Ndirangu v Equity Bank Limited & another [2023] KEHC 23676 (KLR)

Ndirangu v Equity Bank Limited & another (Civil Case 137 of 2014) [2023] KEHC 23676 (KLR) (Civ) (19 October 2023) (Judgment)

Neutral citation: [2023] KEHC 23676 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Case 137 of 2014

AN Ongeri, J

October 19, 2023

Between

George Hiram Ndirangu

Plaintiff

and

Equity Bank Limited

1st Defendant

Banking Fraud Investigation Unit

2nd Defendant

Judgment

1. The plaintiff in this case, George Hiram Ndirangu(hereafter referred to as the plaintiff only) sued Equity Bank Ltd and The Attorney General (hereafter referred to as the 1st and 2nd defendants respectively) seeking general damages for arrest and false imprisonment, malicious prosecution, loss of employment and defamation vide plaint filed on 20/5/2014.

2. The plaintiff averred in the said plaint that he was an employee of the 1st defendant working as operations manager at the 1st defendant’s headquarters when he was arrested on 19/3/2010 and detained at Kileleshwa police station by the Banking Fraud Investigations Unit and he was charged in criminal case no. 551 of 2010.

3. The plaintiff was charged with two offences being forgery contrary to Section 340 of the Penal Code and attempting to steal by servant contrary to Section 281 as read with Section 389 of the Penal Code.

4. The plaintiff was acquitted on both counts on 22/5/2013 under Section 210 of the Criminal Procedure Code.

5. The plaintiff is seeking the following remedies;a.Damages and compensation for arrest, false imprisonment and malicious prosecution.b.Damages for loss of employment.c.Damages for defamationd.Costs of the suite.Interest on (a) and (d) above

6. The 1st defendant filed a statement of defence dated 19/6/2014 denying the plaintiff’s claim.

7. The 1st defendant averred in the said defence that the actions of the 1st defendant were justified, reasonable and probable to forward the matter to the Anti Banking Fraud Unit for investigations.

8. The 2nd defendant also filed a statement of defence dated 25/6/2014 and denied the plaintiff’s claim.

9. The case proceeded orally. The plaintiff who testified as PW 1 adopted his witness statement dated 19/5/2014 as his evidence in chief.

10. The plaintiff stated as follows in the said statement; in it he states that in the year 2007 he was employed as an operation manager at Equity Bank. In November 2007 he took charge of operations at the custody department of the Bank. However on 19/3/2010 he was called by head of department who inquired on some share transfer forms and if he was aware of the transactions. Upon looking at the forms he pointed out that the writing on them and the signature was not his.

11. He subsequently requested the security team to allow him a place to write so that they could compare his handwriting and signatures with the ones on the forms and they gave him some blank share transfer form which he wrote and signed on each of them. He remained in the security office till late in the afternoon when he was arrested by a police officer. This was on a Friday evening when he was taken to Kileleshwa Police station where he was booked and held all weekend till Monday.

12. On 22/3/2010 he was taken to the Chief magistrates Court where he was charged with four counts relating to the transfer of shares held at Equity Bank. He was later released on Kshs. 200,000 cash bail. While he was at Kileleshwa Police station he got infected and the day after he was released on bail he was treated at a hospital where he was treated for a boil under his armpit.

13. After attending court on many occasions the court acquitted him on 22/5/2013 when it found that the evidence of the prosecution did not establish a case against him in the four counts and the case was dismissed under section 210 of the Criminal Procedure Code. As a result of his arrest and subsequent arraignment in court he lost his employment with the 1st defendant and his reputation in society declined and continues to suffer great loss and damages which have been occasioned by the malicious acts of the defendants.

14. In his evidence in court, PW 1 said that the 1st defendant was malicious in prosecuting him.

15. He said he was the one who set up the diaspora banking services and he was placed in charge of diaspora department and the custodial services department.

16. The plaintiff said prior to his arrest, he used to be in charge of the Diaspora Department.

17. He said transfers of shares used to start at a branch. He said John Gachanja was supposed to present himself to Westlands branch to sign the documents.

18. The plaintiff said when he was arrested, he was given blank papers to sign and he was kept in custody for a weekend before he was charged in court.

19. He said the document examiner said there was no agreement between his handwriting and the questioned signatures.

20. He said his employment was terminated before the ruling was delivered.

21. He said Inspector Chepkok said he arrested him on instructions from Mr. Wahome an employee of the 1st defendant.

22. He said the 1st defendant reported him to CRB. He took the ruling to CRB but he has not received any response.

23. In cross-examination PW 1 said the offence for which he was prosecuted was for the transfer of safaricom shares by John Gachanja and Edward Irungu.

24. He said the eventual loss would have been a sum of 20 million shillings.

25. He said he was the operations manager at the 1st defendant bank at that time and he confirmed his names appeared on the two questioned documents.

26. The plaintiff said he was working with Jane Njuguna at that time.

27. The defendant called two witnesses. DW1, Julius Turuchiu adopted his stated dated 3/9/2015 as his evidence in chief.

28. He said as follows in the said written witness statement dated 3/9/2015. In it he stated that he was the security manager on the 1st defendant and is aware that on 18/3/2010 Mr. Ambrose, the head of custodial services was called by the central depository & settlement corporation limited questioning whether a transfer of 2,000,000 and 1,895,000 safaricom shares held at equity Bank Custodial Services was authorized by the 1st defendant.

29. The instructions were to transfer the shares from Equity Bank Custodial services to Genghis Capital and Kestrel Capital Limited at a value of Kshs. 20,892,600 in total. The transfers were purportedly requested by John Gachanja and Edward Njoroge. However, upon being contacted both denied having given such instructions and further that those shares had been acquired through a loan by the 1st defendant and therefore any transfer of their shares had to be authorized by their Westlands branch.

30. The matter was passed to his team to investigate the same where they noted that the name of the plaintiff appeared on the CDSC form having authorized the transaction. The plaintiff’s handwriting was submitted to a handwriting examiner who confirmed that the signature in the CDSC form belonged to the plaintiff. The matter was thereafter reported to the Banking Fraud and investigation Unit to investigate the matter further.

31. In cross-examination DW 1 said their investigations revealed that there was fraud. He said Hawk Eye investigations carried out investigations and the matter was reported to the banking Fraud Unit.

32. DW 1 also said that John Gachanja and Edward Njoroge were the owners of the shares.

33. The defendants also called WYCLIFF ONTUMBI (DW 2) who was HR manager with the 1st defendant as a witness.

34. DW 2 adopted his written witness statement dated 14/6/2022 as his evidence in chief.

35. DW 2 stated as follows in the said witness statement. In it he reiterated the statement of DW1 and added that the plaintiff was summarily dismissed which he subsequently challenged and sought compensation for in a claim against the 1st defendant in the employment and Labor relations Cause No. 683 ‘A’ of 2014. The matter was however struck out on 17/6/2015. The plaintiff filed a notice of appeal against that decision on 24/6/2015. The plaintiff’s loss of employment arose out of his involvement in the fraud which amount to gross misconduct.

36. In cross-examination, DW 2 said he joined the 1st defendant on 1/6/2022. He said the plaintiff was charged with fraudulent transfer of shares.

37. DW 2 said the shares were being transferred from Equity |Bank to Genghis Capital and Kestrel Capital Ltd.

38. He said the transfers were effected by the plaintiff.

39. DW 2 further said in cross-examination that one Ambrose Rugu should have been summoned to give a report.

40. DW 2 said investigations should have started with C.D.S.C. He said the C.D.S.C form had the plaintiff’s name.

41. DW 2 said Jane Wanjiku testified in the criminal case and said the handwriting on the questioned document resembled that of the plaintiff.

42. DW 2 said the report from Hawk Eye Technologies was received after the plaintiff had been charged in court.

43. He said Mr. Kenga found no nexus between the plaintiff’s sample handwriting and the questioned handwriting.

44. The parties filed written submissions as follows; the plaintiff submitted that it is not in dispute that the 1st Defendant through the Departments' Head- Mr. James Wahome C/O Equity Bank Limited lodged the complaint against the Plaintiff.

45. The plaintiff submitted that the prosecution was instituted without reasonable/probable cause as the case was terminated by a ruling dated 22/5/2013 where the magistrate observed that the prosecution had failed to prove that the plaintiff has participated, abetted or aided anyone in wrong doing. The plaintiff argued that it was clear that the 1st defendant had already picked the plaintiff as the scape goat as illustrated by the fact that despite the rigorous procedure which goes into the selling and transfer of shares, which involves a number of staff only the plaintiff was interviewed and/or investigations done on him.

46. The plaintiff further indicated that it is important to note that the report by Hawk Eye Limited was presented to the defendants on 22/3/2010 concluding that the alleged handwriting was by the same hand and by that time the plaintiff had already been incarcerated at Kileleshwa Police Station. The said report was controverted by the report of Mr. E K Kenga from the Director Of Criminal Investigations dated 18/6/2010 confirming that the handwriting in the illegal Transfer Forms did not tally with the handwriting of the Plaintiff.

47. On malice the plaintiff submitted that he felt targeted by his fellow employees to wit, Jane Njuguna and James Wahome due to his meteoric rise within the 1st defendant Bank. That further without any basis at all and having been informed that the Plaintiff was out of office on assignment at the time when the fraud was alleged to have happened, the said James Wahome openly and with bias instigated the 1st Defendant's security officer to interrogate and charge the Plaintiff as the culprit in the fraudulent transaction.

48. As a result, the plaintiff’s career progression was cut-short and short-lived by the malicious charges and incompetent investigation carried out by the 1st and 2nd Defendants. His ability to maintain and build his corporate image as a reputable banker was abruptly cut short. He suffered public ridicule for years while he underwent proceedings motivated by a need to pin a fraudulent transaction on an innocent party.

49. The 1st defendant in the alternative submitted that the plaintiff is not entitled to any damages for loss of employment as pleaded because that claim is time barred and that this court lacks jurisdiction to hear employment matters. In support cited George Hiram Ndirangu v Equity Bank Limited [2015] where it was held as follows: -“That said, the Court finds that the cause of action in the current claim arose on the date the Claimant's summary dismissal took effect being 1st April, 2010. The Claim therefore ought to have been filed not later than 31st March 2013 as required under Section 90 of the Employment Act, 2007. Consequently, the claim filed on 24th April. 2014 was out of time and this Court lacks jurisdiction to entertain it. "

50. The 1st defendant also submitted that the plaintiff is equally not entitled to any award for damages for defamation because that claim is time barred. That is trite law that any action founded on libel and slander should be filed within one year. Further, the plaintiff did not call any character witness to prove and/or substantiate the claim for defamation.

51. On damages for malicious prosecution the 1st defendant argued that it is not in dispute that the 1st Defendant set the law in motion against the Plaintiff by reporting him to the Banking Fraud Investigation Unit, that he was arrested and charged. and that the prosecution was terminated in the Plaintiff's favour. It is however very misguided to claim that the Plaintiff’s prosecution was instituted without reasonable and probable cause. There was a report from Hawk Eye Technologies that confirmed that the signatures on the CDSC forms were by the plaintiff.

52. On malice the 1st defendant contended that the mere fact that the mere fact that a person has been acquitted of the criminal charge does not necessarily connote malice on the part of the prosecutor and/or complainant. That further the plaintiff has not proved that there was some improper or wrongful motive or ill will. That the plaintiff was not singled out as there was 19 others. That additionally, the report to CRB was made in December 2013 while the plaintiffs arrest was on 19/3/2010 therefore it is untrue that the impugned arrest preceded the instance of malice.

53. The 2nd defendant in its submissions shared the same sentiments with the 1st defendant.

54. I have carefully considered the evidence adduced in this case together with the rival submissions filed by the parties.

55. It is the duty of the plaintiff to prove his case to the required standard which is on a balance of probabilities.

56. The issues for determination in this case are as follows;i.Whether the plaintiff has proved his case to the required standard.ii.Whether the defendant had a reasonable and probable cause to have the plaintiff arrested and charged.iii.Whether the plaintiff is entitled to the remedies he is seeking against the defendants.iv.Who pays the costs of this case?

57. On the issue as to whether the plaintiff has proved his case to the required standard, the plaintiff has sued the defendants for arrest and false imprisonment, malicious prosecution, loss of employment and defamation.

58. I find that prior to being arrested, there is evidence that the 1st defendant detected a fraud that would have led to a loss of kshs.20,000,000.

59. The plaintiff was working as operations manager with the 1st defendant in charge of Diaspora Clientele.

60. I find that it is not in dispute that the name of the plaintiff appeared on the questioned documents.

61. In the circumstances I find that the 1st defendant had reasonable cause for reporting the matter to the Anti Bank Fraud Unit for investigation.

62. I find that the reasonable thing for the 1st defendant to do was to report the matter for investigations.

63. I find that the plaintiff has not proved that the defendants are liable for unlawful arrest and false imprisonment or malicious prosecution and defamation.

64. On the issue as to whether the defendants had reasonable and probable cause to have the plaintiff arrested, I find that the answer is in the affirmative.

65. The reason being they had an issue which required to be investigated and no malice has been displayed. According to the authors of Clerk and Lindsell on Torts, 18th Edition at page 823, the essentials of the tort of malicious prosecution are as follows:“in an action of malicious prosecution the claimant must show first that he was prosecuted by the defendant, that is to say, that the law was set in motion against him on a criminal charge, secondly that the prosecution was determined in his favour, and thirdly that it was without reasonable or probable cause; fourthly that it was malicious. The onus of proving every one of this is on the claimant.Evidence of malice of whatever degree cannot be invoked to dispense with or diminish the need to establish separately each of the first three elements of the torts.”

66. In Dr Lucas Ndungu Munyua v Royal Media Services Limited & Another Civil Case 52 of 2008 [2014] eKLR it was stated that:“With respect to malice, the law is clear that the mere fact that a person has been acquitted of the criminal charge does not necessarily connote malice on the part of the prosecutor. As was held in James Karuga Kiiru vs. Joseph Mwamburi and Others Nrb C.A No. 171 of 2000 [2001] eKLR, to prosecute a person is not prima facie tortuous, but to do so dishonestly or unreasonably is the burden of proving that the prosecutor did not act honestly or reasonably being on the person prosecuted. Malice, however, can either be express or can be gathered from the circumstances surrounding the prosecution. A prosecution can either be mounted based on an offence committed in the presence of law enforcement officers or by way of a complaint lodged by a person to the said officers or agencies. However, the mere fact that a complaint is lodged does not justify the institution of a criminal prosecution. The law enforcement agencies are required to investigate the complaint before preferring a charge against a person suspected of having committed an offence. In other words the police or any other prosecution arm of the Government is not a mere conduit for complainants. The police must act impartially and independently on receipt of a complaint and are expected to carry out thorough investigations which would ordinarily involve taking into account the versions presented by both the complainant and the suspect. I say ordinarily because the mere fact that the version of one of the parties is not considered does not make the subsequent prosecution malicious. However, where the police deliberately decide not to take into account the version of the suspect and acts on a story that eventually turn out to be improbable and which no ordinary prudent and cautious man would have relied upon that failure may constitute lack of reasonable and probable cause for the purposes of malicious prosecution. On the other hand it would be obviously absurd to make a defendant liable because matters of which he was not aware put a different complexion upon facts, which in themselves appeared a good case for prosecution. But neglect to make a reasonable use of the sources of information available before instituting proceedings would be evidence of want of reasonable and probable cause and also malice. It is not required of any prosecutor that he must have tested every possible relevant fact before he takes action. His duty is not to ascertain whether there is a defence, but whether there is a reasonable and probable case for a prosecution. Circumstances may exist in which it is right before charging a man with misconduct to ask for an explanation but no general rule can be laid down.”.

67. On the issue as to whether the plaintiff is entitled to the remedies he is seeking, the answer is in the negative.

68. I find that the plaintiff has not proved his case to the required standard. I dismiss the plaintiff’s case at this stage.

69. I find that the plaintiff’s suit for loss of employment was filed in the ELRC Division since this Court has no jurisdiction to handle the same.

70. Had the plaintiff proved his case, he would have been awarded 10 million for unlawful arrest and false imprisonment and malicious prosecution and defamation.

71. However, the plaintiff did not prove his case to the required standard and the same is accordingly dismissed.

72. On the issue as to who pays the costs of this suit, I find that the plaintiff already lost his job as a result of the arrest and prosecution and for that reason I direct that each party bears its own costs of this suit.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. ................................A. N. ONGERIJUDGEIn the presence of:............................. for the Plaintiff............................. for the 1st Defendant............................. for the 2nd Defendant