Umoja Magharibi (K) Limited v John Mabisi Lubano

Analysis and Determination 5. The Claimant's case is principally founded upon the loan application dated 30th July 2021 and the documentary evidence showing that a sum of Kshs. 553,000/= was subsequently disbursed to the Respondent. The Claimant submits that the Respondent, in his response, admits receipt of the said sum, albeit stating that the money was advanced for purposes of clearing import duty on the motor vehicle. It is further submitted that the loan application itself expressly identifies payment of duties and taxes as the purpose for which the loan was sought. 6. I have considered this submission. The Respondent does not dispute that the Kshs. 553,000/= was received. Indeed, his evidence is that the money was advanced to facilitate the clearance of import duty. Thus, the fact of payment and the stated purpose of the advance are, to that extent, common ground. The dispute is principally whether the advance constituted a loan repayable by the Respondent, or whether it formed part of a separate arrangement under which the Claimant was to recover the amount from the proceeds of sale of the motor vehicle. 7. The Claimant contends that the Respondent has not produced an agreement evidencing the alleged vehicle sale arrangement. I have considered this argument alongside the documentary evidence placed before the Court. The Respondent's case concerning the motor vehicle is not entirely unsupported. There is contemporaneous correspondence between the parties' respective representatives concerning the vehicle, including the communication of 9th September 2021 in which Mr. Festus Kiplagat informed the Claimant's Representative one Justus Wanjala that he had authorised the Claimant to sell the vehicle to a willing buyer, followed by an acknowledgment of that communication by the Claimant's Representative on 10th September 2021. 8. That correspondence is significant because it demonstrates that, contemporaneously with the transaction, the Claimant was involved in an arrangement concerning the sale of the motor vehicle. It therefore cannot simply be disregarded on the basis that the Judgment SCCCOMM No. E091 OF 2026 Hon. A.Z Ogange -RM pg. 2

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Respondent did not produce a formal written agreement embodying the alleged arrangement. 9. The court must also consider the Claimant’s failure to call its representative, Mr. Justus Wanjala who from the documentary evidence was directly involved in the dealings concerning the motor vehicle. The Claimant was in an advantageous position to explain what became of the vehicle, whether it was sold, the price at which it was sold and how the proceeds were dealt with. The court is therefore entitled to draw and adverse inference that had the representative testified and/or recorded his statement, his evidence would not have supported the claimant’s case. In so holding I am guided by the case of Nesco Services Limited v CM Construction [EA] Limited [2021] KEHC 12810 (KLR), Odunga J as he then was stated as follows: “Since the said author was for reasons unknown to the Court not called to testify and dispute its authenticity, adverse inference could be made thereon. In Kenya Akiba Micro Financing Limited v Ezekiel Chebii & 14 others [2012] eKLR the court stated as follows: “Section 112 of the Evidence Act Chapter 80 of the laws of Kenya provides: ‘In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.’ Where a party has custody or is in control of evidence that that party fails or refuses to tender or produce, the court is entitled to make an adverse inference that if such evidence was produced, it would be adverse to such a party. In the case of Kimotho v KCB [2003] 1 EA 108 the court held that adverse inference should be drawn upon a party who fails to call evidence in his possession.” 10. Further, I find it material that the Respondent does not merely deny receiving the money. He accepts receipt and gives a specific explanation for the circumstances in which it was advanced. That explanation is supported, at least in part, by the correspondence relating to the motor vehicle. Once that explanation was placed before the Court, the Claimant was required to address it. In particular, having allegedly taken possession of the vehicle and Judgment SCCCOMM No. E091 OF 2026 Hon. A.Z Ogange -RM pg. 3

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undertaken to sell it and I reiterate that evidence concerning the subsequent sale and application of the proceeds would have been relevant in determining the true nature of the parties' transaction. 11. The Claimant submits that the Respondent has not filed a counterclaim. That is correct, but the absence of a counterclaim does not by itself determine the Claimant's claim. The Respondent does not need to establish an independent entitlement to money from the Claimant in order to succeed in defending a claim for repayment. His burden is to rebut the Claimant's assertion that he became indebted to the Claimant in the sum claimed. 12. I have also considered the Claimant's submission that the Respondent's allegation concerning the motor vehicle is unsupported because no formal agreement was produced. The Court is mindful that the Small Claims Court is not bound by strict rules of evidence and is entitled to receive and consider relevant material that assists it in arriving at a fair determination. The absence of a formal written agreement is therefore not, in itself, determinative. The Court must consider the totality of the evidence, including the parties' contemporaneous conduct. 13. On the totality of the evidence before me, I find that the Claimant has established that it advanced Kshs. 553,000/= for the purpose of clearing the import duty. However, the evidence concerning the subsequent vehicle arrangement introduces a material and plausible alternative explanation as to the mechanism through which that advance was to be recovered. The contemporaneous email correspondence concerning authority to sell the vehicle materially supports that explanation. The Claimant has not satisfactorily accounted for this correspondence or placed before the Court evidence concerning the subsequent sale of the vehicle and application of its proceeds. 14. Consequently, although the Claimant has proved the advance of the money, it has not, on the balance of probabilities, sufficiently established that the Respondent remained personally liable to repay the Kshs. 553,000/= as a loan in the manner pleaded. Judgment SCCCOMM No. E091 OF 2026 Hon. A.Z Ogange -RM pg. 4

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15. The Claim therefore fails and is dismissed. 16. On costs, the Respondent has succeeded in defending the claim. Although the Claimant’s Claim was founded upon documentary evidence demonstrating the advancement of the disputed sum, the Court has ultimately found that the Claimant failed to establish the Respondent's liability to repay the said amount as a loan. In the circumstances and in exercise of the court's discretion, I award costs of the suit to the Respondent assessed at Kshs. 20,000/=. JUDGMENT DATED, SIGNED AND DELIVERED VIA CTS AT MALABA SMALL CLAIMS COURT THIS 18TH DAY OF SEPTEMBER 2026. A.Z. OGANGE R.M/ADJUDICATOR 18.09.2026 Judgment SCCCOMM No. E091 OF 2026 Hon. A.Z Ogange -RM pg. 5

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