Peter Godfrey Ouma Okutoyi v Central Bank of Kenya & Attorney General [2017] KEHC 3928 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL SUIT  NO. 391  OF 2007

PETER GODFREY OUMA OKUTOYI.........................................PLAINTIFF

- V E R S U S –

CENTRAL BANK OF KENYA..........................................1ST DEFENDANT

THE ATTORNEY GENERAL...........................................2ND DEFENDANT

JUDGEMENT

1. Peter Godfrey Ouma Okutoyi, the plaintiff herein filed this suit against Central Bank of Kenya (C.B.K) and The Attorney General, the 1st and 2nd defendants vide the plaint dated 3rd May 2007.  In the aforesaid plaint, the plaintiff sought for the following reliefs:

1. A mandatory injunction compelling the 1st defendant to issue to the plaintiff a certificate of employment

2. General and aggravated damages for unlawful confinement at various police stations between 25th May 2003 and 1st July 2003, both days inclusive.

3. General and aggravated damages for malicious prosecution

4. General and aggravated damages for loss of credibility

5. Special damages in the sum of kshs.109,967,590/05

6. Cost of the suit

7. Interest on (a) to (e) at court rates until payment in full

8. Any other and further relief that this honourable court may deem fit and just to grant.

When served, the defendants each filed a defence to deny the   plaintiff’s claim.

2. When this suit came up for hearing the plaintiff testified without summoning independent witnesses.  The defence summoned two witnesses to buttress their case.  The brief facts of this case appear to be short and straightforward.  The plaintiff at all material times was an employee of Central Bank of Kenya, the 1st defendant herein.  On 23rd day of May 2003, the plaintiff was arrested and thereafter arraigned in court to face a charge of four counts together with others.

In count I, the plaintiff faced a charge of Forgery contrary to Section 349 of the penal Code.

Particulars: that on the 28th day of January, 2003 at Nairobi within the Nairobi area, jointly with others not before court with intent to defraud forged a certain Kenya Government Securities  Sale confirmation Form S/NO. 119863 purporting it to be genuine and valid, Sale confirmation Form executed by Derrick Francis Ouma and Hasudi Chidambara Ramprasad for CBA Capital Limited.

In count II he faced  Stealing contrary to Section 275 of the Penal Code.

Particulars: that on the 28th day of January, 2003 at the Central Bank of Kenya in Nairobi within the Nairobi Area, jointly with others not before court, stole kshs.175 million the property of Central Bank of Kenya vide Government Securities Treasury Bond Number FXT 2/2002/2.

In count III the plaintiff was tried for Forgery contrary to Section 349 of the Penal Code.

Particulars: that on the 4th day of April, 2003 in Nairobi within the Nairobi area, jointly with others not before court, with intent to defraud forged a certain Kenya Government Securities Sale Confirmation Form S/N116471 purporting it to be a genuine and valid Sale confirmation Form duly executed by john Kariuki Mbuu and Getrude Mumbi Mbuu for Mumbu Holdings Limited.

In count IV he faced a charge of Stealing contrary to Section 275 of the Penal Code.

Particulars: that on the 4th day of April, 2003 at Central Bank of Kenya in Nairobi within the Nairobi area, jointly with others not before court, stole kshs.30 million the property of the Central Bank o Kenya vide Government Securities Treasury Bonds issue No. FXT 1/2002/4.

3. After undergoing a full trial, the plaintiff was acquitted of all counts.  The plaintiff felt aggrieved by the aforesaid trial hence he was prompted to file this action seeking for the reliefs outlined hereinabove.

4. In his testimony, the plaintiff (PW1) told this court that he was employed by the 1st defendant in 1988 and deployed to the department of Bank supervision.  He produced as exhibit in evidence his letter of appointment.  PW1 said he worked until May 2003 when he was interdicted and later charged for the offences of forgery and stealing.  The plaintiff stated that he did not commit the aforesaid offences but the 1st defendant pressed on with the charges yet it knew he was innocent.  PW1 alleged that the was suspended without pay and subsequently arrested and placed in custody by the Central Bank Fraud Detection police unit.  He said he was held in custody for 42 days.  The plaintiff stated before this court that his trial took three years to be concluded and that during his trial the case attracted wide media attention.  PW1 said that his career as a footballer was destroyed.  At the time of his suspension he said he was earning ksh.154,824/05 per month and was never paid from 22nd May 2003 despite making demands.  The plaintiff further stated that he was eventually forced to quit his job at the Central Bank of Kenya by resignation.  As a result, the plaintiff claimed that he suffered mental anguish, emotional distress, financial ruin, loss of pension and other benefits.  He also claimed that even after leaving he was not given a certificate of employment as required by law.  The plaintiff further stated that the defendants had no good reasons to suspend and later charge him with a criminal offence.  In cross-examination, the plaintiff conceded that in 2003 the Central Bank of Kenya, lost through fraud kshs.205,000,000/= which required serious investigations and police intervention.  The plaintiff further stated that the contract of employment he executed with the 1st defendant had a clause in which either side could terminate the contract by giving notice.  PW1 further admitted in cross-examination that the pension scheme in which he was a member and which the 1st defendant was the sponsor was governed by a Trust deed and rules.  He further admitted that the decision whether or not to pay pension dues lay with the trustees and not the Central Bank of Kenya.  The plaintiff further admitted in cross-examination that he personally wrote a letter of resignation in which he thanked Central Bank of Kenya for giving him a chance to serve for 14 years.  He also admitted that he informed C.B.K to deduct from his dues the amount in lieu of notice.  The plaintiff also conceded that it is the Pension Fund, which pays pension and not the 1st defendant.  In re-examination, the plaintiff stated that the police officers who were attached to the Banking Fraud Investigation Department under the payroll of the Central Bank of Kenya and that they took instructions from the Governor Central Bank of Kenya.  PW1 also stated that the  interest rate of his mortgage rose by 5% over and above the one offered by the employer.

5. The 1st defendant summoned Silas Mugeria (DW1) to testify in support of its defence.  DW1 stated that he has been in the employment of the 1st defendant since 1976 and that the plaintiff was his colleague.  DW1 confirmed that investigations were launched following the fraudulent disposal of the Treasury Bonds.  DW1 informed this court that on 28. 1.2003, the Treasury  Bond valued at ksh.175 milion and purchased by C.B.A Capital Ltd, was fraudulently and without the knowledge or consent of CBA Capital Ltd transferred from its CDS account to the CDS account no 09-30-192819 held by Alex Rebiro Ngugi (trading as Mpesha Agenicies)

6. DW1 further stated that Treasury Bond for ksh.30 million was also fraudulently transferred from Mumbu Holdings Ltd CDS account no. 09-30-19086to the account held by one Alex Rebiro Ngugi t/a Mpesha Agencies CDS account no. 09-30-19086-8 without the knowledge of the said Mumbu Holdings Ltd and without any consideration.  He further stated that the said Treasury Bonds were thereafter disposed of without the knowledge of the true owners and an amount of kshs.216,191,750/= was paid into the account of Alex Rebiro Ngugi held in Giro Bank being the proceeds for the sale of the Treasury Bonds.  DW1 stated that upon receipt of the aforesaid complaints from Mumbu Holdings and CBA Capital of the fraudulent disposal of their Treasury Bonds, the matter was referred to the Banking Fraud Department attached to the Kenya Police for investigations.  DW1 stated that Kenya Police investigated the case and made independent decision to arrest and charge the plaintiff alongside other people with various offences.  DW1 stated that he was arrested as one of the suspects for the loss of kshs.205,000,000/=.  DW1 stated that on 28. 1.2003, he found the form relating to ksh.175,000,000/= placed on his desk. He then took it to the plaintiff to go through and that he saw PW1 call the number of the person stated on those forms.  DW1 stated that he took the CDS forms to the plaintiff to verify the mandates since he headed the section.

7. The 1st defendant also summoned Peter Rotich (DW2) to testify in support of its defence.  DW2 produced various documents relating to this dispute.  DW2 told this court that the plaintiff resigned from his employment with the 1st defendant.  He told this court that plaintiff together with other staff members were suspended pursuant to rule 6. 37 of the C.B.K Staff Rules and Regulations.  DW2 stated that the plaintiff was jointly charged and tried with one Alex Rebiro Ngugi t/a Alex Mpesha.  The plaintiff was eventually acquitted and Alex Rebiro Ngugi was convicted.  DW2 stated that the plaintiff was charged because he gave clearance to the fraudulent transaction yet he had already moved out of that section.  DW2 said the Banking Fraud Unit is a police department under the control of the police.  He told this court that the Central Bank of Kenya reported to the Banking Fraud Unit about the theft.

8. The Honourable Attorney General summoned one Joseph Kiplagat Yegon (DW3)to testify in support of its defence.  He said he was tasked to investigate the loss of ksh.205 million from Central Bank of Kenya. It is the evidence of DW3 that the Director, Foreign Debt with the central Bank of Kenya made a phone call to request the Bank Fraud Unit to investigate the aforesaid loss.  DW3 stated that the transaction was handled by other employees and not the plaintiff alone.  DW3 said that it is Mr. Mugeria (DW1) who raised the red flag over the transaction and in the process he triggered this investigation.  DW3 stated that his investigation did not find the plaintiff culpable in the transaction.  He also stated that no money was recovered from the plaintiff.

9. Having considered the evidence and the submissions, the following issues arose for determination.  First, is whether or not the plaintiff was maliciously prosecuted.

10. In the case of Kasana Produce Store =vs= Kato (1973) E.A 190, the East African Court restated the ingredients necessary to prove malicious prosecution to include inter alia:

i. That a complaint was made against the appellant

ii. That the defendant(s) in lodging the complaint, did so without a reasonable and probable grounds.

iii. That the complaint was malicious.

11. It is the plaintiff’s assertion that there was no shred of evidence to support the charge levelled against him by the defendants. It was pointed out that at the material time the plaintiff did not work in the department where the suspicious transaction took place.  The plaintiff further pointed out that the investigation into the fraudulent discounting of ksh.175 million and ksh.30 million presented by the Banking Fraud Investigation Department clearly indicates that the plaintiff was not involved in the confirmation of the fraudulent transfer.  The plaintiff further stated that there was no evidence showing that the plaintiff handled any of the transaction documents at any stage of the transactions.  Accordingly, the plaintiff is of the opinion that there was no reasonable or probable cause to suspect and prosecute him.  On the other hand, the 1st defendant denied being actuated by malice in the prosecution of the plaintiff.  It was stated that the plaintiff had failed to tender evidence showing that the 1st defendant lodged a complaint to the police mentioning him.  There is no dispute that fraud was committed leading to the loss of kshs.205,000,000/=.  In the circumstances of this case, the 1st defendant was therefore entitled to lodge a complaint to the relevant investigative authority of the loss to facilitate investigations.  It cannot therefore be said that a loss of ksh.205 million cannot constitute reasonable and probable grounds to complaint to the police.

12. In this case, the 1st defendant did not target the plaintiff alone when it complained of the loss of kshs.205 million through fraud.  There is evidence that the plaintiff and others were arrested.  The plaintiff claimed that the actual culprits were left off the hook and that he was made the sacrificial lamb.  The plaintiff claimed that many of the prosecution witness had in one way or another dealt with the transaction documents therefore they should have prosecuted as suspects and not made as witnesses to fix him.  The plaintiff further submitted that the alleged stolen money was clearly traced to  individuals well known by the 1st defendant and a substantial amount was recovered therefore he should not have been arrested and prosecuted at all.  It is for this reason that the  plaintiff opines that his prosecution was actuated by malice and intended to destroy his reputation and employment. It is clear from the evidence that the 1st defendant through the evidence of one Silas Mugeria (DW2) that there was a loss of a huge sum  of money and that as a consequence of the loss, a report was made to the police which conducted their investigations and independently made the decision to prosecute the plaintiff.  In the circumstances of this case it cannot be said that the complaint by the 1st defendant which led to the arrest of the plaintiff was actuated by malice.

13. The complaint lodged to the police by the 1st defendant  was based on a complaint lodged by two customers of irregular retirement of their treasury bonds. It was its legal duty to do so.  The plaintiff has not disputed the fact that a colossal sum of money was lost hence the 1st defendant was justified to complain.

14. The second claim by the plaintiff is damages for loss of credibility.  It is the plaintiff’s submission that his prosecution was wholly fabricated and was intended to destroy his reputation and employment.  He stated that he was detained, had his home searched and police summoning him to appear before a disciplinary committee at his residence at 9. 00 pm, lost his employment and was rendered unemployable as a  result of the defendants’ actions.  He said that he lost reputation and immense emotional distress at the fear of being sentenced.  The news of the theft charge preferred against the plaintiff was all over the media.  The  1st defendant is of the view that the plaintiff failed to summon witnesses to support this allegation.  In my humble estimation, the plaintiff gave evidence showing that indeed he lost employment and reputation.  In my view the act of being arrested detained and later being tried prima facie caused a blot in the plaintiff’s reputation.  The plaintiff’s evidence in this case needed no corroborations as alluded by the 1st defendant. On a balance of probability, the plaintiff has shown that his credibility suffered a major blow.  The question is whether or not the 1st defendant is liable.  I have already stated that the 1st defendant made a genuine complaint.  It cannot therefore be condemned to pay damages for the plaintiff’s loss of reputation.

15. The third complaint/claim the plaintiff made is for payment of damages for loss of employment.  According to the plaintiff, the 1st defendant’s conduct amounted to constructive termination of his employment.  He pointed out that he was suspended without any probable or reasonable cause despite the fact that the investigations carried out by the defendants in respect of the alleged fraud disclosed no impropriety or guilt on his part.  He also claims that he was suspended without notice and pay contrary to Central Bank of Kenya Staff Rules and Regulations.  The plaintiff further claimed that he was subjected to humiliating investigations and interrogations on matters which he had no knowledge of. He claimed that as a result of the aforesaid circumstances and his inability to meet his financial obligations the plaintiff was compelled to resign from employment vide the letter dated 27. 6.2003.  For this reason the plaintiff claimed that he was entitled to damages for constructive termination.  The 1st defendant on the other hand is of the view that the plaintiff is not entitled to the claim of damages for loss of employment since he voluntarily resigned from employment.  I have examined the plaintiff’s letter of resignation dated 27. 6.2003 and it is clear that the plaintiff had expressed his gratitude to the 1st defendant for giving him an opportunity to serve the country.  He even went ahead to authorise the 1st defendant to recover payment in lieu of notice from his terminal dues.  The letter is couched in a manner which shows there was no duress on the part of the 1st defendant.  For the above reason I find no merit in this claim.

16. The other claim the plaintiff made is for payment of special damage of ksh.109,967,590/05.  The 1st defendant urged this court to reject the prayer because though the particulars of special damage were pleaded and the same were not strictly proved.  With respect, I agree with the 1st defendant.  The plaintiff failed to tender credible evidence to establish the claim on special damage.

17. The final prayer is for general and aggravated damages for unlawful confinement at various police stations between 25th May 2003 and 1st July 2003.  The 1st defendant denied detaining the plaintiff in any police cell.  The plaintiff testified and told this court that he was arrested and kept in police custody for 42 days before being taken to court.  The 2nd defendant did not tender any evidence to controvert the plaintiff’s assertion.  I am convinced that the plaintiff was held in custody beyond the period allowed by the constitution.  Under the old constitution, the police were only allowed to keep in custody a suspect for a non-capital offence for 24 hours.  I am satisfied that the plaintiff was unlawfully held in police custody beyond the period set by the then constitution.  The plaintiff did not suggest the amount of damages on this claim.

18. The 2nd defendant having breached the plaintiff’s constitutional Rights, is found liable to pay damages to the plaintiff.  I award the plaintiff a global sum of kshs.1,500,000/= as damages for unlawful confinement.

19. In the end, the claim as against the 1st defendant is dismissed.

However the claim for damages as against the Attorney General, the 2nd defendant for unlawful confinement is awarded to the plaintiff in the sum of kshs. 1,500,000/=.

20. In the circumstances of this case a fair order on costs  is to direct that each party meets its own costs.

Dated, Signed and Delivered in open court this 20th  day of July, 2017.

J. K. SERGON

JUDGE

In the presence of:

.................................................  for the Plaintiff

............................................. for the Defendant