[2017] KEHC 786 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KIAMBU

CIVIL APPEAL NO. 12 OF 2017

DR. KANJIRA K. MUGAMBI

VILLAGE HOPECORE INTERNATIONAL (KENYA)…APPELLANTS

VERSUS

BEATRICE WANJIKU MIGUNA…………………..… RESPONDENT

JUDGMENT

1. In the Court below, the Appellants sued the Respondent for prayers “that judgment be entered against the Respondent for:

a. The sum of Kshs. 371,465. 55/=

b. Interest on the principal at 13% per annum from 10th November, 2005

c. Costs of this suit.”

2. The Appellants’ case as pleaded and as brought out in the 1st Appellant is simple enough. It is that the 1st Appellant was a friend to the Respondent and that, as the Chief Executive Officer (CEO) of the 2nd Appellant, he arranged for a friendly loan of Kshs. 371,465. 55/= to the Respondent. The agreement, according to the 1st Appellant, was that:

a. The money will be repaid over a period of 18months with interest of 13% per annum.

b. The Respondent would execute a formal contract at a later date after disbursement.

3. It is common among the parties that the money (Kshs. 371,465. 55/=) was released to the Respondent. A bank slip to that effect was produced in evidence and was undisputed.

4. According to the Appellants, the Respondent then refused to repay the money as agreed and also refused to execute the formal contract as agreed hence the suit in the lower Court. It is not clear if the suit is founded on a theory of breach of contract or on a theory of money had and received or on a theory of unjust enrichment. I will return to that shortly.

5. On the other hand, the Respondent does not, and cannot plausibly, in the face of the evidence available, deny receiving the money (Kshs. 371,465. 55/=). Her story, though, is that the amount was paid to her by the 1st Appellant as refunds for services rendered and amounts she had spent on the 1st Appellant’s child. It is common among the parties that the 1st Appellant has an autistic child. It is also common among the parties that the Respondent is a Special Education teacher who took care of the autistic child from time to time – including periods when the 1st Appellant had travelled to the United States and left the autistic child in the exclusive care of the Respondent. In cross-examination, for example, the 1st Appellant stated thus:

The Defendant assisted with my autistic daughter. She used to take care of her after I returned from the U.S.A. in 2005. I took her to the Defendant’s school. She assisted in every way. She would spend her own money when I was away in the U.S.A. I would refund the money expended.

6. Hence, the Learned Trial Magistrate was faced with two dueling narratives: on the one hand, the 1st Appellant’s narrative was that he had loaned the Respondent the money with clear stipulation that it would be repaid with interests. On the other hand, there was the narrative by the Respondent that it was no loan at all but a refund for monies expended on the 1st Appellant’s daughter as well as payment for services rendered taking care of the daughter.

7. The dueling narratives are further compounded by the fact that the money was sent to the Respondent – not by the 1st Appellant – but by the 2nd Appellant. Further compounding the narrative is the fact that there is no single document other than the bank slip indicating what the sum was for. All the Learned Trial Magistrate had to go with is the rival accounts of the parties. Faced with these narratives, the Learned Trial Magistrate pronounced himself thus:

It is trite law that he who alleges must prove. The onerous burden of proof rests on Plaintiffs to show on the required balance of probabilities that the money transferred to the Defendant was a loan. The Plaintiffs have only produced a bank slip in support of their claim. I find that the bank slip can only go so far as showing that the money was transferred from the 2nd Plaintiff’s bank account to the Defendant’s bank account, and no more.

As already noted, the Plaintiffs allude to some “formal contract documents” that were to be signed by the parties in regard to the amount of money claimed herein. It seems to me, from the submissions of the Plaintiffs, that the “formal contract documents” were not executed by the Defendant because she failed to show up for the same. It was my expectation that Plaintiffs would at the very least produce a draft copy of the “formal contract documents”, if at all they existed. The plaintiffs did not produce to the Court any draft “formal contract documents” to prove existence of any such term purporting to impose upon the Defendant the obligation to refund the [amount]

The Court is left to speculate and assume that the amount of money transferred to the Defendant was a loan thereby creating an obligation to repay….The upshot is that I find that the Plaintiff has not proved his case against the Defendant on a balance of probability or at all and do hereby dismiss the suit with costs to the Defendant.

8. On appeal, the Appellants raise five grounds of appeal as follows:

a. That the Learned Trial Magistrate erred in fact and law in failing to enter judgment for the plaintiffs despite overwhelming evidence in support thereof.

b. That the Learned Trial Magistrate applied a high burden of proof in determining the Plaintiff’s claim than that applicable in civil cases.

c. That the Learned Trial Magistrate failed to appreciate that once receipt of the money was proved, the Plaintiffs were entitled to judgment for the money had and received and the burden shifted to the Defendant to show that the money was not repayable.

d. That the Learned Trial Magistrate having dismissed the Defendant’s defence for set off erred in dismissing the Plaintiff’s suit.

e. That the judgment of the Learned Trial Magistrate is not supported by law and evidence.

9. I have now had an opportunity to read the entire file and assess the evidence as I am required by the law to do as an appellate Court of the first instance. The role of the first appellate Court is to reconsider and re-evaluate the evidence presented by the parties and come up with independent determinations and conclusions. However, in doing so the Court must recall that it did not have an opportunity to observe the witnesses or their demeanor and make allowance for it. See Kemfro Africa Ltd T/A “Meru Express Services (1976)” & Another v Lubia & Another [1987] KLR 30.

10. Overall, I should begin by pointing out that all the five grounds of appeal are related. The view of the Learned Trial Magistrate was that all that the Appellants were able to prove is that they had transferred funds to the Respondent and no more. In his view, this was not enough to entitle them to a judgment in their favour.

11. The Appellants disagree. Their view is that once they had proved that they had transferred the funds, they were entitled to a judgment in their favour at least for the actual sums transferred. My view is that the Learned Trial Magistrate was correct to refuse to enter judgment for the Appellants on the facts but for different reasons. My view is that, overall, the Appellants were unable to prove their case on a balance of probabilities. Having read the case file, the Court is faced with the dueling accounts, and a Court is, in my view, justified to disbelieve the narrative by the Appellants and demand more. My view is that having listened to the two narratives, the Learned Magistrate should have made a positive finding that he found the narrative of the Respondent more credible than that of the Appellants in the context. As I pointed out above, in cross-examination, the 1st Appellant admitted about the services the Respondent used to offer for his daughter. There is, therefore, enough on record to believe that the Respondent’s story juxtaposed against that told by the 1st Appellant is more credible.

12. There is another reason why, in my view, the Appellants’ narrative is less believable than that of the Respondent. The money was advanced by the 2nd Appellant – not the 1st Appellant. The 2nd Appellant is a corporate body – a Non-Government Organisation with a Board of Directors of eleven persons. There are no records whatsoever from the 2nd Appellant showing that the Board approved the loan: no board resolution; no letter from the corporate entity; no extract of books of accounts. This would be highly suspicious. Indeed, it is unclear whether the 1st Appellant is claiming the funds for himself or for and on behalf of the 2nd Appellant.

13. In my considered view, therefore, I do not find that the Learned Trial Magistrate erred in failing to enter judgment on behalf of the Appellants in the circumstances. However, the Learned Magistrate ought, in the face of the duelling accounts, to expressly consider them and discuss his reasons for believing one as opposed to the other. As I have held above, on the facts of the case, I would find the Respondent’s account more credible.

14. In their third ground of appeal, the Appellants assert that the Learned Trial Magistrate failed to appreciate that once receipt of the money was proved the Appellants were entitled to judgment for the money had and received and the burden of proof shifted to the Respondent to show that the money was not repayable. This may be so – but I believe that the Respondent satisfied that burden when both she and the 1st Appellant gave concurring evidence of the services that she rendered to the 1st Plaintiff’s child and the expenses she paid for that daughter. In my view, since she was not claiming a liquidated set off, that was enough. Indeed, she testified and was not challenged on cross-examination that before the funds were transferred to her, she sat down with the 1st Plaintiff and agreed on the amounts to be paid. This was enough. The fourth of ground of appeal falls on this sword as well.

15. Finally, I would suggest another ground for denying the Appellant’s claim altogether: public policy grounds. If at all this was a loan as the Appellants claim it was, it would be readily obvious that it was an illegal one. By the 1st Appellant’s own admission at the witness dock, he “approved” the loan without the approval of the Board of Directors and without any due process on the part of the 2nd Appellant, a public charity. Indeed, there is no indication whatsoever in the 1st Appellant’s pleadings that the funds, if indeed loaned out, were to be refunded to the organization and not to him personally. What emerges, then, is a pattern of commingling of funds between the 1st Appellant and the 2nd Appellant: where the 1st Appellant almost acted as an alter ego of the 2nd Appellant. Such a scheme would be against public policy and should not be enforced by Courts of law.

16. In the circumstances, and for the reasons enumerated above, I find no merit in this appeal. Consequently, I dismiss it with costs.

17. Orders accordingly.

Dated and delivered at Kiambu this 5th day of September, 2017.

…………….......

JOEL NGUGI

JUDGE