New Titanic Jacaranda General Spares v Nasongo (Commercial Case E071 of 2025) [2026] KEMC 256 (KLR) (7 July 2026) (Judgment)

New Titanic Jacaranda General Spares v Nasongo (Commercial Case E071 of 2025) [2026] KEMC 256 (KLR) (7 July 2026) (Judgment) Neutral citation: [2026] KEMC 256 (KLR) Republic of Kenya In the Malaba Law Courts Commercial Case E071 of 2025 AZ Ogange, RM July 7, 2026 Between New Titanic Jacaranda General Spares Claimant and Diana Purity Nasongo Respondent Judgment 1.Vide a statement of claim dated 7th May 2026 and filed in court on 8th May 2026 the Claimant prays for judgment in its favor for the sum of Kshs. 488,411/= together with costs and interest from 30th April 2026 when the same fell due. 2.The circumstances leading to the filing of this case are that on diverse dates between 1st November 2025 and 3rd February 2026 the Respondent working for the Claimant as an Accountant/Internal Auditor misappropriated the company’s funds amounting to Kshs. 275,701/= prompting the Claimant to incur an additional expense of Kshs. 130,000/= for external auditing to ascertain the loss therein. That despite the Respondent undertaking to liquidate the sums therein in three monthly installments, she has failed to do so and the Claimant seeks the reliefs as enumerated in the Statement of Claim. 3.The suit is opposed vide the Respondent’s Statement of Response dated 22nd May 2026 denying misappropriation of funds and further denying owing the Claimant any money. That if at all any audit was done, the costs should not be borne by the Respondent. The undertaking is denied and the jurisdiction of the court is also and it is averred that this is purely a labor court matter. 4.This matter came up for hearing on 17th June 2026 of both the Claimant’s and Respondent’s case where the Claimant’s Director one Stephen Kamau Nganga testified as CW1 and the Auditor one Alarcon Kepha testified as CW2. The Respondent testified on her own behalf. 5.At the close of the Respondent’s case, parties were granted leave to file submissions and the court reserved the matter for judgment on 7th July 2026. Both counsel for the Claimant and the Respondent have filed submissions which I have read and considered. 6.Having considered the pleadings filed by parties, evidence tendered and the submissions on record, there are preliminary issues arising for determination. The Respondent raised the issue that the Claimant lacked a board resolution authorizing the institution of these proceedings. The court notes that the earlier position, as espoused in the case of Bugerere Coffee Growers Ltd v. Sebaduka & Another [1970] E.A. 147 treated such a resolution as mandatory for purpose of commencing suit. However prevailing jurisprudence, both persuasive and local has since shifted from that rigid position. The current legal position is that the absence of a board resolution at the time of filing is not in itself fatal to the suit, so long as the company subsequently ratifies the action or demonstrates authority to prosecute the claim. In so holding I am guided by the Court of Appeal decision in Arthi Highway Developers Limited v West End Butchery Limited & 6 others [2015] KECA 816 (KLR) where the Court held as follows:-44.The submission that there ought to have been a resolution to authorize the filing of the suit in the name of the company appears to have emanated from a decision of the Uganda High Court which has been followed and applied in this country for a long time; Bugerere Coffee Growers Ltd v Sebaduka & Anor(1970) 1 EA 147.The court in that case held:-“When companies authorize the commencement of legal proceedings, a resolution or resolutions have to be passed either at a company or Board of Directors’ meeting and recorded in the minutes, but no resolution had been passed authorizing the proceedings in this case. Where an advocate has brought legal proceedings without authority of the purported plaintiff the applicant becomes personally liable to the defendants for the costs of the action.”45.To their credit, the appellant’s Advocates have cited another authority from the Supreme Court of Uganda decided in April 2002, confirming that the principle enunciated in theBugerere case has since been overruled by the Uganda Supreme court. The authority is Tatu Naiga & Emporium vs. Virjee Brothers LtdCivil Appeal No 8 of 2000.The Uganda Supreme Court endorsed the decision of the Court of Appeal that the decision in theBugerere case was no longer good law as it had been overturned in the case of United Assurance Co. Ltd v Attorney General: SCCA NO.1 of 1998.Thelatter case restated the law as follows:-“…. it was now settled, as the law, that, it does not require a board of directors, or even the general meeting of members, to sit and resolve to instruct Counsel to file proceedings on behalf and in the names of the Company. Any director, who is authorized to act on behalf of the company, unless the contrary is shown, has the powers of the board to act on behalf of that Company.”The decision has since been applied in Kenyan courts, for example, in Fubeco China Fushun v Naiposha Company Limited & 11 others[2014] eKLR.46.It was also asserted before us by Mr. Newton Mwangi, and it was not strongly rebutted, that the procedural issue was unsuccessfully raised before Mbogholi-Msagha J. before the hearing of the suit in the High Court and there was no interlocutory appeal against the decision of that court. We have indeed seen the relevant Ruling of the High court made on 3rd July 2009. The Attorney General for his part made submissions on other procedural defects which appear nowhere in the Memorandum of appeal and are therefore contrary to Rule 104 of the Court of Appeal Rules 2010. We decline to consider those submissions.For the above reasons we find no merit in the procedural challenge and accordingly reject that ground of appeal. 7.Accordingly, this court finds that want of a board resolution does not render the claim incompetent and the objection on that score fails. 8.The second preliminary issue that arises is whether this court has the requisite jurisdiction to hear and determine this matter or whether this matter falls within the jurisdiction of the employment and labor relations court. In the case of Maisha Mapya Kenya Foundation Limited v Shikuku & another ([2025] KEELRC 761), the Court held as follows: -17.In this instant case, the Respondents were the Claimant’s employees who were allegedly involved with the misappropriation of funds amounting to Kshs.63,201,897.27/=. The 1st Respondent resigned while the 2nd Respondent was terminated by the 1st Respondent and then filed a claim for unfair termination in Nakuru Chief Magistrate MCELRC No. 146 of 2023.18.The 1st Respondent resigned from his employment on 9th May 2023 and the 2nd Respondent’s employment was terminated on 3rd March 2023.This claim was filed on 5th July 2024. By then the Respondents had no employee relationship with the claimant.Therefore, their case cannot be said to fall under Section 12 of Employment and Labour Relations Court Act.19.Further, the claim is for special damages for money apparently stolen by the two Respondents during their term of employment.This is a suit that should be in the High Court and clearly not this court. This would be better tried in a Civil court.20.The court agrees with the Respondent’s Preliminary objection that this court has no jurisdiction to hear this claim. 9.Accordingly, it is the finding of the court that it is seized with the requisite jurisdiction to hear and determine this matter. The remaining issue for determination therefore is whether the Claimant proved its claim and the extent of liability if any, against the Respondent. 10.The Respondent admitted executing the undertaking dated 3rd February 2026. Her attempt to deny liability on the grounds of forgery and alleged non-involvement in the alleged misappropriation was not supported by any documentary evidence including the alleged report made to the police or any extract of an occurrence book. No documentation was provided to show that at the time of misappropriation the Respondent was on medical leave and had undergone a surgical procedure as alleged. Mere allegations, without proof cannot displace a written undertaking voluntarily executed. 11.The small claims court act has no provision for duress, forgery and/or coercion and it therefore follows that we revert to the Civil Procedure Rules. The civil procedure rules under Order 2 rule 10(1) of the Civil Procedure Rules provides that a party who relies on duress, coercion, undue influence and like defences must plead them with particularity. It provides as follows:Subject to sub rule 2, every pleading shall contain necessary particulars of every claim, defence or other matter pleading including, without prejudice to the generality of the foregoing-Particulars of any misrepresentation, fraud, breach of trust, willful default or undue influence on which the party pleading relies. 12.The Court of Appeal in Mohamed Ahmed Abdun & another v Mini Bakeries (MSA) Limited MSA CA Civil Appeal No. 88 of 2018 [2019] eKLR went at length to explain the meaning of duress, as follows: 25.The editors of Chitty on Contracts, 13th edition, volume 1 note at paragraph 7-003, that a contract which has been entered as a result of duress may be avoided by the party who was threatened.Duress is broadly defined in Black’s Law Dictionary, 8th edition as:“a threat of harm made to compel a person to do something against her will or judgment”and strictly, as:“the physical confinement of a person or the detention of a contracting party’s property.” 26.In Nabro Properties Limited vs. Sky Structures Ltd (above) this Court adopted an extract from Chesire & Fifoot’s Law of Contract, 8th edition as a correct statement of legal duress sufficient to vitiate an agreement, that:“Duress at common law, or what is sometimes called legal duress, means actual violence or threats to violence to the person i.e, threats calculated to produce fear or loss of life or real harm.” 27.In Pao On vs. Lau Yiu Long [1980] A.C. 614 to which counsel on both sides referred, the Privy Council while accepting that economic duress might be recognized in principle in law insisted:“… that the basis of such recognition is that it must amount to a coercion of will, which vitiates consent. It must be shown that payment made or the contract entered into was not a voluntary act.” 28.In Lynch vs. D.P.P. of Northern Ireland [1975] A.C. 653 Lord Wilberforce expressed that while duress does not destroy the will, for example to enter into a contract, it prevents the law from accepting what has happened as a contract valid in law. In the same case, the court stated that duress does not literally deprive a person affected of all choice but leaves the person affected with a choice between evils. In effect, as noted by the editors of Chitty on Contracts the basis of duress is a combination of illegitimate pressure and absence of practical choice. 29.In the recent decision in John Mburu vs. Consolidated Bank of Kenya [2018] eKLR this Court echoed the words of the Privy Council in Pao On vs. Lau Yiu Long (above) that in determining whether duress is established,“Duress, whatever form it takes, is a coercion of the will so as to vitiate consent. Their Lordships agree that in a contractual situation commercial pressure is not enough. There must be present some fact on which could in law and be regarded as coercion of his will so as to vitiate his consent…In determining whether there was coercion of will such that there was no true consent it is material to enquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy, whether he was independently advised; and whether after entering the contract he took steps to avoid it.” 13.This court cannot re write contracts for parties nor relieve a party from a bargain freely entered into unless vitiating factors such as fraud, duress or misrepresentation are specifically pleaded and strictly proven which was not the case here. 14.Consequently, the undertaking for Kshs. 275,701/= with interest of 30% being Kshs. 82,710/= is found valid and enforceable. On the claim for the auditor’s fees amounting to Kshs. 130,000/=, the Respondent averred that if at all the Claimant conducted an audit the same was done on its own volition and was in the cause of doing his own business. The Claimant relied on a document bearing the title “Final Zero-Tolerance Theft Warning and Undertaking” and produced as an exhibit before this court which provided that the Respondent shall be held liable for all incidental costs including that of audit in the event of theft, fraud and dishonesty. The expense was specifically pleaded in the Statement of Claim and proved by way of a cheque and supported by the evidence of CW2. It is therefore the court’s finding that this expense was proven by the Claimant. 15.The upshot of my findings therefore is that:-a.Judgment be and is hereby entered for the Claimant against the Respondent for the sum of Kshs. 488,411/=b.Interest on (a) from the date of filing of suit until payment in full; andc.Costs of the suit assessed at Kshs. 35,000/=. JUDGMENT DATED, SIGNED AND DELIVERED VIRTUALLY AT MALABA SMALL CLAIMS COURT THIS 7TH DAY OF JULY 2026.A.Z. OGANGER.M/ADJUDICATORIn the Presence ofMr. Mbugua for the Claimant andMr. Machimbo h/b for Mr. Simiyu Makokha for the RespondentCourt Assistant: Paul Otieno