https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6883

Mwaura v Family Bank Limited (Commercial Case E005 of 2024) [2026] KEHC 6883 (KLR) (14 May 2026) (Judgment) Neutral citation: [2026] KEHC 6883 (KLR) Republic of Kenya In the High Court at Thika Commercial Case E005 of 2024 FN Muchemi, J May 14, 2026 Between Cheffin Nganga Mwaura Plaintiff and Family Bank Limited Defendant Judgment Brief facts 1.The Plaintiff instituted the suit herein vide plaint dated 10th June 2024 seeking for judgment against the defendant for damages for breach of contract; general damages for loss of business opportunity; aggravated, exemplary and punitive damages as well as costs of the suit. The Plaintiff’s Case 2.The plaintiff, PW1, adopted his witness statement filed on 13th June 2024 and testified that he holds an account with the defendant bank number 0XXXXXXXXX8 Thika Branch. It was an express or implied term of their contract under which the client account was opened that the defendant would honour and effect payment of cheques drawn by him or in his favour. The plaintiff stated that on 12th March 2024, he received cheque number 000249 for Kshs. 218,230/- from one of his clients, one Mary Wairimu Wanjiku, and upon depositing the cheque he was issued with a deposit slip dated 12th March 2024 by the defendant. Unfortunately, upon the lapse of 48 hours, the defendant never issued him with any notification indicating whether the cheque had been honoured or not. On 14th March 2024, he proceeded to the defendant’s offices to inquire on the progress of the cheque and he was informed that he required to hand over the copy of the deposit slip to the banker to check for him the progress. 3.The plaintiff testified that he requested to be issued with an image return document which proved to be an uphill task and the defendant did not say much to him. He stated that he was eventually issued with a fake image return document. The said image which had handwritten information indicated as ‘refer to drawer RSN:’ and the defendant insisted that they retain his copy of the deposit slip which he persisted it should be handed back to him. 4.The plaintiff stated that the defendant’s refusal to hand over the deposit slip prompted him to call a security guard on him making him feel threatened, intimidated and maltreated yet he had not committed any offence. Further, the plaintiff stated that the dishonor led to the loss of business opportunity from an investor who had intended to invest in his business USD 400,000. The said investor declined to invest in his business as a direct consequence of the defendant’s dishonor of the cheque. 5.The plaintiff testified that he visited the defendant’s Makongeni Branch in Thika on 11th April 2024 and requested a statement of account for the period between 1st February 2024 to 11th April 2024 and upon perusal he noticed that the cheque he deposited on 12th March 2024 had not been honoured. Additionally, by the time of filing thus suit, he had not received any communication from the defendant with regards to the cheque deposited on 12th March 2024. The plaintiff stated that he has developed anxiety visiting any of the defendant’s branches and especially the Thika Branch where he was treated with contempt in the presence of other bank users. He further stated that he has suffered distress, agony, mental torture, humiliation, scandal, opprobrium and contempt in the eyes of the public and his character, credit and reputation have been injured. 6.On cross examination the plaintiff testified that the cheque was issued by Mary Wairimu Wanjiku and he is aware that cheques only clear when the account of the person issuing has funds. He further stated that he was told that there were no sufficient funds as he demanded for the image of the cheque. The plaintiff stated that he did not contact Mary Wairimu concerning the bounced cheque. 7.The plaintiff stated that his issue with the bank was that they took away his banking slip and failed to give him the image of the cheque. He stated that he needed the images for evidence to enable him follow up the cheque issue. The Defendant’s Case 8.The defendant, DW1, led evidence through Julius Mbugua Wachira who is the Operations Manager in Family Bank Thika Branch The witness adopted his witness statement as his testimony. The witness confirmed that the plaintiff was a customer and operated an account with the defendant bank. On 12th March 2024, the plaintiff visited the defendant banking hall to deposit cheque number 249 issued in his favour for the sum of Kshs. 218,230/- by one of the defendant’s other customers namely Mary Wairimu Wanjiku. Upon depositing the said cheque at one of the counters in the bank, the plaintiff was issued with a copy of the drop box deposit slip duly stamped by the defendant acknowledging the receipt of the cheque. 9.DW1 testified that during the processing of the cheque, it came to their attention that the drawer’s account was not sufficiently funded to satisfy the amount in the cheque and the said cheque had not been signed properly by the drawer. Thus, the subject cheque could not be cleared and was returned unpaid. On 14th March 2024, the plaintiff visited the defendant’s Makongeni Branch to enquire on the status of the cheque and he was informed that the same had returned unpaid on account of insufficient funds and lack of a proper signature by the drawer. Upon request by the plaintiff, the defendant took it upon itself to contact the drawer of the cheque informing her that the cheque she issued could not be honoured as the account was not sufficiently funded. The drawer thereafter informed them to request the plaintiff to contact her directly so that they could sort out the issue between themselves. 10.The witness stated that they informed the plaintiff of the said developments and outcome of the phone call but he remained uncooperative and insisted that the defendant re-banks the cheque. The plaintiff even proceeded as far as meting out unpalatable slurs aimed at the defendant’s customer service team. The witness stated that the allegations that the plaintiff was mishandled by their security personnel are unfounded. Further the witness stated that they could not issue the image of the cheque on the material day as the systems were down. He stated that normally when such a scenario happens, they inform the customer and later issue the document to them when systems get back to operation. 11.DW1 explained that it was not the defendant’s fault that the drawer’s account was not sufficiently funded to satisfy the cheque drawn in favour of the plaintiff and further the defendant was not privy to the engagement between the plaintiff and defendant. 12.On cross examination, the witness stated that the cheque never reflected in the plaintiff’s account and where there is an issue with the signature, the bank notifies both the account holder and the depositor. He further stated that they notified the plaintiff when he went to their bank. Additionally, the witness stated that it is after 48 hours that the notification is sent to the depositor on the position of the banked cheque and that this was done. 13.DW1 testified that they had called the drawer of the cheque on 14th March 2024 and customer care accordingly informed the plaintiff. The witness confirmed that there was no indication on the cheque image that there was a problem with the signature. He further testified that customers are normally issued with images of cheques by the bank and they have no formal communication of reaching customers on such issues. 14.Parties closed their respective cases and put in written submissions. The Plaintiff’s Submissions. 15.The plaintiff submitted that the practice by the defendant was to clear internal cheques on the same day, a fact that was admitted by the defendant’s own witness, yet his cheque remained dishonoured hours later. The plaintiff relied on the case of Eunice Wairimu Muturi & Another vs James Maina Thuku & Another [2018] eKLR to support his contentions. The plaintiff further relied in the case of Lipkin Gorman vs Karpnale [1992] 4 ALL ER 409 quoted in Barclays Bank of Kenya Limited vs John Nyangeri Simba (liquidator of Lakestar Insurance Company staff Retirement Scheme) in liquidation (2015) eKLR and submitted that the defendant failed to honour his obligation as per the terms and conditions of conventional banking procedures. 16.The plaintiff referred to the cases of Equity Bank of Kenya & Another vs Robert Chesang [2016] eKLR and Harit Sheth & Richard Kariuki t/a Harit Sheth Advocates vs NIC Bank Limited [2010] eKLR and submitted that the negligence by the defendant to dishonor the cheque resulted in a loss of business opportunity of USD 400,000. 17.The plaintiff argued that the defendant could not prove that they communicated with him which shows negligence on the part of the defendant. Further, the defendant’s action could imply they were in collaboration with the defendant to ensure that the cheque number 00249 remained dishonoured. The plaintiff further argued that the dishonoured cheque was never returned to him and that the defendant breached the Central Bank of Kenya policies that requires inhouse cheques be cleared within 24 hours from the date of presentation. 18.The plaintiff submitted that although DW1 blamed the system failure that led to the setback to communicate that the cheque was not properly signed and that the drawer had insufficient funds in her account, no such evidence was placed before the court to prove that indeed the system failure information was relayed to him. The plaintiff referred to Section 107 of the Evidence Act and the case of William Kabogo Gitau vs George Thuo & 2 Others [2010] 1 KLR 526 to support his contentions. The plaintiff further submitted that he deposited the impugned cheque at Thika main Branch and not Makongeni Branch as alleged by DW1. He only obtained a statement from the Makongeni Branch and never inquired on the cheque as he had not deposited it there. 19.The plaintiff argued that he requested an image return document which was never issued to him. He further argued that he required the image return document for purposes of reporting the drawer to the police station if at all the drawer’s account had insufficient funds. Thus he was unable to pursue the drawer through other legal channels and claim a refund of his money because of the defendant’s failure to issue him an image return documents. The plaintiff further argued that there is a clear distinction between his exhibit marked No. 3 and the defendant’s exhibit marked No. 2. Additionally, the defendant’s exhibit No. 2 does not contain any information whatsoever that the impugned cheque was not properly signed by the drawer which implies that the said allegations are far fetched and a cover up of the defendant’s ineptitude in honouring his instructions. The plaintiff reiterated that if there were any issues with the drawer’s signature the defendant through its call back system would have called both the drawer and the plaintiff regarding the issue of signature on the cheque and the cheque’s authenticity which was not done herein. The plaintiff argued that although DW1 testified that they called the drawer on the issue of the signature he stated on re-examination that he was not a party to that phone call. Further, the witness did not produce any call logs from the bank to confirm the position. Nevertheless, the account opening forms contain both the phone numbers and the personal emails address of his. 20.The plaintiff submitted that he is not faulting the defendant for the drawer’s lack of funds but for refusing to perform his duties including furnishing him with all traceable information on a timely basis. The plaintiff argued that the defendant failed to provide the alleged records of communication of the alleged improper signatures, proof of insufficient funds, proof of alleged communication to the drawer and proof of any updates to him which denied him a chance to pursue justice in other forums. The Defendant’s Submissions 21.The defendant submitted that an Image Return Document (IRD) could not be generated due to system downtime but a manual return document duly stamped and signed was issued. The defendant further submitted that the plaintiff declined to contact the drawer despite advise of by the bank. The plaintiff could not explain why he failed to sue the drawer in order to shed light on the matter and insisted the bank ought to have banked the cheque despite the insufficient of funds. 22.The defendant argued that a bank can only honour a cheque where there are sufficient funds in the drawer’s account and in the present case the drawer’s account had Kshs. 13,300/- against a cheque of Kshs. 218,230/-, a fact confirmed and admitted by PW1 during cross examination. Thus it would have been illegal and ultra vires for the bank to honour the said cheque in the absence of sufficient funds as the same would amount to granting an unauthorized overdraft. The defendant relied on the case of Barclays Bank of Kenya Ltd vs Mahamud [1985] KEHC 25 (KLR) to support their contentions. 23.The defendant referred to Sections 47 and 55 of the Bill of Exchange Act and the case of Diamond Trust Bank Limited vs AMCEA Limited [2020] KEHC 9735 (KLR) and submitted that in the event of dishonor, liability attached to the drawer and not the bank as the bank acts as a custodian of customer funds and is bound to operate within the limits of the funds available in the drawer’s account. 24.The defendant argued that the bank had immediate access to confirm insufficiency without invoking external clearing processes and there was no legal obligation requiring the bank to process a cheque it already knows cannot be honoured. Thus the cheque was dishonoured and if it had been banked, the plaintiff would have incurred bank charges once the cheque bounced and thus it was in his interest that the cheque was not cashed. 25.The defendant submitted that the plaintiff failed to show any legal requirement mandating only an image return documents or any prejudice suffered due to issuance of a manual return. The defendant further submitted that the bank contacted the drawer and the drawer invited the plaintiff to engage her directly, which he refused to do. The plaintiff could not explain why he did not sue the drawer for the bounced cheque. The defendant argued that the cause of action if any, was against the drawer and therefore, the failure to enjoin the drawer to the proceedings was fatal to the plaintiff’s case. Owing to the said omission, the plaintiff has failed to prove any breach of duty by the bank, any contractual obligation owed to him that was violated. 26.The defendant referred to the decision in Amon vs Raphael Tuck & Sons Ltd cited with approval in Mwangi & Another vs Kassamali & 2 Others (Commercial Case E896 of 2021) [2025] KEHC 18920 (KLR) and submitted that the plaintiff having sued the wrong party his claim is fundamentally defective and unsustainable. As such it should fail in limine and fall by the wayside with costs. Issues for determination. 27.The main issues for determination are:-a.Whether the defendant breached the contract between them and the plaintiffb.Whether the document issued to the plaintiff was a forgery.c.Whether the plaintiff is entitled to the reliefs sought. The Law Whether the defendant breached the contract between itself and the plaintiff 28.The burden of proof in civil matters rests on the party who makes a claim. This position was adopted by the Court of Appeal in Palace Investment Ltd vs Geoffrey Kariuki Mwenda & Another (2015) eKLR where it held:-Denning J. in Miller vs Minister of Pensions (1947) 2 ALL ER 372 discussing the burden of proof had this to say:-That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not’, thus proof on a balance or prepodence of probabilities means a win however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally unconvincing the party bearing the burden of proof will lose, because the requisite standard will not have been attained. 29.Similarly in the case of Evans Nyakwana vs Cleophas Bwana Ongaro [2015] eKLR, it was held:-As a general preposition the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. That is the purport of Section 107(1) of the Evidence Act, Chapter 80 Laws of Kenya. Furthermore, the evidential burden is cast upon any party, the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in Section 109 and 112 of the law of proof of that fact shall lie on any particular person… 30.It is imperative to note that banks have procedures that guide them in dealing with their clients to ensure they meet their contractual obligations. In the case of Iskorostinskaya Svetlana & Another vs Gladys Naserian Kaiyoni [2019] eKLR, the court held that:-A bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to operations within its contracts with its customers. The duty to exercise reasonable care and skill extends over the whole range of banking business with the contract with the customer. Thus the duty applies to interpreting, ascertaining and acting in accordance with the instructions of a customer.I am of the view that the bank is under an obligation to honour the instructions of the client however the same must be done with reasonable skill and care in order to avert loss associated with fraudsters. 31.In Co-operative Bank of Kenya Ltd vs Biwott (Civil Appeal 18 of 2019) [2022] KEHC 9946 eKLR the court held that:-The bank customer relationship is contractual in nature and imposes a duty on the bank to exercise reasonable care and skill in its dealings with the customer…A bank has a duty under its contract with its customer to exercise ‘reasonable care and skill’ in carrying out its part with regard to operations within its contract with its customer. The standard of that reasonable care and skill is an objective standard applicable to bankers. Whether or not it has been attained in any particular case has to be decided in the light of all the relevant facts, which can vary almost infinitely. 32.It is therefore clear that the duty of care arises from the bank customer relationship that exists between a bank and its customer. In the present case it is not in dispute that there existed a contractual banker customer relationship between the defendant and the plaintiff through his account number 0XXXXXXXXX8 at Thika Branch. There also existed the same relationship between the bank and one Mary Wairimu Wanjiku. 33.It is not disputed that the said Mary Wairimu Wanjiku drew a cheque being cheque no. 000249 in the plaintiff’s favour for a sum of Kshs. 218,230/-. The plaintiff deposited the said cheque with the defendant on 12th March 2024 vide drop box and was issued with a receipt. However the plaintiff argued that he never received any communication via SMS or email on the progress of the cheque which was meant to occur upon the lapse of 48 hours. According to PW1’s evidence he visited the bank on 14th March 2024 to inquire about the progress of the cheque and he was requested to hand over the copy of the deposit slip and he in turn requested to be issued with a copy of the image return document. He was issued with a copy of the cheque he previously deposited with the handwritten notes “Refer to drawer (RSN:63)”. 34.On perusal of the record, the plaintiff annexed a copy of cheque as PExh 3 which is written “Refer to drawer RSN:63” and has a signature and stamp of the defendant bank, Thika Branch. According to DW1, the systems were down that day and they could not furnish the plaintiff with an image return document but instead gave him a photocopy of the cheque which they duly affixed their stamp. It is my considered view, that the bank acted with reasonable care in furnishing the plaintiff with the copy of the cheque which they duly signed and stamped authenticating that the document originated from the bank. This also supports DW1’s testimony that the systems were done as they could not generate an image return document. Although the plaintiff has argued that the document amounts to a forgery, he has failed to prove the same. Furthermore, the document had a signature and stamp from the bank. It is therefore my considered view that the allegations of forgery cannot suffice. 35.The plaintiff has further argued that the bank in dishonouring the cheque failed to honour its obligations and exercise reasonable skill and care. DW1 led evidence that during the processing of the cheque they discovered that the drawer’s account did not have sufficient funds to satisfy the amount of the cheque and that the drawer of the cheque had not appended her proper signature to match the bank records regarding her account. The witness produced a statement of Mary Wairimu Wanjiku’s account which showed that at the time of depositing the cheque, the available balance was only Kshs. 13,300/-. As such, the bank could not deposit the cheque as there were no funds to satisfy the cheque amount. It is noted that the witness informed the court that since both the plaintiff and Mary Wairimu were customers in their bank, they did not clear the cheque to avoid the plaintiff from being penalized by was of bounced cheque. The law provides in Sections 47 and 55 of the Bills of Exchange Act for the dishonouring of a cheque for non payment. 36.Section 47 of the Bills of Exchange Act provides:-(1)A bill is dishonoured by non payment-a.When it is duly presented for payment and payment is refused or cannot be obtained; orb.When presentment is excused and the bill is overdue and unpaid.(2)Subject to the provisions of this Act, when a bill is dishonoured by non payment, an immediate right of recourse against the drawer and endorsers accrues to the holder. 37.Section 55 of the Act provides:-The drawer of a bill by drawing it-a.Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or any endorser who is compelled to pay it, so long as the requisite proceedings on dishonor be duly taken;b.Is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse. 38.Section 48 of the Act provides that notice of dishonor of a cheque must be given to the drawer and each endorser and any drawer or endorser to whom such notice is not given is discharged. Further, Section 49 sets down the rules for validity and efficacy of the notice of dishonor required by the preceding section. It is worth noting that under Section 49(a) notice of dishonor must be given by or on behalf of the holder of the cheque, the notice under (e) may be given in writing or by personal communication while under (f) the return of the dishonoured bill to the drawer is a sufficient notice of dishonor. 39.The provision provides for timelines within which to give notice in (l) which reads:-The notice may be given as soon as the bill is dishonoured, and must be given within a reasonable time thereafter; and in the absence of special circumstances, notice is not deemed to have been given within a reasonable time unless-i.Where the person giving and the person to receive notice reside in the same place, the notice is given or sent off in time to reach the latter on the day after the dishonor of the bill;ii.Where the person giving and the person to receive notice reside in different places, the notice is sent off on the day after the dishonor of the bill, if there be a post at a convenient hour on that day, and if there be no such post on that day then by the next post thereafter; 40.The record shows that DW1 notified Mary Wairimu Wanjiku of the dishonoured cheque by way of a telephone call. It is also discerned by both the plaintiff and the defendant witness that the plaintiff was not notified of the fact that the cheque was dishonoured until he visited the bank on 14th March 2024. Both witnesses testified that such notifications occurred after 48 hours on presenting the cheque. The plaintiff testified that he had banked the chqequ on 12th March 2024. He then waited to get notification after 48 hours on whether the cheque had cleared which was not forthcoming. He visited the bank on 14th March 2024 after the 48 hours had lapsed. Thus in the absence of the said timelines, it is difficult to ascertain whether the notice he received in the bank was sufficient. Thus it is my considered view that the plaintiff has failed to prove that he was not sufficiently notified. 41.The plaintiff has further argued that the bank failed to issue him with an image return document as required by law. Section 74(B)(i) of the Act is of relevance. It provides:-Where a cheque presented for payment in accordance with subsection (1) of Section 74 is dishonoured by non payment, the presenting bank may either-a.On its own motion or at the request of the holder, return the cheque to the holder; orb.Issue to the holder an image return documents. 42.This section relates to cheques that are presented electronically as opposed to manual presentation as was the case here. This provision only makes it mandatory for the bank to issue a holder with an image return document for a cheque presented electronically that is dishonoured. In fact Section 74(A)(2) provides that a cheque is presented electronically then the banker before payment requests for the physical presentment of the cheque Section 74B shall not apply. The plaintiff has failed to demonstrate that the bank failed to act with reasonable care in this case. The issue of a manual return document that was duly stamped and signed was sufficient in my view. 43.On the issue of damages, the plaintiff pleaded and testified that as a result of the dishonor of the cheque, he lost business to the tune of USD 400,000 and his reputation and credit were damaged. In this regard, the plaintiff did not produce evidence of documentation or oral evidence that his reputation and credit was damaged by the interaction with the bank. Nevertheless having found that the bank did not breach its duty of care, the award on loss of business does not arise. The damages on breach of contract and subsequently for aggravated and exemplary damages have not been demonstrated. 44.It is my finding that the plaintiff has failed to prove his case on the balance of probabilities. Consequently, this suit is accordingly dismissed. 45.Due to the facts of this case, I hereby direct that each party meet their own costs. 46.It is hereby so ordered. JUDGMENT DELIVERED VIRTUALLY, DATED AND SIGNED AT THIKA THIS 14TH DAY OF MAY 2026.F. MUCHEMIJUDGE