[2023] KEHC 23520 (KLR)

NCBA Bank Limited v Oriki (Civil Appeal 42 of 2020) [2023] KEHC 23520 (KLR) (11 October 2023) (Judgment)

Neutral citation: [2023] KEHC 23520 (KLR)

Republic of Kenya

In the High Court at Kisii

Civil Appeal 42 of 2020

REA Ougo, J

October 11, 2023

Between

Ncba Bank Limited

Appellant

and

Francis Manyura Oriki

Respondent

(Being an Appeal from the judgment and decree of HON. LUTTA, dated and delivered in KISII CMC NO. 408 OF 2015- FRANCIS MANYURA ORIKI V NIC BANK LIMITED on 30th April 2020)

Judgment

1. The appellant has filed a Memorandum of Appeal being dissatisfied with the judgment of Hon. Lutta Kisii CCMC No. 408 of 2015 and delivered on April 30, 2020 and prays the court grants orders that:a.The appeal be allowed in its entiretyb.The judgment and decree of Hon. Lutta, dated and delivered in Kisii CMCC No. 408 Of 2015- Francis Manyura Oriki V Nic Bank Limited on April 30, 2020 be substituted with an order dismissing the respondents suit with costs.c.The judgment and decree of Hon. Lutta dated and delivered in Kisii CMCC No. 408 Of 2015- Francis Manyura Oriki V Nic Bank Limited on April 30, 2020 be set aside and be substituted with proper finding by this Honorable Court.d.Costs of the appeal be awarded to the appellant.e.Any other reliefs that this honorable court deems fit and just to grant.

2. The appeal is premised on grounds that the grounds that the learned trial magistrate erred both in law and fact by:1. Pronouncing judgment in favor of the Respondent when there was no legal basis of doing so in light of there being no sufficient evidence adduced before him.2. Pronouncing judgment in favor of the Respondent and had not proven his case on a balance of probabilities.3. Failing to take into account all material and relevant facts as to hire the purchase agreements entered into between the appellant and the respondent as a result thereof he reached a wrong decision by holding that the appellant had mismanaged the loan accounts belonging to the respondent.

The Appellant’s And Respondent’s Case At The Lower Court 3. The particulars of the case before the trial court were that on September 18, 2009, the respondent together with John Mose Oriki (‘John’) and the appellant entered into a hire purchase agreement to facilitate the purchase of a High Sided Trailer Reg. No. ZD 1741 (“Trailer”). The terms of the contract were that the appellant would part finance the trailer to a tune of Kshs1,600,000/- which was to be repaid in a total of 48 equal monthly instalments of Kshs 46,590/- and the last installment being Kshs 51,430/-. An account No. 4-560-004020 was opened with respect to the purchase of the trailer.

4. Subsequently on 21/12/2009, the respondent and John on the first part and the appellant on the other part entered into another Hire Purchase Contract for the purchase of a motor vehicle Reg. No. KBK 729 J a Mercedes Benz Axor (“the truck”). The terms of the contract were that the appellant would part finance the purchase of the Truck to the tune of Kshs 2,250,000/- which was to be repaid in a total of 48 equal monthly installments of Kshs 65,520/- and the last installment being Kshs 70,160/-. An account No. 4-560-004460 was opened with respect to the purchase of the truck.

5. The respondent averred that it was a term of the contract either express or implied that the appellant would manage the two accounts prudently. However, the defendant mismanaged both accounts and loaded punitive charges against the plaintiff. The respondent contend that the appellant breached the respondent’s economic right under article 46(1)(c) of the Constitution of Kenya. It also breached the statutory and contractual obligations and acted without due regard of the respondent’s equity of redemption. The respondent also challenged the valuation report compiled on 18/12/2014 by the defendant. The respondent particularized the appellant’s mismanagement with regard to the Hire Purchase Agreement Account No. 4-560-004020 and account Number 4-560-004460 at paragraphs 8(A)(i)-8(A)(iv) & 8 (B)(i)-B(ii) of the plaint. The respondent claimed that the appellant loaded punitive illegal interest and costs onto the Hire Purchase Accounts and the monies demanded by the appellant were based on its management of the accounts. That having repossessed the truck the appellant failed to obtain a credible Valuation report to guide the public auction sale of the same.

6. The appellant filed a statement of defense wherein it denied all the allegations by the respondent against them. In the alternative and without prejudice, the appellant averred that if the said management ever occurred, then the same was due to mismanagement on the part of the respondent. The respondent failed to pay the loan installments as to and when they were due, it failed to honor his part of the Chattels agreement, breached the terms and conditions of the Chattels agreement and declined to honor the default notices issued by the appellant.

Evidence By Parties 7. Francis Manyura Oriki (Pw1) testified that on September 18, 2009, the bank was to finance him 50% of the total cost of the trailer and that they entered into two hire purchase agreements of Kshs. 1. 6 million and 2. 25 million approved by the appellant. The appellant did not manage the loan accounts properly as the “Trailer” Account, began on a debit balance and that transaction that was alien to their agreement. The actual balance was Kshs 38,800/- before the loan proceeds of Kshs 1,600,000/- were disbursed. He noted that there was a double entry of repossession charges on May 21, 2010 yet there was no repossession of the motor vehicle before said date. He explained that the statement of accounts obtained from the appellant’s Kisumu branch recorded a double entry of repossession charges yet this was not reflected in the customer account report.

8. He testified that there was no default in payment on his part before May 21, 2010 as evidenced in the customer report. The customer account at page six (6) shows that repossession is indicated twice and similarly at page ten (10) it is indicated once. Further at page ten (10) the insurance repossession account did no arise. He also stated that page 5 and 10 entries of the report do not agree as one has a default of Kshs 38,800/- while the other does not have.

9. Pw1 testified further that on February 2, 2010 he paid Kshs 96,520/- to the trailer account but the amount was not reflected. The loan granted to this account was 2. 25 million and the first entry was Kshs. 44,800 but no credit was given. At page fifteen (15), the repossessions on 5th August 2011 have no basis and the amounts were never reversed. Pw1 testified that he only got to know of it when he asked for his bank statements and held a meeting with the banks legal team. The bank rejected his proposal and proceeded to repossess the 1st motor vehicle and sold the same. The motor vehicle was valued and at page 20 the assessors report gave the approximate value and showed the motor vehicle condition and its market value which was Kshs 2,500,000/-. The forced sale value as per Automobile Professional Assessors (APA) was Kshs 2,015,000 however for Maka Automotive Works & Assessors the market value was Kshs. 2,370,000/-. The first motor vehicle was sold at Kshs 1,500,000/- far below both values as per the APA. Pw1 testified that he was not given a chance to recommend a motor vehicle assessor. He visited the interest rate advisory centre and it analyzed the two loan accounts and made a report. He prays for a refund for the wrongful debits plus interests and costs as the sale was not proper. He reiterates that the motor vehicle should have been sold at Kshs 2,500,000/- and that the debit shows that he was already in arrears hence the repossession and sale of the motor vehicle.

10. On cross examination, he testified that as per the bank records, the outstanding amount as at February 9, 2018 was Kshs 1,040,000/- and that Account no. 1000729915 was the only account which existed for repossession. The Kshs. 44,000/- was not credited to his account, however Kshs. 45,000 was credited on November 30, 2012, in addition the appellant debited about Kshs 200,000/- to the account. He was not aware that the double entry of repossession fees was due to a computer error. The initial debts on both accounts carried forward were legal fees. The valuation reports showed the conditions of the motor vehicles and that he paid cash for payments from the bank.

11. Wilfred Obincha Onono (Pw2) testified that he is a trained and certified accountant and a managing consultant of interest rates advisory Centre. He stated that the plaintiff approached them to verify hire purchase accounts held with the appellant. He looked at the statements of accounts, hire purchase agreements and several correspondences and consequently prepared and signed a detailed report which was produced in court as an exhibit. Pw2 testified that in summary, the report showed balances as at October 31, 2012 in respect of the accounts. The debit balance of Ksh.38,800 could not be verified and that the account for Kshs 1,600,000/- related to a loan for Kshs 7,600,000/- whose processing fees was Kshs 76,000/- which the respondent had paid. The respondent’s loan was for Kshs 1,600,000 and that the bank should have reduced his indebtness. The respondent’s two accounts were not well managed.

12. During cross examination he testified that there was an account that started with a debit and according to the appellant’s list of documents the loan was disbursed on August 21, 2009, however there was another statement from the same bank. He said that there were cash payments which were not included in the report specifically a pay slip for February 2, 2010 and another for Kshs 76,000/-. In addition, there was a debit on May 21, 2010. The loan was disbursed on December 24, 2009 and he could see a debit payment of Kshs 44,800/-.

13. Chritine Bosire Onsoti, (Dw1) testified that she was an employee of the appellant. She testified that the respondent had taken two loan facilities and provided two securities. She produced as evidence statement of the relevant accounts and agreements. She testified that the loan was disbursed and subsequently the respondent defaulted. The appellant issued demand letters and repossession was done. The biddings were done and the vehicles were sold through a public auction for Kshs 1,500,000/. However, despite the sale there was still an outstanding balance on the account. She maintained that the accounts were properly managed. On cross –examination, she testified that Pexht. 3 was the statement for account for an agreement HPR 4-560-004020 dated July 17, 2013 and two vehicles were pledged as security. The loan was disbursed on August 21, 2009. She conceded that she didn’t understand how the first debit entry arose and explained that a debit cannot be the first entry.

14. She said that in Pexh2 the amount indicated was 7. 6 million, the deposit was to be 3. 8 million and the processing fees was 3%. The bank disbursed 1. 6 million, however she was not certain of how much the processing fees was. In Pexh3 there was a double debit of repossession expenses, however a chattel cannot be repossessed twice on the same day. She said that the bank over demanded the amount due. In Pexb 4 at page 12 was the statement of account in respect of an agreement that was issued by the bank and the first entry was Ksh.44,800 which was a debit and the loan was credited on December 24, 2009.

15. Dw1 explained that the first entry on a loan account should be a credit account therefore the Plaintiffs account had started running irregularly. The bank increased the amount owed to the customer irregularly. In Dexb 4 (a) drafted by Automobile Professional Assessors (APA), it is indicated that the engine of the vehicle did not start and that its condition was a critical factor in ascertaining the value of the vehicle. In Dexh 4(b), is a different valuation report, which indicates that the engine was fitted but did not state the condition of the engine, hence it should not have been accepted as a proper report as it casted doubt on the condition of the vehicle. She said that the two valuation reports were the basis of the sale chattels. In regards to the deposit made as evidenced in the respondent’s list of documents page 29, she could not confirm whether it was made as she had not been given the document issued by the bank and that she was not mandated to manage the account.

16. This appeal was canvassed by way of written submissions and both parties have filed their written submissions.

Appellant’s Submissions 17. The Appellant submitted the following issues for determination:a.Whether the appellant kept proper accounts as mandated by the lawb.Whether the hire purchase facilities were operated satisfactorily and contractuallyc.Whether the respondent defaulted in the repayment of the loansd.Whether repossession was legal

a.Whether The Appellant Kept Proper Accounts As Mandated By The Law 18. The appellant submitted that section 52 (1) of the Banking Act provides that where parties have agreed, the contractual relations are not to be invalidated. The appellant was therefore entitled to charge interest, charge all costs and expenses including advocate fees as per the contract between parties. Furthermore, the respondents allegations of mismanagement of the accounts is based on a report from IRAC. They relied on Daima Bank Limited (In Liquidation) v David Musyimi Ndetei (2018) where the court stated that an IRAC report does not offer much assistance as it does not take into account the contract between parties.

19. The Appellant submitted that the learned magistrate erred by allowing the respondent to raise a defense of mismanagement of the account in a bid to avoid paying his just debt and by relying fully on the report as conclusive evidence. They relied on the court appeal decision in Mrao Ltd v First American Bank of Kenya Ltd & 2 othersAppeal No.39 of 2022, where the court stated that if courts allow debtors to avoid paying their debts by taking some of the defenses such as challenging contractual interest rates, then banks will be crippled and driven out of business.

20. The issue of interest rates was agreed on between parties, however the respondents delayed payments and persistent defaults elongated the payment period and attracted further and default interest charges amounting to the substantial interest expense due to the bank. The bank statements and evidence of DW1 showed how calculations of interest and other charges were done by the bank in accordance with the act. The Appellant submitted that the primary task of the court is to construe the contract and any terms implied in it. Parties are bound by the terms and conditions of the agreements that they voluntary entered into. In addition, it is trite law that the court cannot rewrite the agreement between parties. They cited the case ofNational Bank of Kenya Ltd.vPipe Plastic Samkolit (K) Ltd andanor(2001) eKLR . He also cited Matex Commercial Supplies Limited vs Euro Bank Ltd (In Liquidation) (2008) eKLR where the court stated that the duty of the court is to enforce or legitimize what parties have agreed upon themselves. In Muthuri vs National Industrial Credit Bank Ltd (2003) eKLR the court held that where a contract has been reduced in writing, no extrinsic evidence is admissible to contradict, vary, add to or subtract from the terms of the document. The fact that the respondent invited the court to determine whether the interest rates were unlawful and unjustified was absurd as the rates were charged in accordance with the agreement. This means that the court would be re-writing the terms of the contract. Pw2’s role was only to the extent of recalculation on the loan, therefore the report he provided ought to have been disregarded by the trial magistrate as it was out of his scope. Dw1 testified that the first entry on the statement was a balance brought forward, which related to a previous dealing hence it was possible for the account to reflect such transaction.

21. Furthermore, in Dexh 1(a) & (b), the statements shows that the amounts were duly credited.

22. The Appellant also submitted that from evidence on record, there were two facilities and repossession was done for the two securities (Motor vehicle registration number KBK 729J and axel high sided trailer registration number ZD 1741). In addition, the Respondents produced differing account balances in its own documents. In the customer account report generated on 30th June 2011 the loan balance as on May 25, 2010 was Kshs. 1,409,603. 99 while the statement issued by the Respondent on the same showed the balance to be Kshs. 1,540,203. 99, averments which were not sustained at hearing.

23. The appellant submits that there was no evidence in support of the respondents Mpesa transactions or that the Appellant failed to give credit for the Kshs. 200,000 paid on October 31, 2012.

b.Whether The Hire Purchase Facilities Were Operated Satisfactorily And Contractually 24. The appellant submitted that the loan facilities were not operated satisfactorily because the respondent failed to adhere to the terms thereof and was in perpetual arrears. The appellant did not breach any clause of the contract entered into between the parties and therefore it was improper of the magistrate to issue orders against them. They also submitted that the Respondent being in breach of the contract could not obtain orders against them, hence the court ought to have enforced the agreement between the parties and allow the appellant exercise its rights under the agreement.

c.Whether The Respondent Defaulted In The Repayment Of The Loan 25. The appellant submitted that Pw1 admitted that there was a balance he owed to the appellant as result of his default. Dw1testified that the respondent was in default and produced statements of accounts and a demand letter as proof. The appellant submits that the trial magistrate rightly held that both parties were in agreement that there was a balance owed by the plaintiff, and it ought not to have concluded that the respondent was not in default. It urged the court to set aside this holding and hold that the Respondent is in default.

d.Whether The Repossession Was Legal 26. The appellant submitted that having established default on the payments of the loan amounts, they had the right pursuant to the loan agreements to repossess the motor vehicle. According to the Hire Purchase agreement, the ownership of the vehicle was to stand transferred to the Respondent from the financier upon payment of installments and other dues if any. Since the Respondent defaulted in payment, the ownership remained with the financier. The appellant submits that the trial magistrate erred in holding that there was no evidence to support repossession of the motor vehicle. It was the defendant’s prayer the court sets it aside the lower court’s judgment and allow the appeal as sought. The Appellants place reliance on the case of James Bichange Kenyariri vs Stanbic Bank Ltd (2017) eKLR, where the court stated that courts must uphold the sanctity of lawful commercial transactions.

Respondent’s Submissions 27. The Respondent submitted on the first ground of appeal which was insufficiency of evidence tendered by the Respondent. They argued the first ground did not provide a proper legal ground of appeal because sufficiency of evidence is not a basis upon which any court of law can determine any case. The Respondents also submitted that there is no legal yardstick to determine the amount of evidence which can be considered to be sufficient; however, the law sets a bar to be attained by a respondent on their suit which is proof on a balance of probabilities. (See D.T Dobie & Company (K) Ltd v Wanyonyi Wafula Chebukati (2014) eKLR). On the second ground of appeal, whether the Respondent proved their case on a balance of probabilities, the Respondents submitted that evidence tendered ought to be considered as a whole.

28. The Respondents submitted that the germane issue which the trial court had to decide is whether the respondents loan accounts were mismanaged by the appellant and whether the basis for the sale of the motor vehicle registration number KBK 729J and whether a proper valuation was undertaken prior to the sale of the said vehicle. Pw1 testified to double debits on his account, credits not reflected on payments made and differing accounts being maintained by the appellant. This evidence was backed by exhibits. Pw2 produced a Report (Exhibit 8) which provided a detailed account of the mismanagement which resulted to the loss suffered by the respondent amounting to an aggregate sum of Kshs. 613,455. 25. The report also showed that the first entries on both accounts were debit entries of Ksh.38,800 and Kshs. 44,800 which was not sound banking practice as the respondent did not have other liabilities with the appellant.

29. The effect of failure to maintain credible accounts was considered in Nahashon Njage Nyaggah vs Savings & Loan Kenya Limited & Another (2017) eKLR where the court held that there was no justification why the 1st appellant had 3 statements which did not tally instead of one account, this fact alone was sufficient in tilting the court’s decision in favour of the respondent. The court further held that the bank is obligated to keep proper accounts and when the bank issues different sets of accounts which are conflicting on the same issue, it is difficult to know where the truth lies and whenever such doubt exists between a bank and its customer, the court will naturally give the benefit of the doubt to the customer because the bank is so careless and unprofessional and it is difficult to know the amount of the loan that has been paid and what is outstanding.

30. It was further submitted that when evidence tendered to is not controverted, the same must be taken as establishing. It placed reliance on the case of Linus Nganga Kiongo & others vs Town Council of Kikuyu (2012) eKLR; and Trust bank Limited vs Paramount Universal Bank Limited & 2 others Nairobi (Milimani) HCCS No. 1243 of 2001, where the courts held that where a party fails to call evidence in support of its case, the party’s pleadings remain mere statements of facts. Evidence tendered by the respondent on lack of credibility of the Valuation Reports was corroborated by the evidence of the appellants witness who admitted their deficiencies upon being cross-examined. The Respondents submits that since there was no evidence of the denials in the defense of the appellant, then he has proved on a balance of probabilities that the valuation reports should not have been relied upon, therefore, the auction sale conducted by the appellant was unlawful. He cited the case of David Githuu Kuria V Equity Bank (Kenya) Limited & 2 others (2019) eKLR where the court stated in accordance with section 3 of the Evidence Act, a pleading is not evidence and neither evidence amounts to a pleading.

31. On the third ground, the Respondents submitted that the same has been dealt with in ground 2 of their submissions. The issue of mismanagement was a core feature of the proof of the respondent’s case. they submitted that the trial court did not in any event fail to take into account any material or relevant fact with respect to mismanagement of the loan accounts.

Analysis and Determination 32. I have reevaluated the evidence adduced before the trial court, I have also considered the parties submissions and the authorities relied on. Before I list the matters for the court's consideration, it's important to mention that the following facts are not in dispute:i.The parties entered into 2 contracts, chattel mortgage agreement 4-560-004020 and 4-560-004460 advancing the respondent Kshs. 1,600,000/- and 2,250,000/- respectively, in respect of each agreement.ii.The appellant reposed the respondent’s vehicles.

33. Therefore, the issues that arise for the consideration by the court are as follows:a.whether there was sufficient evidence that the appellant had mismanaged the respondent’s accounts;b.whether the trial court erred in awarding the respondent’s damages.

a)Whether There Was Sufficient Evidence That The Appellant Had Mismanaged The Respondent’s Accounts 34. On whether there was mismanagement of the respondent’s account, the appellant argued that it maintained proper accounts. It was argued that the respondent delayed in making scheduled monthly payments and that as a result the accounts attracted further interest charges and default interest charges. It relied on the case of Daima Bank Limited (supra) where the court held that an IRAC report does not offer much assistance as it does not take into account the contract between parties. However, in that case I note the court found that sufficient cause had not been shown revealing that the respondent therein experienced difficulties to reconcile the accounts to necessitate the involvement of IRAC.

35. On the other hand, the respondent relied on the evidence from Pw1 and Pw2, a managing consultant at Interest Rates Advisory Centre. Pw2 produced a report marked as Pexh 8. According to the report, both mortgage accounts, 4-560-004020 and 4-560-004460, commenced with unexplained debits of Kshs. 38,800/- and Kshs. 44,800/-. It also noted that the bank did not credit the loan account no. 4-560-004020 with an overpayment of Kshs. 60,000/- made in regards to loan processing fees. The appellant also failed to credit account no. 4-560-004020 with Kshs. 96,520/- that was made on 02/02/2010. Finally, there was double debiting of repossession charges on the account. According to the report from the Interest Rates Advisory Centre (IRAC), on November 23, 2012, there was a difference of Kshs. 418,568. 20 between the appellant’s debit balance of Kshs 827,847. 32 and IRAC's balance of Kshs. 409,279. 12 in respect to account no. 4-560-004020. On the other hand, for account no. 4-560-004460 as at 23/11/2012, the difference between the appellant’s debit balance of Kshs 1,080,064. 08/- and IRAC's balance of Kshs. 885,177. 04 is Kshs 194,887. 04/-.

36. The respondent led evidence to prove that there was sufficient evidence suggesting that he required expert assistance for his loan recalculations due to inconsistencies in the information supplied by the appellant concerning the respondent's loan balance. For instance, in regards to account No. 4-560-004020, the respondent’s account statement printed on 17/07/2013 reveal that the balance as at 21/05/2010 was Kshs 1,540,20. 3.99/-. However, according to the customer account report as at 30/06/2011 the balance on 21/05/2010 was Kshs 1,414,603. 99/-.

37. The first debit entry on the respondent account was also not challenged. Dw1 during cross examination testified that the first entry was a debit entry which she could not explain how it arose. She further testified that the first entry on a loan account should be a credit and therefore the respondent’s account was started running irregularly.

38. The respondent also produced deposit slips for the amount of Kshs 96,520/- paid on 2/2/2010, Kshs 200,000/- paid on 31/10/2012, Kshs 2,000/- and Kshs 76,000/- were also paid on 14/08/2009. Although the appellant stamped the respondent’s deposit slips as received, the amounts paid by the respondent did not reflect on his account.

39. There was evidence of double entry for repossession charged in account No. 4-560-004020. The appellant now submits that the amount was for the two securities. However, the 2 securities had different accounts and it was irregular for the appellant to charge double repossession fees for account No. 4-560-004020. Dw1 testified that an asset cannot be repossessed twice and that the appellant asked for more money than was rightfully owed to it.

40. In James Mungai Magari v Housing Finance Company of Limited [2013] eKLR the court held the Defendant therein breached the contract by charging the Plaintiff two types of interest, one for the principal amount and another for default interest, especially when the interest rate exceeded the agreed-upon rate. The court in James Mungai Magari (supra) on the IRAC report that was relied on by the plaintiff further observed as follows:“The question that arises is whether the Court can reliably rely on this report when the issue of default charges was not considered. In my view, PW2 was categorical on the basis of the re-calculation. I have already held that by charging the Plaintiff two sets of interest, interest on Capital and default charges or interest on arrears (and considering that a higher rate of interest than agreed was being charged), the Defendant was acting out of contract. More so, the Defendant did not call any evidence to rebut Mr. Onono’s evidence. In my view, the evidence of DW1 was in conclusive and did not address the issues raised by PW2. To my mind, the report by IRAC was plausible.”

41. The evidence adduced before the subordinate court all point to mismanagement of the respondent’s accounts. The court cannot turn a blind eye to the finding arrived at in the IRAC report considering that there were various anomalies in the respondent’s account. Dw1 conceded that the irregularity started with the debit entry made in his loan accounts. I have further discussed other irregularities in the respondent’s account in the preceding paragraph and as such, it is not possible to ascertain whether there was an outstanding amount at the time of repossession. In Nahashon Njage Nyaggah v Savings & Loan Kenya Limited & another [2017] eKLR cited by the respondent where the court observed as follows:72. …On the basis of the glaring anomalies above this court finds that the 1stDefendant did not keep proper accounts as mandated by the law. Further, the 1st Defendant has failed to demonstrate that the Plaintiff is indebted to it in any manner whatsoever in the absence of proper accounts. The only legal and acceptable means of demonstrating that the Plaintiff was properly indebted to the 1st Defendant was through production in evidence of a complete, accurate and proper and verifiable statements of account showing all the financial dealings in the Plaintiff’s account. It is apparent that some of the statements produced by the 1st Defendant are not generated in the ordinary cause of maintaining the account, and appear to have been re-calculated, generated and printed on plain paper by the 1st Defendant for the specific purpose of plunging the many mistakes which the 1st Defendant has committed during the tenure of the account including failing to give credit to the Plaintiff promptly every time he made the payments. There is no justification why the 1st Defendant should have three (3) sets of statements which do not tally instead of one statement of account. This fact alone is sufficient to tilt the court’s decision in favour of the Plaintiff.73. Although the defendant has tried to show that the plaintiff’s account was properly managed, it has done so merely by attempting to correct errors which actually existed in the account. This court takes notice that such errors should in the first instance be noted by the bank rather than by the customer. It is the bank that is obligated to keep proper accounts and entries; it is the bank that is obligated to provide proper accounts. When the bank issues different sets of accounts or statements which are conflicting on the same issue, it is difficult to know where the truth lies. This has the effect of creating a doubt as to who is telling the truth. Wherever such a doubt exists between a bank and its customer, the court will naturally give the benefit of the doubt to the customer. In this regard, this court is satisfied that the plaintiff has proved that his loan account as kept by the bank were so carelessly and unprofessionally kept, that it is difficult to know what amount of the loan has been paid and what is outstanding, and that the conflicting positions on this issue between the plaintiff, PW2 Mr. Onono, and the 1st defendant bank is a clear indication of the uncertainties herein. That the bank intends to exercise its statutory power of sale over the suit property without making a monetary counter-claim in this matter is a clear proof that even the bank does not know what, if any, is owed to it by the plaintiff. This is a serious indictment on the part of the bank for failure to keep dependable account records. The plaintiff had prayed for accounts to be rendered. Of course, the defendant has dismissed the prayer. The obvious reason is that there are no such accounts and the court cannot issue orders in vain.

42. In the case of Kirinyaga Complex Academy Ltd v Co-operative Bank of Kenya Ltd & another [2019] eKLR the court held that:25. It is plaintiff’s contention, that the defence witness DW1, during cross-examination she admitted there have been various anomalies in respect of amounts demanded through various demand letters, such as demanding Kshs.257,872 in less than two months after the loan was consolidated and restructured for repayment by quarterly installment of 77,724. 25. She admitted that no arrears were properly due and payable by the time of demand of Kshs.257, 892/-. She also admitted the accounts were not kept and maintained in a proper manner and amount demanded in the said letters were erroneous, admitting that the error/mistake was carried forward upto the time the 1st defendant instructed the 2nd defendant to advertise the suit property for sale by public auction of 18th May 2006 to recover the alleged debt of Kshs.1, 240, 405. 60. I find from evidence of DW1 and on clear admission of an alleged debt/arrears, whether manifestly erroneous or not the court should not shut its eyes and let the Bank proceed to exercise its power of sale until the issue of proper amount due is ascertained. I therefore find the Bank on its own admission failed to maintain proper accounts and that justifies the plaintiff complaint on alleged illegal debits.

43. I therefore cannot fault the decision of the trial magistrate in finding that the accounts had been mismanaged as the appellant failed to produce accurate, proper and verifiable statements of account showing all the financial dealings in the respondent’s account. The account balance in the respondent’s bank statements did not tally with the customer account report. The statements did not also capture some of the payments made by the respondent yet he provided stamped deposit slips for the payments. In the absence of proper accounts that are accurate and precise, I cannot fault the finding of the trial court that the repossession was illegal.

b)Did The Trial Court Err In Awarding The Respondent’s Damages? 44. The appellant having mismanaged the respondent’s account meant that the respondent was entitled to damages. The respondent had sought for Kshs 2,500,000/- being the best value for motor vehicle registration number KBK729J assigned by the appellant’s valuer. The trial magistrate found that the respondent ought to have been put back to the position had the breach not been occasioned and awarded the respondent Kshs 2,500,000/- less the amount owed. The claim is a special damage claim and therefore the respondent was required to give evidence of the vehicle after repossession prior to the sale. In Kenya Women Microfinance Ltd v Martha Wangari Kamau [2021] eKLR the court held that:90. That to would apply on the issue of the value of the vehicles. Where the value attributed to the vehicles was that prior to taking the loan, it could not automatically mean the value remained the same, given that the vehicles were meant to have been on the road. Their value and roadworthiness of a vehicle would be dictated by many factors, such as manner of use and accidents. The respondent sought to rely on photographs of the vehicles taken when she was applying for the loan. With due respect, that could not be assumed to be the condition of the vehicles at the time they were repossessed and sold.

45. In this case, the market value for the vehicle given by Automobile Professional Assessors Kenya Limited prior to the sale was Kshs 2,500,000/-. Having found that the repossession was illegal, the respondent was therefore entitled to the value of the vehicle. The subordinate court while exercising its discretion also awarded the respondent exemplary damages of Kshs. 300,000/- in view of the appellant’s duty to keep the accounts in order and not add more financial strain to their clients. In the end, I find no reason to interfere with the finding of the trial magistrate court, the result being that the appeal before this court is hereby dismissed. The respondent shall have the cost of the appeal.

DATED, SIGNED AND DELIVERED VIA MICROSOFT TEAMS THIS 11TH DAY OF OCTOBER 2023. R.E. OUGOJUDGEIn the presence of:Miss Kesei For the AppellantMiss Kebungo For the RespondentOrwasa/ Wilkister C/A