Japheth Murithi v Sidian Bank Ltd & 1 other

6. The learned magistrate misdirected herself grossly on the evaluation of the evidence without affording any reason as required by law. 7. That the trial magistrate erred in law and fact by setting aside the ruling of the trial court on the objection on admissibility DE 8 – without voucher photocopy, thus essentially sitting on appeal of its own ruling. 8. That the trial magistrate erred in law and in fact in failing to find that the respondent’s statutory notices were defective despite 1st respondent’s own admission in testimony. 9. That the trial magistrate erred in fact by concluding that there were not conclusive investigations on unauthorized withdrawal of Kshs. 300,000/= from the appellant’s current account in the absence of any proof in evidence. 10. That the trial magistrate erred in law and in fact by finding that the appellant did not suffer any loss or damage. 11. That the trial magistrate erred in fact and in law by finding that the respondents complied with the law in exercise of statutory power of sale. 12. That the trial magistrate erred in fact and in law by finding that the appellant was not entitled to the prayers and reliefs sought. 2. The appellant prays that the appeal be allowed, the judgement by the trial magistrate dated 19/10/2022 be set aside, he be awarded costs of the appeal. 3. In the magistrate’s court, the appellant had filed a plaint dated 23/9/2020 seeking judgement against the defendants as follows: 4. a. Refund of Ksh. 360,000/= as pleaded above. (b) A declaration that the actions of the defendant, its employees servants, and or authorized agents are in breach of the express and or implied terms of the contract and the defendant’s attempt to dispose off, sell auction or in any other manner transfer the suit property LR No. Abogeta/ukathangari/2048 And Abogeta/u-kathangari/2335 contrary to the terms of the contract and the express provisions of the law is fraudulent, illegal and null and void ab intio. (c) An order of specific performance that the 1st defendant do render a true and just account for the money received by it in loan account No. 0103xxxxxxxx08. (d) A permanent injuction to restrain the defendants whether by themselves, their employees, servants, agents or auctioneers from selling by auction, private treaty or otherwise howsoever and any other manner or by completing conveyancing or transfer of any sale concluded by public auction or otherwise alienating LR NO. Abogeta/u-kathangari/2048 And Lr No. Abogeta/u-kathangari/2335 without issuing the mandatory statutory notices and or in breach of the charge contract. (e) General damages for breach of contract, emotional distress psychological and mental anguish. (f) Costs of the suit and the interests. The learned trial magistrate heard the dispute and dismissed the appellant’s suit. The appellant was dissatisfied with the judgement and filed this appeal. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 2

page 2 of 15

The Appellant’s case 5. The appellant had filed the suit seeking a refund of Kshs. 360,000/= which was illegally and fraudulently withdrawn from his account held by the first respondent. He filed his witness statement which he relied on. It was his contention that the respondent had offered him a loan facility of Kshs. 2,000,000/= to top the initial loan facilitywith the respondent amounting to Khs. 3,500,000/= and Kshs. 315,000/= which he had secured by a charge over Abogeta/U/-Kithagari/2048 and Abogeta/UKithagari/2335. This was in February 2016. 6. The appellant defaulted in repayment and the bank wrote to him a letter dated 8/2/2018 notifying him of the default and demanding the immediate payment of Kshs. 213,754.22 which was the outstanding arrears at the date. 7. Thereafter in April 2018, the respondent demanded Kshs. 3,494,418.41. On 6/4/2018, the respondent wrote to the appellant demanding the payment of Kshs. 3,494,482.41 within 14 days in total disregard of terms of the loan. The appellant then deposited Kshs. 1,850,000/= in his current account to go towards the settling the outstanding and future loan obligations as part of Kshs. 3,494,482.41 which the bank had demanded vide the letter dated 6/4/2018. 8. The appellant made another deposit – debit of Kshs. 775,000/= towards the repayment of the loan facility leaving a total of Kshs. 365,517.94 as the available balance. The appellant averred that, to his dismay, the 1st respondent sent another statutory notice dated January 14th 2019 notifying him of a default of Kshs. 411,352.77 and demanded for immediate repayment. 9. This prompted him to inspect his account and to his surprise he found that a total of Kshs. 360,000/ = which was meant to settle subsequent loan instalments had been fraudulently withdrawn from his account without his authority. He raised the issue with the respondent but no assistance was offered. 10. The appellant made a formal complaint to the manager of security investigations. The 1st respondent rectified the alleged default. Consequently, the 1st respondent conducted an audit at its Branch at Nkubu culminating in the arrest and charging of some of its employees. 11. The appellant contends the actions by the 1st respondent amounted to breach of contract, fiduciary duty, fraud and negligence based on the following particulars: a. Acting perversely and in bad faith in management and conduct of the plaintiff’s account. b. Conducting the plaintiff’s account with material arithmetical and mathematical calculation errors as reflected in various adjustments in the statements of account. c. Compounding the arithmetical errors on a monthly basis. d. Knowingly distorting the course of payment by debiting the plaintiff’s account with illegal and unconscionable instalments amounts. e. Demanding for the full repayment of the loan before it is due and not following the laid down procedure in doing so. f. Fraudulently causing the plaintiff’s account to reflect arrears which were not due to the 1st defendant. g. Fraudulently reflecting monthly repayments and repayments arrears before the same became due under the terms of the legal charges securing the loan to the defendant. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 3

page 3 of 15

h. Failing to secure plaintiffs cash in the account. i. Negligently allowing unauthorized withdrawal of cash from the plaintiff’s account. 12. The appellant pleaded that the 1st respondent was vicariously liable for its employee’s action. 13. The appellant avers that the respondent sent him a statutory notice under Section 90 of the Land Act in relation to the two charged properties Abogeta/U-Kiungone/2048 and Abogeta/U-Kithangari/2335 demanding Kshs. 116,460.48 as the defaulted amount. 14. The respondent subsequently instructed the 2nd respondent to auction the aforementioned properties under its statutory power of sale. He was then served with notification of sale on 18/9/2020 of the aforementioned properties on 25/9/2020 vide an auction by the 2nd respondents. 15. According to the statutory notice and the notification of sale were incurably defective as the properties described in the notification of sale differ from the statutory notice of sale. The appellant further contended that the purported power of sale was illegal for none compliance with the statutory requirements to serve the mandatory forty (40) days redemption notice under Section 96 of Land Act, failed to serve notice of advertisement of sale, failing to adhere to the terms and conditions of the charge/contract and undervaluing the property. 16. The appellant avers that he suffered loss and damages and filed this suit. The appellant relied on his witness statement where he explained that he held a current account No. 0103xxxxxxxx49 with the respondent at its Nkubu Branch. 17. He approached the respondent to consolidate his loan facilities totaling to Kshs. 4,011,000.31. The respondent accepted and consolidated the loan in account number 0103xxxxxx08 repayable in sixty (60) months with monthly instalment of Kshs. 108,797.95 which would be debited from his loan account. He serviced the loan until year 2018 when the respondent demanded arrears of Kshs. 213,754.22. 18. He sold a property Abogeta/U-Kithangari/1913 and he deposited Kshs. 1,850,000/= but thereafter he was served with a statutory power of sale. On enquiry, he discovered that Kshs. 360,000/= was withdrawn from his account. He followed up and eventually filed this suit as pleaded above. 19. The appellant filed a list of documents dated 23/9/2020 and others on 18/3/2011 and 5/1/2021. He stated that he was not aware that Kshs. 60,000/= was deposited in his account and he did not withdraw Kshs. 300,000/= Respondent’s case 20. The 1st respondent filed a defence and denied the appellant’s claim and pleaded that it has a charges registered on both parcels of land Abogeta/U-Kithangari/2048 and LR No. Abogeta/UKithangari/2335. That the respondent issued a letter of offer dated 23/2/2016 for consolidation of outstanding liabilities rather than a new loan facility as claimed by the appellant. 21. The respondent admitted that monies were debited form the appellant account but disputes the amount and process as claimed by the plaintiff. It further denies that the appellant had debited Kshs. 775,000/= on 28/6/2018. On the issue of statutory notice, the respondent contends that it was sent by a registered post on 14/1/2019 and was for Kshs. 411,352.77 which was required to rectify the default but the amount outstanding stood at Kshs. 2,34,471.47. 22. On the issue of monies withdrawn from the appellant’s account, the 1st respondent contends that an available solution was found by the parties and the investigations were still ongoing. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 4

page 4 of 15

23. The 1st respondent stated that the statutory notice was sent on 7/7/2019 and the amount claimed was Kshs. 233,299.79. The respondent admits paragraph 26 & 27 of the plaint and avers that auctioneer’s notification of the sale dated 9/9/2020 and not 18/9/2020. The respondent further denied paragraphs 31, 32 & 33 of the plaint. It was the respondent’s prayer that the suit was an abuse of court process and should be dismissed. 24. The 1st respondent adduced evidence and called it’s witness Pheneas Magaru (DW 1) who by then was its Branch Mnager Nkubu. He adopted as his evidence his witness statement dated 16/3/2021. The witness reiterated what was pleaded in their defence and testified that the appellant took a loan facility of Kshs. 3.5million in 2012; that the loans were non performing and they advised the appellant to dispose of some of the securities. 25. On the withdrawal of Kshs. 300,000/= from the appellant’s account, the respondent testified that it was investigated and closed and as there was no evidence implicating the client. Kshs. 60,000/= was not properly accounted for and was reimbursed to the client. 26. The court allowed the production of a photocopy of a deposit slip showing Kshs. 300,000/= was withdrawn from the account. In cross-examination, the respondent admitted that Kshs. 300,000/= was withdrawn from the appellant’s account on 26/6/2018 but stamped on 28/6/2018 and the entry made on the statement account on 28/6/2018. 27. He admitted that there were discrepancies on the dates. He admitted there was a possibility of having the original withdrawal slip as what they had in court was a copy of the original. He stated that investigations were done but he did not avail the report in court. The judgement 28. The learned magistrate held that on the issue of the withdrawal of Kshs. 300,000/= there did not seem that there were conclusive investigations on the same and none was provided to the court especially on the withdrawal voucher or whatever document was used to withdraw the amount. That going by the evidence on record, it cannot be said for certain it was the plaintiff who withdrew the amount or somebody who impersonated and forged the signature of the plaintiff. That it was impossible to place the liability on the ban when that question was not settled. 29. The learned magistrate held that he appellant did not prove that the 1st respondent breached the contract and that fiduciary duty owed to him or committed fraud in the manner of handling his account. He concluded that the claims were not proved on a balance of probabilities and there was no basis for the appellant to claim damages. 30. On the issue of service of the statutory notice of sale, the learned magistrate held the same was served through registered post. That the statutory notices properly described the properties and the contention was a none issue. 31. Finally, the leaned magistrate declined to order the 1st respondent to render a true and just account and held that there was no basis laid to that demand as the transactions are well captured in the band account statements presented before this court. 32. Having so held, the learned magistrate dismissed the appellant suit with costs. This prompted the appellant to file this appeal. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 5

page 5 of 15

The Appeal 33. The appeal was canvassed by way of written submissions. The appellant filed his submissions through his advocates Murango Mwenda & Muchomba Law dated 25/9/2023. 34. The Respondent filed a response to the appeal sworn by Jackline Ndungu on 5/6/2024 and filed by R. Mugo & Co. Advocates. They however failed to file written submissions as directed by this court on 26/9/2023. Appellant’s submissions 35. On the first ground of appeal, the appellant submits that he learned magistrate erred by shifting the burden of proof on the appellant on the issue of the withdrawal of Kshs. 300,000/= form his account. The appellant relied on Section 107 of the Evidence Act on the issue of burden of proof. That the burden of proof was on the respondent to prove that it is the appellant who withdrew the money but did not as it was the custodian of all the records. 36. The appellant urged the court to rely on Section 112 of the Evidence Act which stipulates that when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disapproving that fact is upon him. That it was within the knowledge of the respondent as how Kshs. 300,000/= was withdrawn from the appellant’s accounts and it was upon him to dislodge the notion that they mismanaged the appellant’s account. 37. That the respondent ought to have produced a computer generated slip signed by the appellant evidencing withdrawal which they did not do and therefore failed to dislodge the allegations of fraud, negligence and illegalities levelled against the appellant. That the respondent has CCTV cameras that would have easily resolved that contention but failed to avail any footage. He relies on Co-operative Bank of Kenya –v- Parsaloi Lasoi 2019 eKLR. He submits that the respondent breached the contract and fiduciary duty to the appellant. 38. The appellant argued grounds 2, 4, 7 & 9 together and argued that they revolve around the weight, admissibility and trial court’s evaluation of the withdrawal voucher produced as exhibit D 8 as prove that it is the appellant who allegedly withdrew Kshs. 300,000/= from his account. That the learned magistrate had held that the withdrawal was inadmissible in the absent of certificate of authentication as required under Section 106 B (4) of the Evidence Act. That inadmissible evidence is no evidence. That the withdrawal voucher was no evidence and the learned magistrate erred in considering and relying on the withdrawal voucher. 39. That the respondent did not prove that it is the appellant withdrew the Kshs. 300/000/= from his account. Ground 5 - 6 40. The appellant submits that he learned magistrate misdirected himself and ignored evidence to the detriment of the appellant who had proved that the respondent had operated his account with mathematical calculation errors as reflected on various adjustments in the statements of accounts. That the appellant had demonstrated that his account was debited with illegal and unconscionable installment amounts and fraudulently causing the appellant’s account to reflect arrears which were not due. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 6

page 6 of 15

41. That the loan statements filed by the appellant and those filed by the respondent as well as various notices showed material miscalculations and inconsistencies of the amounts alleged to have been due for payment. 42. The appellant submits that these reflects the respondent was in breach of its fiduciary duty to the appellant. Relies on Equity Bank Limited & Another –v- Robert Chesang [2016] eKLR. 43. That the learned magistrate ignored material evidence that the appellant did not have the original withdrawal slip as the bank retains the original and he did not withdraw he said amount of Kshs. 3000,000/=. That the court ignored material evidence of cash withdrawal. The voucher had discrepancies on withdrawal dates i.e. filled on 26/62018 yet stamped by the bank on 28/6/2018. 44. That the inconsistencies are elements of fraud. That the appellant produced an auditor’s report containing finding on how the illegal withdrawal of funds form the appellant’s account affected the performance of his loan. That the learned magistrate failed to consider that evidence and also failed to note the inconsistencies on the dates of the statutory notice. That had he done so he would have realized that there was no compliance with the legal requirements of issuing statutory notices and exercising statutory power of sale. Ground 8 & 11 45. The appellant submits that the statutory notices issued by the respondent as well as the exercise of the power of sale were defective. That the notices had defects and were issued when the respondent’s power of sale had not arisen. 46. That the learned magistrate in holding that the appellant did not suffer any loss and damage. The appellant submits that he suffered loss as the respondent did not prove that he is the one who withdrew Kshs. 300,000/=. That the appellant proved that he respondent had manipulated his accounts. That the court ought to have awarded him damages. The appellant urges the court to find that the appeal has merits, allow his claim with costs. Respondent’s response 47. The deponent reiterates the pleadings in their defence which I have analyzed above. The respondent maintains that it is the appellant who withdrew Kshs. 300,000/= from his bank account. The respondent refunded Kshs. 60,000/= to the appellant on 1/3/2019 and reported the matter at Nkubu Police Station. 48. The respondent avers that by January 2018 the appellant’s monthly loan arrears was Kshs. 411,352.77 and since the appellant did not settle the arrears, they served him a ninety (90) days statutory notice to sell his property as required under Section 90 of the Land Act (Cap 6 Laws of Kenya and thereafter Section 96 of the Land Act issued a statutory notice of sale via official posting. 49. The respondent thereafter appointed the 2nd respondent to auction the property. The auction was however unsuccessful as the appellant rushed to court and obtained interim orders to stop sale. On the ground that Kshs. 360,000/= was withdrawn from his account illegally. That by then, the pending loan was Kshs. 3,114,575/=. That the matter before the magistrate’s court terminated in their favour. 50. That the appellant has continually attempted to shift the evidential burden of proof by demanding an original copy of the bank withdrawal slip for Kshs. 300,000/= whereas the evidential burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 7

page 7 of 15

51. That the burden was on the appellant to prove that he did not make the withdrawal. The respondent asserts that the appellant owes Kshs. 4,537,650/= which is in arrears and could have settled the amount less Kshs. 300,000/= as the amount owed is much more than what the burden of proof was on the appellant to proof his claim and he did not discharge that burden. That the appeal be determined in their favour. Analysis and determination 52. 53. I have considered the pleadings and all documentary evidence submitted by both parties as their evidence. The issues that rises for determination are: 1. Whether the learned magistrate erred by failing to find that the appellant had proved his claim on a balance of probabilities. 2. Whether the learned magistrate erred in fact and law by failing to find that the appellant was entitled to general damages for breach of contract and fiduciary duty the by the respondent. 3. Whether the statutory notice of sale issued by the respondent was lawful. 4. Whether sale notice by public auction was proper. This is the first appellate court and its duty has been laid down in authorities of this court and the Court of Appeal that its duty is to analyse the evidence, evaluate it and come up with its own independent finding. In the case of Abok James Odera T/A Odera & Associates –v- John Patrick Machira & Co. Advocates 2013 eKLR. The court stated as follows: “ This being a 1st appeal we are reminded of our primary role as a 1st appellate court, namely, to re-evaluate, re-asses and re-analyze the extracts on the record and then determine whether the conclusion reached by the learned trial judge are to stand or not and give reasons either way.” 54. In Selle –v- Associated Motor Boat Company Limited [1968] EA 123 it was held that the first appellate court has a duty to evaluate the evidence in the below and come up with its own finding. It was stated: “ … in particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he had clearly failed on some point to take account of a particular circumstances or probabilities materially to estimate the evidence or the impression based on demeanor of a witness in inconsistent with the case generally.” 55. In essence, the appeal is in the nature of a retrial with a rider that the court does not have the benefit of seeing the witnesses and must leave room for that. 56. Under the Civil Procedure Act (Cap 21 Laws of Kenya it is provided that: “ Subject to such conditions and limitations as may be prescribed an appellate court shall have powera. To determine a case finally. b. To remand a case. c. To frame issues and refer them for trial. d. Take additional evidence or to require the evidence to be taken. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 8

page 8 of 15

57. e. To order a new trial. 2. Subject to aforesaid, the appellate court shall have the same powers and shall perform as nearly as may be the same duties as are conferred and imposed by this Act on courts of original jurisdiction in respect of suites instituted therein.” Bearing this in mind, I will proceed to analyse the above issues. 1. Whether the learned magistrate erred in failing to ffnd that the appellant had proved his claim. 58. The law imposes a burden on a party who alleges to prove those allegations. This is the burden of proof which the obligation to prove one’s assertion. It is a legal standard that determines if a legal claim is valid or invalid based on the evidence. A person who asserts the existence of some facts bears the burden of proof. This is provided in our law under Section 107, 108 & 109 of the Evidence Act which provides: “ 107. 108. Burden of proof. (1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person. Incidence of burden. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side. 109. Proof of particular fact. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.” 59. There is legal burden of proof and evidential burden. In civil cases, the burden is on the person alleging existence of a fact. This burden may rest on different parties depending on the allegations they have made. The legal burden does not shift as it remains on the person making the allegation. 60. On the other hand, evidential burden initially rest with the person bearing the legal burden, but after such evidence is established, it will shift to the other party who will fail without further evidence. Thus, evidential burden may shift from one party to the other. 61. In Wilfred Nyawira Maina –v- Peterson Onyiego Gichana it was stated: “ I think the foregoing justifies a little rendition on evidential burden for further understanding of the decision of the court in this matter. The way I understand the law, the term burden of proof entails the legal burden of proof and evidential burden. The two terminologies are most of the time misunderstood, albeit distinct. I am concerned mostly with the evidential burden which initially rests upon a party bearing the legal burden but as the weight of the evidence given either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 9

page 9 of 15

62. See Halsbury’s Laws of England 4th Edition, Vol. 17. Therefore, the applicant must first lay prima facie evidence against the respondent. In simple terms, see Raila Odinga –v- IEBC & 3 others [2013] eKLR, Supreme Court that: “ A petitioner should be under obligation to discharge the initial burden of proof, before the respondents are invited to bear the evidential burden.” 63. Thus he who alleges must discharge the burden as well as the evidential burden, depending on the issue at hand, the evidential may shift to the other party. In this case, the appellant’s claim before the trial court was that the respondent had withdrawn a sum of Kshs. 360,000/= from his account. 64. The respondent was quick to admit that since money was withdrawn and quickly refunded Kshs. 60,000/= and disputed the balance of Kshs. 300,000/=. The appellant discharged the burden that indeed Kshs. 360,000/= was withdrawn. He discharged the legal burden. The 1st respondent urged the court to find that Kshs. 300,000/= was withdrawn by the appellant. 65. Section 112 of the Evidence Act provides: “ 112. Proof of special knowledge in civil proceedings. In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.” 66. The Section is to the effect that when any fact is within the knowledge of any party to those proceedings, the burden of proving or disapproving that is upon him. In George Mbiti Kiebia & Another –v- Isaya Theuri m’lintari & Another [2014] eKLR, the court stated that; “ Under Section 112 of the Evidence Act, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disapproving that fact is upon him… How the appellant got registered as proprietor of Land Parcel No. 70 is a fact within the personal knowledge of the appellant and it was incumbent upon the appellant ...” 67. The Court of Appeal in the case of Munyu Maina –v- Hiram Gathiha Maina [2013] KECA 94 KLR stated as follows: “ Under Section 112 of the Evidence Act when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disapproving that fact is upon him. How the respondent acquired title to the suit property is a fact within the personal knowledge of the respondent and it was upon the notion that the deceased father was beneficial owner of the suit property and to explain how the appellant to be in possession of a portion of the property.” 68. In this matter, the 1st respondent had the evidential burden to prove how the money was withdrawn from the account of the appellant. He had the burden to dislodge the notion that they mismanaged the appellant’s account, failed to secure his cash in the account and negligently allowed unauthorized withdrawals of cash from the account. 69. The 1st respondent sought to rely on a withdrawal voucher. This voucher was inadmissible as there was non-compliance with the law as the computer generated slip was not produced, signed by the appellant https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 10

page 10 of 15

evidencing the withdrawal. The withdrawal slip exhibits was inadmissible for failure by the respondent to comply with Section 106 B 4 of the Evidence Act provides as follows: “ 106B. Admissibility of electronic records. (1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied on optical or electro-magnetic media produced by a computer (herein referred to as "computer output") shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein where direct evidence would be admissible.” 70. The learned magistrate found that the voucher was a photocopy and it was contention that it was an electronic record which according to DW-1 was sent from head office through email. It was therefore required to comply with Section 106 B (4) of the Evidence Act in terms of production of a certificate. 71. The learned magistrate held that the voucher was in admissible. The voucher exhibit D8 was inadmissible in evidence and I find that it could not be relied on to prove that the appellant withdrew the money. 72. The DW – 1 received the complaint and investigated the allegation and found that Kshs. 60,000/= was withdrawn from the appellant’s account and it was refunded. Even without venturing into how Kshs. 300,000/= the appellant did prove on a balance of probabilities that there were illegal and unauthorized withdrawals from the account. 73. In civil matters, prove is on a balance of probabilities and that standard of proof was achieved by the appellant. That notwithstanding, the learned magistrate found that there were no conclusive investigations on the withdrawal of Kshs. 300,000/= or none was provided to the court especially on the signature on the withdrawal voucher or whatever document was used to withdraw the amount. 74. He went on to say going by the evidence on record it can’t be said for certain whether it was the plaintiff who withdrew the amount or somebody else who impersonated him and forged his signature. That without that question being settled it was difficult to place liability on the respondent. 75. The learned magistrate erred in fact and law by failing to find liability on the respondent even after saying that there were no conclusive investigations. The evidential burden was on the respondent and had the burden to prove as to who withdrew the funds as it was not in dispute that Kshs. 360,000/= was withdrawn from the appellant’s account. 76. The respondent had the means to produce a computer generated voucher. The respondent had various ways to show, how the money was withdrawn, who was the bank officer who was at the counter, the bank had CCTV camera. It could have verified the signature. This, it did not. The conduct of the respondent refunding Kshs. 60,000/= leaving Kshs. 300,000/= which was a substantial amount shows that there is truth in the appellant’s allegation. 77. It is trite law that where a party holds evidence which is in his hands, leads to an adverse inference that had the evidence been produced it would have been adverse to the respondent’s case. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 11

page 11 of 15

78. In the case of Kimotho –v- KCB [2003] 1 E.A 108 the court held that, “adverse inference should be drawn upon a party who fails to call evidence in his possession. Failure by the appellant to testify only means one thing had the appellant or his driver testified the evidence would have adverse to them.” 79. Adverse inference is a legal principle wherein a court draws negative inference from the absence or withholding of evidence by a party. The record shows that when the respondent (DW – 1 -) was cross-examined, he stated that exhibits was a copy of the original and there was a possibility of having he original scanned copy or a copy of the original one. The DW – 1 – did not have a report of the investigations. There was evidence in the hands of the respondent which was withheld. 80. The inference is drawn that the evidence would have been adverse to them. The DW – 1- witness admitted that the complaint was that Kshs. 360,000/= was withdrawn from the appellant’s account. They refunded Kshs. 60,000/= in lieu of the huge amount. There were discrepancies on the dates the amount was withdrawn. That is 26/6/2018 but stamped on 28/6/2018. 81. The learned magistrate erred in fact and law by failing to find that the plaintiff proved that money was withdrawn from his account and shifting the evidential burden on the appellant. The burden was on the respondent to prove how the money was withdrawn from the account and they did not discharge that burden as they relied on inadmissible evidence 82. The 1st respondent is the custodian of all records of transactions made by its customers and could not have failed to know how the Kshs. 300,000/= was withdrawn. The respondent had the burden of proving or disapproving the claim by the appellant. The appellant proved on a balance of probabilities that Kshs. 360,000/= was illegally withdrawn from his bank account. 83. The appellant proved the allegation of fraud, negligence and illegalities by the 1st respondent which led to loss of Kshs. 300,000/=. In Co-operative Bank of Kenya –v- Parsaloi Lasoi [2019] eKLR it was held: “ In the light of the facts of this case, it was incumbent upon the appellant to leave no stone unturned in a bit to determine who withdrew the money in question … The appellant did not offer any credible evidence, it remained an allegation which was not proved on a balance of probabilities.” 84. In Kenya Commercial Bank –v- Shalimar Flowers Self Help Group [2018] eKLR (Court of Appeal) it was held: “ Bearing all the above in mind, it is our finding that on the record, the respondent discharged its burden of proof on its assertions that withdrawals from the savings account were unauthorized as the appellant failed to tender evidence through its employees who handled the impugned transactions to shed light on how the transactions were undertaken. We appreciate the requirement in Section 143 of the Evidence Act that no number of witnesses is required to prove a fact unless provided for to that effect by law. Further, that an adverse inference for the failure to tender a witness or evidence is only permissible where there is demonstration that a party against whom such inference is intended to be drawn had reason to believe that, had the evidence not tendered been called for, the same would have been adverse to its case. In our view, allegations of breach of contractual obligation; failure to exercise due care, diligence and good faith levelled against the appellant, called for evidence in rebuttal. None were called. Neither was any explanation given by the appellant for this omission. The only reasonable inference that can be drawn from that omission, in our view is that had that evidence been tendered, it would have been adverse to its case.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 12

page 12 of 15

85. The appellant discharged the burden of proof and the respondent admitted that he was holding money in appellant’s account and that money was stolen from the appellant’s account. The respondent was the custodian of all the records. The learned magistrate erred by exonerating the 1st respondent from liability when the allegations the by the appellant were proved. 86. I find that the appellant has proved liability against the respondent as it breached the contractual obligation and fiduciary relationship and exposed him to loss and damage. On grounds 5 & 6 87. The appellant demonstrated that there were discrepancies on the bank statement held by the appellant and those held by the respondent. These are shown at page 190 and page 203. These discrepancies demonstrate that the ability to reduce the loan balance was affected. The appellant demonstrated that respondent mishandled the appellant’s account and breached the fiduciary duty to the appellant. In Equity Bank & Another –v- Robert Chesang [2016] eKLR it was held: “ I also find that the appellant was in breach of the contract it had with its customer, the respondent, to honour the use of ATC Card which was a contractual relationship infirmed by fiduciary nature of customer/bank relationship where the bank should not expose the customer to injury that is foreseeable. The bank/customer relationship is based on the utmost good faith. The bank is also under a contractual duty to diligently handle the accounts of a customer. Any deviation form that understand without justifiable reasons which should be communicated to the customer well in advance or immediately, the bank is in breach of a contract with the customer and is liable in damages.” 88. On the issue of the statutory notice, it is the right and mandate donated by law to a lender to sell a charged land (security) upon default by a borrower without seeking the intervention of the court. The cornerstone of this right is pegged on the right to property as enshrined in the Constitution. 89. The procedure for realizing the security is provided under the Land Act and has to be complied with as failure to do so may lead to the whole process being invalidated. Section 90 of the Land Act has three requirements – a. The nature of and the extent of default in clear and discernible language. b. If the default is on money, the amount owing and the repayment period which must be not less than three (3) months after service. c. If the default is on non-performance of a term, the rectification act and the time, being not two months after service. d. The consequence of default is not rectified within this period. e. The right of the borrower to seek relief from the court against the exercise of this power. 90. In the event that the borrower does not comply with the notice, the lender shall proceed to issue the second notice. This notice is issued under Section 96 of the Land Act. This is the statutory notice of sale. The lender issues a notice of the intention to sell the charged property and shall be served on the borrower. 91. The lender shall not sell the property charged until forty days have lapsed from the date of service of that notice. The rule provides for a third notice under Rule 15 (d) of the Auctioneers Rules which is the Redemption Notice. It requires that the Auctioneer who is instructed by the lender to sell the property https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 13

page 13 of 15

is supposed to give the borrower a notice in writing if not less than forty-five (45) days within which the owner may redeem the property by payment of the amount set forth in the letter of instruction. 92. The purpose of this notice is to give the borrower an opportunity to redeem the property by way of paying all the liabilities as captured in the notice. The appellant faults the court for failing to find that he notices were defective despite the fact that respondent admitted that they were faulty. 93. He refers court to Notice dated 14/1/2019 had indicated land parcel No. Abogeta/U-Kathangari/2048 and 2335 is alleged to belong to Grace Sisian Taipane. The notice at page 126 gives the arrears as Kshs. 233,229.79 and loan balance Kshs. 2,600,904.15 but the statement says it is Kshs. 35,333.19. That 7/7/2019 was a Sunday, posted on 3/7/2019. That the notice dated 7/7/2019 was not served and there was none compliance with procedural requirements. 94. That the notice of sale issued by the auctioneer captured Land Parcel No. 2355 and not 2335. On the notice dated 19/9/2019 at page 130 here was a discrepancy on the loan balance showing a difference of Kshs. 51,708.20. 95. The appellant demonstrated that the notice issued had some defects. I have considered the submissions. I am of the view that the discrepancies were minor. There was compliance with the law with regard to service of the statutory notice. The requirement of service on the defaulter is to give him time to deal with all matters in the notice before the date of sale. 96. A court of law would be reluctant to prevent the exercise of the statutory power of sale which is the remedy acquired by virtue of the charge which was created over the suit property. The court would intervene if there no basis for the chargee to exercise the power of sale or is meant to oppress the chargor or the chargee did not have such power in the first instance. 97. Under Section 96 of the Land Act the charge is given power to sell the charged property if there is default and the charger has not rectified the default during the period of the notice. The discrepancies pointed out are minor. The appellant was served with the notices and power of sale by the respondent accrued. 98. I find no reason to interfere with the findings of the learned magistrate on this issue. Whether the appellant is entitled to damages 99. I have pointed out that the appellant proved that the respondent breached its contractual duty it had with the customer to prevent loss of funds held in its account with the respondent. The relationship between the bank and its customer is of fiduciary nature based on utmost good faith. The respondent in a relationship of bank customer has a duty to diligently handle the account which the customer operates and to ensure that funds deposited in the account are safe and are available to the customer at all times. 100. Failure by the respondent to comply with such duty is negligent and a breach of bank/customer contractual relationship which is of fiduciary nature and the respondent is liable to compensate the customer for damages and loss suffered. I find that the appellant is entitled to damages. 101. I have considered the case of Peter Mathenge Gitonga –v- Kenya Commercial Bank Ltd, Odunga, J. as he then was where he awarded Kshs. 3,000,000/=. In this case, the respondent lost Kshs. 300,000/= which was meant to clear one instalment. The bank refunded Kshs. 60,000/=. The appellant had to sell his land and due to the amount withdrawn unlawfully from his account, his property was advertised for sale. Taking this into account, I order that the Kshs. 300,000/= be deposited in his account by the https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 14

page 14 of 15

respondent with interest from date of filing the suit to the date of judgement and general damages of Kshs. 4,000,000/= 102. I award the appellant the costs of the suit. DATED, SIGNED AND DELIVERED AT KITUI THIS 14TH DAY OF OCTOBER, 2025. HON. LADY JUSTICE L. GITARI JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19561/eng@2025-10-14 15

page 15 of 15