https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11605

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MIGORI** **CIVIL APPEAL NO. E068 OF 2024** **TOSANSE CONSTRUCTION LIMITED …………………………………. APPELLANT VERSUS** **KENYA COMMERCIAL BANK LIMITED …………..………………1ST RESPONDENT** **OLIVER MUHONDA ALLIANGANA …………………………… 2ND RESPONDENT** **(Being an appeal from the judgment and Decree of Hon. Karimi Njeru RM delivered on 3rd March 2022 in Kehancha SPM’s Court Civil Case No. 14 of 2017)** **JUDGMENT** Vide an amended 3rd November2020 the Appellant sued the Respondents herein seeking orders that judgment be entered against the Respondents jointly and severally for 1. General Damages 2. B. An order/ Declaration that debit of Kshs. 520,000/=on the Appellant’s account with the 1st Respondent and consequent payment of the same to the 2nd Respondent was fraudulent and unlawful 3. Compensation of the amount fraudulently withdrawn 4. Refund of Kshs. 520,000/= 5. Costs of this suit 6. Interest on a & b above at court rates from the date of loss 7. Any other relief the court deemed fit to grant in the circumstances The suit was defended and after the Appellant gave evidence in chief the Respondents called three witness who gave evidence against the Appellant’s claim Upon consideration of the evidence on record for the parties the Trial Magistrate found that allegations of fraud and negligence on the part of the bank had not been proved and the suit lacked merit and was dismissed with costs. The Appellant was aggrieved by the judgment and an appeal was lodged vide an amended Memorandum of Appel dated 15th May 2024 on the following grounds:- 1. The Honorable Magistrate erred in law and in fact by failing to appreciate that the Plaintiff is a legal body with capacity to sue on its own accord and not that of its directors. 2. The Honorable Magistrate erred in law and in fact by failing to appreciate that the holder of the bank account number I 68446422 is the Plaintiff in its own legal capacity and that any withdraws and deposits made to the account was supposed to be approved by it. 3. The Honorable Magistrate erred in law and in fact by failing to take into account that no document was adduced as evidence to show that the Plaintiff had instructed and given authority to the Director, John Marwa to engage in business deals with the 2nd Defendant. 4. The Honorable Magistrate erred in law and in fact by failing to take into account and appreciate that the 2nd Defendant did not adduce any evidence in support of his claim that he was engaged in business deals with the Plaintiff. 5. The learned Magistrate erred in law and in fact by failing to appreciate that no evidence was adduced to show that the Plaintiff had business dealings with the 2nd Defendant and thus a stranger to the dealings between the 2nd Defendant and the directors John Marwa at a personal level. 6. The Honorable Magistrate erred in law and in fact by failing to appreciate the Plaintiff did not authorize a sum of Ksh. 520,000 be debited from its account and be credited in the Ft Defendant's account and subsequently to the 2nd Defendant's account. 7. The learned Magistrate erred in law and in fact by failing to take into account that the monies withdrawn from the Plaintiffs bank account in favour of the Defendant was not procedurally withdrawn as the Plaintiff had not issued any authority to do so. 8. The Honorable Magistrate erred in law and in fact by failing to appreciate that the JSI Defendant had a duty of care towards the Plaintiff who was its customer and had failed to exercise its duty by allowing the Plaintiffs money to be withdrawn from its bank account in favor of the Defendant by the 20dl Defendant Without the authority of the Plaintiff. 9. The Honorable Magistrate erred in law and in fact by failing to take into account that the Defendant owes a duty of care to the Plaintiff as its customer and protect it from fraud of agents which let the Plaintiffs monies be withdrawn from the Plaintiffs account into the 2nd Defendant's account. 10. The Honorable Magistrate erred in law and in fact by failing to take into account that there exists a binding contract between the Plaintiff and the 1st Defendant and the Defendant was in breach of the said contract by allowing monies be withdrawn from the Plaintiff account 'in favour of the Defendant without the knowledge and authority of the Plaintiff. 11. The Honorable Magistrate erred in law and in fact by failing to appreciate that the 1 st Defendant had a duty of confidentiality towards the Plaintiff but the Defendant failed to uphold the said duty by giving access of the Plaintiff accounts details to the 2nd Defendant not as its agent but on personal level. 12. The Honorable Magistrate erred in law and in fact by failing to take into account that the 2nd Defendant misled the Plaintiffs representative by advising him to sign on a blank cheque having undertaken to assist the Plaintiffs representative who was not familiar with bank transactions. 13. The learned Magistrate erred in law and in fact by failing to make any finding on vicarious liability on the part of the pact of the 1st Defendant as regards the 1st Defendant in the suit, when the '2nd Defendant within his scope of work had deceived the Plaintiffs representative to sign a blank cheque and thereafter the 2nd Defendant drew the said cheque in favour of the 1st Defendant and subsequently the said money into his personal account. 14. The learned Magistrate totally misdirected herself in delivering the judgement in favor of the Defendants and against the Plaintiff by failing to consider and appreciate the evidence on record. 15. The learned Magistrate erred in law and in fact by failing to that the 2nd Defendant was acting as an agent of the Defendant at the time when he was attending to the Appellants’ director. 16. The learned Magistrate erred in law and in fact in failing to appreciate that the 1st Defendant was in clear breach of Contract and acting contrary and in breach of bank/customer relationship in proceeding to credit funds into an account of its own manager contrary to clear instructions indicated in the Cheque. 17. The Respondent failed in its duty and responsibilities in proceeding to debit an account of the Appellant and crediting an account of the 2nd Respondent without instruction and authority of the Appellant. 18. The learned Magistrate erred in law and in fact by failing take into account that the cheque of Kshs. 520,000 was not procedurally processed on basis that on the face of the cheque the same was drawn 'in favour of the 1 5t Defendant and on the back of the said cheque and different instructions, 19. The learned Magistrate erred in law and in fact by dismissing the suit against the 1st Defendant despite the evidence showing that the Ft Defendant was in breach of fiduciary duty towards the Appellant for failing to reach out to the Appellant when they noted that the cheque had contradicting instructions. 20. The Magistrate erred in law and 'in fact in dismissing the suit against the Defendants despite the said  having failed to adduce the forensic audit report in the matter to prove that they were exonerated from the fraud claim. 21. The learned Magistrate erred in law and in fact in holding that the Appellant and the 2nd Defendant had business dealing despite the evidence of the 2nd Defendant that the tender projects to Francis and Muhingira and the 2nd Defendant did not hand the money to the Appellant. 22. The learned Magistrate erred in law and in fact appreciate the evidence of the 2nd Defendant that the cheque was drawn in favour of the 1st Defendant and that the 2nd Defendant had illegally and unprocedurally expedited the process to have the money credited in his account without following the due process, 23. The learned Magistrate erred in law and in fact by failing to put into account that the Appellant's representative, Mr. John Marwa is an illiterate and wholly relied on the 2nd Defendant's directions and advise in confidence that the said 2nd Defendant would help him. It is proposed to ask the court for orders that:- 1. The appeal be allowed 2. In the result, the judgment made by the learned Magistrate against the Appellant be set aside 3. A declaration that a sum of Kshs. 520,000/= was not procedurally withdrawn from the Appellant’s account 4. The 1s Respondent be ordered to refund the sum of Kshs. 520,000/= together with interest. 5. A declaration that the 2nd Respondent breached his fiduciary duty towards the Appellant and the 1st Respondent be held vicariously liable for the said actions 6. The costs of the appeal and in the subordinate court be granted to the Appellant against the Respondents. The Appellant/Plaintiff in the lower Court instituted a suit vide a plaint and amended plaint dated 03/1 W2020 seeking for a refund of Kshs. fraudulently and unlawfully withdrawn from its account number 168446422 with the Respondent/ 1st Defendant by 2nd Respondent/2nd Defendant without its knowledge and approval, The Respondent/ 1st Defendant entered appearance and filed statement of defence and amended statement of defence dated 11/0 1/202 L In the said statement of defence the 1st Respondent/ 1st Defendant confirmed that the Appellant/Plaintiff was its customer with account number 168446422. It was the defence of the F t Respondent/1st Defendant that that Appellant/Plaintiff and the 2nd Respondent/2nd defendant individually, jointly and severally withdrew funds from the Appellant/Plaintiff’s accounts with its approval by signing 2 cheques numbers 4 and 5 and denied that its alleged employee and/or official engaged in fraudulent activity in any transaction involving the Appellant/Plaintiff. The 2nd Respondent/2nd Defendant also entered appearance and filed statement of defence dated 30/03/2021, In the said statement of defence the 2nd Respondent/2nd Defendant denied all the Appellant/Plaintiffs claim and no averments thereof, PWI John Marwa Chacha adduced evidence as the Appellant’s witness and adopted his statement dated 03/11/202() and produced documents. It was his evidence that he used to be a businessman and director of Appellant/Plaintiff. That he is the managing director with his wife Ann Waisike Mwita and that the company was registered in the year 2015. 'Phat he knows the 1st Defendant as well as the 2nd Defendant herein. Kenya. Commercial Bank was the Company's bank where they saved their company monies. Thai they opened an account at Kehancha Branch A/C No. 1 168446422. The signatories him and his wife. The 2nd Defendant at the time was the Kehancha Kenya Commercial Bank Manager. It was the evidence of PW I that the company had a contract with Kuria West Constituency CDF were they built culverts worth Kshs. 1,000,000 after taxes of Kshs. 852,000 It was the further the evidence of PW I that on 05/02/2016, while a home, he received a call from the 2nd Defendant to go to the bank as there people demanding money from him. That the 2nd Defendant directed him to go with his cheque book that upon arrival at the bank, PW I found his foreman, Gabriel Mungira who was accompanied by Francis Chacha. In attendance was also the Manager of the CDF. That the CDF Manager deposited the cheque of Kshs, 852,000 to the Company's account.  That PW I went to the Manager (2nd Defendant) and asked whether he Could cash in the deposited cheque that day. The 2nd Defendant confirmed that he could and asked PW I (o withdraw the money using 2 cheques namely numbers 4 and 5. It was further the evidence of PW I that the 2nd Defendant asked PW] to sign the said cheques. That in cheque no. 4, PW I just signed and did not fill any details as the manager directed that he would fill other details such as figures and names of payees himself as he was in a hurry to go to Kisumu and as such PW I signed the said cheque in confidence; and the 2nd Defendant filled Kshs. 90,000 and the payee being PW1. PW I went on to testify that as for cheque number 5, PW I signed the same as cheque number 4 then the Manager called the Customer Care Officer at the bank and instructed him to help clear the cheque. The Manager asked PW I to sign on the cheque and leave him to fill other details. The manager them proceeded to date the said cheque 05/02/2016 and it was payable to Kenya Commercial Bank Kehancha for Kshs. 520,000 in letters and words all written by the 2nd Defendant. That he did not authorize the amount indicated and the payee. That he later discovered that the 2nd Defendant's signature was on top of the cheque, 2nd signature was PW 1 's while the 3rd signature was unknown to him but was later informed that the signature was for Euphrenus Mwita, the Customer Care Officer at Kenya Commercial Bank Kehancha. Behind the cheque was the signature and writings of someone unknown to PW I d but the signature on it was his. That the Manager went away with the said cheque and told PWI that the systems had hanged so the cheque could not be cleared and asked PWI to return to the bank on 9.2.2016 That upon return on the said date, the 2nd Defendant illförrned PW1 that the cheque had still hanged and asked PWI to withdraw Kshs. 242,000 to clear the debts as Manager sorted out the balance later. It Was the evidence of PW I that the cheque No. 5 was payable to Kenya Commercial Bank. That he did not have any dealings with Kenya Commercial Bank to pay them anything. The cheque was to be drawn to PW I as the payee. That PW I did don't know the owner of the account indicated on the back of the cheque No.5. That he had no debt of the 2nd Defendant at all and in the event he had any debt, he would have paid the cheque directly to the 2nd Defendant atid did not know why the 2nd Defendant wrote the cheque to Kenya Commercial Bank and payable to him personally, That PW I discovered the fraudulent dealings by the 2nd Defendant from the Kenya Commercial Bank Internal Auditing Investigations Teams. PW1 went ahead to adduce evidence that the Manager duped him into signing open cheques. That he trusted the Manager and the bank to do the right thing. That Mwongera Gabriel worked with him in the project with CDF tender of building culverts and they did not sponsor the project at all and he did not have their debt at all. [t was his evidence that 'in the event he had their debts as alleged, he would not have written the cheques in the names of Kenya Commercial Bank and he neither owed Francis Chacha nor did he agree to share the money with him. That he wrote to the bank and lodged a complainant about the payment through the letter from Agulo Odero dated 25.1.2017 but the bank did not respond. He further wrote to the bank again vide a letter dated 8.22017 and left a copy with the DCI Kehancha. During Cross examination, it was the evidence of PW I that he opened the Kenya Commercial Bank Kehancha account in the year 2015. On 05/02/2016 he went to the bank as a representative of the Company. The Manager called him to the Bank using Gabriel fs phone number. That he used to know the 2nd Defendant as the Manager only and had never dealt with him on business other than bank business. That he only signed the cheques and that is how the 2nd Defendant grounded him. That he had been dealing with the bank severally writing the cheques himself with the help of his wife. That his signature was on the cheque in dispute. That he did not write anything on it and the Manager was left to fill the writings inside. He wrote a bank cheque that day. [lc trusted the bank and just signed. It was the first time he had signed a bank cheque at the bank. It was the evidence of PW1 that the 2nd Defendant had cheated him to withdraw the amount as he sorted the system problems for the other cash. The same day, Kshs. 142,000/= was deposited into the 2nd Account. That PW1 did not authorize the deposit into the 15t Defendants’ account of the Kshs 300,000 on 10/2/2016. not know that Kshs. 520,000 had been withdrawn from the Plaintiffs Account. That on 09/02/2016, PW 1 reported the loss of money to Onyango and the Bank, the 1st Defendant's workers. They told me they could look into it. The Kenya Commercial Bank Investigators went to the Bank in the year 2017. That PW I waited for them and made follow ups through correspondences, That he waited for long as the 2 Officers kept telling PWI to wait for them to handle the issue. Lastly it was the evidence of PW1 that he signed the cheques on trust that Defendants could do the right thing. That He opened the account with his wife. That he signed the account opening documents. That he was not issued with the bank terms and conditions to know that he should not sign on open cheques. That he was visited by the bank's workers. That he is the custodian of cheque book and is responsible for the same. That he was not careless in handling the cheque and did not instruct the bank to pay itself through the' cheque and transfer the money to other account. During re-examination, it was the evidence of PWI that there was no business dealing with Oliver or Gabriel in involvement in the money. The cheque in question cheque No, 5, for Kshs, 520,000. That he saw the 2nd Defendant’s bank statement from Kehancha Kenya Commercial Bank Account No. 1 104015285 which shows he received Kshs. 520,000/= on 05/02/2016. The cheque says to transfer the amount to Account No. 077230848815. These are 2 different accounts. That he did not know how the money ended up into 2nd Defendant's account. Both accounts belong to Oliver. They played games with the money. It is not possible for money to be paid into a different account other than that indicated in the cheque. The 2nd Defendant's account statement is in the 1st defendant's bundle of documents dated 6/7/2018 for Account No. 1104015285 for the period of 4/2/2016 to 10/2/2016. it was further his evidence that he withdrew Kshs. 242000/= on 9/2/2016 and the same amount was deposited into 2nd Defendant's account. The name of the depositor is just stated as John. John could be anyone. PWI confirmed his name as John Marwa. Bank acted on his signature only and are not allowed to involve themselves in fraud. DWI- Merema Yunvalis Mwita a banker at 1st Defendant bank, Kehancha branch testified and it was his evidence that he worked for the bank for 8 years and he was a Customer Service Consultant during the period in question. It was his evidence that the procedure for opening an Account; one is given some documents to comply with. PWI was given documents to open a business account as he requested. The Plaintiff filled these forms. He provided the signature specimen, attached documents e.g. copy of identity card, certificate of business registration, KRA Pin, Board Resolution of the Directors. All these things, the Plaintiff availed. Plaintiff signed the terms and conditions spelling him how to operate the Account and cheque book. Plaintiff signed all these. On 5/2/2016, in the evening around 5.00p.m. the Plaintiff operating the account, came to the bank and was accompanied with 2 people namely Gabriel Mwingira and Francis. That they welcomed them in the presence of the Manager 2nd Defendant herein. Normal banking hours are between 8.30 till all customers are served. They went to the Manager's Office. They stayed there for a while. John Marwa came to went at the Customer Care Desk. That he gave him (DWI) a cheque with Kshs. 520,000. He requested DWI to Clear the cheque. Before dealing with cheques, there are several things to consider:- I) Date on the cheque. It must not be post dated 2) The signature must be authentic 3) The Payee and the instructions given in this case it was drawn to pay Kenya Commercial Bank Kehancha. At the back of the cheques, there was instruction to pay to an account. 4) In Such instructions, the account holder must sign on the instructions. In this case, the owner of the Account delivered the cheque personally. It was the evidence of DW1 that he signed on the cheque as confirming all the requirements are met with a red pen. He signed on it. The signature of the Branch Manager must be on the cheque to clear. This confirms that in his capacity as the Manager was perfect in content. It was further his evidence that the procedure of clearing the cheque was dully followed. That he was not aware of a personal relationship between John and the Manager, John did not declare this at all. That he would not thus know if a relationship was there. [t was further the evidence John withdrew through the cheques Kshs. 520,000 John transferred the money to Oliver's account. It was DWI's testimony that on 9/2/2016, the Plaintiff went to his desk, checked his account balance, He assisted him on this day, he withdrew cash of Kshs. 242,000 at the Cashier. On the same day, he personally deposited Kshs. 228,000 into Oliver's account. In their systems, they do not narrate the whole names of the depositor, just one name. In Plaintiffs statement, the name Oliver Muhoni's is only indicated as Muhoni. The system captures a specific number of names. The relationship between the Defendant and the Plaintiff continued. He made an application and was awarded a loan of Kshs.300,000. The Plaintiff made a complaint about Kshs. 520,000 on 30/12/2016. That he never received a complaint from him (PW l) since February, 2017. It was further the evidence of DWI that in the terms and conditions, the mode of filing a complaint is set out clearly. The terms and conditions paragraph 17 it States, cheque books are issued subject to the following conditions:- l) one agrees to look after and use it with utmost care 1. To ensure all uncompleted cheque forms are kept in custody of all forms 2. To inform the bank of any loss of cheque book leaf The Plaintiff was thus negligent in handling his cheque book in this instant. That he blamed thePlaintiff for loss of his money. He failed to disclose personal dealings with the 1st Defendant. The bank acted on his instructions. The Plaintiffs claims arc thus untrue. The bank honored his instructions. During cross examination it was the evidence of DWI that at the material time of this suit, the 2nd Defendant was the Branch Manager at the Bank. He was the head/overall of the bank overseeing every operation of the bank. The bank has obligations so does the customer and all dealings are in writing. In the Bank's terms and conditions running, the signature of the client/plaintiff is not on the terms and conditions to mean that they were brought to his attention. These terms are in the account opening form. There is no place for signing on the end of the terms and conditions pages. The bank is bound by statutes and regulations regulating the industry of banking. One of the duties of the bank is to keep the client's money as safe as possible. It was the evidence of DWI that the cheque of Kshs. 520,000 dated 5/2/2016 is drawn in favour of Kenya Commercial Bank Kehancha. He did not know of any business the Client had with the bank to get paid for any dealings. It was the testimony of DWI that Oliver signed the cheque in question. At the back of the cheque, there is a contrary instruction to transfer the money to a different account. Kenya Commercial Bank is the beneficiary. It did not authorize/sanction the transfer to a different account, The expected beneficiary as per the face of the cheque is Kenya Commercial Bank. This is the instruction given by the owner of the Account. There is no account called Kenya Commercial Bank. The instructions are usually at the back of the cheque. This is not a group account. There is a name appearing in the instruction note. If he wanted to pay Oliver directly, he had the option of sending to his Account directly other than through Kenya Commercial Bank. It was the evidence of DWI that the drawer is the owner of the cheque. His signature is on the instructions and acted on them. The Account at the back of the cheque is 077230848815. Oliver's statement is account No. I04015285 reflects instead receiving the money. These are different accounts. The reason Why the money, was deposited in this Account is because both accounts belong to the same person. Kenya Commercial Bank updated the system from 07 to the current number I0. Hence the discrepancy in the account numbers. That he did not have the memorandum proving the system change at the moment. The account is the Manager's account. It was the testimony of DWI that the bank verified the signature of the Plaintiff. An internal inquiry or forensic audit in this matter was conducted in 30/12/2016. It arose from this complaint. The letters of complaint are for 2017. The complaint was registered way before. The process of investigations had begun by 30/12/2016 since he was approached on this date. That he was not aware when the same was made. A complaint had no time limit. There is a role that exists at the bank 011 impartiality. That is why he was the one who signed that the cheque was okay before processing the same. That there is no requirement that if the Manager is benefitting from the dealings, he ought to have allowed another person to act entirely on the Cheque. It was further the evidence of DWI that on 9/2/2016, John deposited Kshs.242,000 into Oliver’s account. That he did don't have the hard copies of the transaction slips to prove it is John the Plaintiff that deposited the money into Oliver's account today in Court, Johns are many. The loan granted to the Plaintiff of Kshs. 300,000 in the normal course of business. That the bank is insured against losses by its workers. He did not know if Oliver was still working with the bank. That he did not know if Oliver was fired out of these dealings. The dealing of this cheque was not negligent in the circumstances. During re-examination, it as the evidence of DWI that the terms and conditions of Account Opening/Operations are contained in the Account Opening Forms at the end. In page I declaration "form above", it states that the customer is bound by the terms and conditions. The declaration is on the Account Opening Forms. In 2016, the hank upgraded their systems. By the time the monies were being transferred to Oliver's the systems had changed into the current numbers. A bank has a time frame to act after a complaint has been made in paragraph 14 of the terms and conditions. That he did know when the complainant was made. He wrote his statement with the investigators on 30/12/2016. DW2 Oliver Muhonda Alliangano the 2nd Defendant adopted his statement dated 4th June 2021 and testified that he knew John. That he used to work in Kenya Commercial Bank - Kehancha Branch as the Branch Manager. That he knew John through construction business. That he is the director of Tonsanse Construction Limited. That they did one business with John in late 2016. It was the evidence of DW2 that he was approached by Muhingira and Francis to construct a culvert at Mumbiso Kuria West. They went to him with a proposal that they had been awarded a contract with the CDF Kuria West. They were to construct culverts along a river at Mumbiso area. That they told him they did not have money. They asked him to finance the project. They told him the contract was for Kshs. 900,000. They proposed he funds the project then they share the profit. That he sourced for a foreman Francis and Muhingira and were like supervisors to procure the sand and hardcore. It was further the evidence of DW2 that before they started the construction, Francis and Muhingiti introduced John to him. They told him that John was their cousin and they were using his company. That he funded the project. He sourced his foreman called Dominic Simiyu Wafula. The work took 5 weeks. After completion of the work, the CDF confirmed the work was done and processed payment. He was not involved in the payment. Muhingira and Francis came with a Cheque of Kshs. 800,000/= (clear on the exact amount). It was deposited on Tonsanse Account. They withdrew Kshs, 90,000 stating for supervision of the project. They were John, Muhingira and Francis. John said that they do a cheque of KShs. 520,000 to him for part payment of what he had contributed. They agreed among themselves. The cheque was done in everyone’s presence. John took the cheque for processing. John later paid him (DW2) around Kshs. 200,000. John, Muhingira and Francis paid him all these money. It was the evidence of DW2 that everyone went 'home happy. They did another contract with Tonsanse where he offered his professional advice. He approved their overdraft as the Bank Manager. No issues arose from the second contract. After these transactions, he stayed in the bank for I year. He said he did not fraudulently acquire money from the Plaintiff. He said he paid for the Plaintiffs project and they paid him back his money. That they agreed he finances the project, they paid him his dues. He said he was shocked to be called by Anti-fraud Kisumu. He knew Francis, Muhingira and John before this contract. It was gentlemen’s agreement. During cross examination, it was the evidence of DW2 that he had been sued by Tonsanse Construction Company. He funded [he tender project for Francis and Muhingira. He did not have evidence of the tender documents. The tender was awarded to Tonsanse Construction Limited. That he did not have any lender awarded to Francis or Muhingira Gabriel. He was told the tender was for Kshs. 900,000. That he did not have agreement lending money to any of these people. That it was a gentlemen's agreement. That he personally limded the project on Kshs. 685,000 Evidence is in his statement showing that he bought murram and other construction items. He did not hand the money to Tonsanse Construction Limited. That he has no evidence lending the money to the Plaintiff. That his statement show that he paid Francis money, It was the testimony of DW2 that he did not have the evidence of how the project was calculated not the numerical calculations of how the money was expanded. He had no writing of work out of the profits shared. The profit was Kshs. 125,000. That John got around Kshs. 25,000. That all the money paid of Kshs. 625,000 was his personal funding. It was further the evidence of DW2 that the cheque was dated 5/2/2016 was written in the name or the bank. The bank was the beneficiary of the cheque, That is how transaction is done through the bank. The cheque was not indicated in his name instead the details of his names were written behind. That they did this to effect an instant transfer. If the cheque was written in his (DW2) names, it would have taken 2 days to clear. There was no need to wait and he expedited the transfer quickly. He wrote at the back. The Plaintiff took 'it to the cashier himself. That he was the one that filled the details at the front as well. John only signed the cheque. He did not dishonestly dupe the Plaintiff into signing the cheque so that he could fill the other details. He did not know if Plaintiff is illiterate. DW2 confirmed that his signature is on the cheque. It was the evidence of DW2 that he resigned from Kenya Commercial Bank. He was not sacked at all. That he left Kenya Commercial Bank in February, 2017. That he knew investigations were done in this case. On further cross examination, 'it was the evidence of DW2 that the money transferred into his Account on 9/2/2016 is Kshs. 228,000 it was his evidence that the monies were for personal deals with him and Tonsase Construction Limited. That he had known the Director for 3 years prior. That he had done personal transactions with him. The bank was never involved in his dealings. The bank was never negligent at all. It was his personal dealings. There was no issue with the Kshs. 228,000 even after the deals they still continued dealings with the director of the Plaintiff. On 10/2/2016, Plaintiff was granted a loan by the bank for a road construction. During re-examination, it was the evidence of that they settled on the direct transfer to avoid gimmicks by any party. That he needed the cash quickly that is why. That he used the money to pay his supply. That the transferred on 5/2/2016 to Plaintiff's mobile No. 0726 663080 - John in this case of Kshs.520,000/=. That the payment of the Kshs. 520,000 was the same day as that to John. That the other transactions were payments to suppliers of the project. That they did not do a written agreement since they had conducted business with the gentlemen before and after without issues. Nothing was unusual in this case. They were friends. The Kshs.685, 000 was not paid to John in cash. That he procured items himself. That he paid for the supply of the materials whenever they were needed. DW3- Muhingira Gabriel testified and it was his evidence that he was into construction. That he knew John. He is John Marwa Chacha. That he is his cousin. That in the year 2015 they entered into a business deal, him and Frank Chacha aka Jamaica, got a tender from CDF - Kuria West to construct culverts. That they approached John who had a Construction Company called Tonsanse Building and Construction Company to give him his company to trade with it for tender purposes and John agreed. It was further the evidence of DW3 that John gave them the Company documents. That they were awarded the tender. That they did not have money to finance the culvert project. That they approached Oliver, then the Manager of Kenya Commercial Bank. That they knew him very well. That they fronted the idea to him. That they had not traded with 'him before. Oliver gave just money 'to finance the project. That he was the foreman and Jamaica used to do the purchases It was the testimony of DW3 that the profit after all the expenses was Kshs. 25,000 That he could not recall how much Oliver gave to the fund. After done, the CDF gave a cheque in the name of the Tonsanse Company Limited. That they went to the bank and withdrew Kshs. 90,000 for supervision and license. The money was handed over to CDF Manager. That they went with John to the Bank and withdrew Kshs. 90,000 for them. That they agreed to pay first Oliver Kshs. 520,000. It was John, himself, Frank and the Manager. That they then divided among the 4 of them Kshs. 125,000/=. A cheque was written to Oliver of Kshs. 520,000/= on 5/2/2016. That they were left with Oliver's balance of around Kshs. 200,000, That John withdrew from the account after around 2 days Kshs. 200, 000 and deposited in Oliver's account. The remaining balance they divided among themselves. That was the end of the deal. Later, he got a contract with Ketra. He used John's Company. Oliver advised them and through the bank, advanced an overdraft. After one year, he was informed John was demanding money from Oliver from the deal they did with Frank Chacha. During cross examination, it was the evidence of DW3 that he and Francis were awarded a tender by CDF Kuria West and that he did not have any evidence 1.0 prove the tender existed. That he does not have communications evidence with the CDF. That they did not enter into any written agreement with John or Tonsanse negotiating this deal. That they did not write any agreement. That he does not know if it was illegal to bid using another person's Company. That they had not done any dealings with Oliver before. That they did not write any agreement with Oliver on his funding. That they trusted each other. That he was the foreman of the project. That he does not have any evidence of any expenditure incurred on the project at all. That he was not the one purchasing the materials. Frank was the one doing the purchasing. It was the evidence of Oliver used Kshs. 625,000. That he received some of the money to pay the laborers on the ground. That he did not have the statement to prove the transactions. That they divided the profits, John received his share from the 625,000/=. John did not receive any of this money. That he did not have the calculations of the expenditures and profits of this deal. That he was there during the writing of the cheque of Kshs. 520,000. That he thought John wrote the writings on the cheque. That he could not recall Who exactly wrote the writings. That he did not have a construction company to date. That he used Tonsanse for another contract of about Kshs. 300,000 after and his statement did not reflect this. During further cross examination it was the evidence of DW3 that John is his cousin. John and Olivet' were friends. Oliver gave us an overdraft of another project. The Bank was never involved in this deal at all. It was a personal issue. The bank should not be a party herein. During re-examination, it was the evidence Of DW3 that Kshs. 588,000 was extended through purchase of construction materials used. That they did not enter into a written agreement. That they were all friends. That they did this deal as friends. That he does not deal with his cousin through a written agreement. John is his cousin and he trusted him. John gave them his Company. DW4- Francis Chacha alias Jamaica testified and it was his evidence that he is a contractor/farmer. That he knows John Marwa Chacha. That he is his neighbor. He is the director of Tonsanse Construction Company. Oliver is my friend and former manager Kenya Commercial Bank Kehancha. That they used to do business with him. That they consult him on several issues involving trade. That he contacted the MP Kuria West. He offered him a contract tender. The Manager CDF gave them a tender to construct a culvert at Mambiso. That they went to the office and were advised on how to go about it. Muhingira told him his cousin had a company. That they met John the company owner and they used John's Company. That they were awarded the contract. That they were told by the MP and the CDF Manager to work as they sorted out the paper work. Oliver went in as their financier for the project. That they agreed on how they would share the profits. The contract was for Kshs. 900,000. It was further his evidence that Oliver gave them money for the expenses. It was around 600,000. That he purchased the materials himself using Oliver's money. That they used to write down the expenditures in a book. That he used to write them down himself. Oliver sometimes sent him 'money through Mpesa. After they finished work, they were given their cheque. That he got to know John way later. He came to the site. He told him he was the owner of the Company. He demanded money for giving them the Company. That they sat all of them and decided to share profits. They did not put it in writing. That they were paid the cheque in February. That they paid Kshs. 90,000 for Supervision of the project to the CDF Manager Mr.Too arid Ketra. The CDF cheque was written to Tonsanse Company Limited. That the next day, they met with Oliver, John and Muhingira at Oliver’s Office. They did their calculations. That they had a profit of Kshs. 125,000. That he was paid his cut. That they completed the project and it was done. A year later, John met him and told him he was suing the bank for the money transferred into Oliver's account. Oliver stopped working at the bank. That he does not know if he was sacked. That he did not trade again with Tonsanse or Oliver after this deal. During cross examination, it was the evidence of DW4 that he got to know of John almost at the end of the project. He did not know the normal procedure of getting government tenders. That he did not have the bid for the tender. A bid of Kshs. one million and below does not demand a bid. That they applied for this tender and was awarded. That he did not have the records to prove the same. It was further his evidence that Muhingira is his friend. That he did not have any agreement written between himself with John or Tonsanse Construction Limited. That they agreed orally. That he kept the records himself. That they do not have the records as evidence. That he did not have the receipts either. Muhingira received the cheque from the CDF. That he doesn't have evidence to prove it. Oliver sponsored them. That he did not have any evidence to prove Oliver paid John any money. John was paid at the end of the contract. The CDF Manager was paid Kshs. 90,000 after the contract was done. The entry is indicated as paid to John Marwa. That it is not indicated as paid to Too the CDF Manager. That he was present When the cheque of Kshs. 520,000 was written. That he did not know who wrote the cheque. It was further the evidence of DW4 that the bank was never involved in their deal. As the same was their personal deal and the bank should not have been involved in this deal. During re-examination, it was the evidence ofDW4 that they did not write any agreement between them at all and they did everything on oral agreement The appeal herein was canvassed by way of written submissions. The Appellant’s submissions are dated 11th September 2024 and the Respondent’s submissions are dated 3rd January 2025. **ANALYSIS AND DETERMINATION** Having considered the grounds of appeal, the records of the trial court and the rival submissions by the respective parties the issues that arise foe submissions are:- 1. Whether there existed any relationship between the Appellant/ Plaintiff and Respondents/Defendants? 2. Whether 'the sums Of Kshs. 520,000 was un-procedurally withdrawn from the Appellant/Plaintiff s account? 3. Whether the Respondents are liable for the loss of Kshs. 520,000? 4. Who bears the Costs. From the evidence, it is common ground that the Appellant maintained an account with the 1st Respondent. It is also not in dispute that the cheque for Kshs. 520,000 bore the signature of the Appellant's authorized signatory, John Marwa. There is also no dispute that the funds were ultimately credited into the 2nd Respondent's account and that the 2nd Respondent was, at the material time, the Branch Manager of the 1st Respondent. The Appellant's case rests on the assertion that its director merely signed a blank cheque upon the assurance of the Branch Manager, who thereafter inserted the particulars and diverted the funds to himself without the authority of the company. The Appellant therefore attributes the loss to fraud, negligence and breach of the banker-customer relationship. Fraud, however, is a serious allegation. Although it need not be proved beyond reasonable doubt in civil proceedings, it must be proved to a standard higher than a balance of probabilities. The burden remained throughout upon the Appellant. Upon re-evaluating the evidence, this Court is unable to find that the requisite standard was attained. First, it is not disputed that the Appellant's authorized signatory voluntarily signed the cheque. His explanation was that he signed a blank cheque because he trusted the Branch Manager. By his own admission, he was an experienced bank customer, had previously operated the account and appreciated the significance of signing cheques. Even assuming that he did not complete the particulars himself, voluntarily signing an incomplete negotiable instrument exposed the company to the very risk which subsequently materialized. That conduct constituted substantial negligence on the part of the company's authorized signatory. Secondly, although the Appellant denied any business relationship with the 2nd Respondent, the evidence presented by the defence painted a different picture. The testimonies of the 2nd Respondent, DW3 and DW4 were substantially consistent that there existed a joint construction venture financed by the 2nd Respondent, in which the Appellant's company was used to execute the project. While the alleged arrangement was informal and unsupported by written agreements, it was corroborated by the surrounding circumstances, including the subsequent deposits made by John Marwa into the 2nd Respondent's account a few days after the disputed transaction. These subsequent payments considerably weaken the Appellant's assertion that the transfer of Kshs. 520,000 was wholly unknown to it. Thirdly, the Appellant relied heavily upon the fact that the cheque was drawn in favour of the bank while the proceeds ultimately reached the 2nd Respondent's account. Although that mode of processing may have been irregular and certainly called for greater caution by the bank, the evidence of the bank officers was that the instructions endorsed on the reverse of the cheque authorized the transfer to the specified account and that the signature thereon was verified against the customer's specimen signature before payment. There was no expert evidence challenging the authenticity of the endorsement or demonstrating that the signatures were forged. This Court is nonetheless troubled by the conduct of the 2nd Respondent. As Branch Manager, he occupied a fiduciary position requiring the highest standards of integrity and avoidance of conflicts of interest. Participating personally in a transaction in which he stood to receive substantial funds from a customer's account was imprudent and inconsistent with sound banking practice. The bank would have been expected to ensure that such a transaction was handled independently to eliminate any perception of impropriety. However, imprudence or poor banking practice does not, without more, establish actionable fraud or render the bank liable. The Appellant was still required to prove that the payment was made without its authority. On the evidence before Court, that burden was not discharged. The totality of the evidence instead demonstrates that the impugned transaction arose from personal commercial dealings involving the Appellant's director, the 2nd Respondent and other individuals connected with the construction project. The dispute that subsequently arose appears to concern the parties' private financial arrangements rather than an unauthorized withdrawal engineered by the bank. Accordingly, I find no basis upon which to interfere with the findings of the learned trial magistrate. The trial court properly appreciated the evidence and correctly concluded that allegations of fraud, negligence and breach of contract against the Respondents were not proved. The appeal therefore fails. The judgment and decree of the subordinate court are hereby upheld. Costs of the appeal to be borne by the Appellant. Right of appeal 30 days explained. Orders Accordingly **DATED, SIGNED AND DELIVERED AT MIGORI, THIS 9TH DAY OF JULY, 2026.** **ANNE ONG’INJO** - **JUDGE** **In the Presence of** Court Assistant: Victor