(Appeal from the judgement and decree of Hon. PA Olengo, Senior Principal Magistrate, SPM, in Busia CMCC No. E147 of 2022, of 22nd December 2023)
1. The suit, at the primary court, was by the respondent, against the appellant. The respondent and his brother were directors of a company known as Opakasi Investment Limited, which had an account with the appellant. The company applied for a loan, through its directors, of Kshs. 15,000,000.00, intending to put up a building on Busia Municipality/124, owned by it. The appellant decided to advance a loan of Kshs. 7,500,000.00 to the 2 directors of the company, the respondent included, personally, instead of to the company, secured by a legal charge over Busia Municipality/124, owned by the company, with the company as a guarantor. The loan was repayable in 120 monthly instalments of Kshs. 163,325.00, for 10 years. The respondent and his brother signed the relevant letter of offer, and the money was credited to an account in the name of the respondent and his brother, whereupon Kshs. 7,000,000.00 was transferred to the account of the company.
2. Sometime in December 2020, the appellant began to send messages to the respondent, intimating that the loan was in arrears, despite the respondent not taking any loan from the appellant in his sole name. The appellant was subsequently listed with a credit reference bureau, with respect to accounts that he knew nothing about. The respondent sought details of those accounts and documentation relating to them, but the appellant did not respond. When he eventually got access to the said accounts, he established that the loan of Kshs. 7,500,000.00, had been credited to his joint account with his brother, without his knowledge, and the appellant had gone on to open another account in the sole name of the respondent, without his knowledge, and credited that account with an amount of Kshs. 7,500,000.00. He averred that the amount of Kshs. 7,500,000.00, credited to that account, was never withdrawn, but the appellant continued to load interest on it, while debiting the account with monthly loan repayment sums of Kshs. 160,160.85, and by 7th June 2021, the balance standing on the account was Kshs. 6,572,525.79.
3. The appellant was accused of having acted in breach of contract and negligence, and having exposed the respondent to loss and damage. The respondent sought a declaration that he was not indebted to the appellant in regard to accounts numbers LD 1621601617, LD 1621701044 and LD 2022302691; an order to be furnished with documentation on the opening of those accounts, and complete bank statements of the transactions on those accounts, from the dates of opening to the date of filing suit; a declaration that the enlistment with the credit reference bureaux, on account of defaults in repaying the loans on those accounts was illegal and in bad faith; an order for the lifting of the enlistment; general damages; an order for payment to the respondent of moneys found to have been credited into those accounts; costs and interests.
4. The appellant filed a defence, essentially denying everything pleaded in the plaint, and alleging that the respondent and his brother were in breach of their obligations to it.
5. A trial was conducted. Both sides presented a witness each.
6. The respondent adopted his statement. The said statement was a replica of the plaint. He testified that he had applied for a loan, jointly with his brother, for Kshs. 15,000,000.00, and the appellant offered them Kshs. 7,500,000.00, to be repaid in 10 years. A joint account, number 10044119550, was opened for that purpose, in the name of the respondent and his brother. The money was deposited in that account on 3rd August 2016. Thereafter, he started receiving messages from the appellant, stating that he had a personal loan with the appellant, in respect of which he was in default. He stated that he had not applied for a personal loan for Kshs. 7,500,000.00 with the appellant, save for the loan advanced to him, jointly with his brother, which he and his brother had been servicing. Upon approaching the appellant, he was advised to ignore the message. Thereafter, the appellant caused his name to be registered with a credit reference bureau as a loan defaulter, in respect of accounts numbers 1621601670 and 2022302691, where he was alleged to have been given loans of Kshs. 7,500,000.00 and Kshs. 21,160.00 by the appellant. He asserted that he had not taken such loans, and that he had not applied for them. He also stated that he did not withdraw any amount of money from any of the 2 accounts.
7. Charles Muriithi Kamau testified for the appellant. He adopted his witness statement. He stated that the respondent and his brother had applied for a loan of Kshs. 15,000,000.00, but the appellant approved Kshs. 7,500,000.00, which was credited to an account in their names, which they opened on the advice of the appellant, rather than to the company they operated. He stated that there was also an insurance facility for insurance on the property, ostensibly that was to be developed with the loan moneys. He stated that the messages to the appellant were meant as means of communication, as updates on the status of the loan. He said that there was no default, and no statutory notice had been issued.
8. In the judgement, the subject of the appeal, the trial court found, that the appellant had not adequately answered the questions raised in the plaint, about the other 2 loans and accounts, and the listing with the credit reference bureau. It was concluded that the appellant was a fiduciary, there was a contractual duty, and that the appellant had breached that duty. Damages were awarded at Kshs. 1,000,000.00.
9. The appellant was aggrieved, hence the instant appeal. The grounds revolve around the finding that the appellant had not tendered enough evidence; the court not finding that the respondent and his brother had not been servicing the loan in accordance with the terms of the banking arrangement; the court not appreciating that there were no other loan facilities, and that the messages only related to the 1 loan advanced; the court not appreciating that the appellant, as a bank, was required to share credit information with credit reference bureaux; the court failing to find that the credit report referred to was a positive credit report; the award of general damages was on assumption that the respondent had suffered a financial loss, which had not been proven; and the court arrived at the wrong findings on law and evidence.
10. Directions were taken, on 24th November 2025, for canvassing of the appeal by way of written submissions. Both sides did file written submissions, which I have read, and noted the arguments made.
11. The appeal turns on only 2 principle issues, whether the respondent established his claim to the required standard, to warrant grant of the orders made in the decree.
12. The case by the respondent was that he and his brother, Gabriel Otwani Opakasi, sought a loan of Kshs. 15,000,000.00, for Opakasi Investments Limited, in their capacity as directors of that entity. The appellant approved a loan of Kshs, 7,500,000.00; and advised that the same be made to the 2 of them, rather than to the company, with the company acting as guarantor, by way of securing the loan with its property. The respondent and his brother executed the relevant documents, and the amount of Kshs. 7,500,000.00 was eventually released, to a joint account operated by him and his brother.
13. The dispute arose when the appellant allegedly began to send messages to the respondent demanding payments with respect to loans that he claimed he had not applied for and obtained from the appellant, and in respect of which the appellant had opened accounts in his name, which accounts he did not authorise their opening, and which he never operated. He also alleged that moneys were deposited into those accounts, as loans advanced to him, but he never withdrew the said funds. He said that the appellant subsequently caused a credit reference bureau to list him as a defaulter. He alleged breach of contract and negligence.
14. He made reference to 4 accounts. There was reference to account number 1004419550, under his name and that of his brother, to which the loan sum of Kshs. 7,500,000.00 was disbursed. The second was account number 1621601670, which he alleged was opened without his consent, and to which Kshs. 7,500,000.00 was allegedly credited. The third account was number 2022302691, allegedly opened for Kshs. 21,160.00. The fourth account was number 1621701044 for Kshs. 22,641.00.
15. His claim was that he was not indebted to the appellant in respect of the 3 other accounts, that were not opened jointly with his brother, being numbers 1621601670, 1621701044 and 2022302691; that he be furnished with the documents relating to the opening of those accounts; that his enlisting with the credit reference bureau, with respect to those 3 accounts was illegal, and an order be made for its lifting; that he be compensated with damage for breach of contract; and the moneys credited into those accounts be paid to him.
16. In the defence, the appellant did not quite respond directly to the issues raised, but chose to make general denials, and to allege indebtedness by the respondent and his brother, with respect to the loan advanced to them jointly.
17. Did the respondent lead evidence to prove what he alleged in his plaint? I do not think so. The suit, at the trial court, was a storm in a teacup. It was completely needless. It reflected a total misunderstanding or ignorance, by the respondent, of banking practice. It also reflected complete failure by the appellant to educate its customer, the respondent, about the same, so that he could understand the differences between the various documents that it shared with him. It also reflected poor communication and messaging by the appellant to its customer.
18. What I have stated in the foregoing paragraph comes very clearly from the documents that the respondent placed on record, as his documents, principally the account statement on his joint account with his brother, number 1004419550; the account statement on the account for Opakasi Investments Limited, number 100447761; the loan statement in respect of loan account number 1621601670; and the correspondence exchanged between the respondent and the credit reference bureau. The respondent did not file any account statements relating to accounts numbers 1621701044 and 2022302691, but there is material relating to them in his correspondence with the credit reference bureau.
19. What emerges from these documents is this. The respondent and his brother had sought a loan for their company, Opakasi Investments Limited, from the appellant, by their letter of 9th May 2016, where they sought Kshs. 15,000,000.00 for construction. The loan was not personal, it was the company applying, through its directors, the respondent and his brother. The appellant responded to the application/letter of 9th May 2016, the same day, by a letter of even date. It made an offer to the respondent and his brother, personally, rather than to their company, Opakasi Investments Limited. The amount offered was half of what was sought, that is Kshs. 7,500,000.00. The loan was to be secured by a property.
20. The respondent and his brother executed the letter of offer, on 10th May 2016, personally, and also on behalf of the guarantor, Opakasi Investments Limited, in their capacity as the directors of that company. A charge was subsequently created, on 22nd July 2016, by Opakasi Investments Limited, as chargor, and the respondent and his brother as borrowers, and the appellant as the chargee, over Busia Municipality/124, to secure the loan amount.
21. The respondent opened account number 1004419550, with the appellant on 1st August 2016, and deposited kshs. 7,772.74. The loan amount, of Kshs. 7,500,000.00, was credited into that account, number 1004419550, on 3rd August 2016, under reference number LD 162160167. On the same date, 3rd August 2016, Kshs. 166,546.00 was debited on that account, number 1004419550, in respect of the loan charge, under reference LD 162160167. Thereafter, the said account, number 1004419550, was debited under reference number LD162160167, with loan claims, after every month, of Kshs. 163,340.69, being the monthly instalment, payable under clause 7 of the letter of offer, dated 9th May 2016, which the respondent and his brother executed on 10th May 2016. That figure, Kshs. 163,340.69, represented the loan instalment, that is principal and interest, of Kshs. 160,200.00 and credit life instalment of Kshs. 3,125.00, in respect of credit life insurance.
22. So, what was the magic about this reference number LD162160167? This was actually the number for the loan account. Account number 1004419550 was not the loan account, but the personal account of the respondent and his brother, through which the loan moneys were channelled. The personal account reflects the transactions that the accounts holders carry out on their account, the moneys paid in and out of the account. The balances would keep going up and down, depending on the making of deposits and withdrawals. The loan account is a separate record kept by the bank, to track transactions relating to the loan, reflecting, as debit, the amount due as monthly instalment, and, as credit, the amounts paid. The loan account statement would reflect the loan amount in reducing balance, where payment of instalments happens, and increasing balance whether there is default.
23. The loan statement for LD162160167 is for the loan account, for the Kshs. 7,500,000.00, that the respondent and his brother received, for the moneys loaned to them through the letter of offer dated 9th May 2016. That amount was disbursed to their joint account number 10044119550. The account statement for account number 10044119550 reflects that the sum of Kshs. 7,500,000.00 was received under reference number LD162160167, on 3rd August 2016. The loan statement for loan account reference number LD162160167 shows a loan drawdown of Kshs. 7,500,000.00, made on 3rd August 2016. The transactions reflected thereafter are for Kshs. 160,160.85, being debits, or repayments, for the principal and interest, and credits being varying amounts, being amounts of interest due, inclusive of default interest. The balance is reflected on reducing balance scale. The 2 entries, in both accounts, on the payment of the loan amount of Kshs. 7,500,000.00, were made the same day in both statements.
24. There is clearly a link between the personal joint account of the respondent and his brother, being number 10044119550, and the loan account maintained by the bank, with respect to their loan, being number LD162160167. As a matter of banking practice, the bank opens a loan account book or ledger for the loan, which account record is separate from the personal account of the borrower, through which the loan was disbursed. Therefore, the amount, reflected under account number 10044119550 and the loan account number LD162160167 is the same, the Kshs. 7,500,000.00 that was loaned to the respondent and his brother, disbursed on 3rd August 2016, through account number 10044119550. There were no 2 loans, of Kshs. 7,500,000.00, as alluded to by the respondent.
25. Regarding what the respondent referred to as account number 1621701044, it will be seen, from the account statement in respect of number 10044119550, that there were debits made monthly, of Kshs. 2,075.43, variously referred to as loan set-off charge and loan claim, under reference LD1621701044. Such payments were made 11 times, between 6th September 2016 and 4th August 2017. It is not clear what they were for, and the parties made no effort, at trial, to explain them. Whatever the case, there was no loan, advanced through an account number 1621701044, for that number was a reference for transactions that were carried out within the personal joint account of the respondent and his brother. There was no money disbursed to any such account, which could be available to the respondent.
26. The same would apply to number 2022302691. It will be seen, from the account statement in respect of number 10044119550, that there were debits made on, 10th September 2020, 1st November 2020, 4th November 2020, 10th November 2020, 23rd December 2020, 7th January 2021 and 10th January 2021, under reference LD2022302691, for loan claim and loan set-off. It is not clear what they stood for, and the parties made no effort, at trial, to explain them. Whatever the case, there was no loan, advanced through an account number 202230269, for that number was a reference for transactions that were carried out within the personal joint account of the respondent and his brother. There was no money disbursed to any such account, which could be available to the respondent.
27. Regarding the listing by the credit reference bureau, I note that the respondent did not lead evidence on whether the listing was positive or negative. As a matter of banking practice, banks share details of the credit facilities they extend to customers, and particulars relating to the servicing of loans. That is intended to ease with credit rating. The mere fact that information was shared with a credit rating bureau was not illegal, for it was related to the transaction that the respondent and his brother had with the appellant, through their joint account number 10044119550. They were granted a loan of Kshs. 7,500,000.00, through that account, which led the appellant to open a ledger for that loan, being number LD162160167, often referred to as a loan account, and possibly others, meant to track transactions on the loan account. No illegality was proved, which could support an award of damages. In any case, the breach of contract alleged was not proved, neither was their proof of negligence.
28. Some blame should lie, though, with the appellant. There would have been no dispute, if the appellant took time to communicate effectively with the respondent about what all these reference numbers referred to, and what their utility was. As it is, an erroneous impression was created, that the respondent had other accounts, opened by the appellant, in his name, without his knowledge and consent, and moneys paid into those accounts. Once the appellant raised those issues, the appellant should have done its duty, and communicated effectively with its customer, on all those aspects of banking practice. Otherwise, at the end of it, the respondent was non-suited, and was not entitled to the orders that were made in his favour.
29. I note that the appellant did not bring out those issues clearly. Neither in its defence, nor when it witness, DW1, took to the witness stand. I can only see a belated explanation of the same in the written submissions filed herein. Yet, written submissions are not evidence. Witness submissions ride on the evidence adduced at the trial. They ought not be used, mischievously, to seal gaps in the evidence, by placing on record material that should have been adduced as evidence at the trial.
30. Perhaps, something needs to be said about how the trial court handled the matter. It would appear that not much effort was made to scrutinise and interrogate the documents that the parties placed on record, for if that had been scrupulously done here, the trial court would not have arrived at the conclusions that it arrived at. The matter proceeded largely by way of documentary evidence. Often, parties, in such circumstances, simply throw documents before the court, and do little to explain or expound on their contents. In such cases, the court should not sit back, and say that the parties did not explain the documents. Such documents form part of the court record. They are part of the evidential material. The trial court has no option, but to laboriously go through them, so as to make sense of their contents.
31. Overall, it is my finding that the appeal is merited. I hereby allow it. The consequence shall be that the orders made by the trial court are hereby set aside, and substituted with an order dismissing the suit. As the appellant did not communicate effectively with the respondent, to avoid the misunderstanding, which led to the filing of the suit, I shall not favour it with costs. Each party shall bear their own costs, both here and at the court below. Orders accordingly.
DELIVERED, VIA EMAIL, DATED AND SIGNED IN CHAMBERS, AT MILIMANI, NAIROBI, ON THIS 13TH DAY OF APRIL 2026.
WM MUSYOKA
JUDGE
Mr. Arthur Etyang, Court Assistant.
Advocates
Mr. Kipkoech, instructed by Mulanya & Maondo, Advocates for the appellant.
Mr. Kiarie, instructed by Kiarie & Company, and Mr. Omeri, instructed by Omeri & Company, Advocates for the respondent.
1. The suit, at the primary court, was by the respondent, against the appellant. The respondent and his brother were directors of a company known as Opakasi Investment Limited, which had an account with the appellant. The company applied for a loan, through its directors, of Kshs. 15,000,000.00, intending to put up a building on Busia Municipality/124, owned by it. The appellant decided to advance a loan of Kshs. 7,500,000.00 to the 2 directors of the company, the respondent included, personally, instead of to the company, secured by a legal charge over Busia Municipality/124, owned by the company, with the company as a guarantor. The loan was repayable in 120 monthly instalments of Kshs. 163,325.00, for 10 years. The respondent and his brother signed the relevant letter of offer, and the money was credited to an account in the name of the respondent and his brother, whereupon Kshs. 7,000,000.00 was transferred to the account of the company.
2. Sometime in December 2020, the appellant began to send messages to the respondent, intimating that the loan was in arrears, despite the respondent not taking any loan from the appellant in his sole name. The appellant was subsequently listed with a credit reference bureau, with respect to accounts that he knew nothing about. The respondent sought details of those accounts and documentation relating to them, but the appellant did not respond. When he eventually got access to the said accounts, he established that the loan of Kshs. 7,500,000.00, had been credited to his joint account with his brother, without his knowledge, and the appellant had gone on to open another account in the sole name of the respondent, without his knowledge, and credited that account with an amount of Kshs. 7,500,000.00. He averred that the amount of Kshs. 7,500,000.00, credited to that account, was never withdrawn, but the appellant continued to load interest on it, while debiting the account with monthly loan repayment sums of Kshs. 160,160.85, and by 7th June 2021, the balance standing on the account was Kshs. 6,572,525.79.
3. The appellant was accused of having acted in breach of contract and negligence, and having exposed the respondent to loss and damage. The respondent sought a declaration that he was not indebted to the appellant in regard to accounts numbers LD 1621601617, LD 1621701044 and LD 2022302691; an order to be furnished with documentation on the opening of those accounts, and complete bank statements of the transactions on those accounts, from the dates of opening to the date of filing suit; a declaration that the enlistment with the credit reference bureaux, on account of defaults in repaying the loans on those accounts was illegal and in bad faith; an order for the lifting of the enlistment; general damages; an order for payment to the respondent of moneys found to have been credited into those accounts; costs and interests.
4. The appellant filed a defence, essentially denying everything pleaded in the plaint, and alleging that the respondent and his brother were in breach of their obligations to it.
5. A trial was conducted. Both sides presented a witness each.
6. The respondent adopted his statement. The said statement was a replica of the plaint. He testified that he had applied for a loan, jointly with his brother, for Kshs. 15,000,000.00, and the appellant offered them Kshs. 7,500,000.00, to be repaid in 10 years. A joint account, number 10044119550, was opened for that purpose, in the name of the respondent and his brother. The money was deposited in that account on 3rd August 2016. Thereafter, he started receiving messages from the appellant, stating that he had a personal loan with the appellant, in respect of which he was in default. He stated that he had not applied for a personal loan for Kshs. 7,500,000.00 with the appellant, save for the loan advanced to him, jointly with his brother, which he and his brother had been servicing. Upon approaching the appellant, he was advised to ignore the message. Thereafter, the appellant caused his name to be registered with a credit reference bureau as a loan defaulter, in respect of accounts numbers 1621601670 and 2022302691, where he was alleged to have been given loans of Kshs. 7,500,000.00 and Kshs. 21,160.00 by the appellant. He asserted that he had not taken such loans, and that he had not applied for them. He also stated that he did not withdraw any amount of money from any of the 2 accounts.
7. Charles Muriithi Kamau testified for the appellant. He adopted his witness statement. He stated that the respondent and his brother had applied for a loan of Kshs. 15,000,000.00, but the appellant approved Kshs. 7,500,000.00, which was credited to an account in their names, which they opened on the advice of the appellant, rather than to the company they operated. He stated that there was also an insurance facility for insurance on the property, ostensibly that was to be developed with the loan moneys. He stated that the messages to the appellant were meant as means of communication, as updates on the status of the loan. He said that there was no default, and no statutory notice had been issued.
8. In the judgement, the subject of the appeal, the trial court found, that the appellant had not adequately answered the questions raised in the plaint, about the other 2 loans and accounts, and the listing with the credit reference bureau. It was concluded that the appellant was a fiduciary, there was a contractual duty, and that the appellant had breached that duty. Damages were awarded at Kshs. 1,000,000.00.
9. The appellant was aggrieved, hence the instant appeal. The grounds revolve around the finding that the appellant had not tendered enough evidence; the court not finding that the respondent and his brother had not been servicing the loan in accordance with the terms of the banking arrangement; the court not appreciating that there were no other loan facilities, and that the messages only related to the 1 loan advanced; the court not appreciating that the appellant, as a bank, was required to share credit information with credit reference bureaux; the court failing to find that the credit report referred to was a positive credit report; the award of general damages was on assumption that the respondent had suffered a financial loss, which had not been proven; and the court arrived at the wrong findings on law and evidence.
10. Directions were taken, on 24th November 2025, for canvassing of the appeal by way of written submissions. Both sides did file written submissions, which I have read, and noted the arguments made.
11. The appeal turns on only 2 principle issues, whether the respondent established his claim to the required standard, to warrant grant of the orders made in the decree.
12. The case by the respondent was that he and his brother, Gabriel Otwani Opakasi, sought a loan of Kshs. 15,000,000.00, for Opakasi Investments Limited, in their capacity as directors of that entity. The appellant approved a loan of Kshs, 7,500,000.00; and advised that the same be made to the 2 of them, rather than to the company, with the company acting as guarantor, by way of securing the loan with its property. The respondent and his brother executed the relevant documents, and the amount of Kshs. 7,500,000.00 was eventually released, to a joint account operated by him and his brother.
13. The dispute arose when the appellant allegedly began to send messages to the respondent demanding payments with respect to loans that he claimed he had not applied for and obtained from the appellant, and in respect of which the appellant had opened accounts in his name, which accounts he did not authorise their opening, and which he never operated. He also alleged that moneys were deposited into those accounts, as loans advanced to him, but he never withdrew the said funds. He said that the appellant subsequently caused a credit reference bureau to list him as a defaulter. He alleged breach of contract and negligence.
14. He made reference to 4 accounts. There was reference to account number 1004419550, under his name and that of his brother, to which the loan sum of Kshs. 7,500,000.00 was disbursed. The second was account number 1621601670, which he alleged was opened without his consent, and to which Kshs. 7,500,000.00 was allegedly credited. The third account was number 2022302691, allegedly opened for Kshs. 21,160.00. The fourth account was number 1621701044 for Kshs. 22,641.00.
15. His claim was that he was not indebted to the appellant in respect of the 3 other accounts, that were not opened jointly with his brother, being numbers 1621601670, 1621701044 and 2022302691; that he be furnished with the documents relating to the opening of those accounts; that his enlisting with the credit reference bureau, with respect to those 3 accounts was illegal, and an order be made for its lifting; that he be compensated with damage for breach of contract; and the moneys credited into those accounts be paid to him.
16. In the defence, the appellant did not quite respond directly to the issues raised, but chose to make general denials, and to allege indebtedness by the respondent and his brother, with respect to the loan advanced to them jointly.
17. Did the respondent lead evidence to prove what he alleged in his plaint? I do not think so. The suit, at the trial court, was a storm in a teacup. It was completely needless. It reflected a total misunderstanding or ignorance, by the respondent, of banking practice. It also reflected complete failure by the appellant to educate its customer, the respondent, about the same, so that he could understand the differences between the various documents that it shared with him. It also reflected poor communication and messaging by the appellant to its customer.
18. What I have stated in the foregoing paragraph comes very clearly from the documents that the respondent placed on record, as his documents, principally the account statement on his joint account with his brother, number 1004419550; the account statement on the account for Opakasi Investments Limited, number 100447761; the loan statement in respect of loan account number 1621601670; and the correspondence exchanged between the respondent and the credit reference bureau. The respondent did not file any account statements relating to accounts numbers 1621701044 and 2022302691, but there is material relating to them in his correspondence with the credit reference bureau.
19. What emerges from these documents is this. The respondent and his brother had sought a loan for their company, Opakasi Investments Limited, from the appellant, by their letter of 9th May 2016, where they sought Kshs. 15,000,000.00 for construction. The loan was not personal, it was the company applying, through its directors, the respondent and his brother. The appellant responded to the application/letter of 9th May 2016, the same day, by a letter of even date. It made an offer to the respondent and his brother, personally, rather than to their company, Opakasi Investments Limited. The amount offered was half of what was sought, that is Kshs. 7,500,000.00. The loan was to be secured by a property.
20. The respondent and his brother executed the letter of offer, on 10th May 2016, personally, and also on behalf of the guarantor, Opakasi Investments Limited, in their capacity as the directors of that company. A charge was subsequently created, on 22nd July 2016, by Opakasi Investments Limited, as chargor, and the respondent and his brother as borrowers, and the appellant as the chargee, over Busia Municipality/124, to secure the loan amount.
21. The respondent opened account number 1004419550, with the appellant on 1st August 2016, and deposited kshs. 7,772.74. The loan amount, of Kshs. 7,500,000.00, was credited into that account, number 1004419550, on 3rd August 2016, under reference number LD 162160167. On the same date, 3rd August 2016, Kshs. 166,546.00 was debited on that account, number 1004419550, in respect of the loan charge, under reference LD 162160167. Thereafter, the said account, number 1004419550, was debited under reference number LD162160167, with loan claims, after every month, of Kshs. 163,340.69, being the monthly instalment, payable under clause 7 of the letter of offer, dated 9th May 2016, which the respondent and his brother executed on 10th May 2016. That figure, Kshs. 163,340.69, represented the loan instalment, that is principal and interest, of Kshs. 160,200.00 and credit life instalment of Kshs. 3,125.00, in respect of credit life insurance.
22. So, what was the magic about this reference number LD162160167? This was actually the number for the loan account. Account number 1004419550 was not the loan account, but the personal account of the respondent and his brother, through which the loan moneys were channelled. The personal account reflects the transactions that the accounts holders carry out on their account, the moneys paid in and out of the account. The balances would keep going up and down, depending on the making of deposits and withdrawals. The loan account is a separate record kept by the bank, to track transactions relating to the loan, reflecting, as debit, the amount due as monthly instalment, and, as credit, the amounts paid. The loan account statement would reflect the loan amount in reducing balance, where payment of instalments happens, and increasing balance whether there is default.
23. The loan statement for LD162160167 is for the loan account, for the Kshs. 7,500,000.00, that the respondent and his brother received, for the moneys loaned to them through the letter of offer dated 9th May 2016. That amount was disbursed to their joint account number 10044119550. The account statement for account number 10044119550 reflects that the sum of Kshs. 7,500,000.00 was received under reference number LD162160167, on 3rd August 2016. The loan statement for loan account reference number LD162160167 shows a loan drawdown of Kshs. 7,500,000.00, made on 3rd August 2016. The transactions reflected thereafter are for Kshs. 160,160.85, being debits, or repayments, for the principal and interest, and credits being varying amounts, being amounts of interest due, inclusive of default interest. The balance is reflected on reducing balance scale. The 2 entries, in both accounts, on the payment of the loan amount of Kshs. 7,500,000.00, were made the same day in both statements.
24. There is clearly a link between the personal joint account of the respondent and his brother, being number 10044119550, and the loan account maintained by the bank, with respect to their loan, being number LD162160167. As a matter of banking practice, the bank opens a loan account book or ledger for the loan, which account record is separate from the personal account of the borrower, through which the loan was disbursed. Therefore, the amount, reflected under account number 10044119550 and the loan account number LD162160167 is the same, the Kshs. 7,500,000.00 that was loaned to the respondent and his brother, disbursed on 3rd August 2016, through account number 10044119550. There were no 2 loans, of Kshs. 7,500,000.00, as alluded to by the respondent.
25. Regarding what the respondent referred to as account number 1621701044, it will be seen, from the account statement in respect of number 10044119550, that there were debits made monthly, of Kshs. 2,075.43, variously referred to as loan set-off charge and loan claim, under reference LD1621701044. Such payments were made 11 times, between 6th September 2016 and 4th August 2017. It is not clear what they were for, and the parties made no effort, at trial, to explain them. Whatever the case, there was no loan, advanced through an account number 1621701044, for that number was a reference for transactions that were carried out within the personal joint account of the respondent and his brother. There was no money disbursed to any such account, which could be available to the respondent.
26. The same would apply to number 2022302691. It will be seen, from the account statement in respect of number 10044119550, that there were debits made on, 10th September 2020, 1st November 2020, 4th November 2020, 10th November 2020, 23rd December 2020, 7th January 2021 and 10th January 2021, under reference LD2022302691, for loan claim and loan set-off. It is not clear what they stood for, and the parties made no effort, at trial, to explain them. Whatever the case, there was no loan, advanced through an account number 202230269, for that number was a reference for transactions that were carried out within the personal joint account of the respondent and his brother. There was no money disbursed to any such account, which could be available to the respondent.
27. Regarding the listing by the credit reference bureau, I note that the respondent did not lead evidence on whether the listing was positive or negative. As a matter of banking practice, banks share details of the credit facilities they extend to customers, and particulars relating to the servicing of loans. That is intended to ease with credit rating. The mere fact that information was shared with a credit rating bureau was not illegal, for it was related to the transaction that the respondent and his brother had with the appellant, through their joint account number 10044119550. They were granted a loan of Kshs. 7,500,000.00, through that account, which led the appellant to open a ledger for that loan, being number LD162160167, often referred to as a loan account, and possibly others, meant to track transactions on the loan account. No illegality was proved, which could support an award of damages. In any case, the breach of contract alleged was not proved, neither was their proof of negligence.
28. Some blame should lie, though, with the appellant. There would have been no dispute, if the appellant took time to communicate effectively with the respondent about what all these reference numbers referred to, and what their utility was. As it is, an erroneous impression was created, that the respondent had other accounts, opened by the appellant, in his name, without his knowledge and consent, and moneys paid into those accounts. Once the appellant raised those issues, the appellant should have done its duty, and communicated effectively with its customer, on all those aspects of banking practice. Otherwise, at the end of it, the respondent was non-suited, and was not entitled to the orders that were made in his favour.
29. I note that the appellant did not bring out those issues clearly. Neither in its defence, nor when it witness, DW1, took to the witness stand. I can only see a belated explanation of the same in the written submissions filed herein. Yet, written submissions are not evidence. Witness submissions ride on the evidence adduced at the trial. They ought not be used, mischievously, to seal gaps in the evidence, by placing on record material that should have been adduced as evidence at the trial.
30. Perhaps, something needs to be said about how the trial court handled the matter. It would appear that not much effort was made to scrutinise and interrogate the documents that the parties placed on record, for if that had been scrupulously done here, the trial court would not have arrived at the conclusions that it arrived at. The matter proceeded largely by way of documentary evidence. Often, parties, in such circumstances, simply throw documents before the court, and do little to explain or expound on their contents. In such cases, the court should not sit back, and say that the parties did not explain the documents. Such documents form part of the court record. They are part of the evidential material. The trial court has no option, but to laboriously go through them, so as to make sense of their contents.
31. Overall, it is my finding that the appeal is merited. I hereby allow it. The consequence shall be that the orders made by the trial court are hereby set aside, and substituted with an order dismissing the suit. As the appellant did not communicate effectively with the respondent, to avoid the misunderstanding, which led to the filing of the suit, I shall not favour it with costs. Each party shall bear their own costs, both here and at the court below. Orders accordingly.
DELIVERED, VIA EMAIL, DATED AND SIGNED IN CHAMBERS, AT MILIMANI, NAIROBI, ON THIS 13TH DAY OF APRIL 2026.
WM MUSYOKA
JUDGE
Mr. Arthur Etyang, Court Assistant.
Advocates
Mr. Kipkoech, instructed by Mulanya & Maondo, Advocates for the appellant.
Mr. Kiarie, instructed by Kiarie & Company, and Mr. Omeri, instructed by Omeri & Company, Advocates for the respondent.