Kopo Kopo Inc v Kalee t/a Bei Nafuu Enterptises-Redsoil (Commercial Case E6792 of 2026) [2026] SCC 223 (KLR)
The bottom line
#A Nairobi court cut a lender's 85% annual interest to 18%, ruling excessive loan charges can be thrown out even when the borrower never defends the case.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the claimant has proven the claim on a balance of probabilities despite the respondent's failure to enter appearance or file a defence
- 2.Whether the contractual interest and charges levied on the loan are enforceable or unconscionable
Key legal issues
#Whether the claim was proven on a balance of probabilities
Yes. Sufficient evidence was on record that the respondent applied for, received, and was disbursed a loan of Kshs. 305,000/=, notwithstanding the undefended nature of the proceedings.
Sections 107, 108 and 109 of the Evidence Act place the burden of proof on the party alleging a fact. The respondent having failed to enter appearance or file a defence, the claimant's averments were uncontested, but the court emphasised that default does not relieve the claimant of the evidentiary burden. Sufficient documentary evidence of the loan application, disbursement and repayment terms was adduced, satisfying the balance-of-probabilities standard.
Whether the contractual interest and charges of approximately 84.9% per annum were enforceable
No. The interest rate was unconscionable, excessive and disproportionate, and the court declined to enforce it, awarding interest at 18% per annum instead.
The charges translated to about 41.85% of the principal over six months, or approximately 84.9% per annum. Although parties are bound by contract, courts may refuse enforcement of unconscionable bargains. The in duplum rule under Section 44A of the Banking Act, though not directly applicable to a non-bank lender, was treated as instructive on preventing unjust enrichment and oppressive lending.
Legal principles established
#- Even in undefended proceedings, the claimant must prove the claim on a balance of probabilities; default does not substitute for proof.
- Courts retain discretion to decline enforcement of contractual terms that result in unjust, oppressive or unconscionable outcomes.
Court orders
#- 1.Interest allowed on the principal amount of Kshs. 305,000/= at the rate of 18% per annum for the contractual period of six (6) months from 20/8/2024
- 2.The sum of Kshs. 123,114/= already repaid by the respondent to be deducted
- 3.The balance to attract interest at court rates from the date of judgment till payment in full
- 4.Costs assessed at Kshs. 10,000/= awarded to the claimant
- 5.The respondent granted 30 days stay of execution
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Small Claims Court Act, Section 30 (proceedings in absence of a response)
Relief refused
#The full claimed sum of Kshs. 309,535/= inclusive of the contractual interest and charges
The contractual interest and charges were unconscionable, disproportionate and inequitable and the court declined to enforce them
Costs
The claimant is awarded costs assessed at Kshs. 10,000/=.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Even in undefended proceedings, the claimant must adduce sufficient evidence to prove the claim on a balance of probabilities. A default judgment is not a substitute for proof of a claim, particularly where the relief sought is unliquidated or requires evidentiary substantiation
While parties are generally bound by the terms of their contract, this Court retains discretion to decline enforcement of terms that result in unjust, oppressive, or unconscionable outcomes.
The Court finds it just and reasonable to allow interest on the principal amount of Kshs. 305,000/= at the rate of 18% per annum for the contractual period of six (6) months from 20/8/2024. The amount of Kshs. 123,114/= shall be deducted being the sum already repaid by the respondent.
The claimant is awarded costs assessed at Kshs. 10,000/=. The respondent is granted 30 days stay of execution. It is so decreed.
Issues in the judgment
#The judgment describes the claimant as having been loaned the money, which appears to be a typographical reversal of the roles
The date of the statement of claim (12/6/2026) post-dates the loan events but the judgment does not otherwise present internal contradictions
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kopo Kopo Inc v Kalee t/a Bei Nafuu Enterptises-Redsoil (Commercial Case E6792 of 2026) [2026] SCC 223 (KLR)", Case Analysis (2026). SCCOME6792 of 2026. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2026/223/eng@2026-08-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.