EQUITY BANK KENYA LIMITED VS THERESA WANZA KIMANTHI

1. This is an appeal arising from a judgment of the Small Claims Court delivered on 27th July 2022. The respondent herein was the claimant at the small claims court. She sought judgment against the appellant for Kshs. 68,657/=. The dispute arose out of a loan facility that was granted to the respondent by the appellant, following an application dated 27th March 2015. The facility was for Kshs. 200,000/= repayable over a period of 18 months.  The amount was credited to the respondent’s account on 7th April 2015. The respondent’s case was that as at 7th November 2015 the outstanding amount was Kshs. 137,387/=. On the same date she deposited an amount of Kshs. 138,000/= which she stated was sufficient to repay the loan in full and final settlement.

2. Subsequently, the respondent avers that on 13th May 2020 she deposited a further Kshs. 70,000/= to account number 0390179660187. The appellant without her authorization deducted Kshs. 68,657/= to allegedly offset the loan she had taken with the bank. The respondent’s position was that she had already cleared the previous loan and the appellant was wrong to deduct the amount from her account.

3. On its part the appellant averred that the respondent defaulted in repayment of the loan and that as at 5th September 2018 the amount outstanding was Kshs 68,657.12. The appellant claims that the amount was deducted from the respondent’s bank credit as provided for in clause 11 of the lending contract which both parties executed.

4. The adjudicator entered judgment in favour of the respondent stating that the appellant, being the service provider, was under an obligation to inform the claimant on how she would clear her loan.

5. Aggrieved by the said judgment, the appellant lodged this appeal citing the following grounds;

i. THAT the Adjudicator erred in law in rewriting the terms of the contract between the appellant and respondent;

ii. THAT the Adjudicator erred in law by giving probative value to unsupported and challenged oral evidence.

iii. THAT the Adjudicator erred in law in disregarding the principles of natural justice, particularly, by disregarding the appellant's case.

iv. THAT the Adjudicator erred in law in finding that the respondent had attained the evidentiary burden of a balance of probability.

v. THAT the Adjudicator erred in law in shifting the burden of proof to the appellant.

vi. THAT the Adjudicator erred in law by awarding the respondent costs as opposed to disbursements only when the respondent appeared in person at all times.

vii. THAT the Adjudicator erred in law in making a determination that was not supported by relevant facts, evidence and authorities and overly against the weight of the evidence before the Honourable Court.

6. The appellant seeks the following orders; -

i. That the judgment delivered 27th July, 2022 in favour of the claimant/respondent be quashed and set aside and be substituted with an order dismissing the claimant/respondent's case with costs to the respondent/appellant.

ii. The order made by the learned Adjudicator in the small claims court in regards to costs be set aside.

iii. The Appellant be awarded costs of this appeal.

7. The appellant challenged the respondent’s testimony at the trial court where she stated that she had cleared the entire loan amount. The appeal was not opposed by the respondent.

8. I have considered the record of appeal, submissions filed by counsel for the appellant as well as all supporting documents. I am aware of the duty of this court to examine matters both of law and facts and subject the whole of the evidence to a fresh and exhaustive scrutiny, drawing its own conclusions from that analysis and bearing in mind that the court did not have an opportunity to hear the witnesses first hand. This was as stated in Selle v Associates Motor Boat & Co [1968] EA 123.

9. It is not disputed that the appellant advanced a facility to the respondent for Kshs. 200,000/=. I have also perused the evidence presented before the court. The certified bank statement issued by the appellant for the period 28th September to 6th June 2016 and produced by the respondent (p 43 of the Record of Appeal) confirms the deposit of Kshs. 138,000/= made on 7th November 2015.

10. There is also evidence that as at 7th November 2015 the loan account stood at Kshs. -137,387/= as stated by the appellant.

11. The respondent’s testimony was that the amount of Kshs. 138,000/= was deposited with the appellant with an aim of offsetting the amount owed to the bank. It would however appear that instead of the appellant deducting the entire amount of Kshs 138,000/=, the deductions from the loan account continued being periodic which in turn increased the interest payable. On 5th September 2018 the appellant then purported to exercise its rights to deduct the amount of Kshs. 68,657.12 from the respondent’s credit.

12. The letter dated 6th December 2018 corroborates the respondent’s facts. The respondent wrote to the appellant demanding an explanation over the alleged arrears. This letter was responded to by the appellant on 5th September 2019 promising to look into the issue but instead of doing so, the appellant went ahead to deduct the deposit amount of Kshs.68,657.12, in total disregard of earlier instructions that the respondent had given.

13. In the case of Abu Chiaba Mohammed v Mohammed Bwana Bakari & 2 Others [2005] eKLR the court held that:

“………no man can be allowed to rely on his own wrong to defeat the otherwise valid claim of another man……he cannot be allowed to take advantage of his wrong……..the law will not and cannot permit such a party to rely on his own wrong to defeat an otherwise valid petition.”

14. From the foregoing, the bank cannot therefore be allowed to benefit from the harm inflicted on the respondent. The intention of the respondent is clear that the she wished to settle the loan in full and therefore the Kshs. 138,000/= ought to have been deducted at once. The bank had a duty to exercise reasonable care and skill in its dealings with the customer and particularly in ,carrying out the instructions of the customer.

15. In Karak Brothers Company Ltd v Burden [1972] All ER 1210, the Court observed as follows:

[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 particular case has to be decided in the light of all the relevant facts, which can vary almost infinitely.

16. In the upshot, I find no merit in the appeal and the same is dismissed with costs to the respondent. The court upholds the judgment of the small claims court delivered on 27th July 2022 by Honourable Caroline Ndumia.