Onyoni v Kenya Commercial Bank Limited (Claim E3869 of 2024) [2025] SCC 64 (KLR)

Further, the Claimant averred that despite reporting the alleged fraud to the Respondent, the Respondent failed to refund her the lost money, hence this claim. The Respondent responded to this claim through a Response to Statement of Claim dated 17th September 2024, denying owing the Claimant any money. The Respondent pleaded that the impugned transactions were authorized by the Claimant’s mobile phone number 0722880444 linked to the Claimant’s account, since for any online card transaction to be completed from the Claimant’s account, a One Time Password (OTP) would be sent to the said Claimant’s mobile phone number for authorization. The Respondent added that since there was no SIM swap of the Claimant’s phone number 0722880444 at the time of the impugned transactions, the impugned transactions occurred as a result of the Claimant’s negligence. Therefore, the Respondent urged this court to dismiss this claim with costs. The evidence placed before this court is summarized below. Claimant’s case CW1 Zipporah Onyoni adopted her witness statement dated 08th August 2024 as her evidence in chief. Her testimony was that on 01 st March 2024, she received a call from number 0202505070 from a person who introduced herself as a member of staff from Kenya Commercial Bank (KCB) - Moi Avenue branch, who wanted to increase her daily ATM cash withdrawal limit.

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While still talking to that person on the phone, she received two messages on her phone showing she had made withdrawals of Kshs. 99,000/= and Kshs. 97,500/= from her account. She reported the incident to the Respondent’s Kisumu branch and the Banking Fraud Investigations Unit. She maintained that the impugned transactions were a result of a breach of a duty of care that the Respondent owed her, and a conspiracy between the Respondent’s employees and other persons. On cross-examination, she admitted that she was in control and possession of her phone number during the transactions, and that her phone number 0722880444 is linked to her bank account. She admitted receiving OTPs on her phone for the two transactions. She also stated that she only used passwords to initiate her mobile banking transactions. She added that she did not use the OTPs sent to her phone on the date of the disputed transactions, and that she did not share those OTPs with anyone. She produced the documents listed in her list of documents dated 08th August 2024 as exhibits. Respondent’s Case RW1 Grace Katavi Ireri; a fraud analyst at KCB, adopted her witness statement dated 17th January 2025 as her evidence in chief. Her testimony was that she investigated the Claimant’s complaint regarding the impugned transactions together with her colleague one Peninah Tangut.

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Her evidence was that the transactions in question were not above the Claimant’s daily limit since those transactions were not ATM withdrawals. She attributed the impugned transactions to the Claimant’s negligence, which cannot be blamed on the Respondent. She added that when the OTP is sent to a customer’s phone number, the Respondent’s staff cannot see the OTP from the back end. She testified that the Respondent could not recover the Claimant’s money sent to KCB Vooma accounts since the funds had been transferred immediately after the disputed transactions. She reiterated that the disputed transactions emanated from the Claimant’s phone number linked to her bank account, given that there was no SIM swap of the Claimant’s phone number. She added that the Respondent’s banking systems were not porous. She produced the Forensic Report dated 29th May 2024 as an exhibit. ANALYSIS & DETERMINATION This court has duly considered all the pleadings, evidence, submissions, as well as authorities placed before it. It is not contested that the Claimant and the Respondent had a banker/customer relationship at the time of the disputed transactions that led to the loss of the Claimant’s Kshs. 196,000/=.

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A bank’s duty of care to its account holders was aptly described in United Rubber Estate Ltd -v- Cradock (No.3) [1968] 2 ALL ER 1073 cited with approval in Equity Bank of Kenya & Another v Robert Chesang [2016] eKLR, the court stated as follows regarding the duty of care a bank owes its customers:“A bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to operations with its contracts with its customers. The duty to exercise reasonable care and skill extends over the whole range of banking business within the contract with the customer. Thus, the duty applies to interpreting, ascertaining and acting in accordance with the instructions of the customer.” In Co-operative Bank of Kenya Ltd v Biwott (Civil Appeal 18 of 2019) [2022] KEHC 9946 (eKLR), the court stated:“The bank-customer relationship is contractual in nature and imposes a duty on the bank to exercise reasonable care and skill in its dealings with the customer … A bank has a duty under its contract with its customer to exercise “reasonable care and skill” in carrying out its part with regard to operations within its contract with its customer. The standard of that reasonable care and skill is an objective standard applicable to bankers. Whether or not it has been attained in any

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particular case has to be decided in the light of all the relevant facts, which can vary almost infinitely.” A reading of the authorities above shows that the Respondent owed the Claimant a duty of care to ensure that the Claimant’s funds are in safe custody, and that the Respondent only acts on the Claimant’s instructions on withdrawal of funds from the Claimant’s bank account. In determining this claim, this court is reminded that the burden of proof always lies on the person who alleges. The Court of Appeal dealt with the question of the onus of proof in Mbuthia Macharia v Annah Mutua Ndwiga & another [2017] eKLR and stated; “The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the Appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift" to the party who would fail without further evidence?” The Claimant based her claim on allegations of negligence, collusion and fraud against the Respondent. Regarding negligence, the court in Kiema Mutuku vs Kenya Cargo Hauling Services Ltd (1991)eKLR held that :

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“there is as yet no liability without fault in the legal system in Kenya, and a plaintiff must prove some negligence against the defendant where the claim is based on negligence…..” On fraud, the Black’s Law Dictionary defines fraud thus: “Fraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right, or in some manner to do him an injury. As distinguished from negligence, it is always positive, intentional. Fraud, as applied to contracts, is the cause of an error bearing on a material part of the contract, created or continued by artifice, with design to obtain some unjust advantage to the one party, or to cause an inconvenience or loss to the other. Fraud, In the sense of a court of equity, properly includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence justly reposed, and are injurious to another, or by which an undue and unconscientious advantage is taken of another’. This court is reminded that where a charge of fraud is intended, the particulars of fraud must be pleaded and particularized as stated in Vijay Morjaria vs Nansingh Madhusingh Darbar & Another [2000] eKLR, where Tunoi, JA. (as he then was) stated as follows:

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“It is well established that fraud must be specifically pleaded and that particulars of the fraud alleged must be stated on the face of the pleading. The acts alleged to be fraudulent must, of course, be set out, and then it should be stated that these acts were done fraudulently. It is also settled law that fraudulent conduct must be distinctly alleged and distinctly proved, and it is not allowable to leave fraud to be inferred from the facts.” [Emphasis added]. At page 427 in Bullen & Leake & Jacobs, Precedent of pleadings 13th Edition quoting with approval the cases of Wallingford v Mutual Society (1880) 5 App. Cas.685 at 697, 701, 709, Garden Neptune V Occident [1989] 1 Lloyd’s Rep. 305, 308, Lawrence V Lord Norreys (1880) 15 App. Cas. 210 at 221 and Davy V Garrett (1878) 7 ch.D. 473 at 489 it is stated that:“Where fraud is intended to be charged, there must be a clear and distinct allegation of fraud upon the pleadings, and though it is not necessary that the word fraud should be used, the facts must be so stated as to show distinctly that fraud is charged. The statement of claim must contain precise and full allegations of facts and circumstances leading to the reasonable inference that the fraud was the cause of the loss complained of (see). It is not allowable to leave fraud to be inferred from the facts pleaded and accordingly, fraudulent conduct must be distinctly alleged and as distinctly proved (|). “General

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allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any court ought to take notice”.(Emphasis added) The standard or burden of proof where fraud is alleged in civil matters has been held in decided cases to be higher than the ordinary standard of balance of probabilities but lower than beyond reasonable doubt. (See Kinyanjui Kamau v George Kamau Njoroge (2015) eKLR; Bruce Joseph Bockle v Coquero Ltd (2014) eKLR). Having fully appreciated what negligence and fraud entail, this court is of the considered view that the only issue for determination is whether the Claimant proved to the required standards that the Respondent breached the duty of care it owed her through acts of negligence and fraud. It is worth noting that the Claimant did not plead the particulars of negligence and fraud that she was attributing to the Respondent. Despite the want of particulars of negligence and fraud in the Claimant’s pleadings, this court, cognizant of the relaxed rules of procedure and evidence in the Small Claims Court, will still proceed to determine whether the Claimant proved to the required standards the particulars of negligence and fraud attributed to the Respondent. It is common ground that the Claimant linked her mobile phone number 0722880444 to her account number 1134293038 held at the Respondent’s

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Moi Avenue branch. It is also common ground that the Claimant received OTPs of the disputed transactions through her phone number 0722880444. The Claimant’s evidence was that the disputed transactions occurred while she was on a call with a person who called her using 0202505070 pretending to be an employee of KCB Moi Avenue branch. The Claimant did not provide proof of ownership of the number that called her on the date of the incident. The Respondent, on the other hand, placed before this court all its customer care phone numbers. None of those customer care numbers matched the number that called the Claimant on the date of the incident. Had the Claimant proved that the number that called her on the date of the disputed transactions belonged to the Respondent’s member of staff, that would have established a prima-facie case of collusion, negligence and fraud against the Respondent. Further, the Claimant did not place before this court any evidence to show that whoever called her on the date of the incident accessed her contact details and account number details from the Respondent or the Respondent’s agent and/or servant before engaging the Claimant on the phone over her banking details.

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The Respondent distanced itself from the alleged negligence and fraud on its part through RW1’s testimony and a Forensic Report dated 29 th May 2024. That report detailed how the disputed transactions took place. This court is well aware of the general rule that an expert report is an opinion that is not binding on this court, and that this court can depart from the opinions of an expert if good reasons exist. Whereas the Claimant submitted that RW1 was not qualified to conduct the fraud investigations that she conducted, the record shows that RW1’s testimony that she had two years of working experience as a fraud analyst and that she held certifications in fraud investigations was not controverted by the Respondent. The foregoing shows that the contents of the report that RW1 placed before this court were not impeached by the Claimant in any way whatsoever. In the absence of another fraud analysis report contradicting the Respondent’s fraud analysis report, and in the absence of reasons to depart from the fraud analysis report on record, this court finds no reason to ignore the findings in that report. The Claimant admitted that she received the OTPs for the disputed transactions on her mobile phone number linked to her account. The receipt of those OTPs shows that the disputed transactions were initiated by the Claimant’s phone number.

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Given that the disputed transactions were mobile banking transactions where the bank identifies its customer through a mobile phone number linked to the customer’s account, the Respondent’s only duty of care to the Claimant was to confirm whether those transactions emanated from the phone number linked to the Claimant’s phone number, nothing more. This court is well aware that the Claimant disputed initiating the disputed transactions. The Claimant also maintained that she was in possession of and in control of her mobile phone during the disputed transactions. However, no evidence was placed before this court by the Claimant to show that those disputed transactions were a result of negligence and fraud by the Respondent or the Respondent’s agent and/or servant. This court takes judicial notice of a matter of public notoriety that scammers can remotely control a mobile phone in the custody of another person through phishing scams or social engineering and remote access scams. Therefore, in the absence of adequate evidence to prove fraud and negligence on the part of the Respondent, the only logical conclusion to be drawn in this case is that an unknown person remotely accessed and controlled the Claimant’s phone by initiating and completing the disputed mobile banking transactions. That being the case, the Respondent’s duty was to simply execute the instructions from the Claimant’s phone number linked to her account number (see Philipp vs Barclays Bank UK PLC [2023] UKSC 25). This case is almost on

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all fours with the case of Stanbic Bank Kenya Limited v Simba (Civil Appeal E114 of 2022) [2023] KEHC 22277 (KLR) where the court stated: “…the bank can only carry out transactions based on the instructions of the customer and that the Bank has the primary duty to honour the customer’s instructions and make payment in accordance with the mandate of the customer. I am persuaded that, as averred by the Appellant, once it received a request to transfer funds from the Respondent’s phone number via mobile banking and proceeded to transfer the same to the recipients’ phone numbers, the Appellant did not breach its statutory duty of care as envisioned by the Banking Act. I also note from a careful consideration of the record; the allegation of fraud has not been proved as no material was placed before the court to support the allegations. If there was fraud involved, the Appellant bank did not know as it was simply carrying out the instructions of its customer, in the usual manner…” Regarding the failure to recover the money lost, RW1 stated the steps the bank took in trying to recover the Claimant’s money immediately after the Claimant lodged her complaint. There is nothing much the bank would have done since the recipients of the Claimant’s lost money withdrew the money from their Vooma accounts. The long and short of it all is that the evidence placed before this court by the Claimant was barely adequate to prove collusion, negligence, and fraud

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on the part of the Respondent or the Respondent’s agents or servants in initiating and completing the disputed transactions. DISPOSITION The upshot of the foregoing is that this claim is dismissed with costs of Kshs. 20,000/= to the Respondent. Judgment accordingly. File closed. Read, signed, and delivered in open Court at Bungoma this 02 nd day of September 2025 T.O. OMONO ADJUDICATOR In the presence of: C/A: Rioba Mr. Opini for the Claimant Ms. Nekesa for the Respondent

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