https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10052

Kenya Commercial Bank Ltd v Munuthu (Civil Appeal E272 of 2024) [2026] KEHC 10052 (KLR) (9 July 2026) (Judgment) Neutral citation: [2026] KEHC 10052 (KLR) Republic of Kenya In the High Court at Nakuru Civil Appeal E272 of 2024 JK Sergon, J July 9, 2026 Between Kenya Commercial Bank Limited Appellant and Nelson Mwangi Munuthu Respondent (Being an appeal from the Judgment and Decree of Hon. Edward Oboge, Resident Magistrate/Adjudicator, delivered on 14th November 2024 in Nakuru SCCCOMM No. E1188 of 2024) Judgment 1.This is an appeal from the judgment of the Small Claims Court at Nakuru delivered on 14th November 2024 by Hon. Edward Oboge, Resident Magistrate/Adjudicator, in SCCCOMM No. E1188 of 2024. The trial court entered judgment in favour of the Respondent (the Claimant in the lower court) for special damages of Kshs. 200,000/-, costs of the claim, and interest at court rates from the date of judgment until payment in full. 2.The Appellant, Kenya Commercial Bank Limited, being dissatisfied with the said judgment, lodged the instant appeal vide a Memorandum of Appeal dated 28th November 2024 challenging the trial court's decision on the following seven grounds:i.The learned Adjudicator erred in law and in fact by excluding the evidence provided by the Appellant, including the manager's witness statement dated 19th August 2024, which had been properly adopted and formed part of the record under Section 30 of the Small Claims Act.ii.The learned Adjudicator failed to adequately consider the Appellant's evidence and explanations regarding the alleged failed transaction, thereby arriving at an erroneous conclusion.iii.The learned Adjudicator erred in law by shifting the burden of proof to the Appellant, contrary to Sections 107 and 108 of the Evidence Act, which require the Respondent to prove his claim on a balance of probabilities.iv.The learned Adjudicator erred in law and in fact by relying on the Respondent's submissions and bank statements without subjecting them to rigorous evidentiary scrutiny.v.The learned Adjudicator misapplied legal principles governing fiduciary relationships between banks and customers, failing to establish how the Appellant breached its duty of care.vi.The learned Adjudicator erred in awarding special damages of Kshs. 200,000/- without strict proof, as required under Kenyan law.vii.The learned Adjudicator erred in awarding costs and interest in favour of the Respondent without adequate justification, given the unresolved questions regarding the alleged failed transaction. 3.The Respondent instituted Small Claim No. E1188 of 2024 at Nakuru, alleging that on 4th August 2021, he sent Kshs. 200,000/- in two instalments of Kshs. 100,000/- each from his KCB account (No. 11xxxx45) to his wife's Equity Bank account (No. 013xxxx60), but the funds never reached the intended recipient. The Respondent claimed that the Bank failed to assist in tracing the funds or provide an explanation for their disappearance. He sought judgment for Kshs. 200,000/-, compensation, and costs. 4.The Appellant denied the claim, asserting that the transfers failed for technical reasons and the funds were reversed and re-credited to the Respondent's account in two instalments of Kshs. 100,000/- each on the same day, as evidenced by the Respondent's bank statement. 5.At the hearing on 9th October 2024, the Respondent testified as CW1 and adopted his witness statement dated 1st August 2024 as his evidence-in-chief. He produced his bundle of documents and further list of documents as exhibits. Miriam Njeri Njogu testified as CW2 and adopted her witness statement dated 1st August 2024. She produced her Equity Bank statement showing that no money was received into her account on the material day. 6.During the proceedings, Mr Opondo for the Respondent stated: “We can proceed by way of the 30 of the Small Claims Court Act.” Mr Maina for the claimant stated: “My client wants her day by court.” After the Respondent closed its case, Mr Opondo stated: “I'm not calling witnesses we shall proceed under section 30.” Mr Maina stated: “ I have no objection." 7.The Respondent's later statement "I have no objection" constituted agreement to proceed under Section 30. The trial court proceeded to set a date for the filing of submissions. 8.The trial court found the Respondent's claim "uncontroverted" and entered judgment for Kshs. 200,000/- plus costs and interest, holding that the Appellant's defence was "riddled with mere allegations absent of evidential value." The Appellant now challenges that finding. 9.This being an appeal from the Small Claims Court, this court's jurisdiction is circumscribed by Section 38(1) of the Small Claims Court Act, which provides:“A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law." 10.The Court of Appeal in Mwita v Woodventure (K) Limited & another [2022] KECA 628 (KLR) held that on such appeals, the court confines 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. 11.I am therefore guided by the principle that my jurisdiction is limited to determining whether the trial court committed errors of law in reaching its decision. I cannot re-evaluate the evidence as a first appellate court would in an appeal from the magistrates' court, unless the trial court's findings are so perverse as to amount to an error of law. 12.Both parties filed written submissions in support of their respective positions. I have carefully considered these submissions alongside the record of appeal. 13.The Appellant submits that the trial court erred in law by excluding its documentary evidence. Counsel for the Appellant argues that the Bank elected to proceed under Section 30 of the Small Claims Court Act, which permits the court to determine a claim on the basis of documents and written submissions. The Appellant filed a witness statement by its manager, Daisy Jelagat Kipkawkwar dated 19th August 2024, and the Respondent's bank statement for August 2021, which demonstrated that the funds were reversed and re-credited to the Respondent's account in two instalments of Kshs. 100,000/- each on 4th August 2021. The Appellant contends that the trial court's finding that the claim was "uncontroverted" was erroneous because the court was obligated to consider all evidence on record. The Appellant relies on Four By Four Solutions Limited v Tawaman Holdings Limited [2024] KEHC 15321 (KLR) for the proposition that the question of burden of proof and shifting thereof is a question of law. 14.On the issue of special damages, the Appellant submits that special damages must be specifically pleaded and strictly proved. The Appellant cites Hahn v Singh [1985] KLR 716, Total (Kenya) Limited v Janevams Limited [2015] eKLR, and Bob v Kiro [2025] KEHC 15065 (KLR) for the principle that a claim for special damages cannot be sustained without strict proof. The Appellant argues that the Respondent failed to strictly prove his claim because his own bank statement demonstrated reimbursement. The Appellant further relies on Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited [2016] KECA 56 (KLR) for the proposition that special damages require credible documentary evidence. 15.On the nature of the bank-customer relationship, the Appellant submits that the relationship is contractual, not fiduciary. The Appellant relies on Philipp v Barclays Bank UK PLC [2023] UKSC and Foley v Hill (1848) 2 HL Cas 28 for the principle that a bank is a debtor, not a trustee, of money deposited by a customer. The Appellant argues that a breach would only occur if the Bank failed to reimburse the money, which it did not. 16.On costs, the Appellant relies on Jasbir Singh Rai & 3 others v Tarlochan Singh Rai & 4 others [2014] eKLR for the principle that costs follow the event. 17.The Respondent submits that the trial court properly found the claim uncontroverted because the Bank did not call any witness to adopt its witness statement. The Respondent relies on Robert Ngande Kathathi v Francis Kivuga Kitonde [2020] eKLR for the principle that submissions are not evidence unless expressly adopted. The Respondent argues that counsel cannot assume the role of a witness, and therefore the Bank's documentary evidence was properly excluded. 18.On the burden of proof, the Respondent submits that he discharged his burden under Sections 107-109 of the Evidence Act through his testimony, his wife's testimony, and documentary evidence, including bank statements, a demand letter, and a case resolution document. The Respondent argues that the Bank failed to adduce any evidence to rebut his case. 19.On the bank-customer relationship, the Respondent submits that the Bank breached its fiduciary duty by failing to account for the missing funds or provide an explanation. The Respondent relies on Fidelity Commercial Bank Ltd v Italian Market Kenya Ltd for the principle that banks owe a duty of reasonable skill and care to their customers, and Equity Bank Ltd & Anor v Robert Chesang HCCA No. 571 of 2012 for the principle that a bank's failure to handle a customer's account diligently amounts to breach of contract and fiduciary duty. The Respondent also relies on Karak Brothers Company Ltd v Burden [1972] 1 All ER 1210 for the duty of care in interpreting and acting on customer instructions. 20.On special damages, the Respondent submits that the bank statements strictly prove the amount claimed of Kshs. 200,000/-. 21.On costs, the Respondent relies on Cecilia Karuru Ngayu v Barclays Bank of Kenya & Another, Nyeri HCCC No. 17 of 2014, for the principle that costs follow the event and the successful party is entitled to costs absent misconduct. 22.The Appellant submits that the trial court erred in law by excluding its documentary evidence. The Appellant argues that it elected to proceed under Section 30 of the Small Claims Court Act, which permits the court to determine a claim on the basis of documents and written submissions. 23.The Respondent submits that the Bank's witness statement was not adopted as evidence because no witness was called, and therefore the trial court properly found the claim uncontroverted. The Respondent relies on Robert Ngande Kathathi v Francis Kivuga Kitonde [2020] eKLR for the principle that submissions are not evidence unless expressly adopted. 24.I have carefully considered these rival submissions. Section 30 of the Small Claims Court Act provides:“Subject to agreement of all parties to the proceedings, the Court may determine any claim and give such orders as it considers fit and just on the basis of documents and written submissions, statements or other submissions presented to the Court." [emphasis added] 25.I have examined the proceedings of 9th October 2024. The record shows two exchanges regarding Section 30: In exchange 1 (Earlier in the proceedings):“Mr Maina for the claimant can access the documents which were filed and served. I pray for leave to have the same as evidence.Mr Opondo: That is in order. We can proceed by way of the 30 of the SCCA.Mr Maina: My client wants her day by court."Exchange 2 (After the Respondent closed its case):“Mr Maina: I close my case.Mr Opondo: I'm not calling witnesses we shall proceed under section 30.Mr Maina: I have no objection." 26.The Respondent's counsel initially objected to proceeding under Section 30, stating "My client wants her day by court." However, after the Respondent closed its case, the Appellant's counsel again stated they would proceed under Section 30, and this time the Respondent's counsel did not object, he stated "I have no objection." 27.The Respondent's later statement "I have no objection" constituted agreement to proceed under Section 30. The trial court was therefore entitled to proceed under Section 30. The Appellant's documentary evidence, including the manager's witness statement and the Respondent's bank statement, was properly on record and could be considered by the court. 28.The trial court's finding that the claim was "uncontroverted" was therefore erroneous. The Appellant had placed evidence on record, and the trial court was obligated to consider it. The fact that no witness was called did not render the documentary evidence a nullity, especially since the parties had agreed to proceed under Section 30. 29.I therefore find that the trial court erred in law by excluding the Appellant's documentary evidence from its consideration. Grounds 1, 2, and 4 of the Memorandum of Appeal therefore succeed. 30.Section 107(1) of the Evidence Act provides:“Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist." 31.The legal burden of proof remained on the Respondent to prove his claim on a balance of probabilities. The trial court's finding that the claim was "uncontroverted" effectively relieved the Respondent of this burden. This was an error of law. 32.I am guided by the decision in Four By Four Solutions Limited v Tawaman Holdings Limited [2024] KEHC 15321 (KLR), where the court held:“Burden of proof is indeed a legal concept that in the Kenyan legal system is generally anchored under Sections 107, 108, and 109 of the Evidence Act Cap. 80 Laws of Kenya. ... Shifting of the burden of proof in a trial essentially involves the changing of responsibility of proving or disproving a point, by way of evidence, from one party to the other. The question of who bears the burden of proof and circumstances under which the burden of proof may be shifted and on what conditions, is undoubtedly, a question of law." 33.The Respondent's own bank statement showed reimbursement in two instalments of Kshs. 100,000/- each on 4th August 2021. Had the trial court considered this documentary evidence, it would have found that the Respondent had not discharged his burden of proving non-reimbursement. 34.I therefore find that the trial court erred in law by shifting the burden of proof to the Appellant. Ground 3 of the Memorandum of Appeal also succeeds. 35.The Respondent submits that the special damages of Kshs. 200,000/- were strictly proved through bank statements. The Appellant counters that the claim was not strictly proved because the bank statement demonstrated reimbursement. 36.It is trite law that special damages must not only be specifically pleaded but also strictly proved. The Court of Appeal in Hahn v Singh [1985] KLR 716, as cited in Bob v Kiro [2025] KEHC 15065 (KLR), held:“Special damages must not only be specifically claimed (pleaded) but also strictly proved... for they are not the direct natural or probable consequence of the act complained of and may not be inferred from the act. The degree of certainty and particularity of proof required depends on the circumstances and nature of the acts themselves." 37.In Bob v Kiro [2025] KEHC 15065 (KLR), the High Court set aside an award of special damages by the Small Claims Court where the claim was not strictly proved, holding:“The award of a sum of Ksh 30,000/= was therefore unlawful and has no basis. In a claim for special damages, when damages are not proved, the court cannot assess. Doing the best it can, it must dismiss the claim." 38.Similarly, In Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited [2016] KECA 56 (KLR), the Court of Appeal reiterated:“The appellant apart from listing the alleged loss and damage, it did not, according to the respondent lead any evidence at all in support of the alleged loss and damage. As it were, the appellant merely threw figures at the trial court without any credible evidence in support thereof and expected the court to award them. Indeed there was not credible documentary evidence in support of the alleged special damages… We do not discern from our reading of this decision a departure from the time tested principle that special damages should not only be specifically pleaded but must also be strictly proved." 39.The Respondent's claim for Kshs. 200,000/- required strict proof. The documentary evidence on record, that is, the Respondent's own bank statement showed that the funds were reversed back to his account. The trial court made no analysis of these entries and failed to subject the claim to the strict proof requirement. 40.I therefore find that the trial court erred in law by awarding special damages of Kshs. 200,000/- without strict proof. Ground 6 of the Memorandum of Appeal succeeds. 41.The trial court held that "a customer and a bank share a fiduciary relationship which is a special type of contract based on trust." The Respondent submits that this finding was correct, citing Fidelity Commercial Bank Ltd v Italian Market Kenya Ltd for the principle that banks owe a duty of reasonable skill and care to their customers. 42.The Appellant counters that the relationship between a bank and its customer is primarily contractual, not fiduciary. The Appellant relies on Philipp v Barclays Bank UK PLC [2023] UKSC and Foley v Hill (1848) 2 HL Cas 28. 43.I have considered these submissions. While it is true that a bank owes a duty of care to its customer, the legal nature of the relationship is primarily contractual, not fiduciary. In Philipp v Barclays Bank UK PLC [2023] UKSC, Lord Leggatt observed:“The starting point in understanding the contract between a bank and a customer who holds a current account with the bank is the decision of the House of Lords in Foley v Hill (1848) 2 HL Cas 28. This decision has been described as a historical breakthrough in the development of banking law… It established conclusively that under ordinary circumstances a bank is not a trustee or fiduciary of money deposited by a customer, but simply a debtor." 44.A breach of duty would only arise if the bank failed to reimburse the money when a transaction did not complete, or if it acted negligently. Since the documentary evidence suggested reimbursement, the trial court's finding on fiduciary breach was unsupported. 45.I find that the trial court misapplied the legal principles governing the relationship between banks and customers. Ground 5 of the Memorandum of Appeal succeeds. 46.Having found that the trial court erred in its substantive findings on liability and special damages, the award of costs and interest was also erroneous. Costs follow the event, and since the Respondent's claim has been found to be unproven, the Respondent was not entitled to costs. 47.I therefore find that the trial court erred in awarding costs and interest in favour of the Respondent. Ground 7 of the Memorandum of Appeal succeeds. 48.For the reasons set out above, I make the following orders;a.The appeal is hereby allowed.b.The judgment and decree of the Small Claims Court in Nakuru SCCCOMM No. E1188 of 2024 delivered on 14th November 2024 are hereby set aside.c.The Respondent's claim in the Small Claims Court is dismissed.d.The Appellant shall have the costs of this appeal and the costs of the proceedings in the court below. 49.It is so ordered. DATED, SIGNED, AND DELIVERED AT NAKURU THIS 9TH DAY OF JULY, 2026J. K. SERGONJUDGEIn the presence of:Jamleck/Rutoh C/ANancy Njoroge holding brief for Kairu for the RespondentKaranja holding brief for Opondo for the Appellant