https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10341

Kenya Commercial Bank Limited v Kiburi (Civil Appeal E176 of 2023) [2026] KEHC 10341 (KLR) (9 July 2026) (Judgment) Neutral citation: [2026] KEHC 10341 (KLR) Republic of Kenya In the High Court at Nakuru Civil Appeal E176 of 2023 JK Sergon, J July 9, 2026 Between Kenya Commercial Bank Limited Appellant and Sammy Kamonjo Kiburi Respondent (Being an appeal from the judgment/decree of Hon. D. M. Macharia, Resident Magistrate/Adjudicator, delivered on 6th July, 2023 in Nakuru SCCC No. E213 of 2023) Judgment 1.This appeal arises from the judgment of the Small Claims Court at Nakuru delivered on 6th July, 2023. The learned Adjudicator entered judgment in favour of the Respondent herein for the sum of Kshs. 2,050/= together with costs of the suit and interest. The Appellant, Kenya Commercial Bank Limited, being aggrieved by the said decision, lodged the present appeal. 2.The dispute that gave rise to this appeal raises important questions about the duty of care owed by financial institutions to persons who transact on their platforms, the limits of customer confidentiality, and the equitable principle against unjust enrichment. The Judgment in the small claims court was entered in favour of the claimant who is the Respondent in this appeal. 3.The Appellant, being aggrieved by the judgment of the Small Claims Court, lodged the present appeal on the following grounds as set out in the Memorandum of Appeal dated 21st July, 2023;i.That the Learned Trial Magistrate erred in law and in fact in finding the Appellant liable for negligence in light of cogent evidence to the contrary.ii.That the Learned Trial Magistrate erred in law and fact in failing to consider the chain of causation and/or relational nexus between the Appellant and the Respondent and consequently arrived at a wrong decision.iii.That the Learned Trial Magistrate erred in law and fact in disregarding the Appellant's higher duty of care to its customers thus arriving at an erroneous finding.iv.That the Learned Trial Magistrate erred in law and fact in failing to consider the testimony of the Appellant's witness and relevant authorities and submissions by the Appellant.v.That the Learned Trial Magistrate erred in law and fact in awarding the Respondent instruction fees when the Respondent by virtue of being an advocate represented himself in the lower court. 4.Before I address the merits of the appeal, I must first consider the jurisdictional question raised by the Respondent. The Respondent submitted that this appeal is incompetent because it offends Section 38 of the Small Claims Court Act, 2016, which limits appeals from the Small Claims Court to matters of law only. I have carefully considered this objection. 5.Section 38(1) of the Small Claims Court Act, 2016 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." 6.The Court of Appeal in Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR pronounced itself on the duty of a court exercising appellate jurisdiction on matters of law only. The Court stated;“This is a second appeal and therefore this court confines itself to matters of law only unless it is shown that the courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse." 7.This principle has been consistently applied to appeals from the Small Claims Court. In Bob v Kiro [2025] KEHC 15065 (KLR), the Court held that an appeal on matters of law is akin to a second appeal to the Court of Appeal, and the appellate court is not entitled to interfere with findings of fact unless the same are perverse. 8.I have examined the Memorandum of Appeal filed herein. The Appellant has raised five grounds on appeal, which challenge the trial Adjudicator's finding of negligence, the consideration of the chain of causation, the evaluation of the Appellant's evidence, and the award of instruction fees. These grounds, in substance, invite this Court to re-evaluate the evidence on record and substitute its own findings for those of the trial court. That is not the proper function of this Court in an appeal from the Small Claims Court. 9.However, I am not persuaded that the entire appeal should be struck out for want of jurisdiction. The question of whether the trial Adjudicator misapplied the law on the duty of care, the doctrine of unjust enrichment, and the duty of disclosure raises matters of law. In Bob v Kiro (supra), the Court held that a first appeal from the Small Claims Court may be entertained on mixed matters of law and fact, provided that the primary inquiry is on matters of law. 10.I shall therefore proceed to determine the appeal on its merits, confining myself to matters of law and only interfering with findings of fact where the same are so perverse that no reasonable tribunal would have arrived at them. 11.The Respondent, an advocate practising in Nakuru, on 12th February, 2023 at 9:20 a.m., made an M-Pesa transaction in the sum of Kshs. 2,050/= to Paybill Number 5974874. It was his case that the intended recipient was Paybill Number 5973874 in the name of Njuguna Stores. 12.Upon realizing the error, the Respondent immediately contacted Safaricom, which referred him to the Appellant's customer care desk. He called the Appellant's customer care within minutes of the transaction and was assured that the matter would be addressed and the funds reversed within seven days. He was issued with Reference Number KCB14636225 – TOC9. 13.When the Respondent followed up after seven days, he was informed that the funds had been withdrawn from the recipient's account and that reversal was impossible. The Appellant declined to disclose the particulars of the recipient, citing customer confidentiality. 14.The Respondent issued a Demand Notice dated 23rd February, 2023, which was ignored. He then instituted proceedings before the Small Claims Court. 15.The Appellant's case, as presented through its witness, Christine Munyoki, Administration Manager at the Chuka Branch, was that the recipient of the funds was one Stanley Mwiti Mbura, whose account was domiciled at the Chuka Branch. The Appellant contended that upon receiving the complaint, it escalated the matter to the Chuka Branch to seek the recipient's consent for reversal. However, by the time the account could be locked on 13th February, 2023, the funds had already been transferred to another mobile number via internet banking and withdrawn. 16.The learned Adjudicator found in favour of the Respondent, holding that the Appellant had failed in its duty of care by not acting promptly to avert the loss and by failing to disclose the recipient's details to the Respondent, thereby hindering the Respondent from taking action. 17.The Appellant, through its advocates M/S Mukite Musangi & Company, filed written submissions dated 26th January, 2026. The gravamen of the Appellant's case is that the Respondent's loss was self-inflicted through his own negligence, and that the Appellant discharged its legal, contractual, and regulatory obligations with diligence and good faith. 18.The Appellant submitted that the Respondent admitted he failed to confirm the correct Paybill number prior to finalizing the transaction, and that this failure was the proximate cause of the loss. Reliance was placed on Jones v Livox Quarries Limited [1952] 2 QB 608 and Alfred Chivatsi Chai & Another v Mercy Zawadi Nyambu [2018] eKLR for the proposition that a person who fails to exercise reasonable care and thereby occasions harm to himself is guilty of contributory negligence. 19.On the chain of causation, the Appellant submitted that it neither directed nor facilitated the erroneous payment, nor did it exercise control over the unintended recipient, and that in the absence of a direct causal link between its conduct and the loss, the finding of liability was unsustainable. 20.Regarding its duty of care, the Appellant submitted that it acted promptly, reasonably, and in good faith by escalating the matter to the relevant branch in accordance with established banking procedures and the Kenya Banking Sector Charter. It was further submitted that the Appellant demonstrated, through uncontroverted testimony and documentary evidence, that reversal of funds can only be effected with the consent of the recipient, a principle grounded in the protection of customer property rights and the integrity of the banking system. The Appellant relied on Samson Mumo Mutinda v Inspector General, National Police Service & 4 Others [2014] eKLR and Robert Mwangi Mugo v OCS Nyahururu Police Station & 2 Others [2022] KEHC 2534 (KLR) for the proposition that banks cannot unilaterally debit or interfere with a customer's account without authority. 21.The Appellant further relied on Mate v Stanbic Bank of Kenya Limited [2023] KEHC 49 (KLR), where the High Court held that once a bank has acted promptly and the funds have moved beyond its control, it cannot be held liable for failure to reverse the transaction. 22.The Appellant also submitted that it was bound by a contractual and fiduciary relationship with the unintended recipient, which imposed a duty of confidentiality protected under Article 31(c) of the Constitution. This duty restrains banks from disclosing customer information or interfering with accounts without lawful authority. 23.Finally, the Appellant submitted that the trial court erred in awarding instruction fees to the Respondent, who is an advocate who represented himself. The Appellant relied on Matere v Mwangi [1988] KLR 305 and Peter M. Mwenze & Another v Kenya Power & Lighting Co. Ltd [2007] eKLR. 24.The Respondent, appearing in person through Kamonjo Kiburi & Co. Advocates, filed submissions dated 3rd February 2026. On jurisdiction, the Respondent submitted that Section 38 of the Small Claims Court Act limits appeals to matters of law only, and that the Appellant's grounds of appeal are purely factual, challenging how evidence was weighed and factual findings of the tribunal. The Respondent relied on John Munuve Mati v Returning Officer Mwingi North Constituency & 2 Others [2018] eKLR, ATR Kenya Limited v E. Kati Hauliers Ltd & Another (Civil Appeal E025 of 2024), and Fidelity Insurance Company Ltd v Korir (Civil Appeal 13 of 2023) [2024] KEHC 3365 (KLR). 25.On the merits, the Respondent submitted that the Small Claims Court correctly found that the Appellant failed in its duty of care which resulted in loss of funds. The Respondent argued that the Appellant failed to act fast in order to ensure prompt return of the funds and that the Appellant's refusal to disclose the recipient's details hindered the Respondent from taking swift action. 26.The Respondent placed heavy reliance on Kingdom Bank Limited v Alice Wanja Wanjohi [2024] KEHC 2677 (KLR), where the court held that money paid by mistake is repayable, and a bank must demonstrate that it took necessary steps to recall the erroneously transferred funds or that it did not aid the fraud. The Respondent cited the Court's observation that;“It is undertaken on the basis that the money transacted will reach its intended destination and vice versa, that is, that the same would be reversed to its origin in case of an error. In the normal cause of business, the occurrence of erroneous transactions is inevitable and the question is whether the bank acted in good faith with respect to this transaction." 27.The Respondent further submitted that the duty to refund arises from the contractual banker-customer relationship, general principles of equity, and the obligation to prevent unjust enrichment. 28.Having carefully considered the record of appeal, the submissions of both parties, and the authorities cited, I have identified the following issues for determination:(a)Whether the trial Adjudicator erred in finding the Appellant liable for negligence;(b)Whether the Appellant's ground of appeal on instruction fees is properly before this Court. 29.I shall address these issues in turn. 30.The Appellant's primary argument is that the Respondent's loss was self-inflicted through his own negligence, and that the Appellant cannot be held liable for the actions of the unintended recipient. The Appellant also contends that it acted promptly and in accordance with established banking procedures. 31.I have carefully perused the record of the trial court, including the testimony of the Appellant's own witness, Christine Munyoki (RW1). The following facts emerge as uncontroverted, and I consider them significant;The Respondent reported the erroneous payment within minutes of the transaction on 12th February, 2023. The Appellant acknowledged receipt of the complaint and issued Reference Number KCB14636225-TOC9. The recipient's account was domiciled at the Chuka Branch. The Appellant's customer care desk was operational on 12th February, 2023, and the complaint was received and acknowledged on that day. The funds were transferred and withdrawn by the recipient on 13th February, 2023. The Appellant locked the recipient's account on 13th February, 2023, which was after the funds had already been withdrawn. RW1 admitted under cross-examination that the recipient should have been disclosed to the Respondent immediately upon his call. 32.These facts, as I have noted, are not in dispute. The question is whether the Appellant's response to the Respondent's complaint, when viewed against these facts, amounted to negligence. 33.The trial Adjudicator, after reviewing the evidence, made the following finding;“Once the Respondent admitted that the Claimant made a complaint of payment to a wrong account and requested for a reversal, the burden of proof shifted to the Respondent to establish what steps it took, as the service provider and custodian of client's monies, to avert a possible withdrawal of the funds.""From the evidence before Court, the transaction happened on 12th February, 2023. The customer care desk was open and working hence the Respondent cannot state that the bank was not working on the said day. As a matter of fact, the Claimant received an acknowledgement number KCB 14636225 that his complaint had been received. No evidence was presented before the Court to establish what actions the bank took to avert withdrawal of funds even after the complaint was filed with it." 34.I find these findings well-supported by the evidence on record. The trial Adjudicator correctly appreciated that once the Appellant admitted receiving the complaint and issuing an acknowledgment number, the burden shifted to the Appellant to demonstrate what steps it took to prevent the loss. 35.The Appellant's argument that it cannot be held liable because reversal requires the recipient's consent is, in my view, an incomplete answer to the claim. It is not disputed that banks require the consent of the account holder before reversing funds. But that does not absolve the bank of the duty to act with reasonable diligence to protect funds that have been sent in error, once notified of the error. The duty is not to reverse the funds unilaterally; it is to take reasonable steps to prevent the dissipation of the funds while the reversal process is underway. 36.In Kingdom Bank Limited v Alice Wanja Wanjohi [2024] KEHC 2677 (KLR), the court considered a similar case where a respondent had erroneously transferred funds to a till number held at the appellant bank. The Court held;“It is not in dispute that the respondent is not a customer of the appellant and therefore there is no legal relationship between the two. However, money was erroneously transferred from the respondent through Safaricom and found its way to the customer account which is situate in the appellant's bank. The process of electronic money transfer is based on acts of good faith. It is undertaken on the basis that the money transacted will reach its intended destination and vice versa, that is, that the same would be reversed to its origin in case of an error. In the normal cause of business, the occurrence of erroneous transactions is inevitable and the question is whether the bank acted in good faith with respect to this transaction." 37.The learned Judge further observed;“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." 38.I find this reasoning persuasive and directly applicable to the present case. The Appellant, upon receiving notification of the erroneous payment within minutes of the transaction, had a duty to act with reasonable diligence to prevent the dissipation of the funds. The Appellant's internal procedure of escalating the matter from Headquarters to the Branch resulted in a delay that allowed the recipient to withdraw the funds on 13th February, 2023. The account was locked only after the funds had been withdrawn. The Appellant has not provided evidence of any steps taken between 12th February and the time the funds were withdrawn on 13th February. 39.The Appellant's reliance on Mate v Stanbic Bank of Kenya Limited [2023] KEHC 49 (KLR) is, in my respectful view, distinguishable on its facts. In Mate, the appellant was a customer of the bank who had issued instructions to debit her account twice. The bank acted on those instructions and, upon notification of the error, communicated with the receiving bank. The Court found that the bank acted reasonably and could not be held liable for the failure of a third-party platform. In the present case, the Appellant was not acting on the Respondent's instructions to make a payment; rather, it was holding funds that had been sent in error and failed to take adequate steps to preserve them. The Appellant was in a position to act, it could have placed a hold on the recipient's account, but its internal processes caused a delay that resulted in the loss. 40.On the question of disclosure of the recipient's details, RW1 admitted under cross-examination that the recipient should have been disclosed to the Respondent immediately upon his call. The Respondent's request for the recipient's details was not an unreasonable request; it was essential for the Respondent to pursue the recipient directly. The Appellant's refusal to disclose these details, while understandable from a confidentiality perspective, contributed to the Respondent's inability to recover the funds. If the Appellant was unwilling to disclose the details, it should have taken all necessary steps within its own system to recover the funds or freeze them. It did neither. 41.The Appellant's argument on contributory negligence must also fail. While the Respondent made an error in entering the Paybill number, the trial Adjudicator correctly observed that any party transacting on mobile money platforms may make such errors despite taking reasonable care. More importantly, the trial Adjudicator focused on what happened after the error was reported, which was the critical issue. The Respondent's prompt action in reporting the error within minutes demonstrated that he was not negligent in mitigating the loss. The principle in Jones v Livox Quarries Limited (supra) that a person is guilty of contributory negligence where he fails to act as a reasonable prudent person and thereby occasions harm to himself does not assist the Appellant here, because the Respondent's prompt action in reporting the error showed that he acted reasonably after the mistake was made. 42.I find that the trial Adjudicator correctly considered the evidence on record and arrived at the conclusion that the Appellant failed in its duty of care. The Appellant's internal procedures caused a delay that allowed the dissipation of the funds, and its refusal to disclose the recipient's details hindered the Respondent's efforts to recover the same. 43.I therefore find that the trial Adjudicator did not err in finding the Appellant liable for negligence. Grounds 1, 2, 3, and 4 of the Memorandum of Appeal therefore fail. 44.The Appellant's final ground of appeal, Ground 5, is that the trial Adjudicator erred in awarding instruction fees to the Respondent, who is an advocate and represented himself. 45.I have carefully examined the judgment of the trial court. The judgment simply states;“In conclusion, I enter judgment in favour of the Claimant as against the Respondent for:(a)A sum of Kshs. 2,050/-.(b)Costs of the suit.(c)Interests on (a) and (b) above from the date of judgment until settlement in full.(d)There shall be 30 days stay of execution." 46.The trial court did not expressly award instruction fees. It awarded "Costs of the suit" in general terms. The Certificate of Costs, which itemized the costs and included "Party and party costs on the lower scale" (instruction fees), was prepared by the taxing officer after the judgment. The taxing officer is a separate officer of the court, and the taxation of costs is a distinct process from the judgment. 47.The Appellant's grievance is therefore not with the trial court's judgment, but with the taxation of costs by the taxing officer. The proper forum for challenging a taxation is a reference to the High Court under the Advocates (Remuneration) Order, not an appeal against the judgment. The Appellant has chosen the wrong procedure. 48.I therefore find that Ground 5 of the Memorandum of Appeal is not properly before this Court. The trial court did not err in its judgment by awarding instruction fees because it did not do so. The trial court simply awarded "Costs of the suit." Ground 5 of the Memorandum of Appeal therefore fails. 49.Consequently, the appeal is hereby dismissed in its entirety with costs to the Respondent. 50.It is so ordered. DATED, SIGNED AND DELIVERED AT NAKURU THIS 9TH DAY OF JULY, 2026.J. K. SERGONJUDGEIn presence of:Jamleck/Rutoh C/AObiero for the Appellant