https://new.kenyalaw.org/akn/ke/judgment/scc/2026/35

Mogo Auto Llimited v Nyumbah (Commercial Case E1939 of 2025) [2026] SCC 35 (KLR) (2 June 2026) (Judgment) Neutral citation: [2026] SCC 35 (KLR) Republic of Kenya In the Small Claims Court at Thika Commercial Case E1939 of 2025 JM Mwenda, RM June 2, 2026 Between mogo Auto limited Claimant and Aziz Daniel Odoyo Nyumbah Respondent Judgment A. Introduction. 1.Debt, when left unattended, can quietly grow in the shadows into amounts that are mind- boggling. However, while courts exist to enforce obligations willingly entered into by parties, they equally bear the duty of ensuring that debt recovery does not become an instrument of oppression through the unchecked accumulation of interest and charges. 2.The matter before this Court is fairly straightforward. Through a Statement of Claim dated 27th October, 2025, the claimant seeks judgment against the respondent in the sum of Kshs. 677,381/= together with interest and costs of the suit. 3.The claimant alleges that on 7th June, 2022, it entered into an asset financing agreement with the respondent whereby it advanced him a loan facility of Kshs. 400,000/= and, as security, the logbook of Motor Vehicle Registration Number KBU 973X was jointly registered in the names of the claimant and the respondent. 4.The claimant further states that the respondent made payments amounting to Kshs. 299,369/= before defaulting and that the security allegedly went missing, thereby frustrating its ability to exercise its right of sale and recover the outstanding sums. 5.Consequently, the claimant contends that the respondent presently owes it Kshs. 677,381/= 6.The respondent filed a Response to the Claim dated 3rd February, 2026 wherein he admits obtaining a loan facility of Kshs. 400,000/=from the claimant and making repayments amounting to Kshs. 299,369/=, leaving, according to him, a balance of Kshs. 100,631/=. He denies owing the claimant Kshs. 677,381./= 7.The respondent argues that the claimant is now demanding a total of Kshs. 976,750/= in order to fully redeem a loan of Kshs. 400,000/= and contends that the claimant is not permitted to levy interest beyond permissible rates. 8.He further argues that he never agreed to any fines or penalties under the agreement and therefore prays that the claim for Kshs. 677,381/= be dismissed. 9.The matter proceeded for hearing by way of viva voce evidence. The claimant called one witness, its Customer Operations Manager, who adopted his witness statement, produced the claimant’s documents and, upon cross-examination, testified that the claimant charged interest at the rate of 2.4% per month. He further testified that the respondent owed the claimant Kshs. 677,381/=and confirmed that the claimant still retained the original logbook. 10.The respondent equally testified and substantially repeated the contents of his response to the claim and therefore this Court shall not unnecessarily reproduce the same. 11.During cross-examination, he admitted defaulting in repayment and stated that he was willing to pay Kshs. 200,000/= within thirty-five (35) days from the end of May. 2026. B. Issues For Determination. 12.Having carefully analyzed the pleadings, evidence and submissions by parties during the hearing, this Court finds that the following issues arise for determination:a.Whether the claimant proved its claim.b.Whether the in duplum rule applies to the claimant.c.Whether the claimant is entitled to the reliefs sought. 13.On the first issue, it is not disputed that the claimant advanced a loan facility of Kshs. 400,000/= to the respondent. The dispute revolves around the interest charged, penalties imposed and additional sums claimed. 14.The evidence on record demonstrates that by the time the respondent defaulted, he had already paid Kshs. 299,369/=. The claimant testified through its Operations manager that interest was charged at the rate of 2.4% per month on a flat rate basis over a period of thirty-six (36) months. 15.A simple mathematical calculation demonstrates that by the expiry of the thirty-six months, the respondent would have paid interest amounting to approximately 86.4%, exclusive of additional charges contained in the agreement. 16.In my view, the interest charged on the loan is disproportionate and closely borders on being oppressive. This Court is alive to the principle that it is ordinarily not the role of courts to rewrite contracts freely entered into by parties. Nevertheless, courts should not shy away from interfering where contractual terms become exploitative, unconscionable or oppressive as was held by the Court of Appeal in National Bank Of Kenya Ltd Vs Pipeplastic Samkolit (k) Ltd, Civil Appeal No. 95 OF 1999 where the Court stated:“A court of law cannot rewrite a contract with regard to interest as parties are bound by the terms of their contract. Nevertheless, courts have never been shy to interfere with or refuse to enforce contracts which are unconscionable, unfair or oppressive due to procedural abuse..." 17.On the issue of penalties and fines, during the hearing, the claimant’s witness was unable to point this Court to the specific clause providing for penalties in the documents filed before Court. This Court equally scrutinized the loan agreement and was unable to identify any clause expressly providing for such penalties. 18.Consequently, regarding the claim for penalties, this Court finds that the claimant failed to discharge its burden of proof. 19.Regarding the claim for unpaid principal, the claimant seeks Kshs. 492,132/=. This Court is unable to understand how the claimant arrived at this figure. The principal amount advanced was Kshs. 400,000/= together with application fees of USD 342.2 and loan processing fees of USD 170 which as per the loan agreement were to be added to the principal. 20.Even after converting the said sums using prevailing exchange rates at the time since the loan seems to have been tabulated in dollars, the figures do not appear to correspond with the amount claimed. During the hearing, this Court was not taken through the calculations leading to the said figure and therefore declines to speculate. 21.On the issue of the monitoring fees, and the insurance fees, although pleaded, the court was not taken through the sums as contained in the statement of claim to know how the sums pleaded were arrived at, it is not for the court to speculate or tabulate for itself as that would be prejudicial to the respondent. On that note those claims fail. 22.On whether the in duplum rule applies to the claimant, this Court relies on the decision of Mabeya J in Mugure & 2 Others V Higher Education Loans Board (petition E002 OF 2021), where he stated:“In this regard, I hold that being of public interest, the in duplum rule will be applicable for those lending monies as it does to banks." 23.Consequently, this Court finds that the in duplum rule applies to the claimant and therefore the total interest recoverable shall not exceed the principal amount advanced. 24.On the final issue of whether the claimant is entitled to the reliefs sought, this Court finds that the interest charged was exorbitant. An effective interest rate of 86.4%, exclusive of additional charges, is nothing short of exploitative. 25.Nevertheless, this Court equally acknowledges that the respondent remains indebted to the claimant and therefore the claimant cannot be denied recovery altogether. 26.Having taken note that Ksh 400,000/= was advanced and Ksh 299,367/= has been paid by the respondent, the court makes the final disposition as follows.a.Judgement is hereby entered in favour of the claimant as against the respondent for Ksh 100,631b.That interests on ksh 100,631/= shall accrue at court’s rate from the date of the last payment of the loan by the respondent until payment in full.c.That the claimant is granted costs of ksh 20,000/=d.There shall be 30 days stay of execution.Orders accordingly. DATED, SIGNED AND DELIVERED VIRTUALLY AT THIKA THIS 2ND DAY OF JUNE 2026.HON. JAMLICK MURIITHI MWENDATHIKA SMALL CLAIMS COURTDate: 2026-06-02 16:42:52