Netcom Information Systems Limited v Shitakha & another [2022] KEHC 9949 (KLR)

Netcom Information Systems Limited v Shitakha & another (Civil Appeal 726 of 2016) [2022] KEHC 9949 (KLR) (Civ) (1 July 2022) (Judgment)

Neutral citation: [2022] KEHC 9949 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 726 of 2016

CW Meoli, J

July 1, 2022

Between

Netcom Information Systems Limited

Appellant

and

Patrick Shitakha

1st Respondent

Attorney General

2nd Respondent

(Being an appeal from the judgment of Nyaloti (CM) delivered on 3rd November 2016 in Nairobi Milimani CMCC No. 7201 of 2009)

Judgment

1. This appeal emanates from the judgment delivered on 3rd November 2016 in Nairobi Milimani CMCC No. 7201 of 2009. The suit was commenced by way of a plaint filed on 15th October 2009 by Patrick Shitakha, the plaintiff in the lower court (hereafter the 1st Respondent) against Netcom Information Systems Ltd and the Honorable Attorney General the 1st and 2nd defendants, respectively, in the lower court (hereafter the Appellant and 2nd Respondent respectively). The claim was grounded on the tort of malicious prosecution for which the 1st Respondent sought damages. It was the 1st Respondent’s contention that the arrest, detention, prosecution complained of was malicious and without any reasonable or probable cause. It was further averred that by reason thereof , the 1st Respondent suffered loss , anxiety and anguish.

2. The Appellant filed statement of defence on 18th November 2009 denying the key averments in the plaint and or liability. The 2nd Respondent on its part filed a defence on 21st April 2010 denying the key averments in the plaint and in the alternative averred that the acts complained of were carried out in execution of its statutory duty. The suit proceeded to full hearing during which only the Appellant and 1st Respondent adduced evidence. In its judgment, the trial court found in favour of the 1st Respondent and entered judgment against the Appellant and 2nd Respondent jointly and severally in the sum of Kshs. 2,000,000/-, costs of the suit and interest at the court rates.

3. Aggrieved with the outcome, the Appellant filed a memorandum of appeal dated 1st December 2016 challenging the judgment of the trial court on the following grounds: -“1. That the learned magistrate erred in fact and law in making an award of Kshs. 2,000,000/- as general damages when there was no evidence to support the said award.2. That the learned magistrate erred in fact and in law in making an award of Kshs. 2,000,000/- without giving reasons for such an award.3. That the learned magistrate erred in fact and in law in the manner of analyzing the evidence.4. That the learned magistrate erred in fact and in law in failing to determine the issues.” (sic)

4. The appeal was canvassed by way of written submissions. The Appellant condensed the grounds of appeal into one issue. It was submitted on the authority of Joseph C. Mumo v Attorney General KLR 2008 as cited in Nzoia Sugar Company Limited v Fungututi [1988] eKLR and Susan Mutheu Muia v Joseph Makau Mutua [2018] eKLR that to succeed in his claim, the 1st Respondent needed to establish several ingredients. Namely, that his arrest and prosecution were actuated by malice; that there was no reasonable or probable cause for the prosecution; and that he suffered injury. It was further contended that the mere termination of a criminal case in the 1st Respondent’s favour was not adequate proof that the prosecution was malicious; and that in lodging a complaint with the police, the Appellant had reasonable and probable cause to believe that the 1st Respondent was involved in the theft of its software. That judicial notice ought to be taken of the fact that the conduct of criminal investigations is the mandate of the police and not a complainant.

5. While calling to aid the decision in Robert Okeri Ombeka v Central Bank of Kenya [2015] eKLR cited in the decision in Tobias Moide Kengere v Postal Coproration & 2 Others [2019] eKLR it was argued that the 1st Respondent failed to demonstrate malice or collusion on the part of the Appellant with 2nd Respondent. That the conduct of investigations and the prosecution undertaken by the state was not within the control or discretion of the Appellant whose duty was limited to making a report. The Appellant complained that the trial court erred in shifting the burden of proof to the Appellant.

6. In conclusion it was submitted that there was no evidence to support the lower court’s findings and that in arriving at its judgment in favour of the 1st Respondent, the trial court erred in both law and fact. The court was thus urged to allow the appeal with costs and dismiss the 1st Respondent’s case in the lower court.

7. The 1st Respondent naturally defended the trial court’s findings. Counsel anchored his submissions on the decision of Murunga v Attorney General [1979] KLR 1381 regarding the requisite ingredients that must be established by a party to succeed in a suit grounded on malicious prosecution. Counsel contended that the fact of the prosecution and termination of the criminal proceedings in favour of the 1st Respondent has not been refuted by the Appellant. Citing the English Case of Herinam v Smith [1938] AC 305 counsel asserted that a review of the criminal proceedings against the 1st Respondent revealed no reasonable or probable cause for the Appellant and the police to support the belief that the software claimed by the Appellant had been stolen by the 1st Respondent. That given the circumstances of the matter, a cautious and prudent prosecutor would not have proceeded to lay criminal charges against the 1st Respondent. Hence, an element of malice is revealed in the decision made to the contrary.

8. Concerning the award of damages counsel reiterated the 1st Respondent’s evidence that he was a computer expert and had lost income as a result of the police confiscation of his computer containing programs from which he derived an income. He defended the trial court’s exercise of its discretion by asserting that the award of damages was reasonable and supported by evidence. The court was urged to dismiss the appeal.

9. The 2nd Respondent failed or opted not to participate in the appeal despite due notice.

10. The court has considered the memorandum of appeal, the record of appeal, the pleadings and original record of the proceedings as well as the submissions by the respective parties. This is a first appeal. The Court of Appeal for East Africa set out the duty of the first appellate court in Selle –Vs- Associated Motor Boat Co. [1968] EA 123 in the following terms: -“An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.In particular this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally.”

11. An appellate court will not ordinarily interfere with a finding of fact made by a trial court unless such finding was based on no evidence, or it is demonstrated that the court below acted on wrong principles in arriving at the finding it did. See Ephantus Mwangi & Another vs Duncan Mwangi Wambugu [1982 – 1988] 1KAR 278.

12. Upon review of the memorandum of appeal and submissions by the respective parties before this court, it is the court’s view the appeal turns to the question whether the trial court’s finding that the Appellant and 2nd Respondent were liable for malicious prosecution was well founded, and if so, whether the damages awarded were reasonable in the circumstances. The pleadings form the basis of the parties’ respective cases before the trial court. Hence a review thereof is apposite before dealing with evidentiary matters. In Wareham t/a A.F. Wareham & 2 Others v Kenya Post Office Savings Bank [2004] 2 KLR 91, the Court of Appeal stated in this regard that: -“We have carefully considered the judgment of the superior court, the grounds of appeal raised against it and the submissions before us on those matters. Having done so we are impelled to state unequivocally that in our adversarial system of litigation, cases are tried and determined on the basis of the pleadings made and the issues of fact or law framed by the parties or Court on the basis of those pleadings pursuant to the provisions of Order XIV of the Civil Procedure Rules. And the burden of proof is on the Plaintiff and the degree thereof is on a balance of probabilities. In discharging that burden, the only evidence to be adduced is evidence of existence or non-existence of the facts in issue or facts relevant to the issue. It follows from those principles that only evidence of facts pleaded is to be admitted and if the evidence does not support the facts pleaded, the party with the burden of proof should fail.” (Emphasis added).

13. The 1st Respondent by his plaint averred at paragraphs 4, 5, 6 & 7 that:“4. On 19th March 2007 one Maina Gichangi a Director of the first defendant made a complaint at Kilimani Police station that the Plaintiff had stolen software worth 75 Million from the first defendant and on that complaint a police officer attached to the said station Josiah Gichobi arrested the plaintiff and brought him to the said station on account of the alleged theft. The plaintiff was subsequently released on a cash bail but ordered to be reporting regularly to the said police station.5. On 13th April 2007 the Plaintiff was subsequently arraigned before the chief magistrate court at Kibera Law Courts and charged with theft of the said software in Criminal Case No. 2590 of 2007 whereupon the Plaintiff pleaded not guilty and was released on cash bail.6. The Plaintiff regularly attended court between 13th April 2007 and 13th July 2009 for the trial of his case and after trial was subsequently acquitted of the charges there being no case of theft made out against him.7. It is the Plaintiff’s contention that this arrest, detention and prosecution was malicious and without any reasonable cause. Particualrs Of Malicea.By its complaint, the First Defendant who was a competitor with the Plaintiff in the provision of information technology and computer services intended to stifle the Plaintiff out of business and stem off competition.b.Knowing full well that it did not own the software complained of and that it had not been deprived of its use and that the software was indeed still in its possession and use the first defendant nevertheless made a complaint that the software had been stolen from it.By reason of the matter aforesaid the Plaintiff has been put to considerable loss and expense and has suffered anxiety and anguish.” (sic)

14. The Appellant filed a statement of defence denying the key averments in the plaint or liability by stating at paragraph 5 that:“5. Consequently, all the particular of malice enumerated in paragraph 7 of the plaint are denied and the Plaintiff is put to strict proof of the same. The 1st Defendant further states that it acted without malice and in the bona fide belief that it was discharging a public duty that is, reporting a suspected criminal offence.” (sic)

15. The 2nd Respondent on its part denied the key averments in the plaint and averred in the alternative that its actions were in exercise of its statutory duty, and averred at paragraph 5 of the defence that:“5. In view of paragraph 3 and 4 above the 2nd defendant aver without prejudice that if the plaintiff was ever arrested detained and charged in a court of law it was after investigations were conducted and there was a reasonable case to prosecute the plaintiff. Particualrs of The 2Nd Defendants Statutory Dutya.To receive and act upon information that an offence cognizable in law has been committed.b.Further to (a) above to cause investigation to be undertaken and pursue every credible evidence upon a reasonable and probable cause.c.To apprehend and detain in custody suspects offender(s) for the purpose of an incidental to the furtherance of (b) above.d.To institute and take criminal proceedings against any person before any court in respect of any offence alleged to have been committed by that person.” (sic)

16. The trial court after restating and examining the evidence on record pronounced itself in its judgment by stating in part that:“9. The case of Mbowa vs East Mengo District Administration the East African well settled the tort of malicious prosecution where the court of appeal held that the tort of malicious prosecution is committed where there is no legal reason for instituting criminal proceedings. The purpose of the prosecution should be personal and spite rather than for the public benefit. I am satisfied that the Plaintiff has proved his case on a balance of probability…10. Judgment is entered in favour of the Plaintiff and he is awarded Kshs. 2,000,000 as general damages, I make no award for special damages as the same though pleaded were not proved.” (Sic).

17. The applicable law as to the burden of proof is found in Section 107, 108 and 109 of the Evidence Act. The duty of proving the averments contained in the plaint lay upon the 1st Respondent. He bore the legal burden. In Karugi & Another v Kabiya & 3 Others (1987) KLR 347 the Court of Appeal stated that:“[T]he burden on a plaintiff to prove his case remains the same throughout the case even though that burden may become easier to discharge where the matter is not validly defended and that the burden of proof is in no way lessened because the case is heard by way of formal proof. We would therefore venture to suggest that before the trial court can conclude that the plaintiff’s case is not controverted or is proved on a balance of probabilities by reason of the defendants’ failure to call evidence, the court must be satisfied that the plaintiff has adduced some credible and believable evidence, which can stand in the absence of rebuttal evidence by the defendant…--. The plaintiff must adduce evidence which, in the absence of rebuttal evidence by the defendant convinces the court that on a balance of probabilities it proves the claim.” (Emphasis added)

18. The 1st Respondent’s cause of action was founded on malicious prosecution. The elements to be proved in an action for malicious prosecution are well settled since Mbowa v. East Mengo District Administration [1972] EA 352, where the East African Court of Appeal summarized the law as follows:“The action for damages for malicious prosecution is part of the common law of England...The tort of malicious prosecution is committed where there is no legal reason for instituting criminal proceedings. The purpose of the prosecution should be personal and spite rather than for the public benefit. It occurs as a result of the abuse of the minds of judicial authorities whose responsibility is to administer criminal justice. It suggests the existence of malice and the distortion of the truth. Its essential ingredients are:1)the criminal proceedings must have been instituted by the defendant, that is, he was instrumental in setting the law in motion against the plaintiff and it suffices if he lays an information before a judicial authority who then issues a warrant for the arrest of the plaintiff or a person arrests the plaintiff and takes him before a judicial authority;2)the defendant must have acted without reasonable or probable cause i.e. there must have been no facts, which on reasonable grounds, the defendant genuinely thought that the criminal proceedings were justified;3)the defendant must have acted maliciously. In other words, the defendant must have acted, in instituting criminal proceedings, with an improper and wrongful motive, that is, he must have had, “an intent to use legal process in question for some other than its legally appointed and appropriate purpose” Pike v. Waldrum [1952] 1 Lloyd’s Rep. 431 at p. 452; and4)the criminal proceedings must have been terminated in the plaintiff’s favour, that is, the plaintiff must show that the proceedings were brought to a legal end and that he has been acquitted of the charge...”See also Murunga v Attorney General [1979] KLR 138

19. All the ingredients above must be established for a plaintiff to succeed. The undisputed events leading to the Nairobi Milimani CMCC No. 7201 of 2009 are that pursuant to the undisputed complaint by the Appellant to police, the 1st Respondent, and an employee of the Appellant, one Purity Chemutai, were arrested and jointly charged with the offence of stealing contrary to Section 275 of the Penal Code in Kibera Criminal Case No. 2590 of 2007. The particulars of the charge were that on diverse dates between 15th February 2006 and 19th March 2007, at the Appellant’s offices, the 1st Respondent jointly with his co-accused stole a human resource and payroll software valued at Kshs. 75,000,000/-, the property of the Appellant.Upon the close of the prosecution case, the court acquitted the two accused persons under section 210 of the Criminal Procedure Code on 13th July 2009.

20. The foregoing facts formed the basis of the case by the 1st Respondent and evidence before the trial court. Evidently therefore, there was no dispute that the Appellant’s complaint to police set the ball rolling regarding the criminal proceedings eventually brought against the 1st Respondent and that the criminal proceedings terminated in the 1st Respondent’s favour.

21. The sticking point in the matter was whether there was reasonable and probable cause for the Appellant and 2nd Respondent’s admitted actions and whether their actions were malicious. According to Halsbury’s Laws of England, 4th Edition - Reissue, Vol. 45 (2):“[R]easonable and probable cause for a prosecution has been said to be an honest belief in the guilt of the accused person based on a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances which, assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of an accuser, to the conclusion that the person charged was probably guilty of the crime”.

22. In Murunga v The Attorney General (supra) the court applied the test in Kagane & Others v Attorney General & Anor [1969] EA 643, namely that, whether there was a reasonable and probable cause for the prosecution is primarily to be judged on the objective question whether the material known to the prosecutor would satisfy a prudent and cautious man that the accused was probably guilty. In this regard, the court has reviewed the proceedings of the criminal trial produced as P. Exh.2 in the lower Court and the evidence tendered by the 1st Respondent. The gist of the prosecution case was that on the 19th of March 2007 the managing director of the Appellant received an email from the 1st Respondent whose subject was “Con Woman”. The email was addressed to Purity Chemutai (hereafter Purity) and copied to the Appellant company. The writer of the email accused Purity of secretly selling to third parties the Appellant’s human resource software developed by the Appellant and christened “Per Pay”. Attached to the email were copies or screen shots of the software.

23. Directors of the Appellant immediately questioned Purity and resolved to make a report to police. Police interrogated Purity who had accompanied the managing director to the police station. On the same date, police officers accompanied by the Appellant’s managing director, using information obtained from Purity, traced the 1st Respondent at Industrial area and thereafter proceeded to his house at Ruiru. A copy of the software was found in his computer which was taken by police and the two suspects placed under arrest. On March 25, 2007 the 1st Respondent wrote a further email to the Appellant purporting to explain how the software came to be in his computer, by claiming that he copied or installed it while assisting Purity in her work, that Purity had not sold the software to anyone, and that he had written the first email out of unspecified personal issues with Purity. Police having completed their investigations charged the two suspects.

24. In his evidence in chief and cross-examination in the lower court suit, the 1st Respondent sought to distance himself from the emails to the Appellant while admitting the email address therein as his own and that he managed it himself. He also admitted that he had known Purity for some time but denied that he had used the Appellant’s software to help Purity with her work as stated in the email of March 25, 2007. Admitting further that police indeed retrieved his computer from his home at Ruiru, he however asserted that the Per pay software was not found therein and claimed that, on the contrary, it is the Appellant who stole his hard disk containing his own software. He asserted that his prosecution was malicious. The key reasons cited by the criminal court in its acquittal of the 1st Respondent and his co-accused was the supposed failure by the Appellant to demonstrate ownership of the alleged stolen software, and if I understand it correctly, the second reason was the alleged failure by the prosecution to demonstrate the contents of the 1st Respondent’s computer during the trial or to have the same audited.

25. The findings notwithstanding, this court has reviewed the evidence both in the criminal trial and before the lower court. In my own estimation of the evidence before the lower court, the facts disclosed to the Appellant by the email of 19. 03. 2007 and questioning of Purity leading to the report being made to police, and material collected by the police would satisfy a prudent and cautious man that the 1st Respondent and Purity were probably guilty of the offence eventually preferred against them. In other words, that there was a reasonable and probable cause for the complaint to police and prosecution. The trial court did not examine the evidence before it in this regard.

26. Nor did the trial court address its mind to the question whether the prosecution of the 1st Respondent and his co-accused had been shown to have been mounted maliciously, i.e., for an ulterior, spiteful, or improper purpose, rather than for the public benefit. The Court of Appeal in Hassan Magiya Kiage v Attorney General & Another [2017] eKLR cited with approval the words of the Supreme Court of Canada in Nelles vs. Ontario [1989] 2SCR 170 to the effect that:“Finally, the initiation of criminal proceedings in the absence of reasonable and probable grounds does not itself suffice to ground a plaintiff’s case for malicious prosecution, regardless of whether the defendant is a private or public actor. Malicious prosecution, as the label implies, is an intentional tort that requires proof that the defendant’s conduct in setting the criminal process in motion was fueled by malice. The malice requirement is the key to striking the balance that the tort was designed to maintain between society’s interest in the effective administration of criminal justice and the need to compensate individuals who have been wrongly prosecuted for a primary purpose other than that of carrying the law into effect.”

27. The fact that the Appellant and 1st Respondent were in the same business field was not enough demonstration that the prosecution was intended to drive the latter party out of business. The 1st Respondent did not tender any evidence of the existence of his alleged software business, income tax returns or accounts, or any evidence to demonstrate the existence of business rivalry or competition with the Appellant’s directors, one of whom he conceded to have known while at the university as his (1st Respondent’s) lecturer. Moreover, in his evidence the Appellant’s witness at the trial Maina Wa Gichangi (DW1) though affirming that he had years before met the 1st Respondent while the said Respondent worked at ICDC, disputed the 1st Respondent’s claims, and asserted that while the Appellant’s business was software development, the 1st Respondent was a programmer and at no time had the Appellant competed with the latter for any business, or considered him a competitor in the software development field.

28. It is instructive that the entire transaction leading to the prosecution was triggered by an email from the 1st Respondent’s admitted email address. Secondly, the 1st Respondent’s allegation of business rivalry fails to explain the Appellant’s complaint against its own employee, Purity. In the court’s view, the allegation of malice in this case is clearly negatived by the material in the possession of the Appellant and police prior to taking their respective actions against the 1st Respondent and Purity. Had the trial court considered these issues, it would have concluded that the 1st Respondent failed to demonstrate that his prosecution was firstly, without reasonable and probable cause, and secondly that it was actuated by malice. It was not enough that the criminal prosecution terminated in the 1st Respondent’s favour.

29. In Nzoia Sugar Company Ltd v Fungututi [1988] eKLR, the Court of Appeal held that:“Acquittal per se on a criminal charge is not sufficient basis to ground a suit for malicious prosecution. Spite or ill-will must be proved against the prosecutor. The mental element of ill will or improper motive cannot be found in an artificial person like the appellant but there must be evidence of spite in one of its servants that can be attributed to the company.”

30. It was incumbent upon the 1st Respondent to discharge the burden of proving the various ingredients required in a successful suit for malicious prosecution. In a clear departure from the requirement in Order 21 Rule 4 of the Civil Procedure Rules, the trial court merely outlined the evidence and the applicable principles but did not at all attempt an analysis of the evidence before it or to give any reasons in support of the conclusion that the 1st Respondent had proved his case on a balance of probabilities.

31. Had the court analyzed the evidence, it would have found that the evidence by the 1st Respondent did not rise to the standard of proof on a balance of probabilities of the ingredients to necessary to establish a case of malicious prosecution against the Appellant and 2nd Respondent. Or stated another way, under section 107 of the Evidence Act, the burden of proof lay with the 1st Respondent and since his evidence did not support the facts pleaded, he failed as the party with the burden of proof. (See the case of Wareham t/a A.F. Wareham (supra)). The trial court misdirected itself in finding otherwise and its conclusions cannot stand. In view of this finding, no useful purpose will be served by the court considering the issue of quantum of damages.

32. In the result, the court finds the appeal meritorious and allows it. The court hereby sets aside the judgment of the lower court and substitutes therefor an order dismissing with costs the 1st Respondent’s suit in the lower court. The costs of the appeal are awarded to the Appellant. The costs awarded to the Appellant are to be borne by the 1st Respondent.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 1ST DAY OF JULY 2022C.MEOLIJUDGEIn the presence of:Mr. Ngechu h/b for Ms. Ndirangu for the AppellantMr. Keyonzo for the 1st RespondentFor the 2nd Respondent: N/AC/A: Carol