Bank of Africa Kenya Limited v Njenga & another (Both trading as Totally Wholemark Distributors) [2022] KEHC 9823 (KLR)

Bank of Africa Kenya Limited v Njenga & another (Both trading as Totally Wholemark Distributors) (Civil Case 420 of 2015) [2022] KEHC 9823 (KLR) (Commercial and Tax) (15 July 2022) (Judgment)

Neutral citation: [2022] KEHC 9823 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Case 420 of 2015

A Mshila, J

July 15, 2022

Between

Bank of Africa Kenya Limited

Plaintiff

and

John Karanja Njenga

1st Defendant

Paul Boro Njenga

2nd Defendant

Both trading as Totally Wholemark Distributors

Judgment

Background 1. The Plaintiff filed a Plaint dated August 31, 2015and stated that by a letter of offer and Conditional Restructure of Existing Facility dated November 6, 2013, it agreed to restructure the existing Term Loan Banking facility already advanced to the Defendants amounting to Kshs.13, 505,726. 16.

2. The Defendants in their capacity as borrowers executed the Plaintiff’s letter of offer and Conditional Restructure of Existing Facility dated November 6, 2013accepting the terms and conditions therein.

3. Further, the Plaintiff averred that the Defendants breached the terms of the banking facility and defaulted in payment of the monthly instalments prompting the Plaintiff to send demand letters dated August 1, 2014, August 19, 2014and September 5, 2014. By the letter dated July 9, 2015, the Plaintiff demanded payment from the Defendants of the sum of Kshs.18, 042,289. 57 as at March 18, 2015together with interest thereon.

4. As at August 13, 2015 the Defendants were indebted to the Plaintiff as follows;

Balance inclusive of interest in KES

Current Account No.0701xxxx 5, 523,971. 61

Loan Account No.0701xxxx 7,224,356. 21

Loan Arrears0701xxxx 6,825,98. 23

Total amount as at August 13, 2015 19,574,312. 05 5. The Plaintiff prayed for judgment jointly and severally against the Defendants for;a.Kshs.19, 574,312. 05 with interest at court rates from August 23, 2015until payment in full.b.Costs of the suit on an Advocate-Client basis and interest thereon until payment in full.

6. The Defendants filed a Statement of Defence dated July 11, 2016and stated that no facility was advanced to them to warrant a restructure in any manner stated by the Plaintiff. They totally denied that they executed the Plaintiff’s letter of offer and that the signature affixed in the aforesaid facility is a forgery and the same should be subjected to the handwriting experts for verification at the expense of the Plaintiff.

7. It was the Defendants’ allegation that the Plaintiff was purporting to restructure a facility that was never there and forged signatures from Evenmatt and used them in Totally Wholemark Distributors in the conditional restructure of the purported restructure.

8. In addition, the Defendants stated that their accounts were overcharged with abnormal interest and other penalties on what was never advanced. That the Plaintiff misled the Defendants that money had been credited in their account whereas the monies were blocked and not available for use.

9. They prayed for the dismissal of the Plaintiff’s suit.

Plaintiff’s case 10. The Plaintiff submitted that it produced documentary evidence to support its claim. On the other hand, the Defendants did not challenge the strong evidence adduced by the Plaintiff. The Plaintiff relied on the case of Warui v National Land Commission & another (Civil Appeal 69 of 2019) [2022] KEHC 26 the Court stated as follows:“The 3rd Respondent had filed a Memorandum of Appearance and a Statement of Defence dated 3/07/2018 but the matter proceeded in the absence of the respondent's which means that no defence witness was ever called to testify during the trial; which would then also mean that the appellants evidence was and still remains unchallenged; as was held in the case Trust Bank Limited vs Paramount Universal Bank Limited & 2 Others NBI HCCC No. 1243 of 2001 Lessit J (as she then was) expressed herself as follows;‘It is trite law that where a party fails to call evidence in support of its case, that party's pleadings remain mere statements of fact since in so doing the party fails to substantiate its pleadings.’18. Sìmilarly. in the case of Janet Kaphiphe Ouma & Another vs Marie Stopes International (Kenya) Kisumu HCCC No.68 of 2007 the court held; 'In this matter, apart from filing its statement of defence the defendant did not adduce any evidence in support of its assertions made therein. The evidence of the plaintiff and that of the witness remain uncontroverted and the statement of defence therefore remains mere allegations. ...Sections 107 and 108 of the Evidence Act are clear that he who asserts or pleads must support the same by way of evidence.”

11. It was the Plaintiff’s case that it has proved its claim to the required standards and prayed that the Court enters judgment for the Plaintiff as prayed in the Plaint.

Defendants’ case 12. The Defendants had filed a Memorandum of Appearance and a Statement of Defence dated 3/07/2018; at the hearing the Defendants were not in attendance when the matter was called out and the hearing proceeded in their absence. No defence witness was called to testify during the trial and No submissions were filed.

Issues for determination 13. The Court has carefully considered the Plaint and the annextures therewith, Statement of Defence and the submissions and has framed the following issues for determination;a.Whetherthe Defendants executed the Plaintiff’s Letter of Offer and Conditional Restructure of Existing Facility dated 6th November 2013 accepting the terms and conditions therein?b.Whether the Plaintiff has proved its case to the desired threshold?

Analysis 14. The suit came up for hearing on 2nd February 2022 in the absence of the Defendants and the Plaintiff’s witness testified by adopting his witness statement as evidence.Whether the Defendants executed the Plaintiff’s Letter of Offer and Conditional Restructure of Existing Facility dated 6th November 2013 accepting the terms and conditions therein?

15. The Defendants in their Statement of Defence denied that they executed the Plaintiff’s Letter of Offer and that the signature affixed in the aforesaid facility is a forgery.

16. An allegation of fraud must be specifically pleaded and proved. In Vijay Morjaria -V- Nansingh Madhusingh Darbar & Another[2000] eKLR, the court stated as follows:“It is well established that fraud must be specifically pleaded and that particulars of the fraud alleged must be stated on the face of the pleading. The acts alleged to be fraudulent must, of course, be set out, and then it should be stated that these acts were done fraudulently. It is also settled law that fraudulent conduct must be distinctly alleged and distinctly proved, and it is not allowable to leave fraud to be inferred from facts.”

17. Similarly, in Moses Parantai & Peris Wanjiku Mukuru suing as the legal representatives of the estate of Sospeter Mukuru Mbeere (deceased) vs Stephen Njoroge Macharia [2020] eKLR, the Court of Appeal observed as follows:“……. Fraud is a quasi-criminal charge which must, as already stated, not only be specifically pleaded but also proved on a standard though below beyond reasonable double doubt, but above balance of probabilities……” In R.G Patel -V-Lalji Makanji [1957] EA 314 the former Court of Appeal for East Africa stated as follows:“Allegations of fraud must be strictly proved; although the standard of proof may not be so heavy as to require proof beyond reasonable doubt, something more than a mere balance of probabilities is required.”

18. The Plaintiff produced a copy of the Conditional Restructure of existing facility dated 6th November 2013 signed by both Defendants. On the even date the Defendants executed the standard terms and conditions applicable to all banking facilities.

19. The standard of proof of fraud is higher than on a balance of probabilities. In the case of Evans Otieno Nyakwanavs Cleophas Bwana Ongaro [2015] eKLR the court stated, inter alia, that:“In this case, it is the Respondent who filed the defence and counterclaim and alleged that the document relied upon by the Plaintiff was a forgery. It was therefore incumbent upon him to prove this fact by marshalling the necessary evidence to support his case. The burden of proof to prove fraud lay upon the Respondent. As regards the standard of proof, I would do no better than quote Central Bank of Kenya Ltd vs Trust Bank Ltd and 4 Others Nai Civil Appeal No. 215 of 1996 (UR) where the Court of Appeal, in considering the standard of proof required where fraud is alleged, stated that;“The Appellant has made vague and very general allegations of fraud against the Respondent. Fraud and conspiracy to defraud are very serious allegations. The onus of prima facie proof was much heavier on the Appellant in this case than in an ordinary civil case”.

20. There was no evidence tendered by the Defendants to demonstrate that there was forgery of their signatures andthe evidence on record also reveals that the Defendants executed the documents. Moreover, according to Section 109 of the Evidence Act, the burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, In the premises, the Court finds that the Defendants have failed to prove any fraud against the Plaintiffs.Whether the Plaintiff has proved its case and should the judgment be entered for the Plaintiff?

21. To affirm that the Defendant’s indeed advanced the loan facility; the Plaintiff produced a letter from the Defendants. Vide a letter dated 30th January 2014 to the Plaintiff, the Defendants stated;“………We the directors of the accounts have agreed to combine the two accounts to be repaying the outstanding loans one account. It is also our wish to have them secured by Evensong Title Deed which is already in your possession.We also kindly requesting for an extension of the repayment period to between six and eight years due to the cash flow challenges we are currently undergoingWe would like to thank you for the support you have accorder us and await your kind consideration……………..”

22. The Defendants did not categorically deny that there existed a relationship between them and the Plaintiff and at paragraph 5 of the Statement of Defence they stated;“The contents of paragraph 7 of the Plaint are not true, in the sense that if any amount was advanced (which is denied) the same was paid to the Plaintiff in total. The Defendants will seek leave of the Court to adduce evidence to that effect.”

23. The Court in the case of Nakan Trading Co. Ltd V Coffee Marketing Board 1990-1994 EX 448 on the issue of breach of contract held that:“In a contract a breach occurs when one or both parties fails to fulfil the obligations imposed by the terms since the contract between the parties were reduced into writing. The duty of the court is to look at the documents and determine whether it applies to the existing facts.”

24. Further to the above, the Plaintiff also annexed copies of the Defendants’ bank statements for the three accounts showing that that the Defendants defaulted in making their loan repayments and the balance on each account as follows;

Balance inclusive of interest in KES

Current Account No.0701xxxx 5, 523,971. 61

Loan Account No.0701xxxx 7,224,356. 21

Loan Arrears0701xxxx 6,825,98. 23

Total amount as at August 13, 2015 19,574,312. 05

25. In James Muniu Mucheru vs National Bank of Kenya Ltd [2019] eKLR, the Court stated as follows: -“Indeed, it is settled law that in civil cases the standard of proof is on a balance of probability. This is in effect to say that the Courts will make a finding based on which party’s version of the story is more believable.”

26. From the evidence placed before this Court, which evidence is uncontroverted, the Defendants failed to meet the loan repayment obligations when they became due and demanded; and this court is satisfied that the Plaintiff has proved its case on a balance of probability.

Findings and determination 27. In the light of the foregoing this court makes the following findings and determinations;i.This court finds that the Plaintiff proved its case to the desired thresholdii.Judgment is hereby entered in favour of the Plaintiff against the Defendants jointly and severally for the sum of Kshs.19, 574,312. 05iii.Interest on (ii) at court rates from the date of judgment.iv.Costs of the suit awarded to the plaintiff.Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 15THDAY OF JULY, 2022. HON. A. MSHILAJUDGEIn the presence of;Mr. Kimani for the plaintiffNo appearance for the defendantsLucy------------------Court Assistant