Njuguna v Okodo (Commercial Case E15733 of 2024) [2025] SCC 51 (KLR)
The bottom line
#A Kenyan court ruled a lender cannot recover interest exceeding the loan principal, cutting a Kshs. 70,500 claim to Kshs. 30,000.
What this practically means
#Executive summary
#Key legal issues
#The agreed interest rate on the loan
The loan attracted a monthly interest of 1.5% and a monthly late fee interest of 15%.
The agreement did not expressly state whether the rates were monthly, but a wholesome reading of the agreement and the fact that repayment was via monthly instalments over two months led the court to conclude both rates were monthly. The parties voluntarily agreed to all terms and are bound by them.
The amount due to the Claimant
Recoverable amount capped at principal plus interest not exceeding the principal (in duplum); after the Kshs. 30,000/= already paid, only Kshs. 30,000/= remained owing.
Strict enforcement of the agreement would yield interest of over Kshs. 40,000/= on a Kshs. 30,000/= loan, which the court found excessive, oppressive and unconscionable. Applying the in duplum rule as articulated by Mabeya J in the Mugure case, interest cannot exceed the principal, making the total allowable claim Kshs. 60,000/=; payment of Kshs. 30,000/= left Kshs. 30,000/= due.
Legal principles established
#- Parties are bound by the terms of their voluntarily executed contract unless coercion, fraud or undue influence are pleaded and proved; the court will not rewrite the contract for the parties.
- Where the agreed interest would exceed the principal, the in duplum rule caps recoverable interest at the principal sum, applying to all money lenders as a matter of public interest and equity.
- Equity may relieve a party from an unconscionable interest rate notwithstanding a voluntary agreement.
Court orders
#- 1.Judgment is entered against the Respondent for the sum of Kshs. 30,000/=
- 2.The sum of Kshs. 30,000/= in (a) above shall earn interest at court rate from the date of filing this claim until payment in full
- 3.The costs due to the Claimant are assessed per section 33 of the Act at Kshs. 10,000/=
- 4.Certificate of costs and decree to issue forthwith
- Jurisdiction invoked
- Small Claims Court Act (claim filed under the Act; costs assessed per section 33 of the Act)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Njuguna v Okodo (Commercial Case E15733 of 2024) [2025] SCC 51 (KLR)", Case Analysis (2025). Kitale SCC CC. No. E105 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2025/51/eng@2025-08-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.