National Bank of Kenya Limited v Ikinya & another [2023] KEHC 21071 (KLR)

National Bank of Kenya Limited v Ikinya & another (Civil Suit 123 of 1999) [2023] KEHC 21071 (KLR) (3 July 2023) (Judgment)

Neutral citation: [2023] KEHC 21071 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit 123 of 1999

DKN Magare, J

July 3, 2023

Between

National Bank of Kenya Limited

Plaintiff

and

Patrick Maina Ikinya

1st Defendant

Grace Muthoni Ikinya

2nd Defendant

Judgment

1. This matter has been in our corridors since 1999. The last time it came up for hearing the defendant sought to adjourn the same. The plaintiff’s case was closed as ordered on 21/5/2014 while the defence case was written closed on 29-4-2015. Parties were to file submissions. They filed submissions.

2. For 8 years this case has been in our courts doing absolutely nothing.

Pleadings 3. By a plaint dated 17-3-1999, the plaintiff prayed for aa.sum of Ksh 1,037,444. 90b.Interest at the rate of 35% from 1-3-1999c.Costs.

4. The plaintiff averred that the defendants excluded guarantee for Ksh. 1,080,000/=. The plaintiff had lent money over a charge dated 14-10-1994, with a first charge over subdivision 1mainland north registered against the title.

5. The said property was sold for 1,800,000/= The plaintiff claimed for a guarantee of Ksh. 1,530,380. 40. This was amended to be 1,037,444. 90.

6. The defendant filed their defence on 20-5-1999. They stated that the payment were in full and final settlement. The matter proceeded on 18-9-2000 when the plaintiffs witness Charles Makori Ouya testified. He stated that the defendants were directors of Skyways. They guaranteed 1,080,000/= in 1994. The overdraft was settled by a charge and guarantee by directors. He stated that the applicable interest was 32%.

7. He admitted that a sum of USD 4036. 37 was credited with the customers account in the year 2000. There was no effect shown on the crediting of USD 4500. The customer also paid Ksh. 300,000/= The bank did not produce any statement on the outstanding amount.

8. The guarantee is based on outstanding money. The bank has produced all documents except the evidence that shows that the debt was due and owing. The Evidence Act provides as doth as regards to banker’s books. Under asection 176 of the evidence act, bankers books are prima facie evidence of the transactions. The section provides as doth: -176. Mode of proof of entries in bankers’ books Subject to the provisions of this Chapter of this Act, a copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transaction and accounts therein recorded.

9. The bankers purport that there is a debt due and owing. In their submissions the plaintiff correctly identifies the issues to be: -a.Whether a sum of Kshs. 1,037,444. 90 is truly due and owing.

10. There is alleged to be an admission that the impugned letter is not an admission. It is a discussion of whether the debt is paid fully or not. The only evidence of indebtedness is the bank statement. This will help us understand the effect of the payment and the outstanding dues.

11. A guarantee is collateral. There must be evidence of the indebtedness by the principal. Further, how the debt arose creating a nexus from the original debt secured by the 1st charge and secured by the guarantee.

12. This is also crucial because the defendants exhibit that the rate of interest agreed was 16%. The sum of Kshs. 450,000 was said to be credited. The sale took place and a sum of Kshs. 1,800,000 was recovered. The net proceeds were said to be 1,637,282. 90. The amount deposited was 2,932,382. He explained that the latter of 1,637,292. 90 relates to foreign accounts numbers 0224-006 and 0224-0065.

13. Defendants submissions were filed raising issues of lack of statement of account. They rely on the case of Margaret Njeri Muiruri VS Bank of Baroda No. 282 of 2004. They also rely on Section 44 of the Banking Act. They rely on the case of Prof Daniel Musymi Ndetei VS Daima k Bank Kenya.

14. They also rely on the case of Murugu Maina VS Harun Gathiha Maina (2008) eKLR.

15. The defendant relies on the issue of unconscionable interest. They rely on the case of Kamdal Investment Company Ltd VS Savings & Loan Kenya (2009) eKLR. They pose the issue forced and multilateral variation of terms. They finally relate to the common law induplum rule.

16. Unfortunately, the defence file did not pose most of this issues under order 2 rule 4(1) certain matters must be specifically The plaintiff prayed for a: -a.sum of Kshs. 1,037,444. 90b.Interest at the rate of 35% from 1-3-1999c.Costs.

17. The plaintiff averred that the defendants excluded guarantee for Kshs. 1,080,000/=. The plaintiff had lent money over a charge dated 14-10-1994, with a first charge over subdivision 1mainland north registered against the title.

18. Further for me to find that there was fraud, induplum rule, variation of terms they must not only be pleaded but there should be a counter claim to that effect. The parties are bound by their pleadings. I agree with the statement made in the case of Daniel Otieno Migore v South Nyanza Sugar Co. Ltd [2018] eKLR by Justice A C Mrima, stated as follows: -11. It is by now well settled by precedent that parties are bound by their pleadings and that evidence which tends to be at variance with the pleadings is for rejection. Pleadings are the bedrock upon which all the proceedings derive from. It hence follows that any evidence adduced in a matter must be in consonance with the pleadings. Any evidence, however strong, that tends to be at variance with the pleadings must be disregarded. That settled position was re-affirmed by the Court of Appeal in the case of Independent Electoral and Boundaries Commission & Ano. vs. Stephen Mutinda Mule & 3 others (2014) eKLR which cited with approval the decision of the Supreme Court of Nigeria in Adetoun Oladeji (NIG) vs. Nigeria Breweries PLC SC 91/2002 where Adereji, JSC expressed himself thus on the importance and place of pleadings: -“…..it is now trite principle in law that parties are bound by their pleadings and that any evidence led by any of the parties which does not support the averments in the pleadings, or put in another way, which is at variance with the averments of the pleadings goes to no issue and must be disregarded………In fact, that parties are not allowed to depart from their pleadings is on the authorities basic as this enables parties to prepare their evidence on the issues as joined and avoid any surprises by which no opportunity is given to the other party to meet the new situation.”12. The Supreme Court of Kenya in its ruling on inter alia scrutiny in the case of Raila Amolo Odinga & Another vs. IEBC & 2 others (2017) eKLR found and held as follows in respect to the essence of pleadings in an election petition: -“In absence of pleadings, evidence if any, produced by the parties, cannot be considered. It is also a settled legal proposition that no party should be permitted to travel beyond its pleadings and parties are bound to take all necessary and material facts in support of the case set up by them. Pleadings ensure that each side is fully alive to the questions that are likely to be raised and they may have an opportunity of placing the relevant evidence before the court for its consideration. The issues arise only when a material proposition of fact or law is affirmed by one party and denied by the other party. Therefore, it is neither desirable nor permissible for a court to frame an issue not arising on the pleadings…...’”

19. The issue of unconscionable and prohibitive interest is pleaded, but the court is not asked to do anything. The only issue that the defendant truly pleaded was that such a sale was to be full and final settlement.

20. I have tried to find evidence that could indicate that the defendants are indebted to the plaintiff, in vain. Kenya Commercial Bank Limited v James Kuria Njine [2002] eKLR, the court, justice A.G Ringera, as then he was stated as doth; -“…I am afraid, I cannot agree. Without that statement which is marked as exhibit "ASK 2" in the affidavit of the plaintiff, there would be nothing to support the plaintiff’s pleading that at the commencement of the suit the defendant was indebted to it in the sum of Kshs.2,776,698. 90. That figure would be no better that any figure plucked from the air above the Commercial Court here in Nairobi. The admissibility or otherwise of that statement is therefore crucial to the success or failure of the application for summary judgment. Counsel for the plaintiff was of the view that the statement constituted entries in a book of account regularly kept in the course of business and was therefore admissible under Section 37 of the Evidence Act which reads-"37. Entries in books of account regularly kept in the course of business are admissible whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."

21. The court cannot make a decision on basis of conjecture, surmises and as soothsayers. The court only acts on concrete evidence. The one question that both parties agree on that is how much is due has not been answered.

22. In the case of Rajnikantkhetshi Shah v Habib Bank A.G. Zurich [2016] eKLR, the court, F. GIKONYO, j stated as dofollows: -“…least is should say is that the decision by the bank to keep this account open for as long as they wish was an act comparable to illegal foreclosure; it defeated all prudence and reasonableness. I do not think prudence would call such account active one or performing one. The bank kept a dark ominous cloud hovering upon the chargor. This is not only a source of anxiety and uncertainty as to when the property will be redeemed but is contrived, malicious, stealth and oppressive; a complete negation of the law and equity of redemption.”

23. Though speaking of redemption, the bank in this case papers unsure of whether there is a debt or not. It operated in a mickey mouse way. The defendant was categorical that he cleared the debt. The duty is on the Plaintiff to prove that some debt and the extent of such debt is due and owing.

24. A whole chapter VII of the evidence act is dedicated to bankers’ books. Section 176 of the evidence act provides as follows: -“176. Mode of proof of entries in bankers’ books Subject to the provisions of this Chapter of this Act, a copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transaction and accounts therein recorded.

25. The evidence Act even goes ahead to show how such entries are to be verified. Section 177 of the evidence Act provides as follows: -“177. Proof and verification of copy(1)A copy of an entry in a banker’s book shall not be received in evidence under section 176 of this Act unless it be first proved that—(a)the book was, at the time of making the entry, one of the ordinary books of the bank; and(b)the book is in the custody and control of the bank; and(c)the entry was made in the usual and ordinary course of banking business; and(d)the copy has been examined with the original entry, and is correct.(2)Such proof may be given by an officer of the bank, or, in the case of the proof required under paragraph (d) of subsection (1), by the person who has performed the examination, and may be given either orally or by an affidavit sworn before a commissioner for oaths or a person authorised to take affidavits.

26. There is absolutely no evidence that any of the letters produced amounted to bankers’ books. The Plaintiff did not attempt at all to create a nexus between the amount claimed and the defendants. It is the bankers who have all these special knowledge on how the money from the auction was applied and how much remained due and its fate. There were other accounts which are said to be offset. However, the Plaintiff just threw the figures to court and asked me to give them.

27. A liquidated claim of this nature needs to have very specific proof. While addressing special damages in the case of David Bagine vs Martin Bundi [1997] eKLR, the court of appeal stated as doth: -“It has been held time and again by this Court that special damages must be pleaded and strictly proved. We refer to the remarks by this Court in the case of Mariam Maghema Ali v. Jackson M. Nyambu t/a sisera store, Civil Appeal No. 5 of 1990 (unreported) and Idi Ayub Sahbani v. City Council of Nairobi (1982-88) IKAR 681 at page 684: "....special damages in addition to being pleaded, must be strictly proved as was stated by Lord Goddard C.J. in Bonham Carter vs. Hyde Park Hotel Limited [1948] 64 TLR 177 thus:"Plaintiffs must understand that if they bring actions for damages it is for them to prove damage, it is not enough to write down the particulars and, so to speak, throw them at the head of the court, saying, 'this is what I have lost, I ask you to give me these damages.' They have to prove it"

28. In this court there are pleadings of amounts due. There is nothing to show how they were arrived. The Plaintiff was selective on the kind of evidence they were bringing. There was no bank statement showing indebtedness. This court is a court of evidence. The plaintiff’s evidence has not been proved. The defence assertion that they cleared the debt remain true to date. In absence of a bankers’ book, entered in the ordinary course of business, in this case, a bank statement has not been produced.

29. There are no documents showing the actual debt due. Correspondences cannot be a source of debt. The plaintiff failed miserably in proving their case.

30. The burden of proof on the plaintiff was simple. As set out in sections 107-109, their duty was to prove a debt and that, such a dent was owed by the defendants. The said sections state as doth; -“Burden of proof (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.108. Incidence of burdenThe burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.109. Proof of particular factThe burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

31. The Plaintiff wishes that I believe that the sum sought by the plaintiff is due and owing. They had a duty to show me the same. They failed. The duty was not much. 62. On this sole important issue, the law is that he who alleges must prove. The term burden of proof draws from the Latin Phrase Onus Probandi and when we talk of burden we sometimes talk of onus.

32. Burden of Proof is used to mean an obligation to adduce evidence of a fact. According to Phipson on the Law of Evidence, the term ‘burden of proof’ has two distinct meanings:1. Obligation on a party to convince the tribunal on a fact; here we are talking of the obligation of a party to persuade a tribunal to come into one’s way of thinking. The persuasion would be to get the tribunal to believe whatever proposition the party is making. That proposition of fact has to be a fact in issue. One that will be critical to the party with the obligation. The penalty that one suffers if they fail to proof their burden of proof is that they will fail, they will not get whatever judgment they require and if the plaintiff they will not sustain a conviction or claim and if defendant no relief. There will be a burden to persuade on each fact and maybe the matter that you failed to persuade on is not critical to the whole matter so you can still win.2. The obligation to adduce sufficient evidence of a particular fact. The reason that one seeks to adduce sufficient evidence of a fact is to justify a finding of a particular matter. This is the evidential burden of proof. The person that will have the legal burden of proof will almost always have the burden of adducing evidence.”

33. Justice Luka Kimaru, J, as then he was discussed the burden of proof in the case of William Kabogo Gitau vs. George Thuo & 2 Others [2010] 1 KLR 526 as doth: -“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 are 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.”

34. The persuasion has not happened. The plaintiff’s case is hopeless. It is begging for dismissal which I hereby do with costs of Ksh 125,000/=.

Determination 35. In the circumstances I find and hold that the plaintiff has failed to prove their case on a balance of probability. I therefore dismiss the plaintiffs suit with costs of 125,000 payable within 30 days failing which execution to issue.

DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 3RD DAY OF JULY, 2023. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.KIZITO MAGAREJUDGEIn the presence of: -Kabebe for the DefendantBarasa for the plaintiffCourt Assistant- Brian