https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12320

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL TAX & ADMIRALTY DIVISION** **COMMERCIAL APPEAL NO. 020 OF 2023** **PHILIPPE BIMENYIMA………………………..………………APPELLANT** **VERSUS** **REYHAN PETROLEUM LIMITED………………………..RESPONDENT** **JUDGMENT** 1. Reyhan Petroleum Limited, the Respondent herein, filed a claim against Philippe Bimenyima (Appellant) being Nairobi Milimani Small Claims Court Commercial Case No. 2204 of 2023 (herein referred to as the suit) seeking judgment for Kshs. 874,000/= together with costs and interest. 2. The dispute traces back to a commercial storage arrangement. The Respondent (Claimant at the trial court) alleges that the Appellant (Respondent at the trial court), through its agents, towed and deposited two motor vehicles registration numbers KBG 632E and KAX 364L at the Respondent’s place. The agreed daily parking charge was Kshs. 1,000/=, with an understanding that the vehicles were to be collected within seven (7) days. 3. The vehicles remained uncollected in the Respondent's custody for six years. Because the Appellant failed to pay the accumulated storage fees, the Respondent instructed auctioneers to sell both vehicles via public auction to recover the owed charges. Each vehicle was sold for Kshs. 400,000/=, totaling Kshs. 800,000/=. As a result, the Respondent filed a claim in the Small Claims Court for a net balance of Kshs. 643,000/= in storage charges (after deducting Kshs. 800,000/= from the auction proceeds), plus Kshs. 140,000/= in auctioneer’s fees and Kshs. 100,000/= in legal fees, making a total claim of Kshs. 874,000/=. 4. In response, the Appellant filed a Statement of Defence and Counterclaim. The Appellant denied liability for Kshs. 1,000/= per day, asserting that the agreed daily parking rate was Kshs. 200/=. Crucially, the Appellant raised a Counterclaim for Kshs. 5,600,000/=, alleging that the Respondent had unlawfully converted and illegally disposed of its two motor vehicles under the guise of an auction. 5. Upon hearing the parties, the learned Adjudicator delivered judgment awarding the Respondent Kshs. 634,000/= plus costs and interest, declined the auctioneer’s and advocates' fees, and dismissed the Appellant’s counterclaim with costs. 6. Dissatisfied with the trial court’s decision, the Appellant lodged the instant appeal vide the Memorandum of Appeal dated 29th June 2023, citing the following grounds of appeal. 7. *That the trial magistrate erred in law and fact in dismissing the appellant's counterclaim without giving reasons.* 8. *The learned trial magistrate erred in law and fact by insulating himself with pecuniary jurisdiction over and above what the statute under Section 12 of the Small Claims Courts Act provides, which jurisdiction was ousted when the counterclaim was raised over the Court's pecuniary limit.* 9. *The learned magistrate erred in law and fact by reaching a finding that the Appellant owed the Respondent Kshs 634,000/= whereas it is the appellant who lost by way of his vehicles being lawfully converted and disposed of by him.* 10. The Appellant prays that the appeal be allowed, the judgment and orders of the trial court in Nairobi SCC No. 2204 of 2023 be set aside, the Respondent’s claim be dismissed, and judgment be entered on the counterclaim or, in the alternative, the matter be remitted for retrial before a court of competent jurisdiction. 11. The appeal was canvassed by way of written submissions. The Appellant filed submissions dated 15th January 2026, while the Respondent’s submissions are dated 19th March 2026. **Appellant’s submissions** 1. The Appellant contends that the trial magistrate made an error both legally and factually by not addressing or deciding the Appellant's properly pleaded counterclaim. It is asserted that a counterclaim is an independent claim requiring the court to decide it with reasons, and neglecting this violates Articles 25(c), 47, and 50 of the Constitution, as well as Order 21 Rule 4 of the Civil Procedure Rules. The Appellant cites ***South Nyanza Sugar Co. Ltd v Omwando Omwando (2011) eKLR*** and ***Galaxy Paints Co. Ltd v Falcon Guards Ltd (1999) eKLR*** to support the argument that courts are obligated to rule on all issues raised in pleadings. 2. The Appellant further contends that the Small Claims Court lacked pecuniary jurisdiction once the counterclaim for Kshs. 5,600,000/= was filed, as the amount exceeded the statutory limit of Kshs. 1,000,000/= under section 12 of the Small Claims Court Act. It is submitted that jurisdiction is fundamental and, once challenged, the trial court ought to have downed its tools and allowed the dispute to be heard by a court of competent jurisdiction. The Appellant relies on the decision in **Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd *(1989) KLR1*** to argue that proceedings conducted without jurisdiction are a nullity. 3. The Appellant argues the trial court erred in ruling they owed Kshs. 634,000/=, ignoring evidence that the Respondent unlawfully sold and disposed of the Appellant's motor vehicles. This sale, violating the Appellant's constitutional property rights, also shifted the evidential burden to the Respondent and should have defeated or offset the claim. The Appellant claims the repossession and sale were illegal under the Auctioneers Act and Rules. They request the Court to overturn the judgment, dismiss the claim, or send it back for a proper retrial with consideration of the counterclaim and evidence. **Respondent’s submissions** 1. The Respondent submits that the Small Claims Court properly assumed jurisdiction over its claim since the claim for Kshs. 874,000/= fell within the pecuniary limit prescribed under section 12(3) of the Small Claims Court Act. It argues that, pursuant to section 11 of the Civil Procedure Act, a litigant is obliged to institute proceedings before the court of the lowest competent jurisdiction, and the Respondent correctly filed its claim before the Small Claims Court. Reliance is placed on **Kavuludi v West FM Media Limited (West TV) & 3 Others *[2025] KEHC 5806 (KLR)*** and**Daikyo Japan Motors Ltd & 2 Others v Fairuz Feisal Yasin & Another *[2020] KEHC 10243 (KLR)*** for the proposition that jurisdiction is determined by the value and nature of the plaintiff's claim, rather than the value of the subject matter. 2. On the counterclaim, the Respondent contends that although the Appellant pleaded a counterclaim of Kshs. 5,600,000/= arising from the alleged unlawful sale of the motor vehicles, the Small Claims Court only considered those averments insofar as they constituted a defence to the Respondent's claim and correctly rejected them for lack of merit. 3. It concedes that the court lacked jurisdiction to adjudicate the substantive counterclaim but maintains that the responsibility to seek transfer of that claim to a court of competent jurisdiction rested with the Appellant. Citing section 18 of the Civil Procedure Act, the Respondent submits that only the High Court has power to transfer proceedings and that the Appellant failed to invoke that jurisdiction. **Analysis and determination** 1. I have considered the evidence tendered before the trial court and the submissions made before me. This being an appeal from the Small Claims Court, it is important to note that **Section 38** of the **Small Claims Court Act** provides for this Court's jurisdiction to determine appeals from the Small Claims Court. It provides thus; 2. **-*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.*** 3. ***An appeal from any decision or order referred to in subsection (1) shall be final.*** 4. The first two grounds of appeal concern the duty to give reasons and jurisdiction, which are pure questions of law and properly before this Court. The third, though framed as legal and factual error, mainly challenges the trial court’s assessment of evidence and its finding that the Appellant owed storage charges. This Court can only overturn that finding if it shows the trial court acted without evidence, misapprehended it, or reached a perverse conclusion. With this in mind, I will now address the three issues from the appeal grounds. *Whether the small claims court had jurisdiction over the counterclaim* 1. The Small Claims Court is a court of limited statutory jurisdiction established under Article 169(1)(d) of the Constitution and operationalized by the Small Claims Courts Act, No. 2 of 2016. **Section 12(3)** of the Act explicitly limits the court's pecuniary jurisdiction: ***“The pecuniary jurisdiction of the Court shall be limited to one million shillings.”*** 1. Section 12(1)(e) of the Act confers upon the court jurisdiction to hear and determine set-off and counterclaims under any contracts. However, such counterclaims remain strictly subject to the monetary ceiling of Kshs. 1,000,000/=. 2. The Respondent’s claim was for Kshs. 874,000/=, which fell within the statutory threshold. Conversely, the Appellant filed a Counterclaim seeking Kshs. 5,600,000/= an amount far in excess of the court’s pecuniary competence. 3. The question is whether filing a counterclaim that exceeds the court's monetary limit removes the court's authority to hear the original case. I respond in the negative. It is trite law that a defendant cannot unilaterally strip a court's jurisdiction over a valid claim just by submitting a counterclaim beyond the Court’s jurisdiction. 4. Section 11 of the Civil Procedure Act requires every suit to be instituted in the court of the lowest grade competent to try it except where there are more subordinate courts than one with jurisdiction in the same county competent to try it. (See **Kavuludi v West FM Media Limited (West TV) & 3 Others [2025] KEHC 5806 (KLR**). 5. I find the Respondent properly invoked the jurisdiction of the Small Claims Court. 6. In the present case, the Appellant filed its counterclaim which exceeded the pecuniary jurisdiction of the Small Claims Court. He never applied for its transfer to a competent court. He cannot now be heard to complain that the trial court assumed jurisdiction over the main claim when he took no steps to ensure that his counterclaim was heard in a court with jurisdiction. The trial court, faced with a main claim within its jurisdiction and a counterclaim beyond it, was entitled to retain the main claim and to decline jurisdiction over the counterclaim. 7. Having stated the Small Claims lacked jurisdiction over the counterclaim, I thus find the adjudicator erred in assuming jurisdiction over the counterclaim and proceeding to dismiss it with costs. The only proper order that commends itself is one striking out the counterclaim for want of jurisdiction, with no order as to costs, leaving the Appellant at liberty to pursue his claim in the appropriate forum. *Whether the trial court erred in dismissing the counterclaim without reasons* 1. Order 21 Rule 4 of the Civil Procedure Rules, applicable to the Small Claims Court by dint of Section 31 of the Small Claims Court Act, requires that a judgment contain a concise statement of the case, the points for determination, the decision on each point, and the reasons for the decision. The Court of Appeal in **Galaxy Paints Company Ltd v Falcon Guards Ltd [2000] KECA 215 (KLR)**held that a court is duty-bound to pronounce itself on all issues raised in the pleadings and to give reasons. 2. The trial court disposed of the counterclaim with costs in a single sentence. No reason was given. However, I have already found that the trial court had no jurisdiction over the counterclaim. The law does not require elaborate reasons for a matter the court lacks competence to entertain. Where a court has no jurisdiction, the only proper course is to down its tools. (See **Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd(1989) KLR 1**). 3. I have already determined that the proper order ought to have been one striking out the counterclaim for want of jurisdiction. To the extent that the trial court failed to state that reason and instead dismissed the counterclaim with costs, I find that this ground of appeal is merited to the limited extent already indicated. *Whether the award of Kshs. 634,000/= was against the evidence* 1. The Appellant further contends that the Respondent unlawfully disposed of the motor vehicles and that such unlawful conversion defeated the Respondent's claim for storage charges. 2. I have examined the record. The Respondent’s claim before the trial court was a straightforward one for outstanding storage charges. The vehicles remained in the Respondent’s yard for approximately six years. The Appellant did not collect them. The Respondent rendered a service and was entitled to be paid. 3. The question of the legality of the disposal of the vehicles formed the very basis of the counterclaim. As I have already found, the Small Claims Court lacked jurisdiction over that counterclaim. It could therefore neither investigate nor conclusively determine the legality of that disposal. The trial court confined itself to the dispute properly before it and made a finding on the storage charges based on the evidence presented. 4. The trial court heard the parties on the applicable daily rate. It accepted the Respondent’s evidence of Kshs. 1,000/= per day over the Appellant’s assertion of Kshs. 200/=. That was a finding of fact founded on an assessment of credibility. An appellate court will not lightly interfere with such a finding unless it is demonstrated that the trial court acted on no evidence, misapprehended the evidence, or proceeded on a wrong principle. (See **Peters v Sunday Post Ltd [1958] EA 424)**. 5. The Appellant’s principal grievance relates to the alleged unlawful disposal of the vehicles. That is a separate cause of action. It remains available for determination before a court possessing the requisite pecuniary jurisdiction. It cannot, however, be invoked to invalidate a judgment properly entered on the Respondent’s claim for services rendered. 6. I therefore find no basis for interfering with the award of Kshs. 634,000/= made in favour of the Respondent. 7. For the foregoing reasons, the appeal succeeds only to the limited extent that the order dismissing the Appellant's counterclaim cannot stand. Accordingly, I make the following orders: 8. ***The appeal against the judgment entered in favour of the Respondent for Kshs. 634,000/=, together with costs and interest as awarded by the Small Claims Court, is dismissed.*** 9. ***The order of the Small Claims Court dismissing the Appellant's counterclaim is set aside.*** 10. ***In its place, there shall be an order declining jurisdiction over the Appellant's counterclaim for Kshs.5,600,000/=, without prejudice to the Appellant's right to pursue that claim before a court of competent jurisdiction.*** 11. ***As each party has partially succeeded in the appeal, each party shall bear its own costs of the appeal.*** **JUDGMENT** delivered virtually, dated and signed at **NAIROBI** This **31st** day of **July** 2026. **PETER M. MULWA** **JUDGE** **In the presence of:** *Ms. Gikonyo h/b for Mr. Muema* for Appellant *Mr. Aira* for Respondent Court Assistant*: Lispa*