https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8669

Hass Scientific & Medical Supplies Ltd v KCB Bank Kenya Ltd (Civil Appeal E249 of 2020) [2026] KEHC 8669 (KLR) (Civ) (18 June 2026) (Judgment) Neutral citation: [2026] KEHC 8669 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E249 of 2020 BW Murunga, J June 18, 2026 Between Hass Scientific & Medical Supplies Ltd Appellant and Kcb Bank Kenya Limited Respondent (Being an appeal from the Judgment of the Chief Magistrate’s Court at Milimani, before Honourable L.L. Gicheha (CM), delivered on the 29th May 2020 in CMCC No. 2943 of 2017) Judgment 1.This appeal arises from the Judgment of the Chief Magistrate’s Court at Milimani by Hon. L.L. Gicheha, Chief Magistrate, delivered on the 29th May 2020 in CMCC No. 2943 of 2017. The suit before the trial court was instituted by Hass Scientific & Medical Supplies Limited (hereinafter “the Appellant”) as Plaintiff against KCB Bank Kenya Limited (hereinafter “the Respondent”) as Defendant, arising out of a transaction in which funds were lost. 2.The Appellant averred that it was a customer of the Respondent Bank when it issued instructions for payment through the transfer of a sum of Euros 111,281.75 from its account to suppliers domiciled in Germany. Subsequently, it alleges that it issued further instructions for the funds not to be transferred, but the Respondent did not act on those instructions. 3.The summary above does not do justice to the narrative by the parties, and I will shortly go into the details for a clearer picture of where the claim arises. 4.The Appellant had, on or about 14th November 2016, issued the instructions to the Respondent to transfer the amount to its principal supplier, Sysmex Europe GmBH, where the account number was erroneously quoted. 5.The Appellant averred that, on or about 14th December 2016, the Respondent’s officer, Martin Ogembo, called the Appellant’s Director and requested the Appellant to supply further details, and that the amount could not be released to the recipients. 6.The Appellant alleged that it then issued instructions to the Respondent to stop the transaction, noting that the account number had been wrongly quoted. It was alleged that the Respondent’s officer confirmed that the funds were still being held. However, in a turn of events, the Respondent then wrote to the Appellant on 11th January 2017 indicating that the transfer had already been effected, and that, upon the recall request, its correspondent bank had advised on 22nd December 2016 that the funds had already been withdrawn by a third party before the recall could take effect. 7.The Appellant blamed the Respondent for the loss of the sum and filed the Plaint dated 28th April 2017, in which it sought payment of the said sum. The Respondent swiftly denied the particulars of negligence and the claim in toto in its Defence. At paragraph 4, it averred that its officer did not at any time confirm to the Appellant that the subject funds were still held by the intermediary bank, as the transaction had been completed. 8.The matter proceeded to hearing, in which the parties called witnesses who gave viva voce evidence and were cross-examined on their averments on oath. The testimony of the Plaintiff’s witnesses appears at pages 113 to 116 of the Record of Appeal. The Defence’s testimony appears at pages 116 to 117. Not much was said at the hearing, as the parties relied heavily on their statements and the documents already admitted. 9.In the Judgment, which was to be rendered on 8th May 2020 but was deferred to 29th May 2020, the Learned Magistrate found that the Plaintiff had not proved its case on a balance of probabilities and dismissed the same with costs to the Defendant. 10.In her judgment, she made mention of the fact that the testimony of the second Plaintiff witness mirrored the account of the Plaintiff, save that the Defendant Bank had not provided details of the person who withdrew the funds, if at all, or of any efforts made to recover the lost sums. She captured the fact that another bank, Development Bank, had stopped a similar erroneous transaction upon the issuance of instructions. That bank, it is important to note, was not party to these proceedings. 11.The Learned Magistrate further noted that the Defence insisted that the Plaintiff was the author of its own misfortune. In any event, the application for transfer form contained a disclaimer limiting the Bank’s liability. 12.The Appellant appealed to this Court on the following grounds, upon which the Memorandum of Appeal is mounted:a.That the Learned Magistrate erred in law and in fact by failing to consider the relevant facts, thus arriving at the wrong decision.b.That the Learned Magistrate erred in law and in fact in coming to conclusions in the judgment contrary to the evidence, the law and the submissions before her.c.That the Learned Magistrate erred in law and in fact in failing to appreciate that the Respondent did not fully undertake the instructions issued by the Appellant in accordance with the Application Form for the RTGS transaction.d.That the Learned Magistrate erred in law and in fact in failing to appreciate that the Respondent failed to disclose the details of the erroneous recipient of the money transferred, or of the intermediary bank.e.That the Learned Magistrate erred in law and in fact by failing to appreciate that funds in a similar transaction with Development Bank of Kenya had been recalled and given to the Appellant.f.That the Learned Magistrate erred in law and in fact in failing to appreciate the Respondent’s failure to disclose that the recipient account was fraudulent in good time, and thus in breach of its fiduciary duty of care and skill in the circumstances.g.That the Learned Magistrate erred in proceeding on the wrong principles of law and placing reliance on erroneous considerations, thus arriving at a wrong decision. 13.These grounds can be summarised into two basic questions: whether the evidence tendered supported the allegations of negligence against the Bank, and whether the Bank breached its duty of care to the customer. 14.On the evidence tendered, it is important that the appellate court of first instance reminds itself of its role. This being a first appeal, this Court is to re-evaluate and re-examine the evidence before the trial court and arrive at its own independent conclusion.This is the principle of law that was well settled in the case of Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, where Sir Clement de Lestang VP stated that:“This Court must reconsider the evidence, evaluate it itself and draw its own conclusions, though in doing so it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this Court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence, or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955) 22 EACA 270).” 15.Even as the appellate Court does this, it must nonetheless caution itself that there are elements of the evidence which the trial court was better placed to assess, such as the demeanour of the witnesses. 16.This was pointed out in Stephen Oddiaga & Tsavo Academy Company Limited v Voi Development Company Limited, Civil Appeal No. E034 of 2023, when the Court held that:“This being a first appeal, our mandate is stated in this Court’s decision in Neepu Auto Spares Limited v Narendra Chaganlal Solanki & 3 Others (2014) KECA 383 (KLR) thus: ‘Being a first appeal, we must re-evaluate the evidence and come to our own conclusions, but always bearing in mind that we did not hear the witness nor observe their demeanour. We may only interfere with the findings of the trial judge if the judge failed to take into account particular circumstances or based his impression on the demeanour of witnesses which was inconsistent with the evidence — see the judgment of this court in Maimuna s/o Patrick Mutoo v Wilson Njau Nyaki, Civil Appeal No. 131 of 1994. In Peters v Sunday Post Limited [1958] EA 424 it was held that: while an appellate court has jurisdiction to review the evidence to determine whether the conclusions of the trial judge should stand, this jurisdiction is exercised with caution; if there is no evidence to support a particular conclusion, or if it is shown that the trial Judge has failed to appreciate the weight or bearing of the circumstances admitted or proved, or has plainly gone wrong, the appellate court will not hesitate to so decide.’” Appellant’s Submissions 17.On the issue of duty of care, the Appellant relies on Kingdom Bank v Alice Wanja Wanjohi, High Court Civil Appeal No. E192 of 2023, where the Court held:“while I admit that the bank has a duty to protect its customer’s interests, in this case the customer fraudulently withdrew money that did not belong to it. The bank had a duty to ensure that it did not aid a fraud, and it is not enough to state that the account did not have sufficient funds. The trial court held that money paid by mistake is repayable. That being the case, the bank was under a duty to demonstrate that it took the necessary steps in recalling the money. However, all that the bank did was to file statements to show how the transaction was undertaken or how the money was withdrawn. There was nothing to show that the bank called for the money from its customer. No evidence of its intention to aid the recovery of the money.” 18.In the instant suit, the Appellant submits that the Respondent bank demonstrated great laxity and casualness in complying with the Appellant’s fresh instructions to stop the remittance of funds and to have them returned to its account, the recipient being a fraudster. According to the above authority, once a bank discovers that a transaction touching on its customer is fraudulent, it becomes morally and ethically bound to make every effort to recover and hold the funds for remittance to the rightful owner. 19.The Appellant also relies on the Court of Appeal decision in Fidelity Commercial Bank Limited v Italian Market Kenya Limited, Nairobi CA Civil Appeal No. 248 of 2015 [2017] eKLR, which stated:“Blame should never shift to the customer when the bank was privy to all the ongoings of the customer’s account. That a reasonable and responsible banker is obliged to make such inquiries as might, in given circumstances, be appropriate and practical, and that a bank’s duty of care to its customers includes protecting the customer from exposure to fraud by, among others, third parties and unauthorised persons.” 20.The Appellant further contends that the Bank did not produce evidence of any diligence or enquiries it conducted prior to or during the transfer. These facts are within the knowledge of the Bank; it bears the burden, and without disclosing what, in the ordinary course of business, it would be required to prove, the Court is entitled to draw an adverse inference. 21.The Appellant reiterates that the Bank acted casually, did not act with haste, and that even the content of the messages it sent did not convey any sense of demand or urgency. 22.The Appellant also notes that Mr. Martin Ogembo was not called to give evidence; since he was the officer who had denied the contents of the conversation, he ought to have been called. The Appellant relies on Cooperative Bank of Kenya Ltd v Simon Kiplagat Biwott, Eldoret High Court Civil Appeal No. 18 of 2019, where Nyakundi J held:“The Appellant did not avail the said Dennis Rop as a witness in court, neither did it present any documents in court to support its case. I find it strange that, save for mentioning it in passing, the Appellant herein did not present before Court the alleged application form for funds transfer that was filled by the Respondent instructing it to transfer the said monies from his account to a beneficiary by the name Kingdom Securities. I find that the Appellant failed to discharge its duty of care to the Respondent in the manner it maintained the Respondent’s account. It cannot run away from this responsibility. When a customer opens an account with the bank, the bank is expected to apply its skill, expertise and all manner of safeguards to ensure that the customer’s money is safe from third parties and other unauthorised persons.” 23.The Appellant prays that the appeal be allowed in the interest of justice. Respondent’s Submissions 24.The Respondent submits that the decision of the Magistrate was correct. It invites the Court to consider National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, in which the Court of Appeal laid down the principle that it is not the duty of the courts to re-write contracts between parties. The Learned Justices of Appeal stated:“A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.” 25.The main point reiterated by the Respondent is that, while it admits receiving instructions from the Appellant to transfer Euros 111,281.75 to its supplier, Sysmex Europe GmBH, to an account given by the Plaintiff, it avers that the issue of the erroneous account did not arise at the date of completion of the transaction and was therefore not known to the Respondent. 26.It prays that the appeal be dismissed with costs. Issues For Determination 27.From the pleadings, the Record of Appeal, and the written submissions of the parties, this Court frames the following issues for determination:a.Whether, having executed the original transfer, the Respondent owed the Appellant a continuing duty of care upon receipt of the stop-and-recall instructions of 14th December 2016;b.If so, whether the Respondent breached that duty;c.Whether the learned trial Magistrate erred in finding that the Appellant had not proved its case on a balance of probabilities; andd.What reliefs and orders ought to issue. Analysis And Determination 28.At the outset, it is useful to restate the well-established principles governing the jurisdiction of this Court on a first appeal from the subordinate court. This Court is empowered by Section 78 of the Civil Procedure Act (Cap. 21) and Order 42 Rule 25 of the Civil Procedure Rules, 2010. As the first appellate court, it has a duty to re-evaluate the entire evidence on record and to arrive at its own independent conclusions, while making due allowance for the fact that the trial court had the advantage of seeing and hearing the witnesses. 29.The principle was settled in Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, where the Court of Appeal for East Africa held that a first appellate court should reconsider the evidence, evaluate it itself, and draw its own conclusions, while always bearing in mind that it has neither seen nor heard the witnesses and should make due allowance in that respect. This Court applies that standard in the analysis that follows. 30.The evidential basis for such proof is governed by Sections 107, 108 and 109 of the Evidence Act (Cap. 80), which place the burden of proof upon the party who asserts the existence of the facts upon which a right or liability depends. Of particular relevance to this appeal is Section 112 of the same Act, which provides that, in civil proceedings, where any fact is especially within the knowledge of any party, the burden of proving that fact lies upon that party. 31.In civil proceedings, the standard of proof is on a balance of probabilities, which requires the tribunal to be satisfied that the occurrence of the alleged event was more likely than not. As Lord Denning observed in Miller v Minister of Pensions [1947] 2 All ER 372, the evidence must carry a reasonable degree of probability; if the tribunal can say that it is more probable than not, the burden is discharged. His Lordship expressed it thus:“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’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance 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 convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.” 32.The two questions I have isolated, the existence of a duty of care and its breach, must be answered against the settled principles governing the relationship between a banker and its customer, and upon a re-evaluation of the whole of the evidence on record. 33.It is now well settled that the relationship between a bank and its customer is contractual, and that it imposes upon the bank a duty to exercise reasonable care and skill in its dealings with the customer. 34.In National Bank of Kenya Ltd v Isaac A. Ogetta [1999] eKLR, the Court observed that the standard of reasonable care and skill is an objective standard applicable to bankers, to be assessed in the light of all the relevant facts. That duty is not a narrow one. As this Court held in Simba Commodities Ltd v Citibank N.A. [2013] eKLR (HCCC No. 236 of 2003), the duty of reasonable skill and care extends over the whole range of banking business within the contract, and applies to interpreting, ascertaining and acting in accordance with the instructions of the customer. 35.The Court of Appeal placed the matter beyond doubt in Fidelity Commercial Bank Limited v Italian Market Kenya Limited [2017] eKLR, endorsed the pronouncement of Brightman J in Karak Brother Company Ltd vs Burden [1972] 1 All ER 1210, which has been cited with approval in several of our local cases (e.g Simba Commodities Limited vs Citibank N.A, Civil Case No. 236 of 2003) where the learned Judge stated:-“As between the company and the bank, the mandate, in my view, operates within the normal contractual relationships of customer and banker and does not exclude them. These relationships include the normal obligation of using reasonable skill and care; and that duty on the part of the bank, of using reasonable skill and care, is a duty owed to the other party to the contract, the customer, who in this case is the plaintiff company, and not to the authorized signatories…”“… while carrying out the customer’s instruction a bank is under obligation to exercise reasonable skill and care. That skill and care applies to interpreting, ascertaining and acting in accordance with the instructions of the customer.”The court further observed as follows:-“In exercising its duty of care the paying bank was bound to make such enquiries as might, in given circumstances, be appropriate and practical, where it had, or a reasonable banker would have, grounds of believing that the authorised signatories were misusing their authority for purposes of defrauding their principal or otherwise defeating his true intentions.”This authority is of persuasive value but it is spot on and good law.We would want to believe that the appellant as a responsible banker, should have made enquiries from the respondent, insisted on a directors’ resolution, or at least accepted instructions only on the company letterhead, or instructions under the company’s seal. That was the only way the respondent could have been bound by the decision of any of its directors.” 36.The holding that a reasonable and responsible banker is obliged to make such inquiries as may, in the circumstances, be appropriate and practical, and that a bank’s duty of care includes protecting the customer from exposure to fraud by, among others, third parties and unauthorised persons. 37.The Respondent’s central contention is that its obligation to the Appellant came to an end the moment it transmitted the funds to its correspondent bank on or about 16th November 2016. I am, with respect, unable to accept that proposition. 38.The duty to exercise reasonable care and skill is a continuing one. When, on 14th December 2016, the Appellant discovered the fraud and issued clear oral and written instructions to stop and reverse the transaction, a fresh mandate arose which the Respondent was bound to execute with reasonable care, skill and despatch. 39.This accords with the position that, even where the original payment was authorised by the customer, a bank remains under a duty to take reasonable steps to recall a payment once it has been put on notice that the transaction is tainted by fraud, a residual duty which the United Kingdom Supreme Court, while restating and confining the so-called Quincecare duty in Philipp v Barclays Bank UK PLC [2023] UKSC 25, expressly preserved, and which I find persuasive. The Quincecare line of authority has been applied in this jurisdiction by Nyakundi J in Cooperative Bank of Kenya Ltd v Simon Kiplagat Biwott, Eldoret High Court Civil Appeal No. 18 of 2019. 40.Did the Respondent discharge that continuing duty? On a re-evaluation of the record, I am satisfied that it did not. First, there is no evidence of the date on which the Respondent dispatched the SWIFT free-format recall message that appears at page 23 of the Record of Appeal; the message is undated. Secondly, that message was transmitted at “Normal” priority rather than “Urgent”, notwithstanding that it concerned suspected fraud and a substantial sum. Thirdly, the narrative of the message merely advised that the remitter had recalled the funds and did not demand the immediate freezing and return of the money. Fourthly, the gap between the stop instruction of 14th December 2016 and the advice of withdrawal said to have been received on 22nd December 2016 is wholly unexplained. 41.These are matters peculiarly within the knowledge of the Respondent. By Section 112 of the Evidence Act, the burden of explaining them lay upon it, and its failure to do so entitles this Court to draw an adverse inference that the recall was not pursued with the urgency the situation demanded. 42.Secondly, the Respondent’s officer, Mr. Martin Ogembo, was the very person alleged to have assured the Appellant that the funds were still being held and would be reversed within four to five days. The Respondent denied those assurances in its Defence, yet it did not call Mr. Ogembo to testify. A litigant who fails to call a material witness within its control, and offers no explanation, invites the inference that the evidence of that witness would not have supported its case. Allegations of breach of the duty of care against a bank require evidence in rebuttal, and that a bank which holds the relevant evidence yet declines to produce it bears the burden and risks an adverse inference. The failure to call Mr. Ogembo, in my view, attracts precisely such an inference. 43.Thirdly, and tellingly, the Respondent failed and/or refused to furnish the Appellant with the identity and contact particulars of its correspondent bank, and of the recipient who ultimately received the funds, despite specific written requests. The identity of the correspondent bank that actually released the funds was a fact peculiarly within the Respondent’s knowledge, and its concealment frustrated the Appellant’s ability to trace and recover its money. The admonition of the Court of Appeal in Fidelity Commercial Bank Limited v Italian Market Kenya Limited (supra) is apposite: blame should never shift to the customer where the bank was privy to all the dealings touching the customer’s funds. A bank cannot, by withholding the very information needed to pursue the fraudster, both contribute to the loss and then disclaim responsibility for it. 44.I have not overlooked the Respondent’s argument, accepted by the trial court, that the Appellant was the author of its own misfortune because the original error in the account number emanated from it. The argument, with respect, conflates two distinct events. The keying error did not cause the loss; standing alone, it would merely have directed the funds to a wrong but identifiable destination, from which a prompt recall, such as the Respondent’s own correspondent was still in a position to effect as at 14th December 2016, would have retrieved them. 45.The proximate cause of the loss was the Respondent’s want of diligence in pursuing the recall, not the initial error. Nor does the disclaimer in the transfer form assist the Respondent: a bank may not contract out of liability for its own negligence save by clear and unambiguous words, and the negligence here lay in the handling of the stop-and-recall mandate, not in the original transfer. 46.The approach I take is consistent with Shalimar Flowers Self Help Group v Kenya Commercial Bank [2016] eKLR, where the Court found that all the red flags were waving and that the bank, by not exercising reasonable care and skill, was wholly liable; and with Kenya Grange Vehicle Industries Ltd v Southern Credit Banking Corporation Ltd [2014] eKLR, where Havelock J held a bank liable for failing to make the inquiries that a careful banker ought to have made. 47.As regards the transaction with Development Bank of Kenya, I accept that that bank was not a party to these proceedings and that the surrounding facts were not identical. To that extent it is not determinative. It does, however, serve as some evidence that a prompt and effective recall on a customer’s instructions was both achievable and within the standard expected of a prudent banker. I treat it as corroborative rather than decisive. 48.Taking these matters cumulatively, I am driven to the conclusion that the Learned Magistrate failed to appreciate the weight and bearing of the circumstances proved. The continuing nature of the Respondent’s duty, the want of urgency in effecting the recall, the unexplained gaps in the chronology, the failure to call Mr. Ogembo, and the non-disclosure of the correspondent bank’s particulars and instead disposed of the matter on the narrow footing of the Appellant’s initial error and the disclaimer. 49.That, in the language of Peters v Sunday Post Limited (supra), is a case in which the trial court failed to appreciate the weight or bearing of the circumstances proved and plainly went wrong, such that this Court is entitled and indeed obliged to interfere. 50.Having re-evaluated the entirety of the evidence on record and weighed it on a balance of probabilities, I find that the Appellant established that the Respondent owed it a continuing duty of care, that the Respondent breached that duty in the manner in which it handled the stop-and-recall instructions and in withholding material information, and that the breach was the proximate cause of the loss complained of. The appeal must therefore succeed. 51.In the result, and having considered the written submissions of the parties, the Court makes the following orders:a.The appeal is allowed.b.The Judgment and Decree of the Chief Magistrate’s Court at Milimani delivered on 29th May 2020 in CMCC No. 2943 of 2017 are hereby set aside.c.Judgment is hereby entered for the Appellant against the Respondent in the sum claimed in the Plaint, being the Kenya Shilling equivalent of Euros 111,281.75, together with interest thereon at court rates from the date of filing the suit until payment in full.d.The costs of this appeal, and of the suit before the trial court, are awarded to the Appellant. DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF JUNE 2026.BENARD WAFULA MURUNGAJUDGEDelivered on a virtual platform in the presence of:Ogao, instructed by B.M. Mutie & Co. Advocates, for the AppellantChege instructed by Amolo & Gacoka Advocates, for the RespondentKevin Babu — Court Assistant