Buyechero v Soita (Commercial Case E105 of 2024) [2024] SCC 12 (KLR)
The bottom line
#A Kitale court awarded a private lender Kshs. 600,000 based on WhatsApp messages, but capped interest at the loan amount, halving the claim.
What this practically means
#Executive summary
#Key legal issues
#Admissibility of WhatsApp messages in the Small Claims Court
The WhatsApp extracts were properly before the court; the objection based on section 106B of the Evidence Act was misplaced because the Small Claims Court is not bound by strict rules of evidence under section 32 of the Small Claims Court Act.
The Respondent argued the WhatsApp extracts offended section 106B of the Evidence Act for want of a certificate of electronic records. The court held that such objections belong to mainstream civil courts; section 32(2) of the Small Claims Court Act permits admission of any record the court considers credible or trustworthy, so the extracts were admissible.
Whether only licensed money lenders may charge interest
No; parties' autonomy allows voluntary agreement on interest rates, and an unlicensed lender may charge interest where the debtor voluntarily agrees. Courts intervene only where the contract is unconscionable.
Counsel for the Respondent cited no authority for the proposition that only Central Bank-licensed lenders may charge interest. The court held that party autonomy is the cornerstone of contracts; courts can step in only where a contract is unconscionable.
Whether the Claimant proved her claim
The court found a binding money lending agreement of Kshs. 300,000/= and an agreement to pay Kshs. 432,000/= plus Kshs. 1,000/= per day interest, but capped the recoverable interest at the principal, awarding Kshs. 600,000/=.
The Respondent's evidence was evasive and untruthful; he admitted the phone number and profile photo in the WhatsApp messages but did not plead forgery or fraud. The messages showed the loan and the agreed debt of Kshs. 432,000/= with Kshs. 1,000/= daily interest. However, interest of over Kshs. 700,000/= was unconscionable, so the in duplum rule limited the claim to Kshs. 600,000/=.
Enforcement of an unconscionable interest rate and application of the in duplum rule
Equity may relieve a party from a bad bargain or unconscionable interest; the in duplum rule was applied out of public interest to cap interest at the principal amount.
The court relied on Shah JA in Fina Bank Ltd v Spares & Industries and Ajay Indravadan Shah v Guilders International Bank to hold that courts must enforce agreed interest only unless it is illegal, unconscionable or fraudulent. Interest exceeding double the principal advanced was excessive and oppressive. Guided by the Mugure (HELB) case, the court extended the in duplum rule to money lenders as a public interest measure under articles 10 and 158 of the Constitution.
Legal principles established
#- The Small Claims Court is not bound by the strict rules of evidence and may admit material it considers credible or trustworthy even if inadmissible in other courts
- A party who admits ownership of the phone number and profile picture in WhatsApp messages and does not plead forgery or fraud cannot later impeach the authenticity of those messages
- An unlicensed money lender is not precluded from charging interest on money lent where the debtor voluntarily agrees
- A money lending agreement need not be in writing to be enforceable; parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved
- Courts may decline to enforce an unconscionable interest rate; the in duplum rule applies out of public interest so interest cannot exceed the principal advanced
Court orders
#- 1.Judgment is entered against the Respondent for the sum of Kshs. 600,000/=
- 2.The sum of Kshs. 600,000/= shall earn interest at court rate from the date of filing the claim until payment in full
- 3.The costs due to the Claimant are assessed at Kshs. 30,000/=
- 4.Decree and Certificate of Costs to issue forthwith
- Jurisdiction invoked
- Small Claims Court Act, pecuniary jurisdiction of Kshs. 1,000,000/= invoked by the Claimant
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Buyechero v Soita (Commercial Case E105 of 2024) [2024] SCC 12 (KLR)", Case Analysis (2024). Kitale SCC CC. No. E105 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2024/12/eng@2024-10-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.