https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10454

Wanjugu & another v Gachathi (Civil Appeal E1459 of 2024) [2026] KEHC 10454 (KLR) (Civ) (15 July 2026) (Judgment) Neutral citation: [2026] KEHC 10454 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E1459 of 2024 AC Mrima, J July 15, 2026 Between Consolata Wanjugu 1st Appellant Samson Kiriungi 2nd Appellant and Phoebe Muthoni Gachathi Respondent (Being an appeal from the Judgment and Decree of Hon. M W. Kinyanjui, (SPM/Adjudicator) in Small Claims Court Commercial Case No. E4817 of 2023 delivered on the 14th November 2024) Judgment Background: 1.Phoebe Muthoni Gachathi, the Respondent herein, instituted a claim against Consolata Wanjugu and Samson Kiriungi, Appellants herein, being Nairobi [Milimani] Small Claims Court Commercial Case No. E4817 of 2023 [hereinafter referred to as ‘the suit’], seeking the recovery of a debt based on an alleged loan agreement. The dispute centred on two agreements; an initial agreement dated 19th October 2016 for an advance of Kshs. 155,000/=, and a subsequent disputed contract dated 10th November 2016. The Appellants contended that they fully paid the original loan and that the second contract was a forgery. The Appellants lodged a counterclaim for Kshs. 115,000/=. They claimed they advanced a separate loan to the Respondent. 2.Upon considering the evidence, the Adjudicator found that a valid and enforceable loan agreement existed. He observed that the payments made by the Appellants were part-payments towards the debt and concurrently dismissed the Appellants’ counterclaim as unsubstantiated. 3.It was that determination that prompted the instant appeal which was heard by way of written submissions. The Appeal: 4.The Appellants challenged the trial Court’s decision through a Memorandum of Appeal dated 11th December 2024, and asserted the following grounds: -1.That the Learned Magistrate/Adjudicator erred in law and fact by disregarding the appellants evidence which was not shaken in cross-examination.2.That the Learned Magistrate/Adjudicator erred in law and fact by disregarding the appellants evidence rebuttal of the purported contract dated 10th November 2016.3.That the Learned Magistrate/Adjudicator erred in law and fact by failing to give due consideration of the fraudulent or misleading entry of the 1st Appellant’s name and a strange signature on the contract dated 10th November 2016.4.That the Learned Magistrate/Adjudicator erred in law and fact by failing to give due consideration of the fraudulent or misleading variation of the original contract dated 19th October 2016 and the purported contract dated 10th November 2016.5.That the Learned Magistrate/Adjudicator erred in law and fact by failing to give due consideration of the incapacity of the 2nd Appellant to bind the 1st Appellant as per the contract dated 10th November 2016.6.That the Learned Magistrate/Adjudicator erred in law and fact by disregarding the absence of a witness to the execution of the purported contract dated 10th November 2016.7.That the Learned Magistrate/Adjudicator erred in law and fact by failing to give due consideration to the Respondent’s written acknowledgement of full payment on the original contract dated 19th October 2016.8.That the Learned Magistrate/Adjudicator erred in law and fact by disregarding the evidence of the expert document examiner’s report dated 14th August 2023.9.That the Learned Magistrate/Adjudicator erred in law and fact by disregarding the evidence on the counterclaim and all corroborating witnesses.10.That the Learned Magistrate/Adjudicator erred in her evaluation and analysis of the pleadings and the evidence adduced before the Court.11.That the Learned Magistrate/Adjudicator erred in law and fact in failing to consider the evidence adduced in its entirety hence deciding against the weight of evidence placed before the Court.12.That the Learned Magistrate/Adjudicator erred in law and fact in basing his decision on irrelevant and extraneous circumstances. The Submissions: 5.In their submissions dated 10th September 2025, the Appellants claimed that the trial Court reached a decision against the weight of the evidence. They argued that the 10th November 2016 contract was vitiated by fraud since the 1st Appellant did not sign it, and the 2nd Appellant lacked the agency or capacity to bind her. They relied on their expert document examiner’s report dated 14th August 2023 to substantiate the claim that the 1st Appellant’s signature was a forgery. The Appellants contended that they fully discharged the initial loan and that the Respondent acknowledged it in writing. They further asserted that their counterclaim for Kshs. 115,000/= was corroborated by the unshaken testimony of their witness, Laban Wambugu Waruguru. 6.The Appellants relied on the decision in Selle -vs- Associated Motor Boat Co. [1968] EA 123 and Okeno -vs- Republic [1972] EA 32 to argue that this Court, as a first appellate Court, has a duty to re-evaluate the evidence afresh. They further cited Euromec International Limited -vs- Shandong Taikai Power Engineering Company Limited [2021] KEHC 93 and Kubai -vs- Ochwangi [2023] KEHC 27254 to advance the position that unsigned contracts cannot bind parties. 7.Finally, they relied on the case of Consolidated Bank of Kenya Ltd -vs- Ndung’u & 5 others [2024] KEELC 4456 for the proposition that fraud vitiates all contracts. 8.The Appellants prayed for the appeal to be allowed, the claim be dismissed and the counterclaim be allowed as prayed. The Respondents’ case: 9.The Respondent opposed the appeal through written submissions dated 10th November 2025. She claimed that the Adjudicator meticulously evaluated the evidence and arrived at the correct conclusion. She argued that the Appellants breached the 10th November 2016 agreement, which was an extension of the initial loan facility containing a revised repayment plan. 10.Addressing the allegations of fraud, she pointed out that she presented her own expert forensic witness, Mr. Emmanuel Karisa Kenga, who concluded that the signatures on both contracts matched and belonged to the Appellants. She criticized the Appellants’ expert, Mr. Martin Papa, for failing to compare the disputed signature in the second contract with the 2nd Appellant’s undisputed signature in the first contract. The Respondent relied on the authority in Evans Otieno Nyakwana -vs- Cleophas Bwana Ongaro [2015] eKLR to emphasize that the burden of proving forgery lies with the party alleging it. 11.In addition, the Respondent asserted that the Appellants’ payments were part-payments of the outstanding loan, not a new loan advanced to her, which justified the dismissal of the counterclaim. Drawing from the decision in National Bank of Kenya Ltd -vs- Pipeplastic Sankolit (K) Ltd [2001] eKLR, she argued that the Appellants’ partial payments amounted to ratification by conduct of the November 2016 contract. Analysis and Determination: 12.Having considered the grounds of appeal and the competing submissions, the following two central issues arise for this Court’s determination: -i.Whether the Appellants’ grounds of appeal raise valid questions of law within the strict confines of Section 38(1) of the Small Claims Court Act, andii.Whether the Adjudicator erred in law in evaluating the evidence of fraud, contract validity, and the counterclaim. 13.A consideration of the issues now follows.(a)Whether the Appellants’ grounds of appeal raise valid questions of law within the strict confines of Section 38(1) of the Small Claims Court Act: 14.The jurisdiction of the High Court sitting as an appellate Court over the Small Claims Court is fundamentally distinct from its ordinary appellate jurisdiction under the Civil Procedure Act. Section 38(1) of the Small Claims Court Act (Cap 10A of the Laws of Kenya) provides in mandatory terms as follows;38.Appeals(1)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. 15.In M’bagine -vs- Nyaga (Civil Appeal 172 of 2019) [2026] KECA 335 (KLR), the Court of Appeal outlined its role as a second appellate Court and in the process discussed matters of law as follows;…. For second appeals, this Court has repeatedly stated the limiting principle in Kenya Breweries Ltd v Godfrey Odoyo [2010] eKLR and Stanley Maore v Geoffrey Mwenda [2004] eKLR: that interference with concurrent factual findings is not warranted unless the conclusions are plainly wrong in law on the recognized exceptions.The same approach is reflected in Karingo v Republic [1982] KLR 213 and M’Riungu v Republic [1983] KLR 455, where the Court emphasised that a second appeal must be confined to points of law, and that a complaint about facts only becomes a point of law if the findings are unsupported by evidence or disclose a misdirection in principle. 16.In Gatirau Peter Munya -vs- Dickson Mwenda Kithinji & 2 Others [2014] eKLR the Supreme Court restated that an issue may be one of law where there is a misapplication of legal principle or a conclusion not supported by the evidential record. In the case of J N & 5 Others -vs- Board of Management, St. G School Nairobi & Another [2017] eKLR, the Court discussed points of law in the following fashion.In law, a question of law, also known as a point of law, is a question that must be answered by applying relevant legal principles to interpretation of the law. Such a question is distinct from a question of fact, which must be answered by reference to facts and evidence as well as inferences arising from those facts. Such a question is distinct from a question of law, which must be answered by applying relevant legal principles. The answer to a question of fact (a finding of fact) usually depends on particular circumstances or factual situations. 17.With the foregoing, this Court now turns to the issue at hand. The Appellants heavily relied on the longstanding case of Selle -vs- Associated Motor Boat Co. and Okeno -vs- Republic to urge this Court to conduct a fresh evaluation of the facts and the evidence. While the authorities accurately state the general duty of a first appellate Court, they are entirely inapplicable to appeals emanating from the Small Claims Court. The statutory constriction under Section 38(1) of the Small Claims Court Act is a deliberate legislative design intended to ensure finality in small-scale commercial disputes. It expressly ousts this Court’s jurisdiction to re-hear the facts, weigh witness credibility, or substitute its own factual findings for those of the Adjudicator. 18.A thorough analysis of the twelve grounds of appeal reveals that they overwhelmingly contest the Adjudicator’s factual determinations: Grounds 1, 2, 7, 9, 10, and 11 complain about the weight attached to the evidence, the disregard of rebuttal evidence, the failure to consider the counterclaim, and the assessment of witness credibility. The evaluation of whether a payment was a fresh loan, substantiating a counterclaim, or a part-payment of an existing debt, are all pure questions of fact. 19.Grounds 3, 4, 5, and 6 challenge the validity of the 10th November 2016 contract. It claims fraudulent variation, lack of capacity, and absence of witnesses. Ground 8 specifically challenges the Adjudicator’s treatment of the Appellants’ expert document examiner’s report. On the issue of fraud and the competing expert reports, the trial Court was faced with conflicting expert testimony. The Appellants’ expert, Mr. Papa, alleging forgery, and the Respondent’s expert, Mr. Kenga, affirming the signatures. The Adjudicator evaluated the competing reports and preferred the Respondent’s evidence. The decision to believe one expert witness over another, or to find that a party ratified a contract through subsequent part-payments is a factual and evidentiary determination. 20.From the totality of the grounds of appeal, this Court sees no error of law, or a finding so utterly perverse that no reasonable tribunal could have reached it. The Adjudicator applied the correct legal burden of proof and drew factual conclusions from the material placed before him. 21.This Court cannot intervene simply because the Appellants are dissatisfied with the Adjudicator’s factual findings regarding the loan’s existence and the authenticity of the signatures which was the basis of the counterclaim. Doing so would violate the strict statutory boundaries set by Section 38(1) of the Small Claims Court Act. Therefore, in as much as the appeal raises factual contestations, the trial Adjudicator handled the issues quite well such that the findings were based on a proper consideration of the evidence and the Appellants failed to demonstrate any misdirection in principle or error of law on the part of the Court. For instance, the Court rendered itself on the allegation of fraud and gave reasons why it settled for the expert report produced by the Respondent’s witness and not the other one. To that end, the Court settled the counterclaim in the negative by finding that the subsequent agreement was an extension of the first one. Therefore, without more, the dissatisfaction on the part of the Appellants does not yield to a matter of law. 22.A careful consideration of the Appellants’ submissions reveal that the Appellants took the position that this Court, as an appellate Court, is under a duty to re-evaluate the evidence before the trial Court and to reach its own factual conclusions. As stated above, that is an erroneous position by dint of Section 38 of the Small Claims Act. This Court is sure that had the Appellants appreciated its role under Section 38 of the Small Claims Act, they would have reconsidered the grounds of appeal as well as the approach in their submissions. As such, the Appellants’ grounds of appeal fail to meet the statutory threshold restricting appeals on matters of law. The findings of the Small Claims Court were sound, factual determinations based on the evidentiary record. Disposition: 23.Deriving from the foregoing, this Court finds that the appeal is unmerited. Consequently, the following final orders hereby issue: -(a)The Appeal dated 11th December 2024 is hereby dismissed in its entirety.(b)The Judgment of the Small Claims Court delivered on the 14th November 2024, is hereby upheld and affirmed.(c)The Appellants shall, jointly and severally, bear the costs of this appeal.It is so ordered. DELIVERED, DATED AND SIGNED AT NAIROBI THIS 15TH DAY OF JULY, 2026.A. C. MRIMAJUDGEJudgment virtually delivered in the presence of:Miss Muthanje, Learned Counsel for the Appellant.Miss Wambui, Learned Counsel for the Respondent.Amina – Court Assistant.