https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12245

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NANYUKI** **CIVIL APPEAL NO. E007 OF 2024** **JAMES MUTHUI THUKU………………………………….1ST APPELLANT** **EPHRAIM GICHURU MURIUKI………………………..2ND APPELLANT** **VERSUS** **BRADSHAWS OF MT KENYA LTD………………………..RESPONDENT** *(Being an Appeal against the judgment and decree delivered by Hon. A.K Kithinji (CM) in Nanyuki CMCC 90 of 2018 on 14th February 2024)* **JUDGEMENT** 1. By way of an amended plaint dated 18th March 2022 the Respondent sought the following orders; 2. **Refund or payment of Kenya shillings Sixteen Million and sixty-six thousand, one hundred and nineteen and seventy cents.** 3. **Damages** 4. **Costs of the suit** 5. **Interest on (a), (b) and (c) above at Court rates.** 6. **Any other relief that the Court deems fit and just to grant.** 7. The Respondent, the then plaintiff, pleaded that the Appellants, who were previously its employees in the position of an Accountant and Accounts Clerk, connived with each other to steal from the plaintiff. That the 1st Appellant would draw a cheque with the amount assessed by him and present it to the managing director to sign and he would then withdraw the money to pay for the VAT and during this process, they acquired the claimed sums. The Respondent then discovered the loss after the Appellants had resigned. 8. The Appellants entered appearance and filed a joint statement of defence dated 18th October 2018 in response to the plaint. They denied the allegations in the amended plaint and prayed that the Court dismisses the suit with costs. 9. The Respondent filed a reply to defence dated 4th December 2018, denying all the allegations in the joint statement of defence. It reiterated the contents of the plaint and additionally stated that the amount of Kshs. 7,500,000/- had accumulated over a period during which the defendants were in employment. 10. The matter proceeded for full hearing and the Respondents called 3 witnesses whereas the Appellants called 2 witnesses in their defence. Upon considering the pleadings, testimonies and evidence, the trial Court dismissed the claim vide a judgement dated 14th February 2024. 11. Being aggrieved with the decision, the Appellant filed the present appeal vide a memorandum of appeal dated 8th March 2024. The appeal is premised on the following grounds; 12. **The Honourable Magistrate erred in law and in fact by holding that the Respondent had proven his case to the required standards contrary to the evidence on record.** 13. **The Learned Magistrate misapprehended and misapplied the law on suits instituted by a company thus arriving at an unsound finding.** 14. **The Learned Trial Magistrate erred in law and in fact by relying on inadmissible evidence contrary to Section 65 (5c) and (8) and Section 106 (B) of the Evidence Act arriving at a wrong finding.** 15. **The Learned Trial Magistrate erred in law by making an award of Kshs 16,066,197 in favour of the Respondent when there were no materials or basis in law for doing so.** 16. **The Learned Trial Magistrate erred in law and in fact by holding that the Respondent had discharged its burden of proof contrary to Section 107 of the Evidence Act.** 17. **The Learned Trial Magistrate disregarded the submissions and judicial decisions of the Appellants.** 18. The appeal was canvassed by way of written submissions. The Appellant filed submissions dated 3rd June 2025 through Messrs. Chweya & Associates while the Respondent filed submissions dated 21st October 2025 through Messrs. Mukhama & Co Advocates. **Appellants’ submissions** 1. Learned counsel for the Appellants laid down a brief background of the suit and cited Section 107 of the Evidence Act on the burden of proof. Counsel reproduced the testimonies of the witnesses and urged that in the celebrated case of Salomon versus Salomon the House of Lords observed that a registered company is legal entity separate and distinct from its members. Further, that since Bradshaws of Mount Kenya limited is separate and distinct from its members including its managing director, Brian Jeremy Bradshaws, its company’s assets and liabilities are also separate and distinct from the assets and liabilities of its members. Counsel posited that if the money alleged to have been stolen belonged to Brian Jeremy Bradshaws, he should have been the proper Plaintiff and not the Company itself. Reliance was placed on the case of **Prudential Assurance Company Limited vs Newman Industries Limited and Others [1982] 1 All E.R 364.** 2. Counsel urged that the burden of proof lay with the Respondent to establish that Kshs 16,066,119.70/= had moved from the Company’s account and illegally ended up in the Appellants’ account. The Respondent called its Managing director who produced various documents in support of their case inter alia bank statements belonging to the company, bank statements from the 1st Defendant and an Mpesa statement for the 1st Defendant. He questioned whether the documents proved the transfer of the funds. 3. Counsel submitted that PW1, during cross examination, stated that an audit was done every year and the reports never raised any questions. Further, that it was astonishing that a suit was brought after the Defendants left employment from the Respondent claiming that Kshs 16,066,119/= was stolen by the Appellants despite the yearly audit. Counsel urged that the suit was brought out of malice. 4. Additionally, that PW1 produced an audit report dated 27th June 2017 which report indicates that the money missing from the company was Kshs 2,027,786/=. He also indicated that the audit done covered period when the Appellants had left the company. Counsel urged that even if the Appellants stole from the company, the audit indicates that the money lost was Kshs 2,027,786/= thus there is no material evidence presented before this Honourable Court for an award of Kshs 16,066,119.70/=. He posited that nothing was produced before the Honourable Court indicating that the Kshs. 16,066.119 claimed had been lost by the company and a total of the same had ended up in the pockets of the Appellants. 5. Counsel urged that the Managing director testified that he learnt of the missing amount when he went to pay for VAT after they had resigned and discovered that the amount payable was too low and that he discovered that 1st Defendant would withdraw money and instead of making KRA payments at Barclays, he would walk to Cooperative bank to make a deposit. However, nothing was presented to support these allegations. Further, that no report or any evidence was tabled before Court to prove that the total amount missing was Kshs 16,066,119/= which is the amount claimed. No breakdown was provided before the trial Court to show that the Appellants received a total of Kshs 16,066,119/= from the Respondent’s account, that Kshs 16, 066,119.70 ‘mysteriously’ ended up in the hands of the Appellants which is unaccounted for. 6. Counsel submitted that it is not clear how a sum of Kshs 16,066,119.70/= was arrived at. The documents produced were also not highlighted to enable the Trial Court ascertain that money was stolen and that Kshs. 16,066,119.70/= was stolen. He maintained that the Respondent did not prove its case to the required standard. 7. Counsel submitted that the Managing Director also testified that he was the Plaintiff as it was his money that had been lost, and also stated that some directors of the company knew of the suit while others were unaware and that no Company resolutions were ever filed. He urged that the Respondent in this case never produced any company resolutions authorizing the filing of the instant suit. He stated that they never provided the company resolution and therefore, the suit is incurably defective. Counsel cited the case of **Ibacho Trading Company Limited v Samuel Aencha Ondora & 3 others [2017] eKLR** in this regard. 8. Counsel urged that the documents produced by PW1 were not compliant with Section 65(5c) (8) and Section 106 of the Evidence Act as they were not accompanied by a certificate of electronic evidence. This is because, the said documents i.e. Mpesa statements and bank statements were originally online, downloaded and printed out thus the need for a certificate of electronic evidence as envisaged by Section 106 (B) of the Evidence Act. Reliance was placed on the decision in **County Assembly of Kisumu & 2 others v Kisumu County Assembly Sendee Board & 6 others [2015] eKLR.** Counsel maintained that the Trial Magistrate erred in relying on the documents produced by the Respondent while the same did not conform with laid down rules of procedure. 9. Counsel urged that the bank statements so produced were copies which have not been certified to be true copies of the originals. He cited Section 177 of the evidence act, urging that it is clear from the aforementioned provisions that where a party wishes to produce copies of an entry in a banker’s book, the provisions under Section 177 of the Evidence Act must be complied with. He cited the decision in the case of **Ethics and Anti-Corruption Commission v Otieno & 4 others (Anti-Corruption and Economic Crimes Civil Suit E015 of 2021) [2023] KEHC 17840 (KLR) (Anti-Corruption and Economic Crimes)** in this regard. He reiterated that the evidence relied upon by the Trial Court was inadmissible for lack of certification stamp from the bank that the copies of the bank statements had been compared with the original and that they were true and correct. Counsel urged the Court to allow the appeal. **Respondents’ submissions** 1. Learned counsel for the Respondent submitted that the burden of proof in Civil Matters lies with the Plaintiff while the standard of proof is the level of certainty required for a Party to meet their burden of proof. The burden of proof is typically on a balance of probabilities. He cited Section 107 of the Evidence Act and the Case of **William Kabogo Gitau vs George Thuo [2010] 1 KLR 526, and RE H. AND OTHERS (MINORS) [1996] AC 563,** in this regard. 2. Counsel posited that there is no doubt that the Appellants were Employees of the Respondent, there is no contrary information or denial that the 1st Appellant was the Accountant while the 2nd Appellant was the 1st Appellant’s Assistant. That there is proof on record that the Money drawn on Cheque was partly paid for VAT and the rest deposited to the 1st Appellant’s Co-operative Bank Account. Counsel invited the Court to randomly pick a Cheque, confirm its date, check out the 1st Appellant’s Bank Statement compare the dates, and it would confirm that he indeed deposited less for VAT and the balance taken for Personal benefit. 3. Counsel urged that during Cross-examination of the 1st Appellant, he confirmed that he was in charge of paying taxes and drawing Cheques to be signed by other Directors. He confirmed that he used to go to the Bank and withdraw Money to pay for the Tax Returns. He was shown the Cheque to confirm his signature which he did. The 1st Appellant confirmed that he would submit Payment for PAYE by the 9th day of each Month, VAT by 20th day and NSSF by 15th day of every month. 4. Counsel submitted that the 1st Appellant was shown a Cheque dated 20th October 2015 where he paid Kshs. 15,000/= for VAT and deposited Kshs. 67,000/= to his Personal Account. When asked where he got the Money he responded, *“I can’t remember where I got the Money from…Each time I drew a Cheque, I deposited some Money to my Account. On 15th March 2015, I sent Kshs. 30,000/= to EPHRAIM (2nd Appellant) I can’t remember what it was for…”* Counsel urged that the Respondent clearly proved his case to the required standard thereby discharging the burden bestowed on him as a Plaintiff which is on the balance of probabilities. 5. On grounds b and c, counsel submitted that a Company acts through its Directors and not through individual Shareholders as was expounded in the Case of **Salmon vs Salmon & Co. LTD [1897] AC22.** The Managing Director swore a Verifying Affidavit and prepared a witness statement on behalf of the Company. The Appellants did not raise any Preliminary Objection on the onset of these Proceedings and as a result there is no Ruling by the Trial Court to that effect. Therefore, raising the Ground of lack of Authority Resolutions to institute Proceedings is a fishing exercise. 6. Counsel posited that the Companies Act (2015) does not explicitly state that a Board Resolution must be filed with Plaint, rather, acts of a Company are deemed valid if carried out by Authorized Persons. In this instant Case, the Managing Director Brian Bradshaw while testifying introduced himself as a Person Authorized to represent the Respondent. The Appellants or their Counsel did not object to his testimony and he was thus Cross-examined. Further, that Section 33 of the Companies Act, 2015 provides that the validity of an act or omission of a Company may not be called into question on the Ground of capacity because of a provision in the Constitution of a Company. 7. Similarly, that Section 34 of the Companies Act clearly stipulates the Power of Directors to bind the Company as long as the Director acts in good faith. In the instant Appeal, the Director introduced himself as a Managing Director and pushing for compensation of the Money lost by the Company through the hands of the Appellants. This is an act of acting in good faith. Counsel cited **East Africa Portland Cement Co. LTD vs Capital markets Authority and Five Others [2013] eKLR,** where the Court observed that a Company acts through its Board of Directors. The failure to annex a Resolution to the Pleadings is not necessarily fatal provided there is evidence that the Company subsequently ratified or authorized the Proceedings. 8. Counsel submitted that the best practice is production of the Certificate of Electronic Evidence, however, failure to produce the Certificate does not automatically make the Evidence inadmissible if authenticity can be proven through testimony. Counsel cited **County Assembly of Kisumu & Two Others vs Kisumu County Assembly Board and Six Others [2015] eKLR,** Counsel urged that PW3 INSPECTOR KIBET testified that he acquired the 1st Appellant’s Personal Bank Records from the Co-operative Bank and M-Pesa Statements from Safaricom having filed a Nanyuki Criminal Miscellaneous Application No. 16 OF 2019, Nanyuki Criminal Miscellaneous Application No. 23 of 2020 and Nanyuki Criminal Miscellaneous Application No. E095 of 2021. These Applications granted him orders to access the said documents. These documents were meant to be used as evidence in Criminal Proceedings which were intended against the Appellants. He urged that the process used to acquire these documents was credible, authentic and carried out with integrity. 9. Counsel submitted that Counsel for the Appellants had objected to the production of the Bank Statements and PW3 was thus called to produce the Bank Statements. 10. Counsel urged that on the onset of the Proceedings before the Trial Court, the Respondent filed a Plaint in which he claimed Kshs. 7,500,000/=. The Respondent however filed an Amended Plaint thereby setting the amount claimed to Kshs. 16,066,119.70/= as amount stolen or misappropriated by the Appellants. That the Respondent acquired more information and documentation that warranted amendment of his Pleadings. The Respondent compiled figures from Cheques, M-Pesa Statements of the Appellants, Bank Statements for years 2015 & 2016, KRA General Ledger, VAT and PAYE Returns and the Audit Report. These helped the Respondent to arrive at the figure of Kshs. 16,066,119/=. The Trial Court having analysed the materials presented before it, it came up with a finding that the Respondent proved her Case to the required standard. 11. Counsel urged that the Trial Court clearly addressed the issue of filing a Suit without Authorization or Resolution of the Company and made a finding that the defect would not render the Suit a nullity. Further, that the Respondent suffered a substantial loss of Money in the hands of the Appellants, his Business was almost completely brought to ground and has never recovered. He urged the Court to consider this Submission and exercise the unlimited powers of this Court to award General Damages to the Respondent. He urged the Court to dismiss the appeal with costs. **Analysis & Determination** 1. The principle upon which a first appellate Court exercises jurisdiction is well settled. The task of a first appellate Court was summarized in **Abok James Odera t/a A. J Odera & Associates v John Patrick Machira t/a Machira & Co Advocates [2013] eKLR** as follows: **“This being a first appeal, we are reminded of our primary role as a first appellate Court, namely, to re-evaluate, re-assess and re-analyse the extracts on the record and then determine whether the conclusions reached by the learned trial judge are to stand or not and give reasons either way.”** 1. Additionally, the Court the of Appeal, in the case of **Susan Munyi v Keshar Shiani (2013) eKLR** stated as follows: **“As a first appellate Court our duty of course is to approach the whole of the evidence on record from a fresh perspective and with an open mind. We are to analyse, evaluate, assess, weigh, interrogate and scrutinize all of the evidence and arrive at our own independent conclusions.** 1. I shall therefore recall the evidence of the witnesses in the trial Court before delving into the issues for determination. 2. **PW1** was **Brian Jeremy Bradshaw**, the managing director of the Plaintiff. He urged that James Muthui Thuku was his accounts clerk for 12 years and was responsible for the payment of VAT, PAYE, NSSF and NHIF. That he would calculate VAT and prepare a cheque and bring it for signature. PW1 would then sign and he would pay the cash. He produced his list of documents which included the cheques and KRA Slips and bank statements which confirmed the money lost. He also produced the demand for payment and penalties from NSSF which he stated he was always paying and according to him, there were no arrears. He produced the general ledger from the KRA systems, stating that it showed that there were unpaid taxes and, that the VAT printout and PAYE returns showed that the 1st defendant paid less than what was withdrawn from the bank. 3. **PW2** was **Dominic Njuguna** who testified that he worked with Bradshaws Mount Kenya and adopted his witness statement dated 3rd December 2018. He stated that the defendants were employees of the plaintiff. 4. **PW3** was **Inspector David Kibet**, the investigating officer where the plaintiff was the complainant and the defendants were the suspects in acriminal investigations for the offence of stealing by servant. He stated that he made Miscellaneous application No. 23 of 2020 to investigate the accounts of the defendants and received Mpesa statements from the defendant. Additionally, that he did three Miscellaneous Applications being 16 of 2019 and 23 of 2020 where he served Cooperative Bank and Barclays Bank requesting statements and E095 of 2021 requesting Safaricom for Mpesa statements. He produced the same as exhibits. 5. The defence then opened their case with the 1st Defendant, now Appellant, James Muthui Thuku. He adopted his witness statement dated 13th February 2019 as evidence in chief. He stated that from the documents provided there is no proper calculation as to how the amount was arrived at. He stated that the plaintiff was his employer and he was an accountant whose work entailed keeping company books of account, making tax returns and making payments for various company expenses. He stated that all payments were authorized by Brian Bradshaw and all cheques were signed by three signatories. Further, that after monies were drawn they would be used to cater for various expenses. He stated that no cheques were drawn specifically for VAT, PAYE, or NHIF as they accompanied other company expenses. He urged that an audit was conducted every year and no queries over the matter were ever raised. 6. **DW2** was **Ephraim Muriuki Gichuru** who adopted his witness statement dated 13th February 2019 as evidence in chief. In it he stated he was an accounts clerk and that there was no query raised prior to their resignation. He urged that no payment was ever made without the approval of the director, Brian Bradshaw. 7. Having carefully reconsidered the pleadings, the evidence tendered before the trial Court, the judgment appealed from, the memorandum of appeal and the rival submissions by counsel, in my respectful view the following issues arise for determination: 8. ***Whether the Respondent had the legal capacity to institute the suit.*** 9. ***Whether the documentary evidence relied upon by the trial Court was admissible.*** 10. ***Whether the Respondent proved its claim against the Appellants on a balance of probabilities.*** 11. **Whether the award of Kshs.16,066,119.70 was supported by the evidence.** **Whether the Respondent had capacity to institute the suit** 1. The Appellants submitted that the Respondent's suit was incompetent because no board resolution authorizing commencement of the proceedings was produced. They further argued that PW1 testified that the money belonged to him personally and therefore the company was not the proper plaintiff. 2. It is now settled that although a company acts through its board of directors, failure to file a board resolution together with the plaint is not necessarily fatal to proceedings. Such authority may be given before or even ratified after commencement of proceedings. 3. The Appellants challenged the Respondent's locus standi on the ground that no board resolution authorizing the institution of the suit was produced. That argument cannot be sustained in light of the current state of the law. The Court of Appeal in **Spire Bank Limited v Land Registrar & 2 Others [2019] eKLR** reaffirmed that the absence of a filed board resolution does not, without more, render proceedings instituted by a company incompetent. The Court emphasized that where proceedings have been instituted and prosecuted in the company's name by its duly authorized officers, and the company itself has not repudiated those proceedings, the omission to file a formal board resolution is not fatal. 4. That position is consistent with earlier decisions of the Court of Appeal. In **East African Portland Cement Co. Ltd v Capital Markets Authority & 4 Others [2014] eKLR,** the Court observed that questions concerning internal authorization are matters of corporate governance and internal management which ordinarily do not invalidate proceedings undertaken in the company's name where the company itself has adopted and maintained the litigation. Likewise, in **Makupa Transit Shade Ltd & Another v Kenya Ports Authority & Another [2015] eKLR,** the Court held that defects relating to authority to institute proceedings are curable procedural irregularities and should not defeat substantive justice where the company has participated in and affirmed the proceedings. 5. The same principle finds statutory expression in Sections 33 and 34 of the Companies Act. Section 33 embodies the principle that the validity of acts done by a company shall not be impugned merely because of limitations contained in its constitution, while Section 34 protects persons dealing with a company by recognizing the authority of its directors and officers to bind the company in the ordinary course of its affairs. The statutory scheme therefore reflects the common law doctrine that internal irregularities do not ordinarily invalidate corporate acts as against third parties or the Courts unless fraud, illegality or express repudiation is demonstrated. 6. In the present case, PW1 testified as the Managing Director of the Respondent company. He signed and verified the plaint, adopted the witness statements, produced the company's documentary evidence and prosecuted the suit from commencement to conclusion. At no stage of the proceedings did the Appellants challenge his authority by way of a preliminary objection or formal application. More significantly, there is no evidence that the Respondent company ever disowned, repudiated or sought to withdraw the proceedings on the ground that they had been commenced without corporate authority. On the contrary, the company's continuous participation throughout the trial amounted to a clear ratification of the litigation. 1. This Court must be wary of elevating procedural objections regarding corporate authorization above the constitutional imperative that disputes be determined on their merits. Article 159(2)(d) of the Constitution obliges Courts to administer justice without undue regard to procedural technicalities. Accordingly, once it is shown that the company has appeared before the Court, prosecuted the claim through its principal officer and consistently maintained the proceedings, the absence of a formally exhibited board resolution cannot, standing alone, invalidate the suit. 2. Although PW1, during cross-examination, remarked that "it was his money," that isolated statement cannot be divorced from the totality of the evidence. Courts are required to evaluate testimony as a whole rather than by extracting individual answers from their context. The pleadings, the bank statements, the impugned cheques, the correspondence and the reliefs sought all unequivocally demonstrate that the monies alleged to have been fraudulently withdrawn belonged to the Respondent company's bank account. The claim was therefore at all material times the company's cause of action, and PW1 merely testified in his representative capacity as its Managing Director. His casual expression did not alter either the legal ownership of the funds or the identity of the proper plaintiff. 3. I therefore find no merit in the ground challenging the Respondent's capacity to institute the suit. **Whether the documentary evidence was admissible** 1. The Appellants next challenged the admissibility of the bank statements, M-Pesa statements and KRA records on the ground that they constituted electronic records which were produced without compliance with Sections 65, 106B and 177 of the Evidence Act. 2. The record shows that objections were indeed raised before the trial Court. In response, PW3, the investigating officer, testified that he obtained the impugned documents pursuant to Court orders issued in Criminal Miscellaneous Applications Nos. 16 of 2019, 23 of 2020 and E095 of 2021. According to him, the documents were supplied directly by Cooperative Bank, Barclays Bank, Safaricom PLC and the Kenya Revenue Authority in compliance with those judicial orders. 3. During cross-examination, however, PW3 readily conceded that he neither generated nor extracted the electronic records himself. He did not know the computer systems from which they were generated, the manner in which they had been stored, whether the information had been altered in any way, or whether certificates contemplated under Section 106B of the Evidence Act accompanied them. He equally confirmed that no officer from the respective institutions attended Court to explain the generation, storage or extraction of the electronic data. 4. Similarly, although PW1 produced certain bank statements, the statements were not accompanied by certification under Section 177 of the Evidence Act, nor was any bank officer called to explain the mode of their generation or to authenticate them as true copies of entries maintained in the ordinary course of banking business. 5. The statutory framework governing electronic evidence is now well settled. Sections 65 and 106B of the Evidence Act establish special conditions governing the admissibility of information generated, stored or reproduced by computers. Those provisions were enacted to ensure that electronic records, which are susceptible to alteration, manipulation and duplication, are received only after the Court is satisfied as to their authenticity, integrity and reliability. Section 177 imposes similar safeguards in relation to bankers' books by requiring certification or other lawful proof of authenticity before such records are relied upon. 6. This subject is no longer novel. Contemporary jurisprudence that has gained traction in our case law is that the purpose of Section 106B is not to elevate technicality above substance but to provide an evidential guarantee that the electronic record tendered is an accurate and reliable reproduction of the original information. In **County Assembly of Kisumu & 2 Others v Kisumu County Assembly Service Board & 6 Others,** the Court observed that the provisions governing electronic evidence are intended to assure the Court that the integrity of the electronic record has been preserved and that the document presented is what it purports to be. 7. The Court adopted the same approach in **Republic v Mark Lloyd Stevenson,** **[2016] eKLR**, observing that a certificate under Section 106B is intended to establish the chain of integrity of electronic evidence and to assure the Court that the data has not been altered during storage, retrieval or reproduction. The requirement is therefore directed at reliability rather than mere form. 8. Within this context the absence of a certificate under Section 106B is not invariably fatal where the authenticity of the electronic record is otherwise proved by the testimony of a competent witness capable of explaining the operation of the computer system, the manner of extraction of the data and the integrity of the electronic record. Conversely, where neither statutory certification nor independent authentication is provided, the Court must approach such evidence with considerable caution. 9. In the present appeal, neither avenue of authentication was pursued. No witness from Safaricom PLC testified regarding the extraction of the M-Pesa statements or the integrity of the relevant servers. No officer from Cooperative Bank, Barclays Bank or the Kenya Revenue Authority attended Court to authenticate the records allegedly generated from their respective electronic systems. Equally, no certificates under Section 106B explaining the manner in which the electronic records were produced were tendered. 10. PW3 was merely the recipient of the documents supplied pursuant to Court orders. While the Court orders explained the lawful source from which the documents were obtained, they did not, without more, establish the integrity of the electronic processes by which the records had been generated or reproduced. Indeed, PW3 expressly admitted that he had no knowledge of the computer systems used, the mode of storage, the extraction process or the safeguards employed to preserve the integrity of the electronic data. 11. The production of the documents pursuant to Court orders therefore established the legality of their acquisition but not their evidential authenticity. Those are distinct inquiries. The former concerns the lawfulness of obtaining the evidence, while the latter concerns its admissibility and probative value under the Evidence Act. 12. Consequently, although the trial Court admitted the impugned bank statements, M-Pesa statements and KRA records, the absence of statutory certification coupled with the failure to call competent witnesses from the originating institutions significantly diminished the evidential weight that could properly be attached to those documents. Their authenticity was not established in the manner contemplated by Sections 65, 106B and 177 of the Evidence Act, and the evidential foundation upon which they were admitted was therefore materially weakened. **Whether the Respondent proved fraud or misappropriation** 1. The Respondent's claim was founded almost entirely upon allegations that the Appellants, over a period exceeding ten years, fraudulently appropriated the Respondent company's funds amounting to Kshs.16,066,119.70. Fraud constituted the very foundation of the suit. It was therefore incumbent upon the Respondent to strictly prove every element of the alleged fraudulent scheme. 1. Fraud is among the most serious allegations known to civil law. Although civil claims are generally determined on a balance of probabilities, allegations of fraud attract a higher standard of proof than that applicable to ordinary civil disputes, though not as high as proof beyond reasonable doubt. 2. In **Vijay Morjaria v Nansingh Madhusingh Darbar & Another,** **[2000] eKLR** the Court of Appeal emphatically held that fraud must not only be specifically pleaded, but that the particulars thereof must also be strictly proved by evidence commensurate with the gravity of the allegation. Mere suspicion, inference or conjecture cannot suffice. 3. The same principle was reaffirmed by the Court of Appeal in **Kinyanjui Kamau v George Kamau [2015] eKLR** where the Court stated: ***"It is trite law that any allegations of fraud must be pleaded and strictly proved. Although the standard of proof may not be so heavy as to require proof beyond reasonable doubt, something more than a mere balance of probabilities is required."*** 1. Equally instructive is the decision of the Court of Appeal in **Arthi Highway Developers Limited v West End Butchery Limited & 6 Others, [2015] eKLR** where the Court observed that because fraud is a quasi-criminal allegation, Courts must insist upon cogent, credible and consistent evidence before making a finding of fraud. The Court warned against drawing conclusions of fraud from mere suspicion or unusual circumstances unsupported by direct or compelling circumstantial evidence. 2. Sections 107, 108 and 109 of the Evidence Act imposed the legal burden upon the Respondent throughout the proceedings. Consequently, the Respondent was required to establish: 3. That money belonging to the company was withdrawn; 4. The precise sums alleged to have been misappropriated; 5. that each withdrawal was unauthorized or unrelated to the company's legitimate business; and 6. That the Appellants dishonestly appropriated those funds for their own benefit. 7. The Court of Appeal has consistently held that the legal burden of proof never shifts from the party asserting a fact. In **Palace Investment Ltd v Geoffrey Kariuki Mwenda & Another,** **[2015] eKLR,** the Court explained that while an evidential burden may shift in the course of trial, the legal burden remains throughout upon the party who asserts the existence of the facts in issue. The evidence adduced by the Respondent falls considerably short of satisfying that burden. 8. PW1 readily admitted during cross-examination that throughout the period the Appellants served the company, annual statutory audits were regularly undertaken and none raised any query regarding theft, fraudulent withdrawals or misappropriation of company funds. 9. More significantly, the audit report produced before the trial Court referred to an entirely different figure of approximately Kshs.2,027,786, whereas the amended plaint sought Kshs.16,066,119.70. No witness explained how the latter figure was computed, reconciled or derived from the company's financial records. The pleaded amount therefore remained wholly unsubstantiated. 10. No reconciliation statement, forensic accounting report or transaction schedule was produced tracing each allegedly fraudulent withdrawal from the company's accounts to any corresponding personal benefit received by either Appellant. Neither was there evidence identifying which specific withdrawals constituted legitimate business expenditure and which allegedly amounted to theft. 11. Instead, the Respondent placed before the trial Court voluminous bank statements, M-Pesa records, cheque counterfoils and tax documents, inviting the Court to infer fraud from the existence of those documents alone. 1. That approach was fundamentally flawed. Documentary evidence does not interpret itself. Where a party relies upon extensive financial records to establish a complex fraud spanning several years, it bears the responsibility of leading coherent explanatory evidence demonstrating, transaction by transaction, how each impugned payment constituted fraudulent appropriation. Courts do not undertake forensic accounting on behalf of litigants. The Respondent failed to undertake that evidential exercise. 2. Of equal significance was PW1's own concession that company cheques routinely catered for employees' wages, suppliers, branch operations, directors' payments and other operational expenses. That evidence introduced a perfectly lawful explanation for many of the impugned withdrawals. 3. Having admitted that substantial withdrawals were routinely made for legitimate company purposes, the Respondent was obliged to eliminate that lawful possibility by demonstrating which specific transactions fell outside ordinary business operations. It failed to do so. 4. The learned trial Magistrate nevertheless concluded that because DW1 was unable to recall the source of certain deposits reflected in his personal bank account, the Respondent's allegations stood proved. With respect, that reasoning amounted to an impermissible reversal of the burden of proof. 5. As the Court of Appeal observed in **Kirugi & Another v Kabiya & 3 Others,** [**1987] KLR 347,** Bottom of Form the burden of proof rests upon the plaintiff throughout, and a plaintiff must succeed on the strength of his own case rather than on the weakness of the defence. A defendant assumes no obligation to prove his innocence merely because allegations have been levelled against him. 1. The Court of Appeal expressed the same principle in **Miller v Minister of Pensions,** **[1947] 2 All ER 372 (KB)** as repeatedly adopted in our jurisprudence that proof cannot rest upon speculation or suspicion. 2. The Respondent's evidence, at its highest, established no more than that substantial sums passed through company accounts over several years during the Appellants' employment. That circumstance may have generated suspicion. It did not, without more, establish fraudulent appropriation. 3. Suspicion, however strong, cannot replace proof. A finding of fraud cannot be founded upon conjecture, probability or the inability of an accused party to explain every financial transaction undertaken many years earlier. 4. Upon an independent evaluation of the entire record, I am not satisfied that the Respondent established, by evidence of the quality required in allegations of fraud, that the Appellants dishonestly appropriated the Respondent's funds or that the sum pleaded in the amended plaint represented money unlawfully converted by them. The evidential threshold required by law was therefore not attained. **Whether the award of Kshs.16,066,119.70 was justified** 1. The Respondent sought recovery of the specific sum of Kshs.16,066,119.70. To succeed in the claim, the Respondent needed to lead evidence to support the loss of this specific figure and directly link this loss to the Appellants. The reality from the totality of the evidence was that while the amount was specifically pleaded, proof thereof was lacking. 2. Neither the pleadings, witness testimony nor documentary evidence demonstrated how the precise sum of Kshs.16,066,119.70 was computed. The audit report produced was inconsistent with that figure. 3. There was likewise no reconciliation between the Respondent's bank statements, KRA records, M-Pesa statements and the pleaded amount. The learned trial Magistrate therefore had no evidential basis upon which to enter judgment for the entire amount claimed. **Disposition** 1. Upon independently re-evaluating the entire evidence as required of a first appellate Court, I am satisfied that the Respondent failed to prove, on a balance of probabilities and to the heightened standard applicable to allegations of fraud, that the Appellants fraudulently misappropriated Kshs.16,066,119.70 or any other ascertainable amount. 2. The learned trial Magistrate consequently fell into error by finding that the Respondent had discharged its burden of proof and by entering judgment for the amount claimed. 3. Accordingly, the appeal succeeds. **Orders** 1. Consequently, I make the following orders: 2. ***The appeal is hereby allowed.*** 3. ***The judgment and decree of the Chief Magistrate in Nanyuki CMCC No. 90 of 2018 delivered on 10th July 2024 are hereby set aside in their entirety.*** 4. ***The Respondent's suit before the Chief Magistrate's Court is dismissed.*** 5. ***The Appellants shall have the costs of the suit before the trial Court and the costs of this appeal together with interest thereon at Court rates.*** It is so ordered. **DATED, SIGNED AND DELIVERED VIRTUALLY THIS 30TH DAY OF JULY 2026.** **A.K. NDUNG’U JUDGE Top of Form**