Kenya Commercial Bank Limited v Fredrick Mallya [2017] KEHC 1326 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL APPEAL  NO. 23  OF 2016

KENYA COMMERCIAL BANK LIMITED........APPELLANT

-V E R S U S –

FREDRICK MALLYA ................................... RESPONDENT

(Being an appeal from the judgement and decree delivered on behalf of Hon. A. Lorot (Mr) SPM on 2nd December 2015 in Nairobi CMCC No. 258 of 2013)

JUDGEMENT

1. Fredrick Mallya, the respondent herein, filed an action against Kenya Commercial Bank Ltd, the appellant herein vide the plaint dated 23rd January 2013 before the Chief Magistrate’s Court, Milimani Commercial Courts, Nairobi.  In the aforesaid plaint the respondent sought for judgement against the appellant as follows;

i.Special damages for USD22,477/25.

ii. Special damages for ksh.99,750/=

iii. Interest on (i) and (ii) above at commercial rate of 21% from 11th May 2012 until full payment.

iv. Costs of the suit.

2. The appellant filed a defence  to deny the respondent’s claim.

The suit proceeded for hearing before Hon. Lorot, learned Senior Principal Magistrate who in the end entered judgement in favour of the respondent.  Being dissatisfied with the decision, the appellant preferred this appeal.

3. On appeal, the appellant put forward the following grounds in its memorandum of appeal.

1. THAT the learned trial magistrate erred in both law and fact in finding that the appellant was wholly liable for the loss and withdrawals made on the suspect ATM Cards or in the alternative failing to apportion liability between the parties.

2. THAT the learned trial magistrate erred in fact  in failing to find that there were two sets of ATM cards issued in both the year 2010 and 2012 duly signed for by the respondent.

3. THAT the learned trial magistrate erred in fact and law by failing to consider the evidence of the document examiner (DW1).

4. THAT the learned trial magistrate erred in both law and fact by failing to find that the respondent had a duty of care to keep their ATM cards and their respective PIN numbers secret.

5. THAT the learned trial magistrate erred in law by failing to find that the respondent is liable under contributory negligence and estoppels.

6. THAT the learned trial magistrate erred in fact in failing to find that the respondent applied for ATM cards in 2012 with the full knowledge that he had been issued with ATM cards on both accounts (US Dollar account and shilling accounts) in 2010.

7. THAT the learned trial magistrate erred in fact when he restricted his findings on the grounds where two ATM cards can run on a single account.

8. THAT the learned trial magistrate erred in law in failing to sustain both the legal and factual arguments advanced by the appellant in its written submissions foiled on 7th April 2015.

4. When the appeal came up for hearing, learned counsels appearing in this matter recorded a consent order to have this appeal disposed of by written submissions.  I have re-evaluated the case that was before the trial court and I have also considered the rival submissions.  Before considering the substance of the appeal, it is important to set out in brief the background of this appeal.  The gist of the respondent’s claim is that the monies sought before the trial court were withdrawn from the respondent’s account held with the appellant’s Gigiri Branch by persons other than the respondent  by means of ATM cards issued by the appellant to persons other than the respondent.  It is the evidence of the respondent that he opened a shillings and US Dollar account with the appellant’s Gigiri Branch upon presenting his request on 11. 10. 2010.  He claimed that at the time of opening those accounts he did not apply for ATM cards because he did not require them and that he only made deposits and cash transfers.  The respondent also stated that he eventually applied in January 2012 for the ATM cards and he had not used ATM cards prior to 2012.  The respondent said that he was shocked to find lots of activities logged on his account involving withdrawals through ATM cards yet he had not used them before.  The respondent discovered he had lost the sum claimed in the plaint before the Chief Magistrate’s Court prompting him to file the aforesaid action.

5. I have already set out the 7 grounds of appeal put forward by the appellant.  The aforesaid grounds are interrelated therefore I will deal with them together.  The main ground which commends itself for consideration is in respect of the question as to whether or not the appellant was wholly to blame or liability should have been apportioned between the parties.  It is the submission of the appellant that the respondent was to blame for the loss of his monies.  The appellant avers that it tendered credible evidence showing that the respondent was issued with two sets of ATM cards.  The first set was issued in 2010 while the second set was issued in 2012.  In the alternative the appellant urged this court to find the respondent 90% liable while it be allowed to shoulder 10% of liability.  The respondent is of the view that the trial magistrate was right to rule that the appellant was wholly liable hence that decision should not be disturbed.  It is argued that the appellant was grossly negligent by issuing two parallel sets of ATM cards and for failing to deactivate the old cards upon issuing new ones.  I have carefully re-evaluated the evidence tendered before the trial court.  It is abundantly clear from the evidence of DW3 that she issued two ATM cards one for each account on 29. 10. 2010 whose receipt was duly acknowledged by the respondent who appended his signature on the ATM note book kept by the appellant.  DW1 a document examiner, confirmed that the signature appended in the ATM book belonged to the respondent.  It is not in dispute that the other set of ATM cards were issued to the respondent by the appellant in year 2012.  DW2 stated that she did not know why the old ATM cards which were issued in 2010 were not deactivated when the respondent applied for issuance of new ATM cards.  After a careful consideration of the rival submissions over this issue, it is clear in my  mind that both the appellant and the respondent must share responsibility over liability.  The terms and conditions of operating an account with the appellant clearly shows that the account holder issued with an ATM card to use  to access the account will be responsible for its safety and any transactions made using the card.  This court can comfortably infer from the evidence tendered that the respondent failed to keep both the ATMs and their respective PINs in safe custody hence making it possible for someone else other than the respondent to unlawfully access his account.  I have already stated that the appellant is to equally blame for failing to deactivate the old ATM cards. I am convinced that the learned Senior Principal Magistrate erred when he failed to apportion liability in this case.  In the end I think a fair order is to apportion liability in equal measure.

6. I find the appeal meritorious.  It is allowed thus giving rise to issuance of the following orders:

i. The order wholly finding the appellant liable is set asideand is substituted with  an order apportioning liability in the ratio of 50% each.

ii. The judgement sum awarded by the trial court should bereduced by half i.e

a. USD                     22,477/25

Less  50%            11,238/60

Net      USD         11,238/60

b. Ksh.                     99,750/=

Less 50%             49,875/=

Net                      49,875/=

iii.Interest at court rates on (ii) (a) and (b) from the date ofjudgment until full payment.

iv. Costs of the suit based on the figures subject to 50%apportionment.

v. Each party to bear its own costs of the appeal.

Dated, Signed and Delivered in open court this 6th day of November, 2017.

J. K. SERGON

JUDGE

In the presence of:

....................................................  for the Appellant

................................................ for the Respondent