https://new.kenyalaw.org/akn/ke/judgment/scc/2026/64

Soigwa v Diversity Micro Credit Ltd & another (Commercial Case E1450 of 2025) [2026] SCC 64 (KLR) (4 May 2026) (Judgment) Neutral citation: [2026] SCC 64 (KLR) Republic of Kenya In the Small Claims Court at Mombasa Commercial Case E1450 of 2025 TN Mwangeka, RM May 4, 2026 Between Thomas Ombasa Soigwa Claimant and Diversity Micro Credit Ltd 1st Respondent Foresight Auctioneers 2nd Respondent Judgment 1.This judgment relates to a statement of claim seeking inter alia, a declaration that the proclamation notice issued in respect of Motor Vehicle Registration Number KCQ 467A was unlawful, a permanent injunction restraining the Respondents from repossessing and selling the said motor vehicle, and damages for alleged wrongful proclamation. 2.The 1st Respondent filed an Amended Response to Statement of Claim and Counterclaim dated 1st April 2026. The 1st Respondent admitted advancing a loan facility to the Claimant but maintained that the facility was secured by a logbook/chattel mortgage over Motor Vehicle Registration Number KCQ 467A and that the Claimant defaulted in repayment, thereby entitling the 2nd Respondent to repossess and realize the security. 3.The 1st Respondent further filed a counterclaim seeking payment of outstanding loan arrears stated variously as Kshs. 229,444.66/-, Kshs. 316,581.86/- and Kshs. 344,200.88/- in its pleadings. 4.The 2nd Respondent, being the auctioneer instructed by the 1st Respondent, was said to have issued a proclamation notice dated 10th December 2025 to the Claimant via whatsapp, pursuant to the Auctioneers Act and the Auctioneers Rules, 1997. The 2nd Respondent did not enter appearance or file a response in this matter. 5.Having considered the pleadings and material placed before the Court as well as the witness testimonies, the issues arising for determination are: a) Whether the Claimant defaulted in repayment of the loan facility; b) Whether the proclamation and intended repossession of Motor Vehicle Registration Number KCQ 467A was unlawful; c) Whether the Claimant is entitled to the reliefs sought; d) Whether the 1st Respondent has proved its counterclaim. 6.It is not in dispute that the Claimant took out a loan for Kshs. 280,000/- payable in 18 monthly installments. What is disputed is the amount and time within which the installments were to be paid. From the evidence on record, this court notes that various discrepancies lie with the amount outstanding as at now. The Respondent in Cross examination stated that in December 2025 the outstanding amount was Kshs. 281,781/- yet their counterclaim is for Kshs. 344,200.88/- while stating that the Claimant is in arrears of 14 days which translated to Kshs. 138,644.66/-. 7.It is trite law that special damages and liquidated claims must not only be specifically pleaded but must also be strictly proved. Although the 1st Respondent referred to a loan statement dated 31st March 2026, no clear reconciliation or satisfactory explanation was tendered before the Court to explain the variance in the amounts claimed. 8.However, the Claimant has admitted to still be indebted to the 1st Respondent and is still servicing the loan having paid Kshs. 263,167/- to date. 9.As to whether the proclamation and intended repossession of the Claimant’s motor vehicle was unlawful, Section 2(3)(e) of the Auctioneers Act empowers an auctioneer to repossess goods from any person pursuant to the provisions of any written law or contract. In the present case, the Claimant put up his motor vehicle as collateral for the loan in the event of default. The 1st Respondent was therefore well within its rights to instruct the 2nd Respondent. 10.The Claimant has nonetheless taken issue with the involvement of the 2nd Respondent, the contents of the proclamation notice and the fact that the motor vehicle was never physically assessed for its condition as “fair” to be arrived at. 11.The 1st Respondent during hearing did not dispute instructing the 2nd Respondent to recover Kshs. 300,035/- in December 2025 which figure contradicts the Kshs. 281,781/-he earlier stated in his evidence. Additionally, the 1st Respondent stated that the Claimant’s motor vehicle has not been repossessed and that it can only realize the full loan amount upon repossession. 12.As noted above, there exists glaring inconsistencies in the evidence pleaded and that given in oral testimony from the 1st Respondent as to the amount of money owed by the Claimant which only serves to disadvantage the Claimant. This inconsistency in the outstanding sum goes to the root of the matter and cannot be ignored. Coupled with the unprocedural assessment of the Claimant’s motor vehicle there clearly exists an imbalance between the creditor rights and the debtor protection contrary to the expectations of the Auctioneers Act and Rules. 13.The Court finds that whereas the 1st Respondent was entitled to realize the security upon default, the proclamation process undertaken by the 2nd Respondent did not meet the procedural standards required under the Auctioneers Act and Rules. The proclamation notice appears to have contained assessments unsupported by any physical inspection of the motor vehicle, and service through WhatsApp alone was not sufficient compliance with the law. The Claimant should have been served personally. Accordingly, the proclamation dated 10th December 2025 is declared irregular. However, the Court declines to grant a permanent injunction as the Claimant remains indebted under the loan agreement. The 1st Respondent shall be at liberty to recommence the recovery process in compliance with the law. 14.The Claimant has prayed for general damages at Kshs. 200,000/- for wrongful proclamation. From the evidence it is clear that the proclamation notice did not meet the statutory threshold as under Rule 12(1)(c) specifically of the Auctioneer Rules. Therefore, any subsequent execution would be flawed with impropriety. However, general damages are ordinarily not recoverable in cases concerning breach of contract., as in the instant case, as highlighted in the Court of Appeal case of National Industrial Credit Bank Limited v Aquinas Francis Wasike & Another (2015) eKLR. Nominal damages will however be awarded to the Claimant who was exposed to inconvenience and irregular repossession processes by the 2nd Respondent’s non compliance of the statutory safeguards. 15.Lastly, in the absence of consistent and cogent evidence proving the precise amount outstanding, the Court is unable to enter judgment on the counterclaim as pleaded and the same is dismissed for insufficient evidence. 16.Consequently, the following orders issue: 1.The proclamation notice dated 10th December 2025 is hereby rendered illegal on account of insufficient service upon the Claimant and unsupported assessment of the subject motor vehicle. 2.The prayer for permanent injunction is disallowed. 3.Judgment is entered against the 2nd Respondent for nominal damages for irregular and unlawful proclamation in the sum of Kshs. 30,000/-. 4.Parties to bear their own costs. DATED SIGNED AND READ VIRTUALLY AT MOMBASA THE…4TH….DAY OF………MAY……2026HON. THERESA N. MWANGEKARESIDENT MAGISTRATE/ADJUDICATORIn the presence of;……Mr. Mitei h/b for Mr. Yunis….for Claimant;…Mr. Nduati… for RespondentC/A Sabina