, dated and delivered on 31st October 2024 in Thika SCCCOMM E1899 of 2023) Judgment 1.This appeal arises from the judgment and decree of the Small Claims Court at Thika (Hon. M. Kamau, Resident Magistrate) delivered on 31st October 2024. In the impugned decision, the learned trial magistrate entered judgment in favour of the Respondent (who was the Claimant in the primary suit) for the principal sum of Kshs. 374,214/= together with costs and interest, and concurrently dismissed the Appellant's Counterclaim of Kshs. 100,000/=. 2.Dissatisfied with the entirety of that determination, the Appellant lodged the instant appeal vide a Memorandum of Appeal dated 14th November 2024. The Appellant raises several grounds of appeal which principally challenge the trial court's evaluation of the evidence, the standard of proof applied to the dispute, and the consequential award of special damages. Factual Background 3.The substratum of the dispute before the trial court stems from a labour-and-material construction contract executed by the parties on or about 16th September 2023. Under the terms of the agreement, the Appellant was engaged by the Respondent to construct the foundation (Phase One) of a four-bedroom flat-roof maisonette at an agreed total cost of Kshs. 800,000/=. The Respondent testified that he discharged his obligations fully by paying the contractual sum in full, alongside an additional sum of Kshs. 50,000/= for ancillary adjustments, bringing the total financial consideration to Kshs. 850,000/=. 4.The Respondent’s case was predicated on the assertion that the Appellant executed the foundation works in a defective, negligent, and unworkmanlike manner, rendering the structure unstable and requiring extensive remedial intervention. 5.To prevent further structural failure, the Respondent engaged an alternative contractor, Mr. James Nyutu, who had previously served as the Appellant’s foreman, under a separate 'Foundation Correction Works Contract' to rectify the structural errors. The Respondent consequently sought a total of Kshs. 374,214/=, representing the quantified remedial expenses and associated consequential losses. 6.In its defence, the Appellant (the Respondent at the time) vehemently denied liability, contending that the foundation was constructed professionally according to the provided architectural designs. The Appellant further averred that the Respondent failed to engage necessary professionals such as a structural engineer and quantity surveyor. Alongside its defence, the Appellant filed a Counterclaim for Kshs. 100,000/=, alleging unpaid fees for the provision of architectural and structural designs. The Appeal And Parties' Submissions 7.The appeal was canvassed by way of written submissions. The Appellant contended that the trial magistrate fundamentally misconstrued the scope of the contract by conflating Phase One (foundation) expenses with Phase Two (first-floor slab) costs. It argued that the award of Kshs. 374,214/= erroneously absorbed a sum of Kshs. 198,750/= for materials and Kshs. 60,000/= for labour related to the first-floor slab rather than the foundation itself. The Appellant further challenged the trial court's reliance on the testimony of an allegedly unqualified witness (Mr. Nyutu) and asserted that the special damages had not been strictly proved. 8.In response, the Respondent submitted that the appeal is structurally flawed as it invites this Court to impermissibly re-evaluate factual findings, which runs counter to the statutory limitations governing appeals from the Small Claims Court. The Respondent maintained that he had fully discharged his burden of proof on a balance of probabilities, establishing that the Appellant's breach directly necessitated the remedial outlays. He further argued that the trial court was entirely justified in dismissing the Appellant's Counterclaim for lack of substantiating evidence. Issues For Determination 9.Having carefully analyzed the pleadings, the record of appeal, the trial court's judgment, and the rival submissions, the following issues present themselves for determination:a.Whether the appeal properly raises questions of law to warrant the intervention of this Court under Section 38 of the Small Claims Court Act.b.Whether the trial court erred in its evaluation of the evidence and the application of the standard of proof regarding liability and the award of special damages.c.Whether the trial court erred in law in dismissing the Appellant's Counterclaim. Analysis And Determination Issue (a): The Scope of Appellate Intervention 10.It is an established principle of procedural law that appeals from the Small Claims Court to the High Court are strictly circumscribed by statute. Section 38(1) of the Small Claims Court Act (No. 2 of 2016) explicitly mandates 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." 11.This statutory jurisdiction is designed to safeguard the core philosophy of the Small Claims Court, which is to provide an expeditious, inexpensive, and final resolution of minor commercial disputes. As observed by the High Court in Okech v Faulu Microfinance Bank Ltd (Civil Appeal E001 of 2024) [2026] eKLR, the appellate jurisdiction under Section 38 is intentionally limited; factual dissatisfaction with the trial court's assessment does not constitute a ground of appeal, and a decision will only be disturbed on law if it is shown to be completely irrational or unsupported by any evidence on record. 12.Consequently, an appellate court must accord appropriate deference to the factual findings of the trial court, which enjoyed the distinct advantage of hearing, seeing, and evaluating the demeanor of the witnesses firsthand. This Court will not interfere with such findings unless it is demonstrated that the trial court applied incorrect legal principles, ignored material evidence, or arrived at a conclusion so perverse that no reasonable tribunal, properly directing its mind to the law and facts, could have reached it. A mere divergence of opinion on how a factual matrix should be interpreted does not yield a reversible error of law. Issue (b): Liability, Standard of Proof, and Special Damages 13.In civil litigation, the statutory burden of proof rests squarely on the party who asserts a fact, as codified under Sections 107 and 108 of the Evidence Act (Cap 80). The standard of proof is that of a balance of probabilities. This threshold was clearly illustrated in the classic dictum of Lord Denning in Miller v Minister of Pensions [1947] 2 All ER 372, where it was observed:“That degree is well settled. It must carry a reasonable degree of probability... If the evidence is such that the tribunal can say: 'we think it more probable than not', the burden is discharged, but, if the probabilities are equal, it is not." 14.This standard requires the trial court to weigh the competing versions of the dispute and determine which narrative is more compelling and aligned with the objective evidence. In the present matter, the Respondent tendered a cogent body of evidence including the primary contract, detailed photographs documenting the defective structural alignment of the foundation, and WhatsApp correspondence where the Appellant’s director acknowledged structural shortcomings and the misdirection of project funds. 15.The trial court evaluated these elements against the Appellant’s general denial and concluded that the Respondent’s version was more credible. This Court finds no legal error or perversity in the trial magistrate’s conclusion that the Appellant breached its contractual obligations. 16.Regarding the quantum of damages, the Appellant contends that the sum of Kshs. 374,214/= constitutes special damages that were not strictly proved, specifically attacking the inclusion of material and labour costs which it argues pertained to a subsequent construction phase. The legal principle governing special damages is firmly settled in Kenyan jurisprudence. In Hahn v Singh [1985] KLR 716, the Court of Appeal re-affirmed that special damages must not only be specifically pleaded but must also be strictly proved with as much particularity as the circumstances permit. 17.A review of the lower court record indicates that the Respondent pleaded the sum of Kshs. 374,214/= and produced corroborative documentary evidence, including the 'Foundation Correction Works Contract' executed with Mr. James Nyutu, relevant receipts, and supporting bank statements. While the Appellant argued that certain line items in the remedial bill related to the first-floor slab, the evidence established that the structural integrity of the entire building had been compromised by the defective foundation. 18.Consequently, the remedial works required sequential reinforcement and structural modifications extending into the immediate horizontal slab to stabilize the building safely. The trial court was satisfied that these outlays were a direct, foreseeable consequence of the Appellant's substandard workmanship under the principle of causation. The determination of whether a specific cost is remedial or independent is a question of fact, and since it was anchored on valid documentary exhibits, the threshold of strict proof was fully satisfied. Issue (c): The Counterclaim 19.The Appellant sought a sum of Kshs. 100,000/= by way of a Counterclaim for architectural design and professional services. It is a fundamental rule of pleadings that a Counterclaim is a separate and distinct cross-suit, and the Defendant assumes the burden of establishing the claim independently. As emphasized by the Court of Appeal in National Social Security Fund Board of Trustees v Sifa International Limited [2016] eKLR, a party asserting a claim for specific professional fees must present clear proof of an agreement, an itemized invoice, or evidence of performance to justify an award. 20.In the proceedings in the trial court, the Appellant failed to tender any independent evidence, such as a written design agreement, approved structural invoices, or testimony from certified professionals, to substantiate the value or delivery of the alleged services. A court of law cannot make awards based on bare assertions or unsupported pleadings. In the total absence of such proof, the learned trial magistrate was entirely justified in law in dismissing the Counterclaim. Determination 21.In the final analysis, this Court finds that the Appellant’s grounds of appeal constitute a thinly veiled attempt to have this Court re-evaluate the factual findings of the trial court, a path explicitly barred by Section 38 of the Small Claims Court Act. The trial magistrate properly directed her mind to the applicable legal principles governing contract enforcement, the burden of proof, and the quantification of special damages. The findings are neither perverse nor erroneous in law. 22.On the question of costs, Section 27 of the Civil Procedure Act (Cap 21) mandates that costs follow the event unless the court otherwise directs for good reason. The Respondent having successfully defended the judgment of the lower court is entitled to the costs of this appeal. Final Orders 23.Accordingly, the Court orders as follows:a.The Appellant's Appeal dated 14th November 2024 lacks merit and is hereby dismissed in its entirety.b.The Judgment and Decree of the Small Claims Court at Thika (Hon. M. Kamau, Resident Magistrate) delivered on 31st October 2024 in Suit No. SCCCOMM E1899 of 2023 is hereby upheld and affirmed.c.The costs of this Appeal are awarded to the Respondent. It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF JULY, 2026.BENARD WAFULA MURUNGAJUDGE OF THE HIGH COURTDelivered via virtual platform in the presence of:Gachari for the Appellant instructed by Waweru NyamburaMichael Wanyama for the Respondent instructed by Kipkorir WanyamaKevin Babu — Court Assistant