The three matters herein were consolidated by Honourable Justice J.W. Mong’are on 18-10-2023. The plaintiff in case number E076 of 2019 is a proprietor of the plaintiff in case number E078 of 2019 and a director in the plaintiff in case number E079 of 2019. All the suits are predicated on disclosure of the plaintiff’s bank account statements for the plaintiffs’ respective accounts held at the defendant bank to the Kenya Revenue Authority (hereinafter referred to as ‘KRA’) and Ethics and Anti-Corruption Commission (hereinafter referred to as ‘the EACC’). The common prayers in all the suits are a declaration that the defendant had an obligation not to divulge information in respect of the plaintiffs’ respective accounts to third parties and general damages for violation of rights to privacy. The accounts in question were;
For suit number E076 of 2019- account number 098xxxxxxx938.
For suit number E077 of 2019- account number 029xxxxxxx121.
For suit number E078 of 2019- account number 098xxxxxxx914.
The plaintiff’s case
The plaintiffs’ common witness in all the matters who was the plaintiff in case number E076 of 2019 told the court that in February 2019, he was summoned by Kenya Revenue Authority in Kisumu to be questioned on tax issues where the officer proceeded to print statements for the plaintiffs’ bank accounts in his presence. He questioned the officer where they had gotten the statements from but no explanation was given to him. He stated that he had been a manager of the defendant’s branch in Homabay before he left in 2017 and he was aware that a bank is not supposed to share a customer’s statement without the customer’s consent or a court order.
He added that on 29 th March 2019, he was summoned by EACC in Homabay for questioning about some works he had done for County Government of Homabay and the County Assembly of Homabay where they also produced six years’ statements for the same bank accounts which were printed from their system. He added that the fact that the statements were being printed from the EACC’s computers meant that they could be shared to anyone.
It was his further testimony that, KRA and EACC could not give proper answers on how they got the statements for a long period of six years and that before he filed the suit, he questioned the defendant’s manager who told him that he was not aware of the disclosure and he discovered that they were shared by the Kisumu branch manager. He added that the branch manager in Kisumu could not produce a court order. He added that the plaintiffs felt betrayed because the disclosure resulted to various court cases which would not have been instituted had the defendant not shared the information.
In cross-examination, the witness stated that the plaintiffs’ advocates wrote demand letters to the defendant who gave unsatisfactory response. He insisted that KRA did not have a court order to access the plaintiffs’ bank accounts and the Section of the law the KRA relied on to request for the statements was not applicable and that the EACC had not served any warrants to investigate any of the accounts because the warrants they alleged to rely on came in April 2019 and they were to granted to KRA but EACC only. He admitted that there was no evidence that the information was shared to any person other than EACC and KRA. He stated that he felt that his life was in danger due to the statement being online.
The witness produced the following exhibits;
For suit number E076 of 2019;
Statement for bank account number 098xxxxxxx938 in the name of the plaintiff running from 5-11-2013 to 9-02-2018.
Demand letter dated 5-03-2019
Defendant’s letter dated 13-03-2019.
The list of documents in this matter mentioned the defendant’s certificate of incorporation and letter dated 13-03-2019 but the same were not attached.
For suit number E077 of 2019;
Statement for account number 029xxxxxxx121 in the name of the plaintiff running from 6-01-2014 to 11-06-2016.
Demand letter dated 5-03-2019.
Defendant’s letter dated 13-03-2019.
For suit number E078 of 2019
Certificate of registration for Damila Enterprises dated 8-10-2012.
Bank statement for account number 098xxxxxxx914 for Damila Enterprises for the period 24-03-2014 to 3-12-2015.
Letter dated 5-03-2019.
The list of documents in this matter mentioned the defendant’s letter dated 13-03-2019 but the same was not attached.
The defendant’s case
The defendant’s witness was one Dominic Bulimo Kisonzo who stated that he was an operations manager with the defendant’s Kisumu branch. He admitted that the plaintiffs were the defendant’s customer holding the respective accounts in question.
He told the court that in respect of case number E076 of 2019, the bank received a request from KRA on or about 11-12-2018 asking for information under Sections 58 as read together with Section 3 and previous Section 59(4) of the Tax Procedures Act upon which it shared banking records and account statement.
In respect of case number E077 of 2019, the witness stated that the bank got request for KRA and it did not share the information of the account with EACC as no request came from them in respect of the said account. He also stated that there was a warrant to investigate the account dated 12-04-2019 which was served to the bank on 15-04-2019 and that is the point the information was shared with EACC.
About E078 of 2019, the information was shared with KRA upon receipt of request from them. He also added that there were warrants in the Chief Magistrate’s Court criminal miscellaneous application number 1271 of 2019 received by the bank on 21-03-2019 which related to several accounts. He maintained that the information for this account was shared upon receipt of the warrants from the court. The witness also denied sharing any of the above information to third parties other than the EACC and KRA.
He procured the following documents.
For suit number E076 of 2019;
Letter from KRA dated 10-12-2018.
Warrant in Milimani Chief Magistrate’s Court miscellaneous criminal application number 1618 of 2019 dated 12 th April 2019.
The defendant’s letter dated 13-03-2019.
For suit number E077 of 2019
Letter from KRA dated 10-12-2022.
Defendant’s letter dated 13-02-2019.
For suit number E078 of 2019;
Letter from KRA dated 10-12-2018.
Warrant in Milimani Chief Magistrate’s Court miscellaneous criminal application number 1271 of 2019 dated 12 th April 2019.
The defendant’s letter dated 13-03-2019
In cross-examination, he stated that the information was shared from the defendant’s head office. He added that the accounts were opened in Homabay and had no document to show that they were transferred from there to Kisumu. He was not able to confirm the date when the information was shared or whether the same was shared in hard or soft copies. He also stated that he was not aware that the plaintiffs were complaining that the information was shared before the warrants were issued and insisted that in E077 of 2019, the information was shared with KRA and not EACC and that the sharing was done as per the Tax Procedures Act.
Analysis and determination
The parties filed submissions which I have read and considered. From the submissions, the testimony of the witnesses and exhibits produced by the parties, there is no dispute that the plaintiffs held the accounts in question in the defendant bank. It is also common ground that the defendant shared and disclosed the accounts’ statements to the KRA and EACC. It is also agreed that the disclosure to the KRA were done without the consent of the plaintiffs and court warrants. In my analysis and opinion, the issues in contention and which I need to settle are;
Whether the defendant breached its fiduciary duty not to disclose financial affairs and information about the plaintiffs without their consent.
Whether the disclosure of the affairs was in breach of the plaintiffs’ constitutional right to privacy.
Whether the plaintiffs are entitled to damages.
Who should bear the costs of the suits?
It is trite and indeed indisputable that a bank owes a fiduciary duty to its customers to keep information held by it in relation to the business between the two in confidence and that duty demands that the bank should not disclose the financial and other private information and data to third parties without the consent of the customers unless to the extent only as the law may demand or compel. Article 31 of the Constitution prohibits private information relating to private affairs of a person being unnecessarily required or revealed.
The defendant in this matter does not deny that it disclosed and shared information and statement in respect of the plaintiffs’ accounts to KRA and EACC. Their explanation for that is that the same was done under compulsion of the law in that Section 59 of the Tax Procedures Act required it to provide the information to KRA once the same were demanded. I agree with the submissions of the defendant that the fiduciary duty is limited by factors as held in the celebrated case of Tournier vs National Provincial and Union Bank of England (1924) CA and expounded in Kazuri 2000 Limited v Kenya Commercial Bank (2024) KEHC 6971 (KLR) thus;
‘In the cerebrated English case of Tournier vs National Provincial and Union Bank of England [1924] 1 KB 461 the Court was emphatic that in the relationship between a bank and a client, there is implied contract term not to disclose the client’s information subject to legal exceptions only, as per Bankes L.J stated thus:
“In my opinion it is necessary in a case like the present to direct the jury what are the limits and what the qualifications of the contractual duty of secrecy implied in the relation of banker and customer. There appears to be no authority on the point. On principle I think that the qualifications can be classified under four heads:
Where disclosure is under compulsion by law;
Where there is a duty to the public to disclose;
Where the interests of the Bank require disclosure;
Where the disclosure is made by the express or implied consent of the customer.”
If I understand the defendant well, its argument is that the disclosure complained of was under compulsion of the law pursuant to Sections 58 and 59 (1), (2) and (3) of the Tax Procedures Act. The plaintiffs argue that that Section 59(4) which the defendant relied on in sharing the information had been found unconstitutional by the High Court in Robert K. Ayisi v Kenya Revenue Authority & another (2018) KEHC 6948 (KLR). I have looked at that case and it is indeed true that the said Section was declared unconstitutional by Honourable Justice G.V. Odunga in a judgment dated 16-05-2018 read by Justice J.M. Mativo. In my research and enquiries, I got information that the judgment was either set aside or stayed by the Court of Appeal sometime in 2020 but I have been unable to get the Court of Appeal decision.
The defendant has not contested the fact that the Section was declared unconstitutional. Instead, the defendant has submitted that, even with that declaration, Sections 58 and 59(1), (2) and (3) of the Act cover their trail as they require them to disclose upon demand by the KRA. These Sections provide as follows;
58. Power to inspect goods, records, etc.
1. Notwithstanding anything to the contrary in any written law, an authorised officer may inquire into the affairs of a person under any tax law, and shall at all times have full and free access to all lands, buildings, places to inspect all goods, equipment, devices and records, whether in the custody or control of a public officer, or of a body corporate or of any other person, and may make extracts from or copies of those records.
An officer acting under subsection (1) may require the owner or employee,
or a representative of the owner of the business, to give him all assistance
and to answer all questions relating to the inquiry.
59. Production of records
1. For the purposes of obtaining full information in respect of the tax liability of any person or class of persons, or for any other purposes relating to a tax law, the Commissioner or an authorised officer may require any person, by notice in writing, to-
(a) produce for examination, at such time and place as may be specified in the notice, any documents (including in electronic format) that are in the person's custody or under the person's control relating to the tax liability of any person;
(b) furnish information relating to the tax liability of any person in the manner and by the time as specified in the notice; or
(c) attend, at the time and place specified in the notice, for the purpose of giving evidence in respect of any matter or transaction appearing to be relevant to the tax liability of any person.
2. If the person required to produce documents under subsection (1)(a) is a financial institution-
(a) the documents shall not, while they are being examined, be removed from the premises of the financial institution or other premises at which they are produced;
(b) the Commissioner or authorised officer carrying out the examination may make copies of such documents for the purposes of any report relating to the examination; and
(c) the confidentiality of the information obtained in the course of the examination by the Commissioner or authorised officer shall be maintained and the information shall be used solely for the purposes of the tax laws.
3. The Commissioner or authorised officer may require that the information referred to in subsection (1) be-
(a) given on oath, verbally or in writing, and, for that purpose, the Commissioner or authorised officer may administer the oath; or
(b) verified by a statutory declaration or in any other manner that the Commissioner may prescribe.
If the defendant reads the Sections as a whole and not in isolation, it would notice that Section 59(2)(a) prohibits removal of the documents being examined from the premises they are produced if the person required to produce them is a financial institution. Subsection 3 of the said Section makes provision for confidentiality of the information obtained. In my view, the circumstances contemplated in these Sections are where the authorized officer of KRA intends to enter and examine the documents and records and not where the financial institution is required to produce the financial records outside its premises. In the case before me, it is alleged that the defendant sent the statements online and that means that the documents were removed from the place they were kept to KRA.
Even if this court assumed that the position advanced by the defendant was correct, it is my opinion that the disclosure must be kept limited within the four corners of those provisions. By this, I mean that the bank must ensure that the disclosure or provision of the information to KRA is done in manner and method that will make it impossible to reach people who are not intended by the law. By the intended people I mean the KRA because the Tax Procedures Act does not allow the bank or any other person to disclose information to any other third party.
In this matter, the plaintiff testified that when he went to the KRA offices, the statements were printed in his presence from the KRA’s system meaning that it was sent to the KRA in soft copies and most likely it was still online. The defendant has not controverted this version. The defendant’s witness told the court that he did not know how the statements and records were forwarded or shared with the KRA.
The defendant did not say that it shared the statement through a system or method that was secure and impossible to be accessible to third parties. Sending the statement through email or other online method without security codes or other protective or preventive features would in my view be acting outside the purview of the cited provisions of the Tax Procedures Act. The fact that the plaintiffs’ witness found the same statements with EACC on 29 th March 2019 at which time EACC had not secured court warrants to investigate the accounts, suggests that the information had been shared to persons other than the KRA. In view of this, it is my holding that the disclosure to KRA in the manner the defendant did was a breach of the fiduciary duty as it operated outside the constraints of the law.
As to the disclosure to EACC, the defendant testified and submitted that it had been served with court warrants allowing EACC to investigate the accounts for the plaintiffs in E076 of 2019 and E078 of 2019 vide Milimani Chief Magistrate’s Court criminal miscellaneous applications numbers 1618 of 2019 and 1271 of 2019. It is clear to me that the court warrants in miscellaneous criminal application number 1271 of 2019 were served on the defendant on 25-03-2019 while those in application number 1618 of 2019 were issued on 15-04-2019. The defendant did not produce warrants to investigate the account in case number E077 of 2019.
The plaintiffs’ witness told the court that the statement in all the three accounts were with EACC when he was grilled on the same on 29-03-2019. The defendant did not rebut this evidence. On this basis, I can only conclude that account in cases numbers E076 of 2019 (098xxxxxxx938) and E077 of 2019 (029xxxxxxx121) were shared with the EACC without court warrants or consent of the plaintiffs in those suits, hence the defendant was in breach of its fiduciary duty and in violation of the plaintiffs’ constitutional rights to privacy. It follows without doubt that the defendant’s justification for sharing the plaintiffs’ information with KRA and EACC to the extent discussed above is wanting and it is hereby found liable. The above settles the first and second issues as framed above.
I turn to the issue of whether the plaintiffs are entitled to compensation. The plaintiffs’ witness testified that the statements are still out there. The defendant has not told the court whether there have been any mitigation measures taken after it was served with demand letters. The plaintiffs’ witness insisted that they started facing cases because of the disclosure but he did not mention what kind or nature of cases they were. The plaintiff in case number E077 of 2019 also told the court that his life was in danger due to the disclosure but did not expound how his life was endangered by such disclosure. The plaintiffs have not demonstrated the level of inconveniences they suffered or extent of damages caused by such the disclosure.
However, I am alive to the fact that the plaintiffs have leveraged their claim on both breach of contract and violation of their constitutional rights. Where a party establishes that he suffered a wrong on account of the opposite party’s actions or its constitutional rights were violated, they are entitled to reprieve in form of compensation as it is trite that there is no wrong without a remedy. In Credit Watch Investment Limited v Mbugua & 2 others (2024) KEHC 13703 (KLR), Honourable Justice J.M. Omido held that;
‘On the point that there was no lawful basis for ordering for compensation, the Latin maxim ubi jus ibi remedium postulates that where the law has established a right, there is a corresponding remedy for the breach of that right. Put in another way, for every wrong, the law provides a remedy.’
I have looked at the authorities cited by the plaintiffs which are Robert K. Ayisi v Kenya Revenue Authority & another (2018) eKLR and Roshanara Ebrahim v Ashleys Kenya Limited & 3 others (2016) KEHC 8330 (KLR). In the said authorities, the petitioners were awarded Kshs 2,000,000.00 and Kshs 1,000,000.00 respectively. The defendant has not cited any authorities on quantum but submits that there was no proof that the plaintiffs suffered any damages.
I note that in the Robert Ayisi case, the petitioner established how he underwent humiliation and embarrassment as a result of the respondent’s action which violated his rights to dignity which in my view was more aggravating than the cases before me. The Roshanara case involved violation of the petitioner’s rights to privacy where her photographs were sent to a third party without her consent. I find the latter case more comparable and relevant to the plaintiffs’ cases.
Having considered all the factors and the conduct of the defendant in these matters and considering that the disclosure to EACC in case number E078 of 2019 was justified by court warrants in miscellaneous application number E1271 of 2019, I enter judgment for the plaintiffs against the defendant as follows;
Civil suit number E076 of 2019
Damages for breach of fiduciary duty and violation of right to privacy -Kshs 1,000,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Civil suit number E077 of 2019
Damages for breach of fiduciary duty and violation of right to privacy- Kshs 1,000,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Civil suit number E078 of 2019
Damages for breach of fiduciary duty and violation of right to privacy-Kshs 500,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Dated signed and delivered at Nairobi this 4 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Wacuka for the plaintiffs and in absence of the defendant.
For suit number E076 of 2019- account number 098xxxxxxx938.
For suit number E077 of 2019- account number 029xxxxxxx121.
For suit number E078 of 2019- account number 098xxxxxxx914.
The plaintiff’s case
The plaintiffs’ common witness in all the matters who was the plaintiff in case number E076 of 2019 told the court that in February 2019, he was summoned by Kenya Revenue Authority in Kisumu to be questioned on tax issues where the officer proceeded to print statements for the plaintiffs’ bank accounts in his presence. He questioned the officer where they had gotten the statements from but no explanation was given to him. He stated that he had been a manager of the defendant’s branch in Homabay before he left in 2017 and he was aware that a bank is not supposed to share a customer’s statement without the customer’s consent or a court order.
He added that on 29 th March 2019, he was summoned by EACC in Homabay for questioning about some works he had done for County Government of Homabay and the County Assembly of Homabay where they also produced six years’ statements for the same bank accounts which were printed from their system. He added that the fact that the statements were being printed from the EACC’s computers meant that they could be shared to anyone.
It was his further testimony that, KRA and EACC could not give proper answers on how they got the statements for a long period of six years and that before he filed the suit, he questioned the defendant’s manager who told him that he was not aware of the disclosure and he discovered that they were shared by the Kisumu branch manager. He added that the branch manager in Kisumu could not produce a court order. He added that the plaintiffs felt betrayed because the disclosure resulted to various court cases which would not have been instituted had the defendant not shared the information.
In cross-examination, the witness stated that the plaintiffs’ advocates wrote demand letters to the defendant who gave unsatisfactory response. He insisted that KRA did not have a court order to access the plaintiffs’ bank accounts and the Section of the law the KRA relied on to request for the statements was not applicable and that the EACC had not served any warrants to investigate any of the accounts because the warrants they alleged to rely on came in April 2019 and they were to granted to KRA but EACC only. He admitted that there was no evidence that the information was shared to any person other than EACC and KRA. He stated that he felt that his life was in danger due to the statement being online.
The witness produced the following exhibits;
For suit number E076 of 2019;
Statement for bank account number 098xxxxxxx938 in the name of the plaintiff running from 5-11-2013 to 9-02-2018.
Demand letter dated 5-03-2019
Defendant’s letter dated 13-03-2019.
The list of documents in this matter mentioned the defendant’s certificate of incorporation and letter dated 13-03-2019 but the same were not attached.
For suit number E077 of 2019;
Statement for account number 029xxxxxxx121 in the name of the plaintiff running from 6-01-2014 to 11-06-2016.
Demand letter dated 5-03-2019.
Defendant’s letter dated 13-03-2019.
For suit number E078 of 2019
Certificate of registration for Damila Enterprises dated 8-10-2012.
Bank statement for account number 098xxxxxxx914 for Damila Enterprises for the period 24-03-2014 to 3-12-2015.
Letter dated 5-03-2019.
The list of documents in this matter mentioned the defendant’s letter dated 13-03-2019 but the same was not attached.
The defendant’s case
The defendant’s witness was one Dominic Bulimo Kisonzo who stated that he was an operations manager with the defendant’s Kisumu branch. He admitted that the plaintiffs were the defendant’s customer holding the respective accounts in question.
He told the court that in respect of case number E076 of 2019, the bank received a request from KRA on or about 11-12-2018 asking for information under Sections 58 as read together with Section 3 and previous Section 59(4) of the Tax Procedures Act upon which it shared banking records and account statement.
In respect of case number E077 of 2019, the witness stated that the bank got request for KRA and it did not share the information of the account with EACC as no request came from them in respect of the said account. He also stated that there was a warrant to investigate the account dated 12-04-2019 which was served to the bank on 15-04-2019 and that is the point the information was shared with EACC.
About E078 of 2019, the information was shared with KRA upon receipt of request from them. He also added that there were warrants in the Chief Magistrate’s Court criminal miscellaneous application number 1271 of 2019 received by the bank on 21-03-2019 which related to several accounts. He maintained that the information for this account was shared upon receipt of the warrants from the court. The witness also denied sharing any of the above information to third parties other than the EACC and KRA.
He procured the following documents.
For suit number E076 of 2019;
Letter from KRA dated 10-12-2018.
Warrant in Milimani Chief Magistrate’s Court miscellaneous criminal application number 1618 of 2019 dated 12 th April 2019.
The defendant’s letter dated 13-03-2019.
For suit number E077 of 2019
Letter from KRA dated 10-12-2022.
Defendant’s letter dated 13-02-2019.
For suit number E078 of 2019;
Letter from KRA dated 10-12-2018.
Warrant in Milimani Chief Magistrate’s Court miscellaneous criminal application number 1271 of 2019 dated 12 th April 2019.
The defendant’s letter dated 13-03-2019
In cross-examination, he stated that the information was shared from the defendant’s head office. He added that the accounts were opened in Homabay and had no document to show that they were transferred from there to Kisumu. He was not able to confirm the date when the information was shared or whether the same was shared in hard or soft copies. He also stated that he was not aware that the plaintiffs were complaining that the information was shared before the warrants were issued and insisted that in E077 of 2019, the information was shared with KRA and not EACC and that the sharing was done as per the Tax Procedures Act.
Analysis and determination
The parties filed submissions which I have read and considered. From the submissions, the testimony of the witnesses and exhibits produced by the parties, there is no dispute that the plaintiffs held the accounts in question in the defendant bank. It is also common ground that the defendant shared and disclosed the accounts’ statements to the KRA and EACC. It is also agreed that the disclosure to the KRA were done without the consent of the plaintiffs and court warrants. In my analysis and opinion, the issues in contention and which I need to settle are;
Whether the defendant breached its fiduciary duty not to disclose financial affairs and information about the plaintiffs without their consent.
Whether the disclosure of the affairs was in breach of the plaintiffs’ constitutional right to privacy.
Whether the plaintiffs are entitled to damages.
Who should bear the costs of the suits?
It is trite and indeed indisputable that a bank owes a fiduciary duty to its customers to keep information held by it in relation to the business between the two in confidence and that duty demands that the bank should not disclose the financial and other private information and data to third parties without the consent of the customers unless to the extent only as the law may demand or compel. Article 31 of the Constitution prohibits private information relating to private affairs of a person being unnecessarily required or revealed.
The defendant in this matter does not deny that it disclosed and shared information and statement in respect of the plaintiffs’ accounts to KRA and EACC. Their explanation for that is that the same was done under compulsion of the law in that Section 59 of the Tax Procedures Act required it to provide the information to KRA once the same were demanded. I agree with the submissions of the defendant that the fiduciary duty is limited by factors as held in the celebrated case of Tournier vs National Provincial and Union Bank of England (1924) CA and expounded in Kazuri 2000 Limited v Kenya Commercial Bank (2024) KEHC 6971 (KLR) thus;
‘In the cerebrated English case of Tournier vs National Provincial and Union Bank of England [1924] 1 KB 461 the Court was emphatic that in the relationship between a bank and a client, there is implied contract term not to disclose the client’s information subject to legal exceptions only, as per Bankes L.J stated thus:
“In my opinion it is necessary in a case like the present to direct the jury what are the limits and what the qualifications of the contractual duty of secrecy implied in the relation of banker and customer. There appears to be no authority on the point. On principle I think that the qualifications can be classified under four heads:
Where disclosure is under compulsion by law;
Where there is a duty to the public to disclose;
Where the interests of the Bank require disclosure;
Where the disclosure is made by the express or implied consent of the customer.”
If I understand the defendant well, its argument is that the disclosure complained of was under compulsion of the law pursuant to Sections 58 and 59 (1), (2) and (3) of the Tax Procedures Act. The plaintiffs argue that that Section 59(4) which the defendant relied on in sharing the information had been found unconstitutional by the High Court in Robert K. Ayisi v Kenya Revenue Authority & another (2018) KEHC 6948 (KLR). I have looked at that case and it is indeed true that the said Section was declared unconstitutional by Honourable Justice G.V. Odunga in a judgment dated 16-05-2018 read by Justice J.M. Mativo. In my research and enquiries, I got information that the judgment was either set aside or stayed by the Court of Appeal sometime in 2020 but I have been unable to get the Court of Appeal decision.
The defendant has not contested the fact that the Section was declared unconstitutional. Instead, the defendant has submitted that, even with that declaration, Sections 58 and 59(1), (2) and (3) of the Act cover their trail as they require them to disclose upon demand by the KRA. These Sections provide as follows;
58. Power to inspect goods, records, etc.
1. Notwithstanding anything to the contrary in any written law, an authorised officer may inquire into the affairs of a person under any tax law, and shall at all times have full and free access to all lands, buildings, places to inspect all goods, equipment, devices and records, whether in the custody or control of a public officer, or of a body corporate or of any other person, and may make extracts from or copies of those records.
An officer acting under subsection (1) may require the owner or employee,
or a representative of the owner of the business, to give him all assistance
and to answer all questions relating to the inquiry.
59. Production of records
1. For the purposes of obtaining full information in respect of the tax liability of any person or class of persons, or for any other purposes relating to a tax law, the Commissioner or an authorised officer may require any person, by notice in writing, to-
(a) produce for examination, at such time and place as may be specified in the notice, any documents (including in electronic format) that are in the person's custody or under the person's control relating to the tax liability of any person;
(b) furnish information relating to the tax liability of any person in the manner and by the time as specified in the notice; or
(c) attend, at the time and place specified in the notice, for the purpose of giving evidence in respect of any matter or transaction appearing to be relevant to the tax liability of any person.
2. If the person required to produce documents under subsection (1)(a) is a financial institution-
(a) the documents shall not, while they are being examined, be removed from the premises of the financial institution or other premises at which they are produced;
(b) the Commissioner or authorised officer carrying out the examination may make copies of such documents for the purposes of any report relating to the examination; and
(c) the confidentiality of the information obtained in the course of the examination by the Commissioner or authorised officer shall be maintained and the information shall be used solely for the purposes of the tax laws.
3. The Commissioner or authorised officer may require that the information referred to in subsection (1) be-
(a) given on oath, verbally or in writing, and, for that purpose, the Commissioner or authorised officer may administer the oath; or
(b) verified by a statutory declaration or in any other manner that the Commissioner may prescribe.
If the defendant reads the Sections as a whole and not in isolation, it would notice that Section 59(2)(a) prohibits removal of the documents being examined from the premises they are produced if the person required to produce them is a financial institution. Subsection 3 of the said Section makes provision for confidentiality of the information obtained. In my view, the circumstances contemplated in these Sections are where the authorized officer of KRA intends to enter and examine the documents and records and not where the financial institution is required to produce the financial records outside its premises. In the case before me, it is alleged that the defendant sent the statements online and that means that the documents were removed from the place they were kept to KRA.
Even if this court assumed that the position advanced by the defendant was correct, it is my opinion that the disclosure must be kept limited within the four corners of those provisions. By this, I mean that the bank must ensure that the disclosure or provision of the information to KRA is done in manner and method that will make it impossible to reach people who are not intended by the law. By the intended people I mean the KRA because the Tax Procedures Act does not allow the bank or any other person to disclose information to any other third party.
In this matter, the plaintiff testified that when he went to the KRA offices, the statements were printed in his presence from the KRA’s system meaning that it was sent to the KRA in soft copies and most likely it was still online. The defendant has not controverted this version. The defendant’s witness told the court that he did not know how the statements and records were forwarded or shared with the KRA.
The defendant did not say that it shared the statement through a system or method that was secure and impossible to be accessible to third parties. Sending the statement through email or other online method without security codes or other protective or preventive features would in my view be acting outside the purview of the cited provisions of the Tax Procedures Act. The fact that the plaintiffs’ witness found the same statements with EACC on 29 th March 2019 at which time EACC had not secured court warrants to investigate the accounts, suggests that the information had been shared to persons other than the KRA. In view of this, it is my holding that the disclosure to KRA in the manner the defendant did was a breach of the fiduciary duty as it operated outside the constraints of the law.
As to the disclosure to EACC, the defendant testified and submitted that it had been served with court warrants allowing EACC to investigate the accounts for the plaintiffs in E076 of 2019 and E078 of 2019 vide Milimani Chief Magistrate’s Court criminal miscellaneous applications numbers 1618 of 2019 and 1271 of 2019. It is clear to me that the court warrants in miscellaneous criminal application number 1271 of 2019 were served on the defendant on 25-03-2019 while those in application number 1618 of 2019 were issued on 15-04-2019. The defendant did not produce warrants to investigate the account in case number E077 of 2019.
The plaintiffs’ witness told the court that the statement in all the three accounts were with EACC when he was grilled on the same on 29-03-2019. The defendant did not rebut this evidence. On this basis, I can only conclude that account in cases numbers E076 of 2019 (098xxxxxxx938) and E077 of 2019 (029xxxxxxx121) were shared with the EACC without court warrants or consent of the plaintiffs in those suits, hence the defendant was in breach of its fiduciary duty and in violation of the plaintiffs’ constitutional rights to privacy. It follows without doubt that the defendant’s justification for sharing the plaintiffs’ information with KRA and EACC to the extent discussed above is wanting and it is hereby found liable. The above settles the first and second issues as framed above.
I turn to the issue of whether the plaintiffs are entitled to compensation. The plaintiffs’ witness testified that the statements are still out there. The defendant has not told the court whether there have been any mitigation measures taken after it was served with demand letters. The plaintiffs’ witness insisted that they started facing cases because of the disclosure but he did not mention what kind or nature of cases they were. The plaintiff in case number E077 of 2019 also told the court that his life was in danger due to the disclosure but did not expound how his life was endangered by such disclosure. The plaintiffs have not demonstrated the level of inconveniences they suffered or extent of damages caused by such the disclosure.
However, I am alive to the fact that the plaintiffs have leveraged their claim on both breach of contract and violation of their constitutional rights. Where a party establishes that he suffered a wrong on account of the opposite party’s actions or its constitutional rights were violated, they are entitled to reprieve in form of compensation as it is trite that there is no wrong without a remedy. In Credit Watch Investment Limited v Mbugua & 2 others (2024) KEHC 13703 (KLR), Honourable Justice J.M. Omido held that;
‘On the point that there was no lawful basis for ordering for compensation, the Latin maxim ubi jus ibi remedium postulates that where the law has established a right, there is a corresponding remedy for the breach of that right. Put in another way, for every wrong, the law provides a remedy.’
I have looked at the authorities cited by the plaintiffs which are Robert K. Ayisi v Kenya Revenue Authority & another (2018) eKLR and Roshanara Ebrahim v Ashleys Kenya Limited & 3 others (2016) KEHC 8330 (KLR). In the said authorities, the petitioners were awarded Kshs 2,000,000.00 and Kshs 1,000,000.00 respectively. The defendant has not cited any authorities on quantum but submits that there was no proof that the plaintiffs suffered any damages.
I note that in the Robert Ayisi case, the petitioner established how he underwent humiliation and embarrassment as a result of the respondent’s action which violated his rights to dignity which in my view was more aggravating than the cases before me. The Roshanara case involved violation of the petitioner’s rights to privacy where her photographs were sent to a third party without her consent. I find the latter case more comparable and relevant to the plaintiffs’ cases.
Having considered all the factors and the conduct of the defendant in these matters and considering that the disclosure to EACC in case number E078 of 2019 was justified by court warrants in miscellaneous application number E1271 of 2019, I enter judgment for the plaintiffs against the defendant as follows;
Civil suit number E076 of 2019
Damages for breach of fiduciary duty and violation of right to privacy -Kshs 1,000,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Civil suit number E077 of 2019
Damages for breach of fiduciary duty and violation of right to privacy- Kshs 1,000,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Civil suit number E078 of 2019
Damages for breach of fiduciary duty and violation of right to privacy-Kshs 500,000.00.
Interest on the above sum at court rates from the date of this judgement until payment in full.
Costs of the suit.
Dated signed and delivered at Nairobi this 4 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Wacuka for the plaintiffs and in absence of the defendant.