Mary Muthoni Njihia v Prudential Building Society (Under Statutory Management) [2017] KEHC 10099 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL AND TAX DIVISION

CIVIL CASE NO. 441 OF 2004

MARY MUTHONI NJIHIA........................................…PLAINTIFF

VERSUS

PRUDENTIAL BUILDING SOCIETY

(UNDER STATUTORY MANAGEMENT)..................DEFENDANT

JUDGMENT

[1]This suit was filed herein on 6 August 2004 by the Plaintiff, Mary Muthoni Njihia, through the law firm of M/s Ogeto Kerongo and Company Advocates. Her cause of action  was that, while holding an account with the Defendant during the year 2000, the Defendant, Prudential Building Society (under statutory management), unlawfully and without her authority, wrongfully debited the account with fictitious amounts, thereby causing unlawful interest to be accumulated in respect of the account to her prejudice. It was further pleaded that these unlawful transactions were brought to the attention of the Defendant but that no positive action was taken to correct the anomalies. Instead, the Defendant refused, and persisted in the refusal, to release the Plaintiff's title documents for a mortgage account which she had fully repaid, being title for LR Nairobi/Block 111/1644, on account of the unlawful debits. Accordingly, the Plaintiff prayed for judgment against the Defendant for:

[a]A permanent injunction restraining the Defendant from advertising, selling, alienating or offering for sale property known as LR No. Nairobi/Block 111/1644;

[b]An order that the Defendant do render proper and accurate accounts to the Plaintiff;

[c]A declaration that the Plaintiff has discharged her obligations      under the Charge and that  the documents should be released.

[d]Costs of the suit.

[2]The Plaint was thereafter amended on 31 January 2005 to include Paragraphs 3A, 5A and 8A and to plead that, at all material times relevant to this suit, the Plaintiff was an employee of the Defendant, and that she held a mortgage account as well as a savings account with the Defendant. It was further pleaded that, since no sums were due on the mortgage account, the Defendant's refusal to release the Plaintiff's title documents amounted to an unwarranted clog on the Plaintiff's equity of redemption. The Plaintiff filed a Further Amended Plaint on 10 July 2006 to include a Prayer for Kshs. 170,888. 25 together with interest at commercial rates under Paragraph (cc) of the Further Amended Plaint.

[3]In its Amended Statement of Defence and Counterclaim, the Defendant averred that it advanced the Plaintiff a loan of Kshs. 660,000, which loan was secured by a Legal Charge over the Plaintiff's title comprised in all that parcel of land known as Nairobi/Block 111/1644; and that upon the Plaintiff's default in servicing the mortgage account, it issued a three months' Statutory Notice in lawful exercise of its Statutory Power of Sale under the Charge. It was therefore the contention of the Defendant that the Plaintiff had no basis whatsoever to claim the return of her title documents when the mortgage sums remained outstanding and continued to accrue interest.

[4]It was further averred by the Defendant that, although the Plaintiff had since paid the sums due on the mortgage account, there is still a sum of Kshs. 329,111. 72 due and owing from the Plaintiff in respect of her savings account; and therefore that the Defendant has a right of lien over the title documents until such time that the said sum, together with interest, is fully paid. The Defendant otherwise denied having debited the Plaintiff's savings account with unlawful sums as alleged. Thus, the Defendant filed a Counterclaim against the Plaintiff, contending that, in her capacity as its employee, the Plaintiff had a cash shortage of Kshs. 500,000/= in her cash account and that the Plaintiff was obliged to make good the said shortage; and that the Defendant had offset the shortage from the sum of Kshs. 170,000/=that was in the Plaintiff's savings account, thereby leaving a balance of Kshs. 329,111. 75 outstanding. Thus, the Defendant prayed for Judgment against the Plaintiff for the aforesaid sum of Kshs. 328,111. 75 together with costs of the suit and interest at Court rates.

[5]This suit, having been confirmed ready and fixed for hearing long before the Practice Directions Relating to Case Management in the Commercial and Admiralty Division of the High Court at Nairobi, Gazette Notice No. 5179 of 2014, it was not obligatory for the parties to comply therewith, for Paragraph 18 of the Practice Directions recognizes that:

"This Practice Direction shall apply to all cases pending at the date hereof as well as to all cases filed hereafter.  However, if a case has already been confirmed as ready for hearing prior to the date hereof, it shall not be necessary to comply with the provisions of this Practice Direction."

[6]Whereas the hearing date of 10 July 2017 was given by the Court in the presence of Counsel for both parties, neither the Defendant nor its Counsel attended; and there being no reason for non-attendance, hearing proceeded ex parte as envisaged by Order 12 Rule 2(a) of the Civil Procedure Rules, 2010. Thus, the Plaintiff's brother, James Muiruri Kahumbura (PW1), to whom the Plaintiff had donated Power of Attorney, testified on her behalf and told the Court that he was also an employee of the Defendant and worked for the Defendant, along with the Plaintiff, until his retirement in 1997; and that the Plaintiff worked for the Defendant until 2001 and thereafter relocated to the United States of America. He relied on his witness statement filed herein and dated 15 May 2013.

[7] It was the evidence of PW1 that the Plaintiff had borrowed a sum of Kshs. 660,000/= from the Defendant which was secured by a Charge over her property, LR No. Nairobi/Block 111/1644 in Komarock Estate; and that he thereafter in 2003, repaid the entire loan on behalf of the Plaintiff. However, when he approached the Defendant for discharge of the security documents, the Defendant declined on the ground that the Plaintiff had experienced a shortage of Kshs. 500,000/= while working for it, which shortage had not been fully accounted for.

[8]According to PW1, after the Plaintiff resigned, she requested the Defendant to transfer her dues to her savings account; and that she had denied having experienced any cash shortage; and that, if anything, this issue ought to have been raised at the time of her resignation. PW1 added that the Plaintiff has never been arrested or prosecuted for any such shortage. He therefore contended that the allegation was a mere afterthought on the part of the Defendant. He relied on the Plaintiff's Bundle of Documents marked PExh.1 and urged the Court to find that the Plaintiff had proved her case to the requisite standard; and to accordingly grant orders directing the Defendant to release the Plaintiff's security documents, and for the payment of Kshs. 170,888/25 which was in the Plaintiff's savings account. Written submissions were also filed to that effect dated 14 July 2017 by Counsel for the Plaintiff, M/s Kerongo & Company Advocates.

[9]Having perused the record of the pleadings and proceedings herein, and having given due consideration to the evidence that was adduced by the Plaintiff herein, together with the documents exhibited, there is no dispute that the Plaintiff was an employee of the Defendant at all material times; or that she maintained two accounts with the Defendant in respect of a mortgage she was given by the Defendant and her own personal savings account. The parties are further in agreement that the mortgage was in respect of some Kshs. 660,000/= which has since been fully repaid. In the Amended Defence and Counterclaim, it was expressly acknowledged, at Paragraph 5 that"...The Plaintiff has since paid the sums due on the mortgage account..."

[10]Additionally, in a letter dated 29 October 2004, the Defendant, through its lawyers, Ochieng, Onyango, Kibet & Ohaga Advocates, conceded thus:

"We acknowledge receipt of your letter dated 21st October 2004 together with the further cheque for the sum of Kshs. 32,955/-. We have also banked the cheque for the sum of Kshs. 635,100/= and enclose herewith our official receipt..."

But the letter also states that:

"There is a sum due of from your client in respect of her savings account the details of which you may obtain from our client but which has been advised vide previous correspondence. We are instructed that the charge documents will be released upon the payment of the sums due in respect of this account."

[11]  The disputation, therefore, is over the contention by the Defendant that the Plaintiff could not account for some Kshs. 500,000/=shortage that she experienced in the course of her work as a cashier for the Defendant. However, granted that the Defendant opted to adduce no evidence in support of the Counterclaim, there is absolutely no basis for it to continue holding the Plaintiff's title documents in respect of the mortgage account, noting that the Defendant's claim to a right of lien has not been proved. I would accordingly adopt the reasoning of Mabeya, J. in Safarilink Aviation Limited vs. Trident Aviation Kenya Limited & Another [2015] eKLR, which I entirely agree with, that:

"...failure to rebut evidence tendered by one party leaves the court with no option but to draw an inference that the facts as presented are true...In the absence of evidence in rebuttal from the Defendants, I find that the Plaintiff has proved his case against the Defendants on a balance of probability..."

[12]In the premises, it is my finding that the Plaintiff has proved her case on a balance of probabilities. Accordingly, Judgment is hereby entered in her favour as follows:

[a]A permanent injunction be and is hereby issued restraining the Defendant from advertising, selling, alienating or offering for sale property known as LR No. Nairobi/Block 111/1644;

[b]A declaration be and is hereby issued that the Plaintiff has discharged her obligations under the Charge and that her title documents should therefore be released forthwith by the Defendant.

[c]Costs of the suit be borne by the Defendant.

[d]The Plaintiff's Counterclaim be and is hereby dismissed with costs.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 3RD DAY OF NOVEMBER, 2017

OLGA SEWE

JUDGE