https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9650

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT ELDORET** **CIVIL APPEAL NO. E143 OF 2023** **FAMILY BANK LIMITED………………………………………………….............APPELLANT** **VERSUS** **RODAH CHELAGAT……………………………………………..........................RESPONDENT** **(*Appeal from the Judgment dated 4/07/2023 delivered in Eldoret Chief Magistrate’s Court Civil Case No. 603 of 2018 by Hon. Onkoba Mogire - Principal Magistrate*)** **JUDGMENT** 1. This Appeal arises from the Judgment rendered in the lower Court case referred to above in which the Respondent (as the Plaintiff) obtained Judgment against the Appellant (as the Defendant), a well-known financial institution operating as a bank in Kenya for a sum of Kshs 676,000/-. 2. The suit was instituted by way of the Plaint dated 29/05/2018 filed through **Messrs Annasi Momanyi & Co. Advocates**, in which it was pleaded that in or about the year 2023, the Respondent (Plaintiff) sought financial accommodation or facilities from the Appellant to enable her purchase the motor vehicle registration number **KBN 875T** from one **Geoffrey Omido Ogola** (**hereinafter referred to as “*the Vendor*”**), and that herself and the Appellant agreed that the loan for Kshs 700,000/- for acquisition of the motor vehicle was to be transferred directly into the Vendor’s bank account held at Barclays Bank of Kenya. It was pleaded further that the Respondent then repaid the amount in the mistaken belief that the funds had been disbursed into the Vendor’s account as agreed only to later discover that no such disbursement was made. It was also pleaded that on 25/06/2013, the Appellant allowed an illegal or unathorized withdrawal of a sum of Kshs 676,000/- from her bank account number **[………………….],** which the Respondent was not privy to, nor did she sanction, and thus fraudulent, and which is the amount the Respondent sought Judgment for against the Appellant. 3. The Appellant, through **Messrs Gumbo & Co. Advocates**, filed the Statement of Defence dated 31/07/2018 in which it was pleaded that it advanced an asset financing facility to the Respondent for purchase of a motor vehicle from a third party, that it was a term of the contract between the Appellant and the Respondent that the motor vehicle was to be registered in the joint names of the Appellant and the Respondent until repayment of the loan in full when the motor vehicle was to be transferred to the Respondent. It was then pleaded that the Appellant advanced the asset facility and the funds were deposited on 25/06/2013 into the Respondent’s said bank Account. It was denied that the funds were to be transferred directly into the Vendor’s account as there was no such term in the Agreement made on 13/06/2013, nor in the Letter of Offer dated 22/06/2013. It was also contended that the Respondent withdrew an amount of Kshs 676,000/- on 25/06/2013, and it was denied that the withdrawal was fraudulent as the Respondent never lodged any complaint about it before suing the Appellant. In the end, it was claimed that the Appellant is a reputable banking institution and the instant suit is an attempt to tarnish its good name and a ploy by the Respondent aimed at unjust enrichment. 4. The Respondent then filed a Reply to Defence basically reiterating her claim, and after close of pleadings, the matter proceeded to full trial until conclusion. I gather from the record that the trial proceedings however went “missing” and, as such, the trial commenced ***de novo***. At the fresh trial, the Respondent called 2 witnesses, while the Appellant called 1. 5. **PW1** wasthe Respondent, **Rodah Chelagat**. She adopted her Witness Statement and basically restated her claim as already captured in the Plaint. She insisted that in breach of the terms of the loan Agreement, the Appellant did not disburse the money to the Vendor as agreed, and that when she learnt of that fact from the Vendor and made an inquiry from the Appellant, she was informed by the Appellant that the funds had been deposited in her own account, and withdrawn. She however insisted that she never made nor sanctioned any such withdrawal from her account. She also reiterated that the Vendor sued her in **Case No. 38 of 2016** for default, and she had to therefore pay him the money. She then produced her supporting documents and reiterated her prayer for Judgment for Kshs 676,000/-. In cross-examination, she reiterated that she had applied for a loan of Kshs 700,000/-, and that she later confirmed, funds were, unknown to her, deposited into her account subject to deductions. She however denied withdrawing the same. She also confirmed that she had taken possession of the motor vehicle unaware that the Vendor had not been paid, that she started repaying the loan from 1/08/2013 up to 5/03/2015, after which the motor vehicle log-book was released to her, and she has since resold the vehicle to a third party. In re-examination, she stated that she had paid or compensated the Vendor a sum of Kshs 900,000/-. Regarding the motor vehicle purchase price, she stated that the Appellant was to top up the balance of Kshs 600,000/-. 6. **PW2** was **Sarah Chepkemoi**, who attended Court pursuant to Witness Summons issued upon the Respondent’s prompting and who introduced herself as a Court Administrator in charge of the Civil Registry at the Eldoret Law Courts. She produced the Court file in **Eldoret CMCC No. 38 of 2016, Godfrey Omulo Ogolla v Rodah Chelagat**, which she testified, was determined on 8/02/2016 by consent of the parties. 7. **DW1** was **Rispah Nyaboke**, who, too, adopted her Witness Statement and introduced herself as the Credit Manager, Nakuru Branch of the Appellant but previously, the Relations Manager at the Eldoret Branch. She produced the Defendant’s bundle of documents, and reiterated the Appellant’s defence, including that the funds were deposited in the Respondent’s account on 25/07/2013 and withdrawn in cash on the same date. She confirmed that the loan was for purposes of financing purchase of a motor vehicle by the Respondent from the Vendor and testified that the Respondent had an Agreement for Sale. Regarding the procedure in withdrawing cash, she explained that a customer must provide identification documents (identity card or passport) and the bank retains the transaction slip which it keeps at the branch for 3 years, and subsequently forwards it to a central unit in Nairobi. She stated that in this case, the Appellant, even after making every effort, could not trace the withdrawal slip considering that the suit was filed 5 years later, and she speculated that the slip may have been misplaced between the branch and the “ordering”. She also confirmed that the Respondent repaid the loan in full between 25/06/2013 and 5/03/2015, and also asserted that that the Respondent never at any time before filing this suit, approach the Appellant over the issue. She also denied that there was any agreement for the Appellant to disburse the funds directly to the Vendor of the motor vehicle. In cross-examination, she confirmed that the Vendor had transferred ownership of the motor vehicle to the joint names of the Appellant and the Respondent, and agreed that it is the Appellant, as the bank, which has to explain all issues touching on debit and credit in a customer’s account, and also is the custodian of all documents pertaining to cash withdrawals from accounts. She also conceded that she had not produced any evidence to demonstrate that the branch had indeed forwarded the withdrawal slip to the central unit in Nairobi as she had alleged, or that the branch had asked the central unit to supply the same. In re-examination, she agreed that she had no document to demonstrate that it is the Respondent who withdrew the cash. 8. After the trial, the Court, by the 23-page Judgment delivered on 4/07/2023, as aforesaid, found that the Appellant had failed to disprove the Respondent’s claims, and entered Judgment in favour of the Respondent as prayed. 9. Aggrieved by the decision, the Appellant filed this Appeal on the following 6 grounds: 10. **The Learned Magistrate erred in law and in fact by holding that that the doctrine of estoppel by conduct was not applicable in the case whereas it was clear from the Plaintiff's conduct that she withdrew the impugned funds when:** 11. **The Plaintiff took possession of the motor vehicle after the loan was disbursed and withdrawn from her account and commenced repayment of the loan facility;** 12. **The Plaintiff continued to make subsequent repayments of the loan facility until payment in full without raising any issues with the Defendant on the impugned transaction;** 13. **The Defendant, after full repayment of the loan released the logbook to the Plaintiff who proceeded to sell the motor vehicle to a third party sometime in 2016;** 14. **The Plaintiff was sued by the Vendor of the motor vehicle in *Eldoret CMCC No. 38 of 2016* on account of non-payment of the purchase price of the motor vehicle but she failed to immediately raise any issue on the impugned transaction with the Defendant** 15. **The Plaintiff brought the suit against the Defendant 5 years after the alleged unlawful withdrawal of the impugned funds from her account** 16. **The Learned Magistrate misdirected himself by proceeding on the premise that the Plaintiff's case against the Defendant was a case for negligence when** 17. **The Plaintiff's case against the Defendant was one tor fraud and illegality;** 18. **The question of negligence as addressed by the Court was never pleaded by the Plaintiff in the pleadings;** 19. **The Court applied the standard of proof of negligence which was lower than that of fraud which is ordinarily higher than the balance of convenience,** 20. **The Learned Magistrate misdirected himself by distinguishing the authorities cited by the Defendant when the said authorities exemplified the issue of fraud as pleaded by the Plaintiff.** 21. **The Learned Magistrate erred in law and in fact by rewriting the terms of the contract between the Plaintiff and the Defendant when it correctly stated that the contract between the parties was silent on how the funds were to be discharged but nevertheless proceeded to imply obligations on the Defendant to remit the impugned funds directly to the Vendor of the motor vehicle.** 22. The Appeal was then canvassed by way of written Submissions. The Appellant filed the Submissions dated 4/11/2025, while the Respondent’s is dated 13/02/2026. **Appellant’s Submissions** 1. Counsel for the Appellant, **Ms. Omalla**, in her lengthy 14-page Submissions, contended that the Respondent’s case borders on incredulity, and that even if it was to be entertained, her own conduct from 2013 to 2018 is wholly inconsistent with that of a person who was unaware of, or uninvolved in the disbursement and withdrawal of the loan proceeds. She submitted that the Respondent’s sustained actions over a period of 5 years are not those of an innocent borrower, but one who benefitted from the facility and later sought to escape the natural consequences of her choices. She pointed out that the Respondent took possession of the motor vehicle immediately after the loan had been disbursed and withdrawn from her account on 25/06/2013, and commenced repayment of the loan barely a month later on 1/08/2013, then continued to make regular payments without protest until the loan was fully settled on 5/03/2015. She also pointed out that upon completion of the repayment, and after receiving the discharged log-book from the Appellant, the Respondent sold the motor vehicle in 2016 to a third party. She also submitted that the Respondent, when sued by the Vendor claiming non-receipt of the purchase price, never raised a single complaint against the Appellant alleging irregular withdrawal or misapplication of funds, and only came to discover the alleged irregularity and filed this suit, a staggering 5 years after the alleged wrongful withdrawal, 3 years after full repayment and discharge of the loan, and 2 years after re-selling the motor vehicle. According to Counsel, the Respondent’s claim is so inherently implausible that it strains the bounds of belief. He faulted the trial Magistrate for accepting the Respondent’s fantastical narrative and disregarding the Respondent’s explanation that the withdrawal slip was unavailable due to time lapse and system upgrades. 2. Counsel also wondered about the Vendor’s conduct, pointing out that although he alleged non-receipt of the purchase price, curiously raised no issue for 3 years, transferred ownership of the motor vehicle to the Respondent, allowed her to use it continuously and only re-emerged in 2016 after the motor vehicle had been re-sold to a third party. According to him, the Vendor’s conduct is also contrived as it aligns suspiciously with that of the Respondent. Counsel also refuted the Respondent’s assertion that the Appellant was required to disburse the loan directly to the Vendor, which assertion she contended, collapses upon scrutiny as there was no agreement to that effect, nor any such instructions from the Respondent, the account holder. Counsel reiterated that evidence was tendered to show that the Appellant retains transactional slips at branch level for 3 years after which they are transferred to a central archive serving all 93 branches and ultimately destroyed as permitted by the law once the statutory retention period lapses. She submitted further that the Respondent’s prolonged silence constituted unequivocal representations to the Appellant that the transaction was valid and complete and was thus estopped by her own conduct. She cited **Section 120** of the **Evidence Act**, and faulted the trial Magistrate’s finding that this was “not a clear case” for estoppel, which finding she termed as unsustainable. 3. She contended further that the Respondent’s case was anchored on express allegations of “***fraud***” and “***illegality***”, and thus faulted the trial Magistrate for determining it as a case of “***negligence***”. She submitted that parties are bound by their pleadings and faulted the trial Court for reframing the Respondent’s case, and introducing a new cause not pleaded, and thus lowering the standard of proof, and also shifting the burden of proof to the Appellant. She contended further that while “***fraud***” must be proved to a standard higher than on a balance of probabilities, “***negligence***” requires only ordinary proof, and as such, the shifting of burden allowed the Respondent to succeed on a weaker case than she had pleaded, contrary to the provisions of **Section 107** of the **Evidence Act**. She urged that the authorities relied on by the trial Court were cases in which “***negligence***”, as a cause of action, was specifically pleaded, unlike the instant case. She then reiterated that the Respondent’s case, as pleaded, was founded on fraud and illegality, and thus a tortious cause of action and was, as such, time-barred under the 3-years window stipulated under **Section 4(2)** of the **Limitation of Actions Act**, which contention the trial Court declined to consider on the basis that it had not been raised in the pleadings, and was only being introduced at the stage of filing Submissions. She asserted that the trial Court, having taken that position, could also not then rely on the cause of action of negligence, an equally tortious cause of action, which had also not been pleaded. She thus termed the trial Court’s position as inconsistent. 4. Counsel also faulted the trial Court for distinguishing binding authorities from the Court of Appeal relied on by the Appellant to restate the principle that fraud must be pleaded and strictly proven, on the ground that they related to forgery of Wills and missing land records, yet the principles enunciated therein were of general application, and the factual context did not therefore matter. She also urged that the trial Court, by stating that the Appellant should have disbursed the loan proceeds directly to the Vendor of the motor vehicle, re-wrote the contract between the parties as there was no such term in the loan contract, and thus introduced a new obligation on the Appellant. **Respondent’s Submissions** 1. On his part, Counsel for the Respondent, Mr. Wainaina, after recounting his client’s case, defended the trial Court’s reliance on the Appellant’s failure to produce the withdrawal slip to enter Judgment urging that the Appellant, being the custodian of the relevant records, failed to demonstrate that the Respondent is the one who had withdrawn the funds from her bank account. He also defended the Court’s rejection of the Appellant’s introduction of the limitation of actions defence as the same had not been pleaded. Similarly, he defended the trial Court’s rejection of the estoppel by conduct defence raised by the Appellant urging that the Respondent could not have been estopped as she was not even aware that the Appellant had not paid the Vendor, which fact she only came to learn around 2016-2017. He further denied that the trial Court had re-written the contract between the parties. In conclusion, he defended the trial Court’s holding that the withdrawal of the funds had all the hallmarks of an improper transaction. **Determination** 1. As reiterated in a plethora of cases, this being a first appellate Court, it has the duty to evaluate, re-assess and re-analyze the evidence before the trial Court, and draw its own conclusion (see for instance, the case of **Kenya Ports Authority vs Kuston (Kenya) Ltd** **[2009] 2 EA 212**. 2. It is evident that the major issue arising for determination in this Appeal is **“whether the trial Magistrate erred in finding that the Respondent had proved her case that the Appellant had allowed an illegal or unathorized withdrawal of a sum of Kshs 676,000/- from her bank account, which withdrawal the Respondent was however not privy to, nor did she sanction.”** 3. In determining the above broad issue, I will have to first answer the following 3 sub-questions: 4. **Whether** **the trial Magistrate erred in holding that that the doctrine of estoppel by conduct was not applicable in this case.** 5. **Whether the trial Magistrate erred by proceeding on the premise that the Respondent’s case was a case for “*negligence*” when the case preferred was one of “*fraud*” and “*illegality*”.** 6. **Whether the trial Magistrate re-wrote the terms of the contract between the parties by implying obligations on the Appellant to remit the impugned funds directly to the Vendor of the motor vehicle.** 7. On the issue of “***estoppel by conduct***”, the phrase refers to a legal principle that prevents a person from going back on his word, actions, or silence if another person reasonably relied on that conduct and suffered a loss or disadvantage as a result. In Kenya, the principle of estoppel is, in general, codified in **Section 120** of the **Evidence Act**. 8. **Halsbury’s Laws of England** defines the principle of “***estoppel by conduct***” as follows: **“Estoppel by conduct, otherwise known as estoppel in pais, arises where a person has by words or conduct made to another clear and unequivocal representation of fact, either with knowledge of its falsehood or with the intention that it should be acted upon, or has so conducted himself that another would, as a reasonable person understand that a certain representation of fact was intended to be acted upon and the other person has acted upon such representation and thereby altered his position. The estoppel arises against the party who made the representation, and he is not allowed to aver that the fact is otherwise than he represented it to be. Estoppel by conduct is generally regarded as a rule of substantive law . . .”** 1. For a defence of “***estoppel by conduct***” to therefore succeed, it must be demonstrated that one party has made a clear, intentional, and “***unequivocal***” statement or behaved in a manner that leads the other party to assume a certain state of affairs. The second party must have therefore genuinely believed the representation and acted upon it. In this case, the Appellant’s Counsel, in urging that the Respondent was estopped by her conduct from making the claims she made in the suit, pointed out that the Respondent took possession of the motor vehicle after the loan was disbursed, withdrawn from her account, and commenced repayment of the loan, that the Respondent continued to make repayments of the loan until conclusion without raising any issues with the Appellant on the impugned transaction, that the Appellant, after full repayment of the loan released the logbook to the Respondent who then proceeded to sell the motor vehicle to a third party sometime in 2016, that the Plaintiff was sued by the Vendor of the motor vehicle on account of non-payment of the purchase price of the motor vehicle but she failed to raise any issue on the impugned transaction with the Respondent, and that the Respondent brought the suit against the Appellant 5 years after withdrawal of the impugned funds from her account. 2. The trial Magistrate, in determining the issue, held as follows: ***“The plaintiff on his part submitted that the doctrine by estopped is inappropriate to the instant case.*** ***That she was not aware that the debit was not in favour of Godfrey Ogola. That she came to discover the same in 2016-2017 and took immediate steps to lodge the suit, after the required demand notice. That the plaintiff never gave the defendant any impression that she was not intent in seeking recovery of the money illegally and fraudulently withdrawn from her account on discovery of the same.*** ***The very first aspect arising from the submissions of the defendant as highlighted above which the court wishes to address is with regard to disposing of the subject motor vehicle to a 3rd party by the plaintiff. As at the time the said motor vehicle was being sold by the plaintiff to a 3rd party in the year 2016, it was not held as collateral/security for the loan facility. The defendant concedes and acknowledges the fact that it had discharged the same and released the log book to the plaintiff. It was therefore her exclusive property and nothing barred her from utilizing it in the manner and style of her choice.*** ***On the issue of repayment of the loan, the plaintiff does not deny the fact that she had executed all the relevant documents and submitted them to the defendant. She had expressly committed herself on how, when and for what duration she was to make the repayments. That course of conduct was no doubt predetermined at the time of executing the loan documents. The critical question is whether or not she had accessed the loan amount she had applied for? That is the question I will seek to determine in the subsequent paragraphs of this judgement. The said issue is hotly-contested by the parties herein. The plaintiff contends that she never made the withdrawal as claimed by the defendant. That she came to know much later that the funds were never remitted to the seller of the motor vehicle. That she opted to settle the matter first with the said seller of the motor vehicle and then proceeded to engage with the defendant on the loan amount. The defendant on the other hand contends that the money was disbursed into the account of the plaintiff and was actually accessed by the plaintiff. I am of the view therefore, that this is not a clear case which the court can apply the doctrine of estoppel by conduct and bar the plaintiff from making the claim which constitutes the substratum of the suit herein.”*** 1. I am constrained to agree with the trial Magistrate. All the alleged aspersions or suspicious actions or inaction imputed by the Appellant against the Respondent are matters of speculation. In layman’s language, the Appellant was asking the trial Court to “put two and two together”, meaning, to “**figure out the truth” or draw a conclusion** by combining different pieces of information, or clues. The Appellant was therefore asking the trial Court to look at separate facts and link them to discern “the bigger picture”, and to therefore infer that the Respondent was fully aware of the happenings but cleverly chose not to act, or in the alternative, was an active participant thereto, or was even perhaps, the mastermind behind a fraudulent scam. By arguing as such, the Appellant was clearly conceding that it did not possesss any cogent evidence of the Respondent’s knowledge of, or participation in the alleged “scam”, and that is why it was pushing the trial Court into making inferences. Unfortunately for the Appellant, Courts adjudicate disputes based on **facts** and **tangible, cogent evidence**, not assumptions or guesses. 2. In this case, the Appellant’s witness, **DW1**, conceded that it is the Appellant, as the bank, which has to explain all issues touching on debit and/or credit in a customer’s account, and also that it is the custodian of all documents pertaining to cash withdrawals from accounts. Regarding the procedure in withdrawing cash from an account over the counter, **DW1** explained that a customer intending to make such cash withdrawal, must provide identification documents such as an identity card or passport. It is therefore pure logic that a bank cannot simply tender an account statement to prove that a specific individual made an over-the-counter (OTC) cash withdrawal. To discharge its **duty of care** and prove physical identity conclusively, the bank must produce documentary, or biometric, or electronic evidence. The primary physical proof is the original, signed voucher or counter cheque used for the transaction, and the bank may also demonstrate that the signature on the slip matches the customer's signature card kept in the bank’s database. 3. Since it is the Appellant who claimed that it is the Respondent who personally withdrew the cash over the counter, the Appellant being the custodian of its bank records, the easiest way for it to have disproved the Respondent’s denial of withdrawing the cash, was to produce evidence demonstrating that it was indeed the Respondent who withdrew the cash. This, the Appellant could have easily done by producing either documentary proof such as the signed withdrawal Application Form, or even visual evidence such as a CCTV clip. Indeed, in re-examination, **DW1** agreed that she had no document to demonstrate that it is the Respondent who withdrew the cash. **DW1** explained further that in cash withdrawals, the Appellant retains the transaction slip which it keeps at the branch for 3 years, and subsequently forwards it to its central unit in Nairobi. She stated that in this case however, the Appellant, even after making every effort, could not trace the bank slip considering that the suit was filed 5 years after the withdrawal. She therefore speculated that the withdrawal slip may have been “misplaced” somewhere between the branch and the central unit. Up to that stage, **DW1’s** explanation sounds quite plausible. What I however found to be curious is that, as she conceded in cross-examination, that she had not produced any evidence whatsoever to demonstrate that the Eldoret branch had indeed forwarded the withdrawal slip to the central unit in Nairobi as she had alleged, and worse still, she did not produce any evidence to demonstrate that any effort had indeed been made to trace the slip. I say so because no evidence of any emails, or letters, correspondence, or inquiries of any nature sent out by the branch to the alleged central unit in Nairobi was produced. Again, although Counsel for the Respondent faulted the trial Magistrate for disregarding the Respondent’s explanation that the withdrawal slip was unavailable “***due to time lapse and system upgrades***”, that is a creation of Counsel since nowhere in her testimony, or in her adopted Witness Statement, did **DW1** make any reference to “***to time lapse and system upgrades***” as being the reason for non-availability of the records, Under these circumstances, how did the Appellant expect the trial Magistrate to accept the claim that it is the Respondent who withdrew the cash? 4. Adoption of the word “***unequivocal***” in construing “***estoppel by conduct***” means that the impugned party's conduct, words, or silence must have been clear, unambiguous, and capable of only one reasonable interpretation. It must therefore leave no room for doubt about the party's intended meaning or promise. In this case, apart from mere conjecture and inferences, the Appellant did nothing to disprove the Respondent’s explanation that she did not act earlier because she was not aware that the disbursement was never made directly to the Vendor, or that the funds had, instead, been deposited in her account, and that she only came to discover the same around 2016-2017. As the Appellant concedes that the issue was never discussed between the parties, the Appellant cannot claim that the Respondent gave it any impression that she was not intent in seeking recovery of the money alleged to have been fraudulently withdrawn from her account. By relying on inferences, conjecture and suspicions to “paint a picture” over the Respondent’s conduct inevitably means only one thing; that the Appellant failed to demonstrate the “***unequivocal***” part of the Respondent’s alleged conduct. 5. For the above reasons, the ground of Appeal that the trial Magistrate erred in holding that the doctrine of estoppel by conduct was not applicable in the case fails. 6. The next issue is whether the trial Magistrate entered Judgment on the basis of the cause of action of “***negligence***”, when the case preferred was one of “***fraud***” and “***illegality***”. 7. In determining the above question, I note that although the Plaint contains phrases which may be construed to refer to the cause of action of “***negligence***”, there was no express pleading in the Plaint of “***negligence***” as a cause of action. I say so because although the Plaint contains a phrase such as that “***the Defendant was under a duty to safeguard the funds advanced to the Plaintiff***”, and accusations against the Appellant such as **“*acting carelessly to the detriment of the Plaintiff****”*,and, **“*failing to exercise caution expected of a financial institution*”**, no effort was made toalso plead “***negligence***” as a cause of action.The Appellant’s Counsel is therefore indeed right that the Respondent’s case was pleaded entirely under the cause of action of **“*fraud*”**.The question of “***negligence***” as addressed by the Court was clearly never pleaded by the Plaintiff in the pleadings. The trial Magistrate, in determining this issue did not really address the matter at hand but instead, chose to distinguish the authorities cited by the Appellant. 8. I may state that the relationship between a bank and its customer is a fiduciary and contractual one, under which the bank owes the customer a strict **duty of care** to secure and protect the customer’s funds. Where, as in this case, an “unidentified third party” is alleged to have inexplicably managed to withdraw funds from the account without the customer’s authority, it should not be difficult to establish a case of “***negligence***” and/or “***breach of contract***”. I may therefore state further that a civil case against a bank for an unauthorized withdrawal by an alleged “unidentified person” stands a higher chance of succeeding if brought under the cause of action of “***negligence*”**, and/or “***breach of contract***”, or a combination of both as demonstrating “***breach of the duty of care***” would obviously be an easier task. It is risky to bring such a case solely under the cause of action of “***fraud***” as was done in this case, unless the Plaintiff possesses conclusive or definitive proof that it is the bank's own agents, such as employees, who committed the fraudulent withdrawal of funds, or abetted, or actively participated in the “***fraud***”. 9. “***Fraud***”, as a cause of action, is a distinct and rigid cause of action in civil litigation as it requires a high standard of proof. First, the allegation of “***fraud***” must be pleaded with extreme specificity since the standard of proof is much higher than the standard “***balance of probabilities***”, it almost borders on “***proof beyond reasonable doubt***”. In a case such as the instant one, the Plaintiff would find it extremely difficult to sustain a claim of “fraud” against the bank if the perpetrator is unknown, and cannot be verified. In any event, if the “fraud” was executed entirely by an outsider, the bank may still be easily found to have breached its duty of care under the cause of action of “***negligence***”, but it cannot, itself be said to have commit fraud. This is because the bank can only become liable under fraud if “***vicarious liability****”* against it is demonstrated. The safest strategy in cases of this nature is to therefore plead multiple causes of action bysplitting the claim into both primary and alternative causes of action to cover all probable eventualities. This would therefore entail pleading “***breach of contract”*, “*negligence”****,*and also “***fraud”*** in the same Plaint. 10. I therefore agree with the Appellant’s Counsel that the Respondent’s case having been anchored on express allegations of “***fraud***” and “***illegality***”, the trial Magistrate erred in determining it as a case of “***negligence***” on the part of the Appellant. Parties are indeed bound by their pleadings and the trial Magistrate erred since he, in effect, reframed the Respondent’s case by introducing a new cause of action of “***negligence***” not pleaded. Counsel is therefore right that in doing so, the trial Magistrate, as well intentioned as he might have been, unintentionally lowered the Respondent’s standard of proof, and also shifted the burden of proof to the Appellant. This is because while “***fraud***” must be proved to a standard higher than on a balance of probabilities, “***negligence***” requires only ordinary proof, and as such, the shifting of burden allowed the Respondent to succeed on a weaker case than she had pleaded, contrary to the provisions of **Section 107** of the **Evidence Act**. 11. Having found as above, the third issue, namely, whether the trial Magistrate re-wrote the terms of the contract between the parties no longer merits consideration. **Final Orders** 1. The upshot of my findings above is therefore as follows: 2. The Judgment delivered in **Eldoret Chief Magistrate’s Court Civil Case No. 603 of 2018** on 4/07/2023 allowing the Respondent’s (Plaintiff’s) suitis hereby set aside, and substituted with an order dismissing the suit. 3. Since however the Respondent was unable to disprove the Respondent’s case on factual basis, and has only escaped on the basis of the “blunder” committed in drafting and framing of the Plaint, I decline to award it any costs. 4. Each party shall therefore bear the costs of her/its own costs of both the trial Court suit, and of this Appeal. **DELIVERED, DATED AND SIGNED AT NAIROBI THIS 3RD DAY OF JULY 2026** **……………..……….…..** **WANANDA JOHN R. ANURO** **JUDGE** **Delivered in the presence of:** | | | | | --- | --- | --- | | **Ms. Omalla for the Appellant** | | | | **Mr. Wainaina for the Respondent** | | | | **Court Assistant: Brian Kimathi** | | |