Kenya Insights

Tag: Small Claims court

  • Court Dismisses 139 Claims by Debt Collecting Firms, Accuses Them of Abuse of Process

    Court Dismisses 139 Claims by Debt Collecting Firms, Accuses Them of Abuse of Process

    A Nairobi court has dismissed more than 130 claims filed by six start-up companies terming the cases as vexatious.

    The Small claims court noted that the six companies have been filing similar claims, and termed them as vexatious litigants.

    Resident magistrate Kiongo Kagenyo went ahead and dismissed the 139 claims.

    The firms that filed the claims include Kalita System Debt Holding Kenya Limited, Garnet Portfolio Management Limited, Aventus Technology Limited, Sirius Collect Limited, Maxlev-Finance Limited and M-Collect Limited vexatious litigants.

    The magistrate said she was concerned on whether the companies had satisfied the requirements under Section 33S of the Central Bank of Kenya Act.

    “The totality of the foregoing is that the Court is compelled to make a finding that the Claimant is abusing the Court process making it a candidate of being declared a vexatious litigant pursuant to section 2 (1) of the Vexatious Proceedings Act, and consequently dismiss the suit in limine, at this stage, which it hereby does,” ruled the Magistrate.

    In one of the claims filed by Aventus Technology Limited, on 6th January 2025, the magistrate noted that Donald Nyaga appeared before her and stated was an employee of the firm and was representing it all matters.

    And when asked whether the firm had complied with the CBK requirements, he said the firm was in the process of doing so.

    “As it stands therefore, Aventus Technology Limited is operating in non-conformity with the dictates of the regulating Authority and the court cannot dignify an illegality by presiding over such matters. For the foregoing, all the matters filed by Aventus Technology Limited as appearing in today’s causelist are hereby dismissed for the Claimant is operating contrary to the law,” ruled the magistrate.

    The magistrate added that the ruling would apply to all the 139 claims.

    Kagenyo noted that  the companies have been filing claims in droves and immediately after such filing abandon them and hardly prosecute them.

    “This matter is no exception and falls in the category of such neglected filed Claims,” Magistrate Kagenyo noted.

    The Court further observed that the claimants seem to be just intent of filing a suit and having a case number and summons to enter an appearance endorsed by the court, for other purposes but not pursuing the matter to its logical conclusion.

    The magistrate said the conduct of the claimants was abusing the Court process.

    “Indeed, a keen look at the documents filed by the aforestated six companies shows a striking similarity and it is not so hard to discern that they are all but a metamorphosis of one, and sadly only metamorphosing in form but inherently retaining the character of abandoning the filed suits,” Said Resident Magistrate Kagenyo.

  • You Can Now Sue Your Landlord For Rental Deposits At The Small Claims Court

    You Can Now Sue Your Landlord For Rental Deposits At The Small Claims Court

    In a landmark ruling, the High Court of Kenya has affirmed that the Small Claims Court (SCC) has jurisdiction to hear cases involving the refund of rental deposits. This decision, delivered by Justice Helene Namisi on January 23, 2025, marks a significant victory for tenants across the country, providing them with a legal avenue to reclaim their deposits from landlords who unjustly withhold them.

    Background of the Case

    The ruling stemmed from a case filed by Dr. Michelle Muhanda against LP Holdings Ltd. Dr. Muhanda had rented a property from LP Holdings Ltd from February 2015 until October 2022. Upon vacating the premises, she requested a refund of her KShs. 230,000 rental deposit. However, the management refused, instead presenting her with a bill of KShs. 271,857.60 for alleged repair costs.

    Dr. Muhanda argued that the property was in good condition when she left and that the company had ignored her request for a joint inspection. After her attempts to resolve the matter amicably failed, she filed a case at the SCC, seeking a refund, punitive and exemplary damages under the Consumer Protection Act, and damages for breach of contract.

    High Court’s Decision

    The SCC initially dismissed Dr. Muhanda’s case on jurisdictional grounds, prompting her to appeal to the High Court. In her ruling, Justice Namisi stated that the SCC has the jurisdiction to hear cases involving the refund of rent deposits, as such claims fall under the SCC Act, which covers “contracts relating to money held and received.”

    Justice Namisi emphasized that the SCC is an appropriate forum for post-tenancy disputes, including claims for the return of rent deposits and damages against landlords who withhold refunds. She overturned the SCC’s earlier decision, allowing tenants to seek redress through the SCC for rental deposit disputes.

    Implications for Tenants and Landlords

    This ruling has significant implications for both tenants and landlords. Tenants now have a clear legal pathway to reclaim their deposits if landlords unjustly withhold them. The SCC is designed to handle cases quickly, with proceedings required to be heard and determined on a day-to-day basis, ensuring a resolution within 60 days from the date of filing the claim.

    Joseph Mwal, the Human Rights and Consumer Protection Advocate who represented Dr. Muhanda, hailed the decision as a wake-up call for landlords and real estate agents. He emphasized the importance of fair and transparent practices in dealing with tenants, particularly regarding rent deposits.

    “The judgment underscores the importance of consumer protection, which is a guaranteed right under Article 46 of the Constitution,” Mwal said. “Tenants should now feel empowered to demand their deposits and take legal action if necessary.”

    Consumer Protection and Fair Treatment

    The ruling aligns with the constitutional right to fair treatment and consumer protection. Article 46 of the Constitution guarantees consumers the right to goods and services of reasonable quality, the right to information about products and services, and the right to compensation for loss or injury arising from defects in goods or services.

    This decision reinforces the need for landlords to adhere to these principles, ensuring that tenants are treated fairly and that their economic rights are protected. It also serves as a reminder that tenants have legal recourse if they feel their rights have been violated.

    Justice Namisi’s ruling marks a significant step forward in protecting tenants’ rights and holding landlords accountable for unfair practices. With the SCC now clearly empowered to handle rental deposit disputes, tenants can seek justice more efficiently and effectively.

    As the real estate market continues to grow, this decision is expected to promote greater transparency and fairness in landlord-tenant relationships, ensuring that both parties uphold their obligations and respect each other’s rights.

    Below is the copy of the judgment.

    [pdf-embedder url=”https://cms.kenyainsights.com/wp-content/uploads/2025/01/JUDGEMENT-MILIMANI-HCCCOMA-E256-OF-2023_250127_142308.pdf” title=”JUDGEMENT – MILIMANI HCCCOMA E256 OF 2023_250127_142308″]

  • Kingdom Bank Aided Fraud, Court Makes A Landmark Ruling That Will Open Floodgates For Lawsuits

    Kingdom Bank Aided Fraud, Court Makes A Landmark Ruling That Will Open Floodgates For Lawsuits

    In a landmark ruling that is expected to disrupt the peace of many banks in Kenya, the High Court on March 15, 2024 upheld the decision of the Small Claims court in which a customer successfully sued Kingdom Bank a subsidiary of Co-operative bank after losing Sh50,600 he erroneously credited to an M-Pesa till number that terminated in an account domiciled at the bank. The court held that the bank was liable for the loss.

    The High Court judge ruled that despite Kingdom Bank having demonstrated that money was withdrawn before the affected customer reported the erroneous transaction, it failed to show that it tried following up with the customer who withdrew the money to stop the fraud.

    “The bank was under a duty to demonstrate that it took the necessary steps in recalling the money. However, all that the bank did was to file statements to show how the transaction was undertaken or how the money was withdrawn. There was nothing to show that the bank called for the money from its customer. No evidence of its intention to aid the recovery of the money,” said Justice Mabeya, the presiding judge of the Milimani High Court Commercial and Tax Division.

    “While I admit that the bank has a duty to protect its customer’s interests, in this case, the customer fraudulently withdrew money that did not belong to it. The bank had a duty to ensure that it did not aid a fraud and it is not enough to state that the account did not have sufficient funds.”

    The case of Kingdom Bank and Alice Wanja Wanjohi

    In court papers seen by Kenya Insights, Ms Wanja erroneously sent a total some Ksh50,600 to the Kingdom-linked MPESA till.

    She reached out to Safaricom upon realizing the mistake informing them of the erroneous transaction but was instead instructed to reach out to the Bank for assistance.

    “On 16/8/2022, a day after the transaction, Safaricom informed the respondent that the reversal request had been transferred to the appellant for resolution,” read the court papers.

    On reaching out to the Bank, Wanja was informed the money had already been withdrawn by the receiving customer and could not be recovered.

    The Bank produced a bank statement showing that its customer withdrew the funds on the same day the amount landed in the account.

    Dejected, Wanja went on to sue the Kingdom Bank at the Milimani Small Claims Court, arguing that the lender acted in breach of care.

    She pointed out that the Bank failed to stop a fraudulent transaction and in turn shielded its customer.

    The High Court finding now raises the bar of the responsibility of banks in protecting the interests of customers who are not even their own.

    Banks will be held responsible for loss of cash erroneously sent by clients to unintended Safaricom M-Pesa tills numbers, which terminate into accounts held by the lenders.

    The High Court has held that banks will have to demonstrate that they took all the “necessary steps in recalling the money” to stop their clients from illegally profiting from such erroneous transactions or be held liable for the losses suffered by affected M-Pesa users.

    This could open up banks to thousands of lawsuits involving M-Pesa customers who accidentally send money to the wrong till numbers terminating in banks and end up losing the money amid the tedious process involved in requesting for reversals.

    Safaricom has over 606,000 enterprises using its payment service, Lipa na M-Pesa, to accept payments for goods and services, pointing to the popularity of the service that transacted Sh1.63 trillion in the financial year ending March 2023.