1.This appeal arose from the Judgement of Hon. F. Nekesa delivered on 16th January, 2019 in Kitui Chief Magistrate Court Civil Case No. 116 of 2018.
2.In that suit, the appellant was sued by the Respondent on an account of a breach of contract where the Respondent claimed that he had advanced a friendly loan of Kshs. 700,000 to the appellant on 26th August, 2017 and was to refund the amount on 26th October, 2017.
3.The Respondent alleged that the appellant breached the agreement by failing to repay as per their written agreement.
4.The Appellant on the other hand pleaded that he borrowed only Kshs. 230,000 and was coerced into paying Kshs. 406,000 in interests which he stated were unlawful. He therefore, denied owing Kshs. 700,000 and counter-claimed Kshs. 406,000 stating that the agreement was signed under duress.
5.The following is a brief summary of the evidence tendered at the trial court.
6.In her testimony in court the Respondent stated that she met the Appellant in 2018 and that he would borrow money from her from time to time which he would refund. That in August of 2017, the Respondent borrowed Kshs 476,000/- from her which he repaid in two installments one of Kshs 450,000/- and the other was Kshs 26,000/- which was paid on 28th August 2017. That on the same day that the Appellant paid the second installment, he called the Respondent and asked for a loan of Kshs 700,000/-. He stated that she took the money to the Appellant the same day and the two made an agreement that the Respondent was going to repay the money within a period of two months and that they both executed an agreement to that effect. According to her, the Appellant failed to repay the money within the agreed timelines which prompted the Appellant to send him a demand letter through her advocates on 5th October 2017. She stated that the Appellant refused to pay her back but denied threatening him in any way. He tendered an agreement indicative of the loan as P Ex1.
7.On his part, the Appellant denied receiving Kshs 700,000/- from the Respondent in August of 2017. He however acknowledged receiving Kshs 100,000/- in 2015, Kshs 30,000/- in January 2016 and Kshs 100,000/- in February 2016. He stated that he repaid the full amounts back but the Respondent demanded an interest of Kshs 1,200,000/- for the reason that he had taken long to repay the money. According to him, he took a loan and paid the Respondent Kshs 450,000/- on 26th August 2017 as she was pressurizing him and threatening to embarrass him to his colleagues. He also stated that he signed the friendly loan agreement on the same day due to fear.
8.The trial court evaluated the evidence tendered and found that the appellant signed the agreement willingly and there was no evidence of duress. It then entered judgement in favour of the Respondent and ordered the appellant to refund the money in 30 days from 19th January, 2019.The trial court however, found that the Respondent’s claim on interest was not proved and also dismissed the counter-claim.
9.Being dissatisfied with the trial court’s decision, the Appellant lodged this appeal vide a Memorandum of Appeal dated 5th February 2019 and raised the following grounds namely:-i.The Learned Magistrate erred in law and fact by her failure to consider the relevance of Kshs 450,000/- paid by the Appellant to the Respondent on the 26th August 2017.ii.The Learned Magistrate erred in fact and law in holding that the previous transactions between the Appellant and the Respondent were not relevant to the determination of the suit.iii.The Learned Magistrate erred in law and fact in her failure to take into account the fact that the Respondent was not truthful in relation to her dealings with the Appellantiv.The Learned Magistrate erred in law and fact in not taking into account the fact that the Appellant was not provided with a copy of the Agreement dated 26th August 2017 and that the said Agreement had been altered.v.The Learned Magistrate erred in law in holding that the burden of proof lied with the Appellant only and or shifting the burden of proof to the Appellant.vi.The Learned Magistrate erred in law and fact in arriving at the conclusion that the Appellant was not under duress in executing the agreement dated 26th August 2017vii.The Learned Magistrate erred in law in holding that the Appellant had not proved the counterclaimviii.The Learned Magistrate erred in law in taking into consideration irrelevant material and failing to take into consideration relevant material.
10.In his written submissions done through Counsel, the appellant submits that the trial court erred by failing to consider the previous payments he had made to the respondent. He faults the trial court for failing to consider that there was duress in the signing of the agreement exhibited in court showing he had agreed to refund Kshs. 700,000.
11.He further contends that he proved his claim on the counter claim of Kshs. 406,000 he had pleaded. He submits that he should have been awarded the said amount.
12.The Appellant has cited the cases of Transnational Bank Ltd v Peter Kipsat Lelei & another  eKLR where the court dismissed the suit for failure of production of bank statements by the bank to support their claim that it had advanced a sum of Kshs. 3,540,348.45 in respect of an overdraft facility accorded to the 1st Defendant at his own request and which overdraft was guaranteed by the 2nd Defendant.
13.The Appellant has also cited the case of Hellen Wangari Wangechi v Carumera Muthoni Gathua  eKLR on the issue of duress where Mativo J held that an agreement drafted and executed at a police station could not have been entered into freely.
14.The Respondent has opposed this appeal through written submissions by Counsel dated 5th October, 2022. She contends that she advanced a loan of Kshs. 230,000 to the appellant between 2015 and 2016 and that a further Kshs. 700,000 was advanced to him vide an agreement dated 28th August, 2017 which was exhibited during trial.
15.The Respondent has refuted the claim that she threatened the Appellant and submitted that the Appellant should have reported the same to the police or called his colleagues to testify. She has also accused the Appellant of inconsistencies in his testimony for the reason that he claimed to have signed the agreement outside his work place at one point but testified in court that he signed the agreement at Kafoka.
16.This court has considered this appeal and the response made. The duty of this court as 1st appellate court is to re-evaluate the evidence tendered during trial with a view to making own conclusion on the issue(s) at hand.
17.The only issue for determination in this appeal is whether both the respondent and appellant proved their respective cases because the appellant had a counter-claim as well.
18.This court has perused through the evidence tendered and in particular the agreement tendered by the Respondent showing that the appellant undertook to repay Kshs. 700,000 to the Respondent on 26th October, 2017.
19.There is no doubt that the transaction between the appellant and the Respondent was an informal and somewhat unconventional one that had all the hallmarks of a shylock transaction. This is because there was no evidence of actual money changing hands. There was no evidence that the money said to have been advanced passed through the formal bank channels.
20.The Appellant did not refute executing the agreement but stated that he only executed it under duress following threats from the Respondent. He denied borrowing Kshs 700,000/- from the Respondent but stated that he borrowed Kshs 230,000/- instead. He gave a breakdown of how he received and repaid that money stating that he first borrowed Kshs 100,000/- in December 2015 and Kshs 30,000/- and Kshs 100,000/- in February 2016. He then stated that the Respondent demanded a total of Kshs 630,000/- in interest which he paid as follows, Kshs 20,000/- via m-pesa on 12th November 2015, Kshs 40,000/- paid on 28th July 2016 via m-pesa, Kshs 100,000/- paid on 19th January 2017 via bank deposit Kshs. 450,000, via bank deposit on 26th August 2017 and another bank deposit of Kshs. 26,000 on 28th August, 2017.
21.It was apparent therefore that the money stated to have been advanced could have been lumped together with interests. The reason for that conclusion is that evidence of payment tendered by the appellant was uncontested by the Respondent.
22.This court also finds the fact that the Respondent went to the appellant’s employer at National Bank to be unusual given that the arrangements made between the two had been done outside the bank premises in the first place. The Respondent conceded that she went to the bank where the Appellant works and talked to the manager.
23.That concession by the Respondent shows that she went to a great length to have the appellant repay whatever amount plus interest.
24.The appellant stated that he feared for his job because the Respondent was applying pressure on him.
25.It is given that the fear or even perception of fear/duress is a question of fact that can be proved through facts. Inferences can also be drawn from circumstances obtaining.
26.Mativo J in (as he then was) Euromec International Limited v Shandong Taikai Power Engineering Company Limited (2021) eKLR referenced the case of Paragon Business Forms (Ply) Ltd v Du Preez on the question of duress as follows;
27.This court finds that the money advanced to the Appellant by the Respondent was shylock business because it is clear from the evidence that though the Respondent termed the load ‘‘friendly’’ the interests accrued therefrom were no so ‘‘friendly’’ but exploitative.
28.This is a business that both unregulated by any legislation in Kenya and is often used by unscrupulous businessmen to fleeze unsuspecting people out to meet some financial challenge/obligation. Such businesses operate outside the law. (Section 3 of the Banking Act ) and therefore, can get away with punitive and exploitive interest. It is unconscionable in my view to allow such enterprises to use court process to sanitize their unscrupulous business where the interests charged are contrary to Section 16A of Banking Act and are so high that it only serve to rob its victims of hard earned cash or assets. It should not be allowed to flourish in an open, progressive, transparent and democratic society.
29.This court finds that if the said transaction was legitimate and transparent, the respondent could have deposited the money advanced in the appellant’s bank account. It is quite telling that while the repayment by the appellant can be traced through money trail via bank deposits and M-pesa the money advanced to him on the other was not traceable and the question posed is why? The question that needed answers was, did the Respondent carry cash of Kshs. 700,000 went to the bank, where the appellant worked, took him outside the bank premises and handed the cash to him? That is highly doubtful and unlikely.
30.This court finds that the Respondent at the trial deliberately avoided telling the trial court how the money changed hands and instead simply said he had a written agreement with the appellant acknowledging the debt of Kshs. 700,000/.
31.The trial court in my view should have interrogated that issue better with a view to ensuring that justice at the end of the day prevails. In my view it is not enough in the circumstances obtaining to just rely on a written agreement where it was apparent that one of the parties was coerced or intimidated because one of the parties was at a disadvantaged position characterized by induced fear.
32.This court finds that there was no evidence given by the Respondent showing how the money which by any standard was a large sum (Kshs. 700,000) if at all was paid to the Appellant. The agreement exhibited in my view was insufficient to prove her case. The agreement was obtained through undue influence/fear put on the Appellant and was not lawful.
33.I also find that the counter-claim by the appellant opened a can of worms on the kind of transaction that took place between the parties herein. The same was unenforceable in law.
34.In the premises, this court finds merit in this appeal. The same is allowed. The Judgement of the Lower Court dated 16th January, 2019 is hereby set aside and in its place the Respondent’s case is dismissed with costs. The appellant’s counter-claim also fails and is dismissed with costs.