Faulu Microfinance Bank Ltd v Wanyama & 2 others (Commercial Case E092 of 2024) [2024] SCC 24 (KLR)

2. The Claimant’s cause of action arose from a check off loan facility of Kshs. 413,000/= that the Claimant advanced to the 1 st Respondent on 14th August 2021. The terms of the said loan facility were that the 1 st Respondent would repay the loan facility within 48 months in equal monthly instalments of Kshs. 13,048.04/= at an interest of 20.53% per annum. 3. It was averred by the Claimant that the 1st Respondent defaulted in repaying the loan advanced to him hence making the outstanding debt Kshs. 347,651.48/= as at 15th March 2024. 4. The Respondents neither entered appearance nor filed a Response to the Claim despite having been duly served. That being the case, the Claimant chose to proceed with this claim by way of sec. 30 of the Small Claims Court Act. Issues for Determination 5. The Claimant’s pleadings ,documents, and the oral testimony by Mr. Fredrick Nyabuti (CW1) have been duly considered by this court. The only issue for determination is whether the Claimant proved their claim to the required standards. 6. A keen reading of the Loan Application Form dated 17 th July 2021, the Client General Transaction Form dated 03rd August 2021,, the Personal Loan Verification Form dated 23rd July 2021, the Loan Statement Account dated 23rd January 2024 as well as the other documents placed before this court when analyzed together with CW1’s testimony substantiate the Claimant’s claim in the Statement of Claim herein. 7. The sum claimed of Kshs. 347,077.10/= does not exceed the combined total of the outstanding principal of Kshs. 278,782/= and the outstanding interest of Kshs. 87,806.84/= that was due at the time of filing this claim. In the circumstances, this court finds and holds that Kitale SCC CC. No. E092 of 2024 Page 2 of 4 Judgment

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the Kshs. 347,077.10/= claimed by the Claimant does not offend the in duplum rule. 8. Turning to the 2nd and 3rd Respondents, it is trite law that the essence of a guarantor is to discharge liability when the principal debtor fails to honour his duty. The duty of a guarantor was well enunciated in Geraldine Andrews & Richard Millet in “The Laws of Guarantees” at page 156 in the following words:‘A contract of guarantee is an accessory contract, by which the surety undertakes to ensure that the principal performs the principal obligations. It has been described as a contract to indemnify the Creditor upon the happening of a contingency namely the default of the principal to perform the principal obligation. The surety is therefore under a secondary obligation which is dependent upon the default of the principal and which does not arise until that point.’ 9. The 1st Respondent having defaulted in repaying the loan advanced to him, the 2nd and 3rd Respondents must be called upon to indemnify the Claimant. 10. It is against this background that this court holds and finds that the Respondents must be bound by the terms of the Loan Agreement herein that they voluntarily executed. DISPOSITION 11. The upshot of the foregoing is that: a) Judgment is entered against the Respondents jointly and severally for the sum of Kshs. 347,651.48/= b) The sum of Kshs. 347,651.48/= shall earn interest at court rate from the date of filing this claim until payment in full c) The costs due to the Claimant are assessed at Kshs. 30,000/= 12. Judgment accordingly. Kitale SCC CC. No. E092 of 2024 Page 3 of 4 Judgment

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13. Decree and Certificate of Costs to issue forthwith. Read, signed, and delivered in open court at Kitale this 30th day of September 2024 T.O. OMONO ADJUDICATOR Kitale SCC CC. No. E092 of 2024 Page 4 of 4 Judgment

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