https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8199

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MILIMANI LAW COURTS** **SMALL CLAIMS CIVIL APPEAL NO. E231 OF 2025** **ZIPPORAH ONYONI ........................................................................................... APPELLANT** **-VERSUS-** **KENYA COMMERCIAL BANK LIMITED ................................................... RESPONDENT** (*Being an appeal from the Judgment and Decree dated 2nd September 2025 delivered by Hon. Tobias O. Omono, Adjudicator, in the Small Claims Court at Milimani Commercial in Small Claims Court Cause No. E3869 of 2024*) **JUDGMENT** **A. Background** 1. This appeal arises from the judgment of the Small Claims Court delivered on 2nd September 2025, in which the Adjudicator dismissed, with costs, the claim that the Appellant, Zipporah Onyoni, had instituted against the Respondent, Kenya Commercial Bank Limited. 2. By a Statement of Claim dated 8th August 2024 the Appellant, who held a personal current account numbered 11[redacted]38 at the Respondent’s Moi Avenue Branch, sought judgment in the sum of Kshs. 196,500/=, compensation to be assessed by the court, interest and costs. 3. Her case was that on 1st March 2024 the said sum was withdrawn from her account through two transactions of Kshs. 99,000/= and Kshs. 97,500/= which she neither initiated nor authorised, and which were channelled to two KCB Vooma wallets held within the Respondent’s own system. She attributed the loss to the conspiracy, collusion or negligence of the Respondent or its employees, contending that the Respondent, as custodian of both her funds and her confidential account information, was liable to make good the loss. 4. The Respondent denied liability. Its position, advanced through the Response to the Statement of Claim dated 17th September 2024 and the evidence of its sole witness, a Fraud Analyst named Grace Ireri Gatavi (RW1), was that the Appellant’s registered mobile number +254[redacted]444 was linked to her account, that each of the impugned transactions was authenticated by a One Time Password (OTP) transmitted to that number, that there had been no SIM-swap on the line, and that the Appellant was at all material times in possession of her telephone. 5. On that footing the Respondent maintained that the transactions bore the Appellant’s authority, that it had merely honoured its customer’s mandate, and that the loss, if any, was occasioned by the Appellant’s own want of care. The trial court accepted that defence, found that the Appellant had failed to prove negligence, collusion or fraud against the Respondent, and dismissed the claim with costs of Kshs. 20,000/=. 6. The Appellant, aggrieved, lodged the present appeal upon a Memorandum of Appeal dated 12th September 2025 raising nine grounds, the ninth of which was abandoned and the remainder condensed, in submissions, into three clusters. **The Appellant’s Submissions** 1. On the first cluster, being grounds 1, 2 and 3, the Appellant submitted that the trial court misapprehended the nature of her claim by reducing it to one founded solely on negligence and fraud. Her claim, she urged, was anchored more broadly on the contractual and fiduciary duty of care that a bank owes its customer, and on reasonable inference. 2. She contended that the requirement to plead particulars of negligence and fraud has no application to the simplified procedure of the Small Claims Court, invoking sections 23 and 24 of the Small Claims Court Act, Rule 3(1) of the Small Claims Court Rules, 2019, and Article 159(2)(d) of the Constitution, which enjoins courts to administer justice without undue regard to procedural technicalities. She further argued that the Adjudicator had elevated the standard of proof above the balance of probabilities and had wrongly placed upon her a burden that, in the circumstances, lay on the Respondent. 3. On the second cluster, being grounds 4, 7 and 8, the Appellant complained that the trial court failed to consider her evidence, in particular her Supplementary Witness Statement dated 31st January 2025, in which she denied initiating the transactions, denied using or sharing the OTPs, and asserted that she had never subscribed to or used the OTP facility, having always authenticated her mobile banking through a Personal Identification Number (PIN). That evidence, she said, was not controverted and shifted the evidential burden to the Respondent under section 112 of the Evidence Act, the manner in which the transactions were processed being a matter especially within the Respondent’s knowledge. 4. She invoked the doctrine of *res ipsa loquitur*, contending that unauthorised withdrawals from a secure banking system do not ordinarily occur without negligence, and relied on ***Kingdom Bank Limited v Wanjohi (Commercial Appeal E192 of 2023) [2024] KEHC 2677 (KLR)*** for the proposition that a bank is under a duty to aid the recovery of misdirected funds and cannot escape liability merely by asserting that the recipient accounts had been emptied. 5. On the third cluster, being grounds 5 and 6, the Appellant impugned the trial court’s reliance on RW1 and on the Forensic Report dated 29th May 2024. She submitted that RW1, being an employee of the Respondent, was not an independent witness and had an interest in the outcome; that the report, authored solely by the Respondent’s own staff, was neither objective nor impartial and amounted to the Respondent investigating itself; and that RW1’s expertise had been put in issue yet no credentials were tendered to establish her as a forensic expert. 6. Relying on ***Kagina v Kagina & 2 others* (Civil Appeal 21 of 2017) [2021] KECA 242 (KLR)**, she argued that a witness who claims expertise must prove the source and extent of that expertise, and that the report ought therefore to have been treated with circumspection rather than accepted as unimpeached. She prayed that the appeal be allowed, the judgment of the trial court set aside, and judgment entered in her favour for the amount lost, together with compensation, interest and costs. **The Respondent’s Submissions** 1. The Respondent met the appeal first on the threshold of jurisdiction. Relying on section 38(1) of the Small Claims Court Act, it submitted that an appeal from the Small Claims Court lies to the High Court on matters of law only, and that the jurisdiction of this court is akin to that of the Court of Appeal in conventional matters: findings of fact are not to be disturbed unless they are unsupported by evidence or founded on wrong principle. 2. It cited ***Fidelity Insurance Co. Ltd v Korir* [2024] KEHC 3365 (KLR), *Bosire v Njihia* [2026] KEHC 2744 (KLR)** and ***Directline Assurance Co. Ltd v Nyawa* [2023] KEHC** **20201** to the effect that the High Court may not substitute its own appreciation of the facts for that of the trial court unless the findings are so perverse that no reasonable tribunal would have arrived at them. On that basis it contended that the grounds of appeal raise questions of fact dressed up as law and must fail in limine. 3. On the merits, the Respondent submitted that the burden of proof rested on the Appellant and was never discharged. Drawing the distinction between burden and standard of proof articulated in ***Raila Odinga & 5 others v Independent Electoral and Boundaries Commission & 3 others* [2013] KESC 6 (KLR),** it argued that the Appellant placed nothing before the trial court beyond bare assertion. Even within the relaxed regime of the Small Claims Court, it said, a party must plead and prove the factual basis of liability; and where, as here, the claim was expressly founded on conspiracy, collusion, negligence and fraud, those serious allegations had to be specifically pleaded and strictly proved, per ***Vijay Morjaria v Nansingh Madhusingh Darbar & another* [2000] KECA 223 (KLR), *Gituma v Chege* [2026] KEHC 2351 (KLR), and *Fred Ben Okoth v Equator Bottlers Limited* [2015] eKLR**. As to fraud, it relied on ***Kibathi t/a Osoro Chege Kibathi & Co Advocates v Musti Investments Ltd* [2024] KECA 270 (KLR)** for the intermediate standard, higher than the balance of probabilities though lower than beyond reasonable doubt, and submitted that the Adjudicator applied that standard correctly and did not, as alleged, demand proof beyond reasonable doubt. 4. The Respondent further submitted that it had positively demonstrated that the Appellant’s number was linked to the account, that the OTPs were sent to and received on that number, that the Appellant retained custody of the line, that there was no SIM-swap, and that its system was not porous; whereas the Appellant adduced no evidence of a system breach, insider involvement or failure of the Respondent’s security architecture. **Issues for Determination** 1. Having considered the Memorandum of Appeal, the record of the trial court and the rival submissions, the issues that fall for determination in this appeal are the following: 2. the scope of this court’s jurisdiction on an appeal from the Small Claims Court, and whether the grounds raised disclose questions of law; 3. whether the trial court misapprehended the nature of the claim and the requirement to plead particulars of negligence and fraud; 4. whether the trial court applied the correct standard and burden of proof; 5. whether, on the evidence, the Respondent discharged its duty of care to the Appellant, including its duty to act on a valid mandate and to take reasonable steps to recover or mitigate the loss; and 6. what reliefs, if any, the Appellant is entitled to, and who should bear the costs. **Analysis and Determination** 1. I begin with the threshold raised by the Respondent, for it shapes the whole exercise. Section 38(1) of the Small Claims Court Act confines an appeal of this kind to “matters of law”, and the authorities relied upon by the Respondent, namely ***Fidelity Insurance Co. Ltd v Korir*, *Bosire v Njihia* and *Directline Assurance Co. Ltd v Nyawa*,** correctly state that this court owes deference to the Adjudicator’s findings of fact and will not disturb them merely because it might, on the same material, have reached a different view. 2. That, however, is not the end of the inquiry. The same line of authority recognises that a finding of fact made on no evidence, or arrived at by the application of a wrong legal principle, ceases to be a pure question of fact and becomes a question of law. The Appellant’s complaints that the trial court misdirected itself on the nature of the claim, on the standard of proof, and on the incidence of the burden of proof are, by their nature, complaints of law. To that extent the appeal is properly before me, and the Respondent’s invitation to dismiss it in limine cannot be accepted without first interrogating those complaints. 3. This Court takes next the contention that the trial court misunderstood the claim by treating it as resting solely on negligence and fraud. The Small Claims Court is, by design, a forum of simplified procedure. Sections 23 and 24 of the Act and Rule 3(1) of the Rules prescribe a Statement of Claim in Form SCC-1, and section 32 of the Act and Rule 31 of the Rules free the court from the strict rules of evidence and procedure. 4. Article 159(2)(d) of the Constitution reinforces that ethos. Yet simplicity of form is not a licence to dispense with proof. Where a litigant chooses to ground a claim on fraud or collusion, the gravity of the allegation imports a settled requirement that it be distinctly alleged and distinctly proved; mere generalised assertion will not do. That is the teaching of ***Vijay Morjaria v Nansingh Madhusingh Darbar & another***, where Tunoi JA observed that fraud must be specifically pleaded and may not be left to be inferred from the facts. The Court stated that: ***“It is a mandatory requirement of the law that any allegation of fraud must be particularised. This requirement cannot be met by a mere allegation that the registration of the suit premises in the name of the appellant was fraudulent because the appellant knew that the money had been fully repaid. ...the re-amended plaint falls by the wayside and leaves the allegation of fraud not only unsubstantiated but with no attempt to particularise it. That is contrary to rule 8 of Order 6 of the Civil Procedure Rules.”*** 1. The trial Court was therefore right to note that the Appellant had not particularised the fraud and collusion she alleged. 2. But the point must be kept in proportion. The Adjudicator did not dismiss the claim on the pleading defect. He expressly proceeded, “cognizant of the relaxed rules of procedure and evidence in the Small Claims Court”, to determine whether the Appellant had proved her case on the merits. 3. The want of particulars therefore did the Appellant no decisive harm, and her second ground, taken on its own, does not carry the appeal. The more substantial question is whether the Appellant is correct that her case was wider than fraud and negligence, that it engaged the bank’s contractual and fiduciary obligations independently of any need to prove a particularised fraud. On this she is, in my view, on firmer ground, and I return to it shortly. 4. As to the standard of proof, the Appellant’s third ground asserts that the Adjudicator imposed a standard of proof beyond reasonable doubt. A careful reading of the impugned judgment does not bear this out. The Adjudicator stated, accurately, that the standard where fraud is alleged in civil proceedings is “higher than the ordinary standard of balance of probabilities but lower than beyond reasonable doubt”, citing ***Kinyanjui Kamau v George Kamau Njoroge* [2015] eKLR.** That is the intermediate standard later restated by the Court of Appeal in ***Kibathi t/a Osoro Chege Kibathi & Co Advocates v Musti Investments Ltd***. The Court of Appeal stated that: ***“The question is whether that fraud was proved to the required standard. The standard of proof of fraud in civil disputes is the intermediate one, not as high as beyond reasonable doubt, but higher than on a balance of probabilities. In R. G. Patel v. Lalji Makanji [1957] EA 314, the former Court of Appeal for Eastern Africa explained the standard thus:*** ***“Allegations of fraud must be 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.”*** ***Further, in Richard Akwesera Onditi v. Kenya Commercial Finance Co Ltd [2010] eKLR, this Court, in rejecting what it found to be bare allegations regarding fraud, stated thus:*** ***“…fraud and collusion are serious accusations and require a very high standard of proof, certainly above mere balance of probability and the bare allegations put forward by the appellant do not therefore avail him.”*** 1. The Appellant’s assertion that a criminal standard was applied is, with respect, a misreading of the record, and to that narrow extent the Respondent is correct. The fraud and collusion limb of the claim, unparticularised and unproved, was properly rejected. 2. That, however, exposes rather than resolves the real issue in this appeal. The distinction between the burden and the standard of proof, drawn in ***Raila Odinga & 5 others v Independent Electoral and Boundaries Commission & 3 others*,** is instructive: the burden asks whose duty it is to place evidence before the court, while the standard asks what weight that evidence must bear. The Court of Appeal in ***Mbuthia Macharia v Annah Mutua Ndwiga & another* [2017] eKLR** explained that while the legal burden rests on the party who asserts, the evidential burden may shift in the course of trial as the weight of the evidence varies, falling upon the party who would fail without further evidence. 3. The question, then, is not merely whether the Appellant proved a particularised fraud, which she did not, but whether, the parties’ relationship and the undisputed loss being what they were, the evidential burden came to rest upon the Respondent to justify the debits it had made. 4. It is common ground, and indeed the foundation of the claim, that the Appellant and the Respondent stood in a banker-customer relationship. The content of that relationship is well settled. In ***Co-operative Bank of Kenya Ltd v Biwott* (Civil Appeal 18 of 2019) [2022] KEHC 9946**, and in ***Equity Bank of Kenya & Another v Robert Chesang* [2016] eKLR,** which adopted the classic statement in ***United Rubber Estate Ltd v Cradock (No.3)* [1968] 2 All ER 1073**, the courts have held that a bank owes its customer a contractual duty to exercise reasonable care and skill across the whole range of its banking business, including in interpreting, ascertaining and acting in accordance with the customer’s instructions. 5. The duty is to act on the mandate of the customer, no more, but equally no less. A debit made otherwise than on the customer’s authority is, prima facie, a debit the bank must answer for. It follows that where a customer disputes a debit, the bank that seeks to retain it must be in a position to demonstrate the authority on which it acted. 6. The Respondent’s answer to that requirement rests entirely on the OTP. Its case, distilled, is that an OTP was generated and sent to the Appellant’s registered and un-swapped line, that the Appellant received it, and that the transactions were thereby authenticated and clothed with her authority. 7. Now, in this case, the Appellant did not herself instruct the Respondent; she squarely denies initiating the transactions. And the authenticating credential was not a static secret known only to her but a one-time code transmitted by the bank to a handset, a code which, on the Appellant’s uncontroverted evidence, she neither keyed in nor shared. The mere generation and delivery of an OTP does not, without more, establish that the customer used it or authorised the transaction it secured. 8. This is where the evidential burden, and section 112 of the Evidence Act, become decisive. The Appellant’s consistent and uncontradicted evidence, on oath and in her Supplementary Witness Statement dated 31st January 2025, was that she had never subscribed to or used the OTP facility and had always authenticated her mobile banking by PIN. If that is so, the Respondent’s entire defence, that an OTP equals the Appellant’s mandate, required the Respondent to establish, at the least, that the Appellant had subscribed to OTP authentication and had used it before. 9. The account opening form, the Respondent’s own first exhibit, is silent on OTP. No transaction history was tendered to show prior use of OTP by the Appellant, although that history lay peculiarly within the Respondent’s knowledge and was producible at the press of a key. Section 112 provides that where a fact is especially within the knowledge of a party, the burden of proving it lies on that party. The Respondent did not discharge it. The trial court’s finding that the receipt of those OTPs shows that the disputed transactions were initiated by the Claimant’s phone number conflated receipt with authorship and, in so doing, relieved the Respondent of a burden the law placed on it. 10. The difficulty is compounded by the route the trial court took to fill the evidential gap. Having recognised that the Appellant disputed initiating the transactions and remained in possession of her phone, the Adjudicator invoked judicial notice of “a matter of public notoriety that scammers can remotely control a mobile phone” and concluded that “an unknown person remotely accessed and controlled the Claimant’s phone”. 11. With respect, that conclusion sits uneasily with itself. There was no evidence of remote access; it was a hypothesis. More significantly, if it were true that an unknown third party remotely controlled the handset and effected the transfers, that would tend to confirm, not refute, that the Appellant did not authorise the transactions, which is the very premise of her claim. The hypothesis cannot simultaneously exonerate the bank and establish the customer’s authority. It does neither; it merely demonstrates that the question of how the OTPs came to be used was left unanswered by the party best placed, and legally obliged, to answer it. 12. There remains the distinct question of recovery and mitigation, on which the Appellant’s case is at its strongest. It is undisputed that the stolen funds did not vanish into an external system; they were transferred to two KCB Vooma wallets, accounts held within the Respondent’s own ecosystem, in respect of which the Respondent held, or was obliged to hold, know-your-customer information. The Respondent’s account of its recovery efforts, through RW1, amounted to little more than an assertion that the wallets had been emptied and were closed. In ***Kingdom Bank Limited v Wanjohi*** the court confronted a closely analogous situation and held that “*the bank had a duty to ensure that it did not aid a fraud and it is not enough to state that the account did not have sufficient funds*”; the bank was required to show that it had taken steps to call in and recover the money. The principle was echoed in ***Safaricom PLC v Kafwa* (Civil Appeal E191 of 2022) [2023] KEHC 19109 (KLR),** where the duty of a financial institution to act diligently upon a report of fraud was affirmed and its involvement held indispensable. 13. Tested against that standard, the Respondent’s bare assertion of futility, unaccompanied by any evidence of demand upon its own account-holders, of tracing, or of report to the authorities, did not discharge the duty. To that extent the trial court erred in treating the recovery question as concluded by RW1’s say-so. 14. I am conscious that this conclusion must be weighed against the matters genuinely told in the Respondent’s favour, which I do not minimise. The Appellant admitted receiving the OTPs, admitted she retained possession and control of her handset throughout, and there was no SIM-swap. Had the Respondent established that the Appellant had subscribed to and previously transacted by OTP, the *Simba* analogy might have prevailed and the loss might properly have lain where it fell. 15. But the Respondent, having pleaded OTP authentication as the foundation of its defence, failed to prove the facts on which that defence was predicfated, and failed to discharge the duty of recovery that the law imposed once the funds were traced into its own system. Weighing the whole of the evidence, and applying the ordinary civil standard of the balance of probabilities to the contractual claim, as distinct from the fraud limb, which I have already found was not made out, I am satisfied that the Respondent did not establish a valid mandate for the debits and did not act with the reasonable care and skill its contract with the Appellant required. The Appellant’s appeal therefore succeeds on liability for the principal sum, though not on the basis of proven fraud or collusion. 16. It remains to address quantum, on which the Respondent advances a sound point that survives the foregoing. The Appellant sought, in addition to the principal sum, the sum of Kshs. 1,000,000/= as compensation for inconvenience. The loss she suffered is, however, a precise and quantifiable sum, Kshs. 196,500/=. 17. As the Court of Appeal explained in ***Dharamshi v Karsan*, adopted in *Kenya Commercial Bank Limited v Obae***, damages flowing from a breach of contract are in the nature of special damages that must be pleaded and proved; general damages are not recoverable for breach of a banking contract where the loss is capable of quantification. The Appellant’s claim for compensation of Kshs. 1,000,000/= is accordingly not maintainable and must fail. Her remedy lies in the restoration of the sum lost, together with interest, which adequately answers the deprivation of the use of her money. **Disposition and Orders** 1. For the reasons given, and weighing the strengths and weaknesses on either side, I find that the appeal partly succeeds. The trial court was right to reject the unparticularised allegations of fraud and collusion and did not apply a criminal standard of proof; but it misdirected itself in law by relieving the Respondent of its burden to prove a valid mandate for the disputed debits and by treating the Respondent’s duty to recover funds traced into its own system as discharged on bare assertion. Accordingly, I make the following orders: 1. *The appeal is allowed in part.* 2. *The Judgment and Decree of the Small Claims Court at Milimani Commercial in Cause No. E3869 of 2024, delivered on 2nd September 2025, including the order for costs of Kshs. 20,000/= against the Appellant, is hereby set aside.* 3. *Judgment is entered for the Appellant against the Respondent in the sum of Kshs. 196,500/=.* 4. *The said sum shall carry interest at court rates from the date of filing the Statement of Claim until payment in full.* 5. *The Appellant’s claim for general or compensatory damages in the sum of Kshs. 1,000,000/= is dismissed.* 6. *The Respondent shall bear the costs of this appeal and the costs of the proceedings before the Small Claims Court.* It is so ordered. **Dated and Delivered Via Microsoft Teams at Nairobi this 11th Day of June, 2026.** **BENARD WAFULA MURUNGA** JUDGE OF THE HIGH COURT *Delivered on virtual platform in the presence of:* *Opini instructed by Onyoni Opini & Gachuba for the Appellant* *Okoth instructed by Musyoka Murambi for the Respondent* *Kevin Babu - Court Assistant*