The Appellants Case;
1. The trial court entered judgment on 13.9.24. Being dissatisfied with the judgment, the Appellant filed the Memorandum of Appeal dated 9th October 2024 inviting this court to subject the whole of the evidence to a fresh and exhaustive scrutiny and make conclusions about it.
2. The Appellant opened a bank Account No. 1071740399001 for the Respondent vide the account opening form signed on 24th June 2014. The account opening documentation identified the Respondent by name, national ID, telephone number and business (Aberdare Steel & Hardware Ltd).
3. The Respondent admitted at trial that the telephone number and national ID in the form were his, and that he was a director of the company Aberdare Steel & Hardware Ltd named on the form.
4. The Respondent did not dispute that the passport photo on the form was his. Despite these admissions and the unchallenged account details, the Respondent denied ever operating the account or obtaining a cheque book.
5. Between September 2014 and July 2015 the Respondent drew and signed a series of cheques on this account, causing it to become overdrawn. The Appellant honored the cheques presented by the payees and credited them to the respective third-party accounts.
6. It is the Appellant’s case that insofar as the law is concerned, each cheque constituted an instruction by the Respondent as drawer to pay the stated sum to the named payee. Despite being put on notice, the Respondent never repaid the overdrawn amounts.
7. The Appellant therefore sued for the unpaid balance of Kshs. 2,653,571.18, with interest. In his defence the Respondent denied the account existed in his name, disclaimed knowledge of the cheques and insisted that the Appellant had failed to prove its case.
8. In its ruling the trial court accepted that the Appellant had proved some matching details – namely that the account opening form’s unique customer identification number (1740399), name, National ID number, and telephone number corresponded to the Respondent, and that the Respondent admitted being a director of the company listed therein, Aberdare Steel & Hardware Ltd.
9. The court found that the documents bore the Respondent’s identity. Nevertheless, the court concluded that a critical issue of fact remained: whether the Respondent had actually signed the cheques. The court observed that while the Appellant insisted the signatures matched the specimen on the account form, this was not “proved” in trial.
10. The court faulted the Appellant for not producing any handwriting expert. It held the question of signature authenticity was “fundamental” and it required expert comparison. In the court’s view, without expert evidence the Appellant could not satisfy its burden.
11. The learned Magistrate held that the Appellant tried to shift the onus of proof to the Respondent, and ultimately found the Appellant had failed to prove its case on the balance of probabilities.
12. In advancing this, it relies in the case of Moses Nyandusi Nyakeramba v Kiamokama Tea Factory Co. Ltd [2016] KEHC 364 (KLR) cited with approval the case of Selle & another V Associated Motor Boat Co. Ltd. & Others.
13. It is its case that under the Bills of Exchange Act, Cap 27, that a cheque is a negotiable instrument and a bill of exchange payable on demand .
14. By drawing and signing each cheque, the Respondent unmistakably instructed the Appellant (as drawee) to pay the specified sums to the named respective payees thereby creating a binding obligation, being that the drawer becomes indebted for the amount he orders paid.
15. In Kitui Tobacco Distributors Ltd V Barclays Bank Of Kenya Ltd the High Court observed that:-
“by drawing each cheque the plaintiff was thereby authorizing the defendant bank to pay the payee named in each cheque the sum of money mentioned in that cheque.”
16. It argues that once the Appellant honored and paid the cheques to the respective payees, the Appellant became subrogated to the payees’ rights, and the overdrawn account debt duly became due from the Respondent to the Bank.
17. It places Reliance in Section 30(1) of the Bills of Exchange Act to the extent that it provides that every person whose signature appears on the instrument is “prima facie deemed to have become a party thereto for value” that is, liable on the bill.
18. It advanced the following identity links as evidence that the account in issue was the Respondent’s, and that he conducted banking transactions under it.
19. It submits that no party disputed that the account was opened in the Respondent’s name to which he admitted supplying the identifying details as set out in the account-opening form for account number (1740399).
20. It is its case that the identification number in the in the account opening from, in the cheques and overdrawn statement, PW-1 explained the purpose and significance of each digit in an account number and to clarify the slight discrepancy in the first and last digits of the accounts where he apprised the court as follows, the 1st, 2nd and 3rd digits signify the Bank’s Branch, the Customer’s, and the Type of Number Unique Identification Number Account respectively.
21. It is its case that the Respondent admitted that the telephone number and National ID on the form were his, and that he was a director of Aberdare Steel & Hardware Ltd – the business recorded on the form.
22. The passport photograph on the form was not challenged as belonging to the Respondent. It is its case that the only aspects in dispute were the signatures.
23. The Respondent deposited two Cheques which were dishonored into his account, cheques drawn by the same M/S Aberdare Steel Hardware Limited, a company that features in the account opening form in which the Respondent was the majority shareholder and director in an attempt to regularize his account. This establishes a contractual nexus between drawer, payee and by extension the bank.
24. From his Statement of Account, it is indicative that the Respondent on various occasions since he overdrew his account on 22nd September 2014, made attempts to regularise his account, some which were successful and some of which were not. It submits that courts should enforce negotiable instruments as contracts, and not let technical loopholes excuse defaults.
25. Reliance is placed in the Court of Appeal decision in Mrao Ltd –V- First American Bank of Kenya Ltd & 2 Others [2003] EKLR where the court noted that: -
“If courts are going to allow debtors to avoid paying their just debts by taking some of the defences I have seen in recent times, lenders will be crippled if not driven out of business altogether and no serious investors will bring their capital into a country whose courts are a haven for defaulters.”
26. It is its case that since the Respondent’s and the consistent identification across documents, the trial court ought to have treated the evidence as creating a prima facie debt.
27. Having proved that the Respondent was the account-holder and drawer of the cheques, the Appellant established that he became indebted to the Bank once the cheques were honored shifting the burden shifted to the Respondent to show why he should not be held liable. But no adequate explanation was offered other than bare denial.
28. The Appellant argues that the trial court’s conclusion that the Appellant “failed to prove its case on the required standards” ignores the strong inferences of identity and intent.
29. Reliance is placed in the case of William Kabogo Gitau V George Thuo & 2 Others [2010] Kehc 4124 (KLR) , where the court stated that:-
“In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case is more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51%, as opposed to 49% of the opposing party, is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegations that he made occurred.”
30. On the balance of probabilities, it is far more likely that the Respondent, whose ID and phone number match the bank’s records, drew the cheques, than that an unknown imposter did so.
31. It argues that even if there were small deviations in handwriting style, those do not outweigh the corpus of consistent evidence as to allow the Respondent to repudiate his debts.
32. Section 107 of the Evidence Act provides:-
“Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”.
33. By the trial court’s own citation of Kabogo (Supra), the Appellant need only establish its case by at least 51% likelihood. Once the Appellant makes out a prima facie case, the Respondent must come forward with evidence to rebut it.
34. The Appellant is challenging the fact that the learned Magistrate correctly acknowledged this standard, yet in practice required the Appellant to do more. The court criticized the Appellant for “shifting the onus of proof to the defendant”, even though the Appellant had done its part by presenting direct documentary evidence linking the Respondent to the account.
35. It submits that while the ultimate legal burden remains with the Appellant throughout, once a prima facie case is established, the evidential burden effectively shifts and the defendant must explain or rebut the inference.
36. It is its case that the Respondent offered no credible explanation for the matching unique identification number, National ID, telephone and business records, choosing instead to deny authorship of the cheques. Yet the trial court treated this denial as somehow resetting the Appellant’s onus, rather than as the Respondent’s burden to justify why the convergence of evidence should be disregarded.
37. The Appellants’ case is that the trial court’s central error was treating expert handwriting analysis as essential. The learned Magistrate stated that the issue of signatures was “quite fundamental” and that he had expected the Appellant to bring a document examiner to “make an informed conclusion”.
38. Even if the Respondent’s denial introduced doubt, the law provides tools to resolve it without handicapping the plaintiff. The Evidence Act expressly contemplates contested signatures where Section 70 requires proof of alleged handwriting, but Section 76 permits direct comparison of disputed writing with admitted samples.
39. Where evidence of identity is strong, the fact-finder is entitled to compare the handwriting on the cheque with the known signature on the account form. It is not necessary to call a handwriting expert as a matter of course.
40. Ordinary comparison by judges or witnesses is permissible when the features are clear. The Supreme Court of India in In Re Ajitsinh Chehuji Rathod V State Of Gujarat (India) observed that certified copies of specimen signatures maintained by a bank may be procured “with a request to the Court to compare” them with the signature on the cheque where it stated: -
“Hence, in an appropriate case, the certified copy of the specimen signature maintained by the Bank can be procured with a request to the Court to compare the same with the signature appearing on the cheque by exercising powers under Section 73 of the Indian Evidence Act, 1872”
41. It is its case that this is what the Appellant urged, where the Appellant’s own witness and the court could compare the cheque signatures to the single specimen it had.
42. There was no legal impediment to this approach, and the trial court should have given effect to it rather than demanding a forensic report as the only acceptable evidence.
43. It is the Appellants case that in insisting on expert evidence, the trial court essentially imposed a higher standard than “more likely than not”. The requirement transformed a simple civil case into something approaching criminal proof. This was a misapplication of the burden of proof.
44. It is its case that nothing in the Evidence Act compels the drawer or payee to produce an expert to prove a negotiable instrument; indeed the Act envisages ordinary avenues for ascertaining signature authenticity.
45. The Appellant’s failure to call an expert should not be fatal, especially where the evidence is otherwise compelling.
46. To hold otherwise would mean that a plaintiff with a clearly valid debt can lose simply because it chose not to relitigate every detail with an examiner.
47. In civil cases must be decided on probabilities. By contrast, the trial court here treated the case as if requiring proof beyond reasonable doubt.
48. It argues that the trial court also erred in giving undue weight to the Respondent’s expert report (if any) over the Bank’s own records.
49. It is its case that it is settled that expert testimony is only one piece of the evidentiary puzzle and “does not trump all other evidence.” A judge may accept or reject expert conclusions based on the overall facts.
50. Reliance is placed in the case of Njega V Republic [2023] Kehc 22953 (Klr),where the court stated that: -
“…expert evidence does not “trump all other evidence”. It is axiomatic that judges are entitled to disagree with an expert witness. Expert evidence should be tested against known facts, as it is the primary factual evidence which is of the greatest importance.”
51. Section 76 of the Evidence Act expressly authorizes the court to compare any signature or writing admitted to have been made by a person with the one in question, even without prior proof.
52. The court may even direct a person to write words in court for comparison. Thus, if there is a genuine doubt about a signature, the court can itself or through witnesses visually compare it against known samples. No “expert” is needed unless the case is unusually technical.
53. The Indian Supreme Court in Rathod (Supra) stressed the point that certified specimen signatures can be obtained from the bank and compared by the court under Section 73 of India’s Evidence Act (analogous to Kenya’s Section 76 of the Evidence Act). This is fully consistent with Kenyan law.
54. It argues that it was incumbent on the court to exercise Section 76, allowing comparison, rather than rule that the Appellant had failed. By demanding an expert, the trial court also effectively reversed the evidential dynamic.
55. The correct approach according to the Applicant would have been that the Appellant proves the cheques were drawn on the Respondent’s account and identifies the handwriting as matching; at that point, the burden (both legal and evidential) is on the Respondent to show why the inference should not be drawn.
56. Instead, the court said “the onus of proof strictly remained with the plaintiff” even after Defendant’s denial. This ignores the settled principle that once a civil plaintiff has made out a prima facie case, a mere unsubstantiated denial by the defendant does not mean the plaintiff must disprove the denial beyond the standard threshold.
57. The burden properly remained on the Appellant only to maintain its case to the probability standard, which it had done in full. It was the Respondent who had to justify his outlandish claim that the numerous matching details were a coincidence.
58. The Appellant also relies on the doctrine of estoppel that bars a party from contradicting facts it has already unequivocally admitted. It is settled that a party’s formal or informal admissions of facts preclude later denials of those facts.
59. The court in Carol Construction Engineers Limited & Another V National Bank Of Kenya [2020] EKLR went ahead and further defined equitable estoppel as: -
“The doctrine of equitable estoppel prevents a party from acting inconsistently with a promise the party has made if that promise or representation had the effect of inducing another party to reasonably rely on it to that other party’s detriment.”
60. These admissions need not appear only in pleadings; they may be in correspondence, affidavits, or even oral statements as was observed by the court in Synergy Industrial Credit Limited V Oxyplus International limited & 2 Others [2021] EKLR which made reference to the Court of Appeal decision in Choitram V Nazari {1984} Klr 327 where it stated that:-
“Admissions of fact need not be on the pleadings; they may be in correspondence or documents, or oral because the rule uses the words "or otherwise" which are words of general application and are wide enough to include such other admissions.
61. The Respondent repeatedly admitted the existence of the debt by undertakings to repay, through his attempts to regularize his overdrawn account vide the cheques drawn by Aberdare Steel Hardware Limited, a company that was directly affiliated to the Respondent.
62. As previously stated hereinabove, these cheques were deposited in favour of the Defendant account, however, they were each returned as dishonoured. Such admissions, viewed as a reasonable bystander would see, amounted to a clear acknowledgment of liability.
63. Having thus placed himself in that position, the Respondent cannot now turn around and deny owing the Bank any sums. This estoppel principle independently defeats his defense.
64. If this Court were to affirm the trial court’s ruling that the Bank cannot recover the overdrawn sums, the Respondent would retain the benefit of those payments without an option for repayment, an outcome fundamentally unjust.
65. The Doctrine of Unjust Enrichment prevents just such windfalls, where if a defendant has been enriched at the plaintiff’s expense, it would be unjust for him to keep that benefit, and the plaintiff is entitled to restitution.
66. Reliance is placed in Samuel Kamau Macharia Vs Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] EKLR while making reference to the Court of Appeal in the case of Chase International Investment Corporation And Another V Laxman Keshra And Others , [1978] Kenya LR 143, highlighted the elements of unjust enrichment where it stated:-
“Elements presupposed by the doctrine of unjust enrichment are:
1) that the defendant has been enriched by the receipt of a benefit;
2) that he has been so enriched at the expense of the plaintiff; and (3) that it would be unjust to allow the defendant to retain the benefit in the circumstances of the case.
These subordinate principles of the general principle of unjust enrichment are interrelated. They clearly show the nature of restitutionary claims, and how people incur restitutionary obligations.”
67. It is argued that the Respondent indisputably received the face value of the outstanding overdrawn account as extended by the Bank. He is thus enriched at the Bank’s expense. It would be against conscience that he should keep these sums without payment.
68. Upholding the trial court’s dismissal of the Bank’s claim would allow the Respondent avoid accountability. A result flatly at odds with equity and justice.
69. Credence is placed in Samuel Kamau Macharia (Supra) where the court stated that: -
“Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice.”
70. The trial court erred by hinging liability on the lack of formal collateral. By agreement and conduct, the parties treated the facility as unsecured.
71. In an unsecured overdraft as was highlighted by PW-1, the bank plainly has no collateral to realize. The obligation to repay arises from the banking relationship itself. Neither party ever promised security, so the Bank cannot be faulted for “not having security.” the absence of collateral is immaterial. The Respondent expressly issued the cheques and accepted credit for them, thereby incurring a debt.
72. It is well settled that an unsecured borrower is nonetheless liable for amounts drawn down; a mere lack of security does not vitiate the obligation or bar the bank’s claim.
73. The trial court’s fixation on collateral misunderstands the legal nature of an unsecured overdraft. There was no requirement that an unsecured advance be guaranteed by property. By the very term unsecured, the advance was granted on trust that Respondent would repay.
74. Allowing him to escape payment due to the absence of collateral would exalt form over substance, contrary to the parties’ agreement and commercial reality.
The Respondent’s Case:
75. In opposing the appeal he relies on the case of Mbogo & Another v Shah [1968] EA 93, Sir Charles Newbold P. stated:
“An appellate court will not interfere with the exercise of discretion by a trial judge unless it is satisfied that the judge misdirected himself and as a result arrived at a wrong decision.”
76. Section 107 of the Evidence Act provides:
“(1) whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”
77. Section 109 continues:
“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence…”
78. Section 112 crystallizes the position:
“In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.”
79. He invites the court to look at the question as to who opened and operated account number 1071740399001, who authored the disputed cheques and whether any indebtedness crystallized, were matters peculiarly within the Appellant’s knowledge.
80. The Court of Appeal in Kinyanjui Kamau v George Kamau [2015] eKLR held in categorical terms that:
“Allegations of fraud must be pleaded and strictly proved, the standard of proof being higher than a balance of probabilities, but not beyond reasonable doubt.”
81. Whether viewed as a contractual claim or as a case enmeshed in allegations of fraud and irregularity, the evidential threshold was steep and on the Appellant, it fell short.
82. According to him, the Appellant’s claim was the purported account-opening form dated 24th June 2014. It bore three different passport photographs purportedly of the Respondent contrary to sound banking practice and it renders the alleged account-opening exercise wholly unbelievable.
83. The contradiction points, inescapably, to internal fraud and negligence within the bank, rather than culpability on the part of the Respondent.
84. Section 67 of the Evidence Act mandates that “Documents must be proved by primary evidence except in the cases hereinafter mentioned.” The Appellant called no maker of the form, no officer who witnessed the account opening and offered no explanation whatsoever for the three photographs.
85. In Kenneth Nyaga Mwigev Austin Kiguta & 2 Others [2015] eKLR, the Court of Appeal made it plain:
“Admission of a document in evidence does not amount to its proof.”
86. According to him,the learned trial Court, correctly held that the mere production of the account opening form, standing alone, could not, in law, suffice to ground liability.
87. The Appellant, however, elected to remain conspicuously silent on the veracity of the document and, in consequence, wholly failed to substantiate its assertions to the requisite legal standard.
88. The Appellant also heavily leaned on cheques allegedly drawn by the Respondent.One cheque was processed on the 18th of September 2014 yet bore the date 19th of September 2014 while others bore handwriting styles clearly inconsistent with one another.
89. Section 48(1) of the Evidence Act directs that when the court must form an opinion on handwriting, the opinion of experts is admissible.
90. Section 50(1) permits the court to consider the opinion of those acquainted with the handwriting of the person alleged.
91. The Appellant did not call a handwriting expert or any person familiar with the Respondent’s handwriting.
92. The principle in Bukenya & Others v Uganda [1972] EA 549 applies:
“…the prosecution must make available all witnesses necessary to establish the truth, even if their evidence may be inconsistent. Where they fail to do so, the court is entitled to draw the inference that the evidence of the uncalled witnesses would have been adverse.”
93. He invites this court just like the trial court did to draw the adverse inference that the testimony of such witnesses would have been inimical to, and indeed destructive of, the Appellant’s case.
94. The Appellant linked the cheques drawn by Aberdare Steel & Hardware Ltd to the Respondent personally. Contrary to the doctrine of corporate personality. The timeless authority of Salomon v Salomon & Co. [1897] AC 22 is instructive:
“The company is at law a different person altogether from its subscribers... Nor are the subscribers, as members, liable, in any shape or form, except to the extent and in the manner provided by the Act.”
95. During trial, the Appellant expressly conceded that the Respondent was not the sole director of Aberdare Steel & Hardware Ltd, but merely a co-director.
96. The Appellant asserted that his claim before the trial court ultimately rested on the allegation of a contractual banker–customer relationship and an overdraft facility.
97. The Court of Appeal in William Muthee Muthami v Bank of Baroda (Kenya) Ltd [2014] eKLR held:
“In the law of contract, the aggrieved party… must prove that there was offer, acceptance and consideration. It is only when those three elements are available that an innocent party can bring a claim against the party in breach.”
Analysis and Determination;
98. I have given the memorandum of appeal, the rival submissions carefully considered the arguments as advanced by the respective learned counsel for the parties.
99. I have also perused the entire record consistent with this court’s duty as a first appellate court to re-evaluate and reassess the evidence afresh with a view to making our own inferences of fact and arriving at independent conclusions.
100. This appeal proceeded by way of re-hearing but with the caution that unlike the trial court, I have not had the advantage of observing the witnesses in live testimony as set out in the case of Selle vs. Associated Motor Boat Co. Ltd & Others [1969].
101. Personal bank accounts are opened with the customer’s details with ordinarily as a minimum documents, the National Identity card or passport, a passport size picture a personal identification number, a phone number and in some cases, witnesses and a signature that enables the operations in the account or a mandate authorizing an agent to run their account.
102. A signature is such a fundamental requirement in the account opening process. In the instant appeal, it is not in doubt that the Respondent signature was not appended to their account opening evidence.
103. The fact that the account has been functioning cannot be used to waive requirement of a signature in a bank account. To that extent this court is in agreement with a trial court’s finding. The Appellant was under a duty to produce evidence to show that the Appellant acted with the requisite diligence and duty of care in ensuring that the Respondent account was opened in the compliance with the requirement of a signature. The Appellant did not discharge that burden within the Section 107 and 108 of the evidence act and I so hold.
104. The general thrust and import of the conduct on the part of the Respondent did not suffice to raise an estoppel against the Respondent.The bank acted negligently by allowing the deposit of a cheque in the name of a company that did not have an account.
105. It was not disputed that The Respondent admitted at trial court that the passport photo on the form, the telephone number and national ID in the form were his, and that he was a director of the company Aberdare Steel & Hardware Ltd named on the form.
106. It is a well-established principle of company law that a company has corporate legal personality. In other words a company is recognized as a legal entity separate and distinct from its members [see Salmon v Salmon Company Limited 1897 AC 22].
107. The fact that the Respondent was a director is neither here nor there given that the company is a separate legal entity from the Respondent when it comes to the fact that the Company deposited a cheque into the bank account at the Appellant the bank.
108. In Tai Hing Cotton Ltd vs. Liu Chong Bank [1985] 2 ALL ER, it was held, “I find it to be of high persuasive authority, providing the legal answer to the bank’s assertions that the customer and not itself, should bear the loss occasioned by Joseph’s actions in that it failed to, as it were to keep its eyes open, check the statements, and otherwise prevent the fraudulent acts. As all the three holdings of that Court are relevant to the matters under our consideration, I consider them worthy of in extenso quotation;
(1) In the absence of express agreement to the contrary the duty of care owed by a customer to his bank in the operation of his current account was limited to a duty to refrain from drawing a cheque in such manner as to facilitate fraud or forgery and a duty to inform the bank of any unauthorised cheques purportedly drawn on the account as soon as he, the customer, became aware of it. The customer was not under a duty to take reasonable precautions in the management of his business with the bank to
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1. The trial court entered judgment on 13.9.24. Being dissatisfied with the judgment, the Appellant filed the Memorandum of Appeal dated 9th October 2024 inviting this court to subject the whole of the evidence to a fresh and exhaustive scrutiny and make conclusions about it.
2. The Appellant opened a bank Account No. 1071740399001 for the Respondent vide the account opening form signed on 24th June 2014. The account opening documentation identified the Respondent by name, national ID, telephone number and business (Aberdare Steel & Hardware Ltd).
3. The Respondent admitted at trial that the telephone number and national ID in the form were his, and that he was a director of the company Aberdare Steel & Hardware Ltd named on the form.
4. The Respondent did not dispute that the passport photo on the form was his. Despite these admissions and the unchallenged account details, the Respondent denied ever operating the account or obtaining a cheque book.
5. Between September 2014 and July 2015 the Respondent drew and signed a series of cheques on this account, causing it to become overdrawn. The Appellant honored the cheques presented by the payees and credited them to the respective third-party accounts.
6. It is the Appellant’s case that insofar as the law is concerned, each cheque constituted an instruction by the Respondent as drawer to pay the stated sum to the named payee. Despite being put on notice, the Respondent never repaid the overdrawn amounts.
7. The Appellant therefore sued for the unpaid balance of Kshs. 2,653,571.18, with interest. In his defence the Respondent denied the account existed in his name, disclaimed knowledge of the cheques and insisted that the Appellant had failed to prove its case.
8. In its ruling the trial court accepted that the Appellant had proved some matching details – namely that the account opening form’s unique customer identification number (1740399), name, National ID number, and telephone number corresponded to the Respondent, and that the Respondent admitted being a director of the company listed therein, Aberdare Steel & Hardware Ltd.
9. The court found that the documents bore the Respondent’s identity. Nevertheless, the court concluded that a critical issue of fact remained: whether the Respondent had actually signed the cheques. The court observed that while the Appellant insisted the signatures matched the specimen on the account form, this was not “proved” in trial.
10. The court faulted the Appellant for not producing any handwriting expert. It held the question of signature authenticity was “fundamental” and it required expert comparison. In the court’s view, without expert evidence the Appellant could not satisfy its burden.
11. The learned Magistrate held that the Appellant tried to shift the onus of proof to the Respondent, and ultimately found the Appellant had failed to prove its case on the balance of probabilities.
12. In advancing this, it relies in the case of Moses Nyandusi Nyakeramba v Kiamokama Tea Factory Co. Ltd [2016] KEHC 364 (KLR) cited with approval the case of Selle & another V Associated Motor Boat Co. Ltd. & Others.
13. It is its case that under the Bills of Exchange Act, Cap 27, that a cheque is a negotiable instrument and a bill of exchange payable on demand .
14. By drawing and signing each cheque, the Respondent unmistakably instructed the Appellant (as drawee) to pay the specified sums to the named respective payees thereby creating a binding obligation, being that the drawer becomes indebted for the amount he orders paid.
15. In Kitui Tobacco Distributors Ltd V Barclays Bank Of Kenya Ltd the High Court observed that:-
“by drawing each cheque the plaintiff was thereby authorizing the defendant bank to pay the payee named in each cheque the sum of money mentioned in that cheque.”
16. It argues that once the Appellant honored and paid the cheques to the respective payees, the Appellant became subrogated to the payees’ rights, and the overdrawn account debt duly became due from the Respondent to the Bank.
17. It places Reliance in Section 30(1) of the Bills of Exchange Act to the extent that it provides that every person whose signature appears on the instrument is “prima facie deemed to have become a party thereto for value” that is, liable on the bill.
18. It advanced the following identity links as evidence that the account in issue was the Respondent’s, and that he conducted banking transactions under it.
19. It submits that no party disputed that the account was opened in the Respondent’s name to which he admitted supplying the identifying details as set out in the account-opening form for account number (1740399).
20. It is its case that the identification number in the in the account opening from, in the cheques and overdrawn statement, PW-1 explained the purpose and significance of each digit in an account number and to clarify the slight discrepancy in the first and last digits of the accounts where he apprised the court as follows, the 1st, 2nd and 3rd digits signify the Bank’s Branch, the Customer’s, and the Type of Number Unique Identification Number Account respectively.
21. It is its case that the Respondent admitted that the telephone number and National ID on the form were his, and that he was a director of Aberdare Steel & Hardware Ltd – the business recorded on the form.
22. The passport photograph on the form was not challenged as belonging to the Respondent. It is its case that the only aspects in dispute were the signatures.
23. The Respondent deposited two Cheques which were dishonored into his account, cheques drawn by the same M/S Aberdare Steel Hardware Limited, a company that features in the account opening form in which the Respondent was the majority shareholder and director in an attempt to regularize his account. This establishes a contractual nexus between drawer, payee and by extension the bank.
24. From his Statement of Account, it is indicative that the Respondent on various occasions since he overdrew his account on 22nd September 2014, made attempts to regularise his account, some which were successful and some of which were not. It submits that courts should enforce negotiable instruments as contracts, and not let technical loopholes excuse defaults.
25. Reliance is placed in the Court of Appeal decision in Mrao Ltd –V- First American Bank of Kenya Ltd & 2 Others [2003] EKLR where the court noted that: -
“If courts are going to allow debtors to avoid paying their just debts by taking some of the defences I have seen in recent times, lenders will be crippled if not driven out of business altogether and no serious investors will bring their capital into a country whose courts are a haven for defaulters.”
26. It is its case that since the Respondent’s and the consistent identification across documents, the trial court ought to have treated the evidence as creating a prima facie debt.
27. Having proved that the Respondent was the account-holder and drawer of the cheques, the Appellant established that he became indebted to the Bank once the cheques were honored shifting the burden shifted to the Respondent to show why he should not be held liable. But no adequate explanation was offered other than bare denial.
28. The Appellant argues that the trial court’s conclusion that the Appellant “failed to prove its case on the required standards” ignores the strong inferences of identity and intent.
29. Reliance is placed in the case of William Kabogo Gitau V George Thuo & 2 Others [2010] Kehc 4124 (KLR) , where the court stated that:-
“In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case is more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51%, as opposed to 49% of the opposing party, is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegations that he made occurred.”
30. On the balance of probabilities, it is far more likely that the Respondent, whose ID and phone number match the bank’s records, drew the cheques, than that an unknown imposter did so.
31. It argues that even if there were small deviations in handwriting style, those do not outweigh the corpus of consistent evidence as to allow the Respondent to repudiate his debts.
32. Section 107 of the Evidence Act provides:-
“Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”.
33. By the trial court’s own citation of Kabogo (Supra), the Appellant need only establish its case by at least 51% likelihood. Once the Appellant makes out a prima facie case, the Respondent must come forward with evidence to rebut it.
34. The Appellant is challenging the fact that the learned Magistrate correctly acknowledged this standard, yet in practice required the Appellant to do more. The court criticized the Appellant for “shifting the onus of proof to the defendant”, even though the Appellant had done its part by presenting direct documentary evidence linking the Respondent to the account.
35. It submits that while the ultimate legal burden remains with the Appellant throughout, once a prima facie case is established, the evidential burden effectively shifts and the defendant must explain or rebut the inference.
36. It is its case that the Respondent offered no credible explanation for the matching unique identification number, National ID, telephone and business records, choosing instead to deny authorship of the cheques. Yet the trial court treated this denial as somehow resetting the Appellant’s onus, rather than as the Respondent’s burden to justify why the convergence of evidence should be disregarded.
37. The Appellants’ case is that the trial court’s central error was treating expert handwriting analysis as essential. The learned Magistrate stated that the issue of signatures was “quite fundamental” and that he had expected the Appellant to bring a document examiner to “make an informed conclusion”.
38. Even if the Respondent’s denial introduced doubt, the law provides tools to resolve it without handicapping the plaintiff. The Evidence Act expressly contemplates contested signatures where Section 70 requires proof of alleged handwriting, but Section 76 permits direct comparison of disputed writing with admitted samples.
39. Where evidence of identity is strong, the fact-finder is entitled to compare the handwriting on the cheque with the known signature on the account form. It is not necessary to call a handwriting expert as a matter of course.
40. Ordinary comparison by judges or witnesses is permissible when the features are clear. The Supreme Court of India in In Re Ajitsinh Chehuji Rathod V State Of Gujarat (India) observed that certified copies of specimen signatures maintained by a bank may be procured “with a request to the Court to compare” them with the signature on the cheque where it stated: -
“Hence, in an appropriate case, the certified copy of the specimen signature maintained by the Bank can be procured with a request to the Court to compare the same with the signature appearing on the cheque by exercising powers under Section 73 of the Indian Evidence Act, 1872”
41. It is its case that this is what the Appellant urged, where the Appellant’s own witness and the court could compare the cheque signatures to the single specimen it had.
42. There was no legal impediment to this approach, and the trial court should have given effect to it rather than demanding a forensic report as the only acceptable evidence.
43. It is the Appellants case that in insisting on expert evidence, the trial court essentially imposed a higher standard than “more likely than not”. The requirement transformed a simple civil case into something approaching criminal proof. This was a misapplication of the burden of proof.
44. It is its case that nothing in the Evidence Act compels the drawer or payee to produce an expert to prove a negotiable instrument; indeed the Act envisages ordinary avenues for ascertaining signature authenticity.
45. The Appellant’s failure to call an expert should not be fatal, especially where the evidence is otherwise compelling.
46. To hold otherwise would mean that a plaintiff with a clearly valid debt can lose simply because it chose not to relitigate every detail with an examiner.
47. In civil cases must be decided on probabilities. By contrast, the trial court here treated the case as if requiring proof beyond reasonable doubt.
48. It argues that the trial court also erred in giving undue weight to the Respondent’s expert report (if any) over the Bank’s own records.
49. It is its case that it is settled that expert testimony is only one piece of the evidentiary puzzle and “does not trump all other evidence.” A judge may accept or reject expert conclusions based on the overall facts.
50. Reliance is placed in the case of Njega V Republic [2023] Kehc 22953 (Klr),where the court stated that: -
“…expert evidence does not “trump all other evidence”. It is axiomatic that judges are entitled to disagree with an expert witness. Expert evidence should be tested against known facts, as it is the primary factual evidence which is of the greatest importance.”
51. Section 76 of the Evidence Act expressly authorizes the court to compare any signature or writing admitted to have been made by a person with the one in question, even without prior proof.
52. The court may even direct a person to write words in court for comparison. Thus, if there is a genuine doubt about a signature, the court can itself or through witnesses visually compare it against known samples. No “expert” is needed unless the case is unusually technical.
53. The Indian Supreme Court in Rathod (Supra) stressed the point that certified specimen signatures can be obtained from the bank and compared by the court under Section 73 of India’s Evidence Act (analogous to Kenya’s Section 76 of the Evidence Act). This is fully consistent with Kenyan law.
54. It argues that it was incumbent on the court to exercise Section 76, allowing comparison, rather than rule that the Appellant had failed. By demanding an expert, the trial court also effectively reversed the evidential dynamic.
55. The correct approach according to the Applicant would have been that the Appellant proves the cheques were drawn on the Respondent’s account and identifies the handwriting as matching; at that point, the burden (both legal and evidential) is on the Respondent to show why the inference should not be drawn.
56. Instead, the court said “the onus of proof strictly remained with the plaintiff” even after Defendant’s denial. This ignores the settled principle that once a civil plaintiff has made out a prima facie case, a mere unsubstantiated denial by the defendant does not mean the plaintiff must disprove the denial beyond the standard threshold.
57. The burden properly remained on the Appellant only to maintain its case to the probability standard, which it had done in full. It was the Respondent who had to justify his outlandish claim that the numerous matching details were a coincidence.
58. The Appellant also relies on the doctrine of estoppel that bars a party from contradicting facts it has already unequivocally admitted. It is settled that a party’s formal or informal admissions of facts preclude later denials of those facts.
59. The court in Carol Construction Engineers Limited & Another V National Bank Of Kenya [2020] EKLR went ahead and further defined equitable estoppel as: -
“The doctrine of equitable estoppel prevents a party from acting inconsistently with a promise the party has made if that promise or representation had the effect of inducing another party to reasonably rely on it to that other party’s detriment.”
60. These admissions need not appear only in pleadings; they may be in correspondence, affidavits, or even oral statements as was observed by the court in Synergy Industrial Credit Limited V Oxyplus International limited & 2 Others [2021] EKLR which made reference to the Court of Appeal decision in Choitram V Nazari {1984} Klr 327 where it stated that:-
“Admissions of fact need not be on the pleadings; they may be in correspondence or documents, or oral because the rule uses the words "or otherwise" which are words of general application and are wide enough to include such other admissions.
61. The Respondent repeatedly admitted the existence of the debt by undertakings to repay, through his attempts to regularize his overdrawn account vide the cheques drawn by Aberdare Steel Hardware Limited, a company that was directly affiliated to the Respondent.
62. As previously stated hereinabove, these cheques were deposited in favour of the Defendant account, however, they were each returned as dishonoured. Such admissions, viewed as a reasonable bystander would see, amounted to a clear acknowledgment of liability.
63. Having thus placed himself in that position, the Respondent cannot now turn around and deny owing the Bank any sums. This estoppel principle independently defeats his defense.
64. If this Court were to affirm the trial court’s ruling that the Bank cannot recover the overdrawn sums, the Respondent would retain the benefit of those payments without an option for repayment, an outcome fundamentally unjust.
65. The Doctrine of Unjust Enrichment prevents just such windfalls, where if a defendant has been enriched at the plaintiff’s expense, it would be unjust for him to keep that benefit, and the plaintiff is entitled to restitution.
66. Reliance is placed in Samuel Kamau Macharia Vs Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] EKLR while making reference to the Court of Appeal in the case of Chase International Investment Corporation And Another V Laxman Keshra And Others , [1978] Kenya LR 143, highlighted the elements of unjust enrichment where it stated:-
“Elements presupposed by the doctrine of unjust enrichment are:
1) that the defendant has been enriched by the receipt of a benefit;
2) that he has been so enriched at the expense of the plaintiff; and (3) that it would be unjust to allow the defendant to retain the benefit in the circumstances of the case.
These subordinate principles of the general principle of unjust enrichment are interrelated. They clearly show the nature of restitutionary claims, and how people incur restitutionary obligations.”
67. It is argued that the Respondent indisputably received the face value of the outstanding overdrawn account as extended by the Bank. He is thus enriched at the Bank’s expense. It would be against conscience that he should keep these sums without payment.
68. Upholding the trial court’s dismissal of the Bank’s claim would allow the Respondent avoid accountability. A result flatly at odds with equity and justice.
69. Credence is placed in Samuel Kamau Macharia (Supra) where the court stated that: -
“Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice.”
70. The trial court erred by hinging liability on the lack of formal collateral. By agreement and conduct, the parties treated the facility as unsecured.
71. In an unsecured overdraft as was highlighted by PW-1, the bank plainly has no collateral to realize. The obligation to repay arises from the banking relationship itself. Neither party ever promised security, so the Bank cannot be faulted for “not having security.” the absence of collateral is immaterial. The Respondent expressly issued the cheques and accepted credit for them, thereby incurring a debt.
72. It is well settled that an unsecured borrower is nonetheless liable for amounts drawn down; a mere lack of security does not vitiate the obligation or bar the bank’s claim.
73. The trial court’s fixation on collateral misunderstands the legal nature of an unsecured overdraft. There was no requirement that an unsecured advance be guaranteed by property. By the very term unsecured, the advance was granted on trust that Respondent would repay.
74. Allowing him to escape payment due to the absence of collateral would exalt form over substance, contrary to the parties’ agreement and commercial reality.
The Respondent’s Case:
75. In opposing the appeal he relies on the case of Mbogo & Another v Shah [1968] EA 93, Sir Charles Newbold P. stated:
“An appellate court will not interfere with the exercise of discretion by a trial judge unless it is satisfied that the judge misdirected himself and as a result arrived at a wrong decision.”
76. Section 107 of the Evidence Act provides:
“(1) whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”
77. Section 109 continues:
“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence…”
78. Section 112 crystallizes the position:
“In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.”
79. He invites the court to look at the question as to who opened and operated account number 1071740399001, who authored the disputed cheques and whether any indebtedness crystallized, were matters peculiarly within the Appellant’s knowledge.
80. The Court of Appeal in Kinyanjui Kamau v George Kamau [2015] eKLR held in categorical terms that:
“Allegations of fraud must be pleaded and strictly proved, the standard of proof being higher than a balance of probabilities, but not beyond reasonable doubt.”
81. Whether viewed as a contractual claim or as a case enmeshed in allegations of fraud and irregularity, the evidential threshold was steep and on the Appellant, it fell short.
82. According to him, the Appellant’s claim was the purported account-opening form dated 24th June 2014. It bore three different passport photographs purportedly of the Respondent contrary to sound banking practice and it renders the alleged account-opening exercise wholly unbelievable.
83. The contradiction points, inescapably, to internal fraud and negligence within the bank, rather than culpability on the part of the Respondent.
84. Section 67 of the Evidence Act mandates that “Documents must be proved by primary evidence except in the cases hereinafter mentioned.” The Appellant called no maker of the form, no officer who witnessed the account opening and offered no explanation whatsoever for the three photographs.
85. In Kenneth Nyaga Mwigev Austin Kiguta & 2 Others [2015] eKLR, the Court of Appeal made it plain:
“Admission of a document in evidence does not amount to its proof.”
86. According to him,the learned trial Court, correctly held that the mere production of the account opening form, standing alone, could not, in law, suffice to ground liability.
87. The Appellant, however, elected to remain conspicuously silent on the veracity of the document and, in consequence, wholly failed to substantiate its assertions to the requisite legal standard.
88. The Appellant also heavily leaned on cheques allegedly drawn by the Respondent.One cheque was processed on the 18th of September 2014 yet bore the date 19th of September 2014 while others bore handwriting styles clearly inconsistent with one another.
89. Section 48(1) of the Evidence Act directs that when the court must form an opinion on handwriting, the opinion of experts is admissible.
90. Section 50(1) permits the court to consider the opinion of those acquainted with the handwriting of the person alleged.
91. The Appellant did not call a handwriting expert or any person familiar with the Respondent’s handwriting.
92. The principle in Bukenya & Others v Uganda [1972] EA 549 applies:
“…the prosecution must make available all witnesses necessary to establish the truth, even if their evidence may be inconsistent. Where they fail to do so, the court is entitled to draw the inference that the evidence of the uncalled witnesses would have been adverse.”
93. He invites this court just like the trial court did to draw the adverse inference that the testimony of such witnesses would have been inimical to, and indeed destructive of, the Appellant’s case.
94. The Appellant linked the cheques drawn by Aberdare Steel & Hardware Ltd to the Respondent personally. Contrary to the doctrine of corporate personality. The timeless authority of Salomon v Salomon & Co. [1897] AC 22 is instructive:
“The company is at law a different person altogether from its subscribers... Nor are the subscribers, as members, liable, in any shape or form, except to the extent and in the manner provided by the Act.”
95. During trial, the Appellant expressly conceded that the Respondent was not the sole director of Aberdare Steel & Hardware Ltd, but merely a co-director.
96. The Appellant asserted that his claim before the trial court ultimately rested on the allegation of a contractual banker–customer relationship and an overdraft facility.
97. The Court of Appeal in William Muthee Muthami v Bank of Baroda (Kenya) Ltd [2014] eKLR held:
“In the law of contract, the aggrieved party… must prove that there was offer, acceptance and consideration. It is only when those three elements are available that an innocent party can bring a claim against the party in breach.”
Analysis and Determination;
98. I have given the memorandum of appeal, the rival submissions carefully considered the arguments as advanced by the respective learned counsel for the parties.
99. I have also perused the entire record consistent with this court’s duty as a first appellate court to re-evaluate and reassess the evidence afresh with a view to making our own inferences of fact and arriving at independent conclusions.
100. This appeal proceeded by way of re-hearing but with the caution that unlike the trial court, I have not had the advantage of observing the witnesses in live testimony as set out in the case of Selle vs. Associated Motor Boat Co. Ltd & Others [1969].
101. Personal bank accounts are opened with the customer’s details with ordinarily as a minimum documents, the National Identity card or passport, a passport size picture a personal identification number, a phone number and in some cases, witnesses and a signature that enables the operations in the account or a mandate authorizing an agent to run their account.
102. A signature is such a fundamental requirement in the account opening process. In the instant appeal, it is not in doubt that the Respondent signature was not appended to their account opening evidence.
103. The fact that the account has been functioning cannot be used to waive requirement of a signature in a bank account. To that extent this court is in agreement with a trial court’s finding. The Appellant was under a duty to produce evidence to show that the Appellant acted with the requisite diligence and duty of care in ensuring that the Respondent account was opened in the compliance with the requirement of a signature. The Appellant did not discharge that burden within the Section 107 and 108 of the evidence act and I so hold.
104. The general thrust and import of the conduct on the part of the Respondent did not suffice to raise an estoppel against the Respondent.The bank acted negligently by allowing the deposit of a cheque in the name of a company that did not have an account.
105. It was not disputed that The Respondent admitted at trial court that the passport photo on the form, the telephone number and national ID in the form were his, and that he was a director of the company Aberdare Steel & Hardware Ltd named on the form.
106. It is a well-established principle of company law that a company has corporate legal personality. In other words a company is recognized as a legal entity separate and distinct from its members [see Salmon v Salmon Company Limited 1897 AC 22].
107. The fact that the Respondent was a director is neither here nor there given that the company is a separate legal entity from the Respondent when it comes to the fact that the Company deposited a cheque into the bank account at the Appellant the bank.
108. In Tai Hing Cotton Ltd vs. Liu Chong Bank [1985] 2 ALL ER, it was held, “I find it to be of high persuasive authority, providing the legal answer to the bank’s assertions that the customer and not itself, should bear the loss occasioned by Joseph’s actions in that it failed to, as it were to keep its eyes open, check the statements, and otherwise prevent the fraudulent acts. As all the three holdings of that Court are relevant to the matters under our consideration, I consider them worthy of in extenso quotation;
(1) In the absence of express agreement to the contrary the duty of care owed by a customer to his bank in the operation of his current account was limited to a duty to refrain from drawing a cheque in such manner as to facilitate fraud or forgery and a duty to inform the bank of any unauthorised cheques purportedly drawn on the account as soon as he, the customer, became aware of it. The customer was not under a duty to take reasonable precautions in the management of his business with the bank to
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