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Small ClaimsPartially AllowedNot stated in the judgment· [2026] SCC 43 (KLR)

Makau v Muthama (Commercial Case E29921 of 2024) [2026] SCC 43 (KLR)

Small Claims Court
29 June 2026
GKGladys W. Kiamah
676 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court enforced an unwritten M-Pesa loan but refused a 180% annual interest rate as unconscionable.

What this practically means

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Executive summary

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The claimant sued for Kshs. 396,000/= plus interest, alleging loans of Kshs. 200,000/= (interest-free, to assist the respondent's ailing father) and Kshs. 240,000/= (to attract 15% monthly interest, advanced via the claimant's sister), totalling Kshs. 530,000/=, of which Kshs. 134,000/= had been repaid. The respondent admitted receiving the sums but denied they were a loan, asserting they were informal personal arrangements between acquaintances that had been fully refunded in cash and M-Pesa transfers, with no agreement on interest. The matter proceeded by way of written submissions under Section 30 of the Small Claims Act. The court identified the main issue as whether the claimant had proven the claim on a balance of probabilities, citing the Court of Appeal in Mumbi M'Nabea v David M. Wachira and Sections 107-109 of the Evidence Act on burden of proof. The court held that although there was no written agreement, a contract could be inferred from the parties' conduct: repeated advances, acceptance, and partial repayments evidenced a debtor-creditor relationship rather than gratuitous transfers. The respondent's assertion of full repayment was unsupported beyond the Kshs. 134,000/= admitted. Judgment was entered for the claimant for Kshs. 396,000/=. However, the claim for interest failed: no agreed interest terms were proven, and the claimed 15% monthly rate (approximately 180% per annum) was held inordinate and unconscionable, with the court declining to enforce it. The claimant was awarded costs of Kshs. 30,000/=, and the respondent received 30 days' stay of execution. The claim was thus partially successful.

Key legal issues

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01

Existence of a binding loan contract

Holding

A debtor-creditor relationship was established from the parties' conduct despite the absence of a written agreement

Reasoning

The court reasoned that repeated advances, the respondent's acceptance of the funds and partial repayments were consistent with a loan rather than gratuitous transfers. The respondent's assertion that the payments were informal and non-repayable was unsupported by evidence, and no proof of gifts or full repayment was tendered.

p. 2
02

Proof of the outstanding debt

Holding

Kshs. 530,000/= was proven as advanced; only Kshs. 134,000/= was proven repaid, leaving Kshs. 396,000/= due

Reasoning

The respondent did not deny receiving the amounts, and Mpesa statements proved the sums advanced. Although the respondent pleaded full repayment, no sufficient evidence of repayment beyond Kshs. 134,000/= was adduced, so the balance of Kshs. 396,000/= was due and awardable.

p. 2
03

Claim for interest

Holding

Interest claim declined as unconscionable

Reasoning

There was no evidence of an agreed interest term. The claimant's charge of 15% per month equated to roughly 180% per annum, which the court found highly inordinate, disproportionate and inequitable, and it exercised its discretion not to enforce those terms.

p. 2

Legal principles established

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  • The standard of proof in civil claims is on a balance of probabilities
  • A contract may be inferred from the conduct of the parties even absent a written agreement
  • The burden of proof of a fact lies on the person who wishes the court to believe in its existence
  • Courts may decline to enforce unconscionable or oppressive contractual terms

Court orders

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  1. 1.Judgment entered in favour of the claimant against the respondent for the sum of Kshs. 396,000/=
  2. 2.Claimant awarded costs of Kshs. 30,000/=
  3. 3.Respondent granted 30 days stay of execution

Authorities

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Legislation

  • Small Claims ActSection 30
  • Evidence Act, Chapter 80 of the Laws of KenyaSections 107, 108 and 109

Cases cited (1)

  • Mumbi M'Nabea v David M. Wachira
    [2016] eKLR
Jurisdiction invoked
Section 30 of the Small Claims Act

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, "Makau v Muthama (Commercial Case E29921 of 2024) [2026] SCC 43 (KLR)", Case Analysis (2026). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2026/43/eng@2026-06-29

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