Okari v Equity Bank Kenya Ltd (Civil Appeal E1441 of 2024) [2026] KEHC 12609 (KLR) (Civ) (30 July 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPELLATE DIVISION** **CIVIL APPEAL NO. E1441 OF 2024** **(Being an appeal from the judgment of the Small Claims Court at Milimani Commercial Court, delivered by Hon. Kiongo Kageyo, Resident Magistrate, on 27th November 2024 in Milimani Commercial Case No. SCCCMM/E6683/2024)** **BETWEEN** **MONDESTER MONYANGI OKARI ..................................... APPELLANT** **AND** **EQUITY BANK KENYA LTD ............................................ RESPONDENT** **JUDGMENT** 1. This is a first appeal from the decision of the Small Claims Court at Milimani Commercial Court (Hon. Kiongo Kageyo, RM) delivered on 27th November 2024 in SCCCMM/E6683/2024. 2. The Appellant had instituted the claim before the trial court by way of a Statement of Claim dated 3rd July 2024. Her case was that on 28th March 2024 she initiated a transaction (Ref. No. EQ823583351701) from her bank account held with the Respondent, generating an M-Pesa reference (SCS7E3W6XT) at 11:40:21, for the sum of Kshs. 12,000/-, which she intended to send to her husband, one Innocent Nyangoka Ombaire, on mobile number 0726807015. 3. However, due to an error in keying in the recipient's mobile number, a single digit (5 in place of 6), the sum of Kshs. 12,000/- was instead credited to mobile number 0725807015, registered in the name of a third party, Tera Kipkirui. 4. Upon the error being brought to its attention, the Respondent communicated with Safaricom PLC, the operator of the M-Pesa platform, with a view to reversing the erroneous credit. Safaricom reversed only Kshs. 483/- of the Kshs. 12,000/-, which sum the Respondent duly credited back to the Appellant's account (reflected as remark "REV-CEEQ823583351701 28MAR24" and relied upon by the Appellant as Exhibit 2 in the trial court). The balance of Kshs. 11,517/- was not recovered, it being the Respondent's case that the remainder had already left the wrongly-credited mobile wallet before reversal could be effected. 5. The Appellant thereafter sued the Respondent for the outstanding balance of Kshs. 11,517/-. The Respondent, in its Response to the Claim dated 1st August 2024, took the position that once the funds were received by Safaricom's M-Pesa platform, a service independent of and outside the Respondent's control, it ceased to be able to compel a reversal, and that it was, in the circumstances, a stranger to the claim. The trial court agreed, dismissing the claim as deficient of merit and awarding the Respondent costs of Kshs. 4,000/-. 6. The Appellant, aggrieved by that decision, filed the present appeal by way of a Memorandum of Appeal dated 5th December 2024 setting out seven grounds of appeal as hereunder: That the Learned Magistrate erred in law and fact: ***(a) in dismissing the Appellant's claim;*** ***(b) in awarding costs of Kshs. 4,000/- to the Respondent without legal or evidential justification;*** ***(c) in failing to appreciate the principle of “stare decisis”;*** ***(d) in failing to appreciate that the evidence adduced by the Respondent was incongruous with its pleadings, and incapable of sustaining the judgment entered;*** ***(e) in dismissing the claim without regard to the Claimant's submissions at trial;*** ***(f) in awarding costs beyond the scope of the evidence or legal entitlement; and*** ***(g) in entering judgment for the Respondent despite what is termed its "miserable failure to defend" the case.*** 1. On the filing of the appeal, the Court directed that it be canvassed by way of written submissions, with timelines given for the Appellant to file and serve first, followed by the Respondent. 2. The appellant argue that the magistrate misapplied binding precedent on a bank’s duty of care. He contends that while the initial error was hers, keying in the wrong digit, her bank had a subsequent legal duty to act once notified of the mistake. 3. Appellant cited ***Karak Brothers Company Limited v Burden (1972) All ER 1210 and Kingdom Bank Limited v Alice Wanja Wanjohi (2024) eklr*** to emphasize that financial institutions must exercise reasonable care and skill, and once alerted, must take immediate steps to secure and recall funds. 4. The appellant further urged that the partial reversal of Kshs. 483/= proves the bank had the systemic ability to freeze and recover funds, yet failed to discharge its duty by not acting swiftly to prevent further withdrawal. She submits that the lower court wrongly absolved the bank of responsibility by focusing solely on her initial mistake, instead of recognizing the bank’s independent duty to mitigate loss. She therefore urges the High Court to allow the appeal, holding that the magistrate erred in law by failing to enforce the bank’s fiduciary obligations. 5. The Respondent filed its submissions. In summary, they urge that: 6. the error in the transaction inputting mobile number 0725807015 instead of 0726807015 was made by the Appellant herself, in the exercise of her own duty of care in initiating the transfer; 7. the M-Pesa/Pesalink platform through which the funds were ultimately received is an independent service operated by Safaricom PLC, and not within the Respondent's control, relied on ***Mate v Stanbic Bank of Kenya Limited (Civil Appeal E841 of 2021) [2023] KEHC 49 (KLR);*** 8. upon notification, the Respondent acted reasonably by contacting Safaricom, and recovered and credited to the Appellant the only sum Safaricom was able to reverse, namely Kshs. 483/-; 9. the balance could not be recovered because it was no longer within the control of the receiving platform, and the Appellant adduced no evidence of any further communication or follow-up with Safaricom to support her claim that more was recoverable, citing the evidential burden under section 107 of the Evidence Act and ***Owiny v Osumba [2023] KEELC 21231 (KLR);*** 10. the Appellant did not join Safaricom PLC or Tera Kipkirui, the recipient of the funds, as parties, despite either being the more appropriate defendant(s) to a claim of this nature; and 11. the costs awarded were a proper exercise of the trial court's discretion, costs ordinarily following the event, relying on ***Republic v Rosemary Wairimu Munene, Ex-Parte Applicant v Ihururu Dairy Farmers Co-operative Society Ltd***, as cited in ***St Joseph Health Care v Mbuthia [2026] KEHC 4643 (KLR).*** 12. On this basis, the Respondent urges that the appeal be dismissed with costs. 13. The following issues arise for determination: 14. ***Whether the grounds of appeal 4(i), 4(ii) and 7 of the Memorandum of Appeal raise matters of law falling within this Court's jurisdiction under section 38 of the Small Claims Court Act, or whether they instead invite a re-evaluation of fact falling outside that jurisdiction.*** 15. ***Whether the trial court erred in law in dismissing the Appellant's claim and entering judgment for the Respondent and, specifically, whether the Respondent's legal obligation on notification of the erroneous transfer was to refund the Appellant the full Kshs. 12,000/- transferred, as opposed to the Kshs. 483/- it in fact recovered and refunded.*** 16. ***Whether the trial court erred in law in awarding the Respondent costs of Kshs. 4,000/-.*** 17. **Section 38** of the **Small Claims Court Act, 2016** **(Laws of Kenya)** governs appeals from the Small Claims Court; provides: ***(1) 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.*** ***(2) An appeal from any decision or order referred to in subsection (1) shall be final.*** 1. This being an appeal from a decision of the Small Claims Court, this Court's jurisdiction is not at large; it is confined by statute. The effect of this provision is twofold: first, that this Court's jurisdiction on such an appeal is confined to matters of law and does not extend, as of right, to a re-evaluation of disputed questions of fact; and second, that this Court's determination of the appeal is final, there is no further right of appeal to the Court of Appeal. 2. This limitation has been consistently affirmed by the High Court. In ***Mogonchi v Ombiro (Civil Appeal E130 of 2024) [2025] KEHC 4096 (KLR),*** the Court held: ***"The court's duty in a small claims court is circumscribed under Section 38 of the Small Claims Court Act. Ipso facto, there is only one chance of appeal to this court. It is an appeal on points of law."*** 1. Likewise, in ***Ochieng v Mshila (Civil Appeal E099 of 2024) [2025] KEHC 2660 (KLR),*** the Court reproduced section 38 in full and held: **"It is clear from the aforementioned provision that jurisdiction of this Court from the Small Claims Court will only be on matters of law and not factual issues."** 1. Both decisions align this jurisdiction with that exercised by the Court of Appeal on a second appeal, confined to matters of law. It follows that, although the general duty of a first appellate court to re-evaluate and reassess the evidence on record *(****as in Odera t/a AJ Odera & Associates v Machira t/a Machira & Co. Advocates [2013] eKLR)*** would ordinarily apply to a first appeal, that general duty is displaced here by the narrower and specific jurisdiction conferred by section 38 of the Small Claims Court Act. 2. Notwithstanding that this is nominally a first appeal from the trial court, it is, by statute, confined to matters of law only, in a manner analogous to a second appeal. Any ground of this appeal which merely invites this Court to reweigh disputed evidence or substitute its own view of the facts for that of the trial court accordingly falls outside this Court's jurisdiction, unless the Appellant demonstrates that the trial court considered irrelevant matters, ignored matters it ought to have considered, or reached a decision that is, on the whole, perverse. 3. Grounds 4(i) and 4(ii) assert that the evidence adduced by the Respondent was "incongruous with the pleadings" and "incapable of sustaining" the judgment entered. Ground 7 asserts, in substance, that the Respondent's defence at trial was factually weak. As framed, none of these grounds identifies any error of law; each invites this Court to reweigh the sufficiency of the evidence and substitute its own assessment for that of the trial court. 4. In the absence of any submissions the Appellant having filed none demonstrating that the trial court considered matters it ought not to have, failed to consider matters it ought to have, or that its decision was, viewed as a whole, perverse, these grounds fall outside the jurisdiction conferred on this Court by section 38(1) of the Small Claims Court Act. Grounds 4(i), 4(ii) and 7 accordingly fail at the threshold, for want of jurisdiction to entertain them as framed. 5. The remaining grounds, the dismissal of the claim (Ground 1), the award of costs (Grounds 2 and 6), the application of precedent (Ground 3), and the alleged disregard of the Claimant's trial submissions (Ground 5) are properly matters of law, going respectively to the correctness of the legal conclusion drawn from largely undisputed primary facts, the exercise of discretion on costs, the application of binding authority, and whether the trial court failed to consider material properly before it. These fall within this Court's jurisdiction under section 38(1) and are considered on their merits below. 6. It is not in dispute that the Appellant, in initiating a transfer of Kshs. 12,000/- from her account with the Respondent, made an error in the mobile number of the intended recipient, resulting in the funds being credited to a wrong party's M-Pesa account. There is nothing on the record to suggest that this error originated from any malfunction, misdirection, or fault on the part of the Respondent's own systems; it was, on the record before this Court, an instruction correctly executed by the Respondent but incorrectly given by the Appellant. 7. It is trite, and not seriously disputed, that money transferred under such a mistake is in principle recoverable. The difficulty in this case is not whether the Kshs. 12,000/- was recoverable in the abstract, but from whom, and to what extent the Respondent, as opposed to the recipient of the funds or the platform through which they were received, is the proper party to bear that liability. 8. Once the funds were credited to mobile number 0725807015, they passed into a platform operated by Safaricom PLC, a distinct entity not party to these proceedings, and thereafter into the control of the account holder, Tera Kipkirui, also not joined to the suit. 9. On the record, the Respondent, upon notification, contacted Safaricom and secured reversal of the only sum Safaricom confirmed as recoverable at that point, Kshs. 483/-, which it promptly credited to the Appellant. No evidence was placed before the trial court, and none is urged before this Court, that the Respondent had any further power, contractual or otherwise, to compel Safaricom or Tera Kipkirui to disgorge the balance, or that it failed to take any step reasonably available to it. 10. Since the facts are not disputed, the only question before the court is a legal one; ***whether the Bank acted negligently and can be held responsible to the Appellant.*** 11. It is a general principle that money held in credit in a bank account belongs to the customer and the bank is under a fiduciary duty to act within and follow the customer’s instructions with respect to money held in the account. In ***Eunice Wairimu Muturi and Another v James Maina Thuku and Another ML HC COMM. No. 343 of 2011 [2018] eKLR*** the court held: **“The general principles of law are that, the relationship between the Bank and its customer is contractual. The main basis of this relationship is one of debtor and creditor. As held in the case of; Foley vs Hill (1848), where the customer’s account is in credit, then the bank is in effect the customer’s debtor, that is to say that the bank owes the money to the customer. Where it is in debit, then the customer is the banker’s debtor. In this contractual relationship, the bank owes the customer several duties which includes but not limited to: a duty to comply with the customer’s mandate (Joachson vs Swiss Bank Corporation (1921)). It is important to realize that this duty not only refers to the original mandate completed when the customer opened the account but also various other documents which are interpreted as mandates, including standing orders, direct debits and cheques. Therefore, the Bank owes its customer an obligation to obey the customer’s instructions based on the mandate given. (emphasis mine).** 1. In ***Mate v Stanbic Bank of Kenya Limited [2023],*** the court said that once money is sent to a mobile-money service (like M-Pesa), the bank no longer controls what happens to it. The mobile-money platform runs separately and independently from the bank. The bank's duty of care in recalling an erroneous transfer is discharged where it takes reasonable steps to notify and pursue reversal through the receiving platform, notwithstanding that the platform or receiving party ultimately declines or is unable to reverse the full amount. 2. It is not contested that the Appellant, while initiating a transfer of Kshs. 12,000/- from her account with the Respondent, inadvertently entered an incorrect mobile number. This error resulted in the funds being credited to an unintended M-Pesa account. The Respondent bank, having executed the instructions exactly as provided, bore no fault in the misdirection of the funds. Consequently, the bank’s responsibility in such circumstances is limited, as the mistake originated from the customer’s own input. The bank only needs to act reasonably like quickly telling the mobile-money company about the error and asking for the money to be reversed. If the mobile-money company or the person who received the money refuses or cannot return it, the bank is not at fault, as long as it did its part. 3. On the material before this Court, the trial court's finding that the Respondent had discharged its duty by recovering and refunding what was in fact recoverable, and could not be held liable for the balance that had already passed beyond recall, cannot be faulted. 4. Similarly, the ground alleging failure to appreciate the doctrine of stare decisis does not identify the binding precedent said to have been disregarded, and in the absence of submissions elaborating it, affords no basis for disturbing the trial court's judgment. 5. Accordingly, this Court finds that the trial court did not err in dismissing the Appellant's claim for the outstanding Kshs. 11,517/-, nor in entering judgment for the Respondent. Grounds 1, 3, 4(i), 4(ii), 5 and 7 of the Memorandum of Appeal fail. ***(ii) Whether the Respondent was entitled to costs of Kshs. 4,000/*** 1. Costs are in the discretion of the court and ordinarily follow the event, not as a penalty on the losing party but as compensation to the successful party for the trouble taken in defending the claim. The Respondent, having succeeded before the trial court, was prima facie entitled to costs. 2. The Appellant's challenge to the quantum of Kshs. 4,000/- is not supported by any submission demonstrating that the sum was disproportionate to the claim, unsupported by the record, or wrongly assessed. In the absence of any such showing, this Court finds no basis to interfere with the trial court's exercise of discretion on costs. Grounds 2 and 6 of the Memorandum of Appeal accordingly also fail. ***Disposition*** For the foregoing reasons, this Court finds that the appeal lacks merit in its entirety. The following orders are made: **(a)** ***The appeal be and is hereby dismissed.*** ***(b) The judgment of the Small Claims Court at Milimani Commercial Court delivered on 27th November 2024 in SCCCMM/E6683/2024, dismissing the Appellant's claim and awarding the Respondent costs of Kshs. 4,000/-, is hereby upheld in its entirety.*** ***(c) The Appellant shall bear the costs of this appeal.*** ***D) This being an appeal from the Small Claims Court determined on a matter of law, this decision is final in accordance with section 38(2) of the Small Claims Court Act, 2016.*** *It is so ordered.* **DELIVERED, SIGNED AND DATED AT NAIROBI** **THIS 30TH DAY OF JULY 2026.** **M. S. SHARIFF** **JUDGE**