On determination on refund of security deposits by the Small Claims Court: The case of Muhanda v LP Holdings Ltd (Civil Appeal E256 of 2023) [2025] KEHC 393 (KLR)

The Small Claims Court (SCC) established under Section 4 of the Small Claims Court Act, CAP 10 A, as a specialized commercial court, has, in the past, been hesitant to entertain claims for security deposit refunds. The SCC previously declined jurisdiction in Nairobi Small Claims Court Case SCCOMM No. 5354 of 2023) judgment that it did not have jurisdiction over rental security deposit claims. However, a landmark decision by the High Court in Muhanda v LP Holdings Ltd (Civil Appeal E256 of 2023) [2025] KEHC 393 (KLR) (Commercial and Tax) (23 January 2025) has now clarified that the Small Claims Court has jurisdiction over such claims.

 

The High Court determined that refund of security deposits falls within the category of “a contract for money held and received” under Section 12(b) of the Small Claims Act (No. 2 of 2016). The judgment also noted that the matter had initially been declined by the Small Claims Court on jurisdictional grounds. However, Justice Helene R.  Namisi, after finding that the Small Claims Court has jurisdiction, referred the matter back to the SCC to be heard and determined on its merits by a different adjudicator.

 

This ruling is a significant relief for tenants as the Small Claims Court Act was specifically designed to simplify legal procedures and allow individuals, including those without legal representation, to file claims efficiently. Section 12 of the Act provides that the court has jurisdiction over claims for:

• Contracts for the sale and supply of goods or services.
• Contracts relating to money held and received.
• Compensation for personal injuries.
• Recovery of movable property.
• Liability in tort in respect of loss or damage caused to property.

One of the key advantages of the Small Claims Court is its pecuniary jurisdiction, which covers claims of up to Kshs 1,000,000, as provided under Section 12(3) of the Small Claims Act. Furthermore, the court is statutorily required to expeditiously resolve cases within 60 days from the date of filing the claim, making it a highly efficient option for tenants seeking a quick resolution to their disputes.