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Small ClaimsPartially AllowedKitale SCC CC. No. E087 of 2024· [2024] SCC 16 (KLR)

Rutto v Gumo (Commercial Case E087 of 2024) [2024] SCC 16 (KLR)

Small Claims Court
16 September 2024
TOT.O. Omono
1,362 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~5 min to read original · ~4 min brief

The bottom line

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A Kenyan court enforced a signed debt agreement and threw out a counterclaim because the claimed lost income was never proven with evidence.

What this practically means

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Executive summary

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The Claimant sued in the Kitale Small Claims Court seeking Kshs. 800,000/= plus interest and costs, contending that he paid Kshs. 1,200,000/= under a Land Lease Agreement dated 21st August 2020 for the lease of 65 acres out of LR No. 11442/11442, Kimoson Farm Endebess, and that the transaction failed. The Respondent filed a Response and Counterclaim seeking Kshs. 885,000/=, alleging the Claimant used his motor vehicle KCF 518 K for over a year, depriving him of car hire income of Kshs. 1,200,000/=. By consent, the matter proceeded under section 30 of the Small Claims Court Act. The court framed two issues: whether the Respondent owed the Claimant Kshs. 800,000/=, and whether the Claimant owed the Respondent Kshs. 885,000/=. Relying on the sanctity-of-contract principle from National Bank of Kenya Ltd v Pipe Plastic Samkolit and Pius Kimaiyo Langat v Co-operative Bank of Kenya, the court held that the Respondent, having executed the lease agreement and a Memorandum of Understanding dated 18th August 2023 acknowledging a debt of Kshs. 1,200,000/= and paying Kshs. 400,000/=, was bound and owed the balance of Kshs. 800,000/=. The counterclaim failed: the Claimant's uncontroverted evidence showed the vehicle was held as security and released upon execution of the Memorandum of Understanding; and loss of income being special damage, it had to be pleaded and specifically proved, which the Respondent failed to do, per Francis Muchee Nthiga v David N. Waweru and David Bagine v Martin Bundi. The court declared the Respondent indebted in Kshs. 800,000/= with interest at court rate from filing until payment in full, dismissed the counterclaim with costs, and assessed the Claimant's costs at Kshs. 30,000/=.

Key legal issues

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01

Whether the Respondent owes the Claimant Kshs. 800,000/=

Holding

Yes. The Respondent executed a Land Lease Agreement and a Memorandum of Understanding acknowledging a debt of Kshs. 1,200,000/= and paid Kshs. 400,000/=, leaving Kshs. 800,000/= owing.

Reasoning

The Claimant produced the Land Lease Agreement showing payment of Kshs. 1,200,000/= consideration for a lease that failed. The Respondent did not dispute executing the agreement or the Memorandum of Understanding acknowledging the debt and part payment of Kshs. 400,000/=. Guided by the principle that parties are bound by their contracts and courts cannot rewrite them, the court found the debt proved on a balance of probabilities.

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02

Whether the Claimant owes the Respondent Kshs. 885,000/= for loss of car hire income

Holding

No. The counterclaim failed both because the vehicle was held as security with the Respondent's consent and because the claimed loss of income was unproven special damage.

Reasoning

The Claimant's uncontroverted evidence was that he took possession of motor vehicle KCF 518 K with the Respondent's consent as security for the debt, releasing it on execution of the Memorandum of Understanding. Further, a claim of loss of income/business is special damage that must be pleaded and specifically proved; the Respondent gave no evidence of the alleged hire business or daily earnings, so damages could not be awarded.

p. 4

Legal principles established

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  • Parties are bound by the terms of their contracts unless coercion, fraud or undue influence are pleaded and proved; courts cannot rewrite contracts.
  • Special damages must not only be pleaded but also specifically proved.

Court orders

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  1. 1.A declaration is made that the Respondent is indebted to the Claimant to the sum of Kshs. 800,000/= (Kenya Shillings Eight Hundred Thousand) only
  2. 2.The sum of Kshs. 800,000/= in (a) above shall attract interest at court rate from the date of filing this claim till payment in full
  3. 3.The Respondent's Counter Claim is dismissed with costs
  4. 4.The costs due to the Claimant are assessed at Kshs. 30,000/= (Kenya Shillings Thirty Thousand) only
  5. 5.Decree and Certificate of Costs to issue forthwith
Jurisdiction invoked
Section 30 of the Small Claims Court Act (by consent of the parties)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Rutto v Gumo (Commercial Case E087 of 2024) [2024] SCC 16 (KLR)", Case Analysis (2024). Kitale SCC CC. No. E087 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2024/16/eng@2024-09-16

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.