https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9414

 **REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPEAL NO. HCCOMMA/E078 OF 2026** **PREVIOUSLY CIVIL APPEAL NO. HCCOMMA/E261 OF 2023** **FAMILY BANK LIMITED…………………………………………………...APPELLANT** VERSUS **LUCY WAMAITHA KIARIE…………………………………………...…RESPONDENT** *(Being an appeal from the judgment of the Small Claims Court at Milimani* *(Hon. B.J. Ofisi, Adjudicator) delivered on 8th September 2023* *in SCCCOMM No. E2734 of 2023)* **JUDGMENT** **Background** 1. This is a first appeal from the Small Claims Court. The Respondent has for over two decades held an account with the Appellant, Family Bank Limited. Between the 7th and 10th of February 2022, a series of withdrawals which she says she neither authorised nor knew of drained a total of Kshs. 720,000/= from her account. She reported the losses to the Appellant and, through the Banking Fraud Investigation Unit, to the police. 2. Of the sum lost, Kshs. 40,000/= was recovered by the police and a further Kshs. 150,000/= was reimbursed by the Appellant on 24th April 2023, after her claim had already been filed. The balance she pursued in the Small Claims Court. 3. By its judgment of 8th September 2023 in SCCCOMM No. E2734 of 2023, the trial court found that the Appellant owed the Respondent a duty of care to safeguard her account and that, from the moment the fraud was reported, that duty was not discharged. It entered judgment for the Respondent in the sum of Kshs. 350,000/= together with interest at court rates from the date of filing the claim, and costs. 4. Aggrieved, the Appellant lodged this appeal upon eight grounds and, pursuant to this court’s order of 9th October 2024, deposited Kshs. 280,000/= in court as security for the decretal sum. **The Appellant’s Submissions** 1. The Appellant, through G.M. Gamma Advocates LLP, submits that this appeal turns upon the trial court’s failure to interrogate the evidence with the care that it demanded. 2. Its central plank is that every impugned transaction was effected using the Respondent’s own Personal Identification Number (PIN), keyed through the mobile banking platform; that a bank has no mechanism to distinguish a fraudulent instruction from a genuine one where the correct PIN is used; and that the Respondent, bound to keep her PIN in confidence, is the author of her own misfortune. 3. Invoking Section 35 of the Evidence Act, the Appellant contends that documentary evidence establishing the manner of the transactions was before the court and, had it been weighed, would have compelled a different conclusion. 4. On the law, the Appellant concedes that an appeal from the Small Claims Court lies only on matters of law. It urges, however, that two such questions arise: first, that the trial court misapplied the burden of proof, casting upon the Appellant a burden the Respondent had never discharged; and second, that to compensate an account holder whose correct PIN was used, without interrogating how that PIN came to be used, exposes financial institutions to a peril in which any customer might collude, withdraw, and then cry fraud. 5. It prays that the record be re-evaluated and the judgment set aside. **The Respondent’s Submissions** 1. The Respondent, through Tim Njenga & Co. Advocates, meets the appeal at its threshold. Relying upon Section 38 of the Small Claims Court Act and upon *Wachira v Mwai (Civil Appeal E022 of 2023) [2024] KEHC 3173 (KLR)*, she submits that all eight grounds, however they are dressed, are complaints of fact, and that this court is without jurisdiction to entertain them. 2. The Small Claims Court, she urges, is the master of its own evidence, and a dissatisfied litigant may not convert a disagreement about facts into a question of law by the mere invocation of the Evidence Act. 3. On the merits, and without prejudice to the jurisdictional objection, the Respondent submits that the finding of liability was amply supported. The unauthorised transactions were initiated through an android application she had never used, her own dealings having always passed through the USSD code \*325#; the funds travelled to third parties unconnected to her; she reported promptly and repeatedly; and the Appellant’s voluntary refund of Kshs. 150,000/= was an implied admission of the very wrong it now denies. 4. She prays that the appeal be dismissed with costs and the security released to her. **Issues for Determination** 1. Two issues fall for determination: 2. ***Whether the appeal raises any question of law within the meaning of Section 38(1) of the Small Claims Court Act; and*** 3. ***If so, whether the appeal is merited.*** **Analysis** 1. An appeal from the Small Claims Court is a creature of narrow compass. Born of Article 48 of the Constitution and the promise of swift and inexpensive justice, that court is by design unshackled from the strict rules of evidence. Section 32 of the Small Claims Court Act permits it to receive any material it considers credible or trustworthy. 2. Section 38(1) then provides that a person aggrieved ***“may appeal against that decision or order to the High Court on matters of law”***, and subsection (2) makes that decision final. The gateway is therefore not merely narrow; once passed, it is the end of the road. 3. The measure of what may enter was settled in **Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR,** where the court, echoing **Stanley N. Muriithi & Another v Bernard Munene Ithiga [2016] eKLR,** confined itself ***“to matters of law only, unless it is shown that the court below considered matters it should not have considered, or failed to consider matters it should have considered, or looking at the entire decision, it is perverse.****”* It is against that yardstick, and mindful of the caution in **Wachira v Mwai [2024] KEHC 3173 (KLR)** that ***“the Small Claims Court is the queen when it comes to evidence”***, that the grounds must be measured. 4. Measured so, the greater part of this appeal cannot pass. Grounds one to six, that the transactions bore the Respondent’s own PIN, that the PIN was changed through her own number, that the Appellant could not sense fraud, that the Respondent was herself negligent, that the platform’s nature was misunderstood, are, every one of them, invitations to reweigh the evidence and substitute a different factual verdict. 5. That is precisely the exercise Section 38 forbids. A ground does not become a question of law by being clothed in the language of Section 35 of the Evidence Act; as the court remarked in **Wachira v Mwai (Supra)**. 6. Only the seventh ground, that the trial court misapplied the burden of proof, carries the genuine timbre of law, for whether a court correctly identified and applied the legal standard of proof is a question of law, even though whether the evidence in fact met that standard remains a question of fact. It is through that single aperture, and the allied contention that the finding rests upon no evidence at all, that this appeal may lawfully be heard. 7. Passing through it, one must first locate the law the trial court was bound to apply. The relationship between banker and customer is contractual, and it carries a duty the law has long described in exacting terms. 8. In **Equity Bank of Kenya & Another v Robert Chesang [2016] eKLR** the High 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”*, and that upon *“any deviation from that understanding without justifiable reasons… the bank is in breach of a contract with the customer and is liable in damages.”*** 9. That standard, as the Appellant’s own line of authority in **Co-operative Bank of Kenya Ltd v Biwott (Civil Appeal 18 of 2019) [2022] KEHC 9946** confirms, is ***“an objective standard applicable to bankers”*,** to be judged in the light of all the facts. The duty is not a still photograph taken when the account is opened; it is a continuing obligation that must rise to meet the customer’s peril as that peril becomes known. 10. As to proof, the governing provisions are Sections 107, 109 and 112 of the Evidence Act. In ***Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & Another [2005] 1 EA 334*** the Court of Appeal explained that ***“the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue”*,** but that there is ***“however the evidential burden that is cast upon any party… which is captured in sections 109 and 112 of the Act.”*** 11. That evidential burden is not frozen; as the Court of Appeal held in **Mbuthia Macharia v Annah Mutua & Another [2017] eKLR**, it ***“may shift in the course of trial, depending on the evidence adduced.”*** And the standard by which it is discharged is the balance of probabilities, no more, but assuredly no less. In **Palace Investment Ltd v Geoffrey Kariuki Mwenda & Another [2015] eKLR**, adopting ***Miller v Minister of Pensions***, the court put it memorably: if the tribunal *“****can say… we think it more probable than not, the burden is discharged… A draw is not enough.”*** 12. With the law so assembled, the Appellant’s complaint that the wrong burden was applied loses its footing. The trial court reproduced Sections 107 and 109 of the Evidence Act, cited ***Anne Wambui Ndiritu v Joseph Kiprono Ropkoi & Another (supra)***, and found that the claimant had proved her claim on a balance of probabilities. 13. A court that identifies the right test, and applies it, does not err in law merely because the party who lost would have weighed the evidence differently. Were the Appellant’s grievance truly one of legal misdirection, it would find no purchase in a judgment that names the very provisions the Appellant now invokes. 14. There remains the sterner question of whether the finding was one no reasonable tribunal could have reached, so that it collapses into an error of law. The transactions on the account had always been initiated by USSD; the impugned ones were initiated through an android application the Respondent testified she had never used. The money did not return to her own wallet but travelled to strangers. 15. She further reported, not once, but repeatedly. And the Appellant, having by its own witness traced the movement of the funds, declined to produce its investigation report, a document peculiarly within its knowledge. Section 112 of the Evidence Act, and the reasoning in **Kenya Akiba Micro Financing Limited v Ezekiel Chebii & 14 Others [2012] eKLR,** entitled the court to infer that the report, had it been produced, would not have assisted the Appellant. To this was added the voluntary refund of Kshs. 150,000/=, which the trial court was entitled to read as an implied admission. On such a record a finding for the Respondent was not perverse; it was probable. 16. But the true answer to this appeal lies in what the trial court did not do. It did not fix the Appellant with liability for the initial compromise of the PIN, for it candidly confessed itself *“unable to decipher whether the claimant’s password was compromised prior to reporting.”* It fixed liability only from the moment the appellant was put on notice, reasoning that from that day the duty to safeguard the account was fully engaged, and that the withdrawals which followed ought to have been prevented. 17. That reasoning is not the court’s invention; it is the appellant’s own confession. At paragraph 18 of its submissions in the trial court, the Appellant admitted that its practice required an account to be frozen once a fraud complaint is made, that in this case *“this was not done”*, and that it was for that very reason that it refunded the sum lost after the complaint. 18. The trial court did no more than hold the Appellant to the standard the Appellant had set for itself. The refrain that the correct PIN was used is no answer to a breach that consists not in failing to divine the fraud, but in failing to act once the fraud was known. 19. What is left falls away quickly. The suggestion that the Respondent was contributorily negligent in sharing her PIN with her daughter was a matter of fact for the adjudicator, who was entitled to weigh it, and did; this court may not re-open it. 20. The award of costs and interest, made under Section 33 of the Small Claims Court Act, was an exercise of discretion with which an Appellate court will not interfere save where it is *“clearly wrong”* ***(Mbogo v Shah [1968] EA 93)***, and no such error appears. 21. A bank is the keeper of the gate through which its customer’s money passes; where it is warned that the gate stands open and does not close it, it cannot afterwards be heard to say that the thief carried the right key. **Disposition** 1. For these reasons, the court finds that the appeal discloses no sustainable question of law; that in so far as the burden of proof is concerned the trial court applied the correct test; and that its finding of liability was neither unsupported by evidence nor perverse. The appeal accordingly fails. 2. The court makes the following orders: 3. The appeal is hereby dismissed. 4. The judgment and decree of the Small Claims Court at Milimani in SCCCOMM No. E2734 of 2023, delivered on 8th September 2023, are upheld. 5. The sum of Kshs. 280,000/= deposited by the Appellant as security be released to the Respondent’s advocates in partial satisfaction of the decretal sum. 6. The Appellant shall bear the costs of this appeal. Orders accordingly. DATED and DELIVERED at Nairobi this 2nd day of July , 2026. ……………………………………… **BENARD WAFULA MURUNGA** **JUDGE** *Delivered on a virtual platform in the presence of:* *GM Gamma Advocates LLP for the Appellants (Oduyo present)* *Tim Njenga & Co. for the Respondents (N/A)* *Kevin Babu - Court Assistant*