Kenya Commercial Bank Ltd v Stephen Mukiri Ndegwa & another [2014] KECA 462 (KLR)
The bottom line
#Kenya's Court of Appeal largely upheld a ruling against KCB over unaccounted customer funds, allowing only a set-off against the overdraft debt.
What this practically means
#Executive summary
#Key legal issues
#Whether judgment could be entered for USD 32,869.26 when the specific prayer was for Ksh.9,929,092.70
The award was legitimate: it flowed from the pleading on unsettled accounts and prayer 3 for a full accounting, plus the general prayer 7(v)
CML pleaded the unsettled accounts claim and a prayer for a full account of monies received but not credited. The parties consented to the appointment of an accounting expert (referee) whose evidence, with the totality of the evidence, established that USD 32,869.26 was unaccounted for. The court found no impropriety in expressing the judgment in foreign currency since the parties transacted in both currencies, and CML was bound by the exchange rate it adopted in its pleadings.
Whether the judgment should have been net of the overdraft debt
Yes - the final judgment should be net of the amount due on the overdraft facility; this ground of KCB's appeal was allowed
The trial court's inquiry established that the overdraft stood at Ksh.648,302.35 while the sum unaccounted for by the bank was USD 32,869.26 (equivalent to Ksh.1,939,286.30 at Ksh.59 to the dollar). Properly credited, the account would have been in credit, so the debt was extinguished. Common sense required the decree to reflect the set-off of the amounts due between the parties, even though KCB filed no counterclaim.
Whether KCB could be restrained from exercising its statutory power of sale
Yes, on these facts - the Habib Bank line of authorities was distinguishable because there was no unequivocal admission of debt and the bank failed its duty to account
The suit was not merely a challenge to the statutory power of sale. CML had for two years sought explanations from the bank over unexplained disappearance of remitted funds; the explanation for the initial admission of debt was accepted; no proof existed of Ndegwa's personal account. If CML was not indebted, there was no purpose in detaining the securities. The injunction and order for discharge of the securities were properly granted.
General damages for loss of business and breach of contract
Correctly dismissed - loss of business is quantifiable and must be specially pleaded and proved; general damages are not awardable for breach of contract; and the contractual terms breached were never pleaded or proved
Following Siree and Dharamshi v Karan, damages calculable to a cent are special damages requiring specific pleading and proof. CML did not specify the business lost or adduce supporting evidence, and did not disclose the terms of the contract allegedly breached. Ndegwa, having no account or contractual relationship with the bank, could not claim under this head at all.
Legal principles established
#- A dispute as to the exact amount owed under a mortgage/charge does not, of itself, justify restraining a mortgagee who has served a valid statutory notice from exercising its statutory power of sale - though distinguishable where there is no unequivocal admission of debt and the chargee has failed in its duty to account
- General damages cannot be awarded for breach of contract; where damages can be quantified they cease to be general and must be specifically pleaded and proved as special damages
- A first appellate court must reconsider, reassess and reevaluate the factual evidence and reach its own conclusions, while deferring to the trial court on credibility of witnesses, and may interfere only where findings are based on no evidence, a misapprehension of it, or wrong principles
- Where money claimed is based on unsettled accounts, a plaintiff need not state a precise amount in the plaint, and a court may grant relief under a general prayer flowing from such a pleading
Court orders
#- 1.The main appeal is dismissed, save to the extent of correcting the decree by offsetting the amount found due to the 2nd Respondent, USD 32,869.26 converted to Ksh.1,939,286.30, from the debt owed to the bank in the sum of Ksh.648,302.35
- 2.The cross appeal is dismissed
- 3.Each party shall bear its own costs of the appeal and cross appeal
- On appeal from
- High Court of Kenya at Machakos
- H.C.C.C. No. 172 of 1997
- Jurisdiction invoked
- First appellate jurisdiction over the High Court (constitutional and statutory appellate jurisdiction; the court describes itself as 'the first, and possibly final appellate court')
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kenyatta University & another v Fred Obare [2017] KECA 227 (KLR)[2017] KECA 227 (KLR)19 Oct 2017
Cite this brief
#Cite this brief
Caselaw, "Kenya Commercial Bank Ltd v Stephen Mukiri Ndegwa & another [2014] KECA 462 (KLR)", Case Analysis (2014). Civil Appeal No. 132 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/462/eng@2014-07-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.