Standard Chartered Bank (K) Ltd v Mohammed [2023] KEHC 26267 (KLR) | Overdraft Liability | Esheria

Standard Chartered Bank (K) Ltd v Mohammed [2023] KEHC 26267 (KLR)

Full Case Text

Standard Chartered Bank (K) Ltd v Mohammed (Civil Appeal E105 of 2021) [2023] KEHC 26267 (KLR) (4 December 2023) (Judgment)

Neutral citation: [2023] KEHC 26267 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Appeal E105 of 2021

HM Nyaga, J

December 4, 2023

Between

Standard Chartered Bank (K) Ltd

Appellant

and

Nadeem Iqbal Mohammed

Respondent

(Being an appeal from the judgment and decree of the Resident Magistrate Hon. B. Limo delivered on the 21st July, 2021 in Nakuru CMCC NO.1307 OF 2018)

Judgment

1. The Appellant, Standard Chartered Bank Kenya Limited instituted the aforementioned suit against the Respondent, Nadeem Iqbal Mohammed by way of a plaint dated 1st November,2005 and sought the following reliefs:i.The sum of Ksh. 1,654,286. 35 plus the interest thereon at the rate of 13. 75% per annum from 31/7/2005 until payment in full.ii.Costs of and incidental to this suit with interest thereon at court rates.iii.Any other relief that the Honourable Court may deem just and fit to grant.

2. The Appellant averred that the Respondent was his customer and holder of account no. 01020-944861-00 and on various occasions, he drew cheques against his said account when the account had insufficient funds, and at the special request of him, it granted the Respondent temporary overdrafts to enable payment of the said cheques.

3. The Appellant pleaded that the Respondent defaulted in repayment of the overdrawn amounts and despite repeated request from it to the respondent to make payment, the Respondent persisted in the default.

4. The Respondent denied entirely the Appellant’s claim vide his defence dated 19th December, 2005.

5. The trial court upon hearing the case found that the Appellant had not proved its case on a balance of probabilities and proceeded to dismiss its case with costs.

6. Dissatisfied with the Lower Court Judgement, the Appellant lodged the instant appeal on 29th September,2021 raising the following grounds;i.The Learned Magistrate erred in Law and in fact by failing to evaluate correctly the evidence adduced by the Appellant and consequently arriving at a conclusion that has no legal or factual basis.ii.The Learned Magistrate failed to consider and take into account the extensive material placed before him, touching on pertinent and substantial points of fact and law, so as to arrive at a just and fair decision.iii.The Learned Magistrate erred in Law and fact in failing to consider the written submissions of the Appellant in arriving at his judgment.iv.The Learned Magistrate erred in Law and in fact in failing to appreciate that where a party fails to call evidence in support of its case, that party’s pleadings remain mere statements of fact since in so doing the party fails to substantiate its pleadings.v.The Learned Magistrate erred in Law and in fact in failing to appreciate that the Respondent’s defence was therefore unsubstantiated and remained mere statements. In the same vein failure to adduce any evidence meant that the evidence adduced by the Appellant against the Respondent was uncontroverted and therefore unchallenged.

7. The Appellant thus prayed that the Appeal be allowed and judgement of the Lower Court be set aside and judgement be entered for it with costs.

Appellant’s Submissions 8. On ground (c) and (e) of the Memorandum of Appeal, the Appellant submitted that its case against the respondent was uncontroverted as the Respondent did not adduce any evidence in support of his case.

9. The Appellant submitted that it is not disputed that the Respondent was the registered account holder of account no. 01020-944861-00 and the respondent cannot therefore claim to be unaware of the withdrawals and deposits made on the account between 30. 12. 2003 to 2. 7.2005.

10. The appellant contended that its witness Joshua Kipngetich Machii testified and produced documents to support its claim. That he produced the Respondent’s certified statement of account under agreement number 01020-944861-11 to demonstrate its lending.

11. The appellant further argued that the Respondent on his part closed his case without adducing any evidence. In support of the proposition that failure to adduce evidence in support of his case, the respondent rendered its case unchallenged and uncontroverted, reliance was placed on the cases of South Nyanza Sugar Company Ltd vs Donald Ochieng Mideny [2018] eKLR; Autar Singh Bahra and Another vs. Raju Govindji, HCCC No.548 of 1998 cited in the case of Insurance Company of East Africa Limited vs Eva Vivian Wanjiru Mbogoro [2014] eKLR; & North End Trading Company Limited (Carrying on the Business under the registered name of Kenya Refuse Handlers Limited) –vs The City Council of Nairobi [2019]eKLR.

12. The Appellant urged this court to allow its appeal.

Respondent’s Submissions 13. On whether the Appeal has merit, the Respondent submitted that the burden of proof serves as a foundation of our legal systems, protects the rights of the accused and ensures a fair and just process. The respondent argued that shifting the burden to the respondent would undermine these principles and potentially lead to unfair trial. The Respondent relied on the case of Raila Amolo Odinga & another v Independent Electoral and Boundaries Commission & 2 others [2017] eKLR for the proposition that once the court is satisfied that a party has adduced sufficient evidence in support of its case, if not controverted, then the evidentiary burden shifts to the respondent.

14. He argued that in view of the foregoing, the appellant did not discharge its burden satisfactorily to shift the obligation.

15. The respondent contended that the Appellant failed to prove on a balance of probabilities that it granted the said overdraft facility as alleged because; No correspondence was produced to show the Respondent had made a special request for a temporary overdraft facility.

The appellant failed to establish by way of evidence, the existence of consideration for the alleged granted overdraft facility either in the form of a security or a guarantor.

The appellant failed to exhibit the dishonoured cheques it purported needed settling.

No proof was adduced to show that the demand letters was sent to him.

16. In buttressing his submissions, the Respondent also relied on the case of Trust Bank Limited vs Paramount Universal Bank Limited & 2 Others [2009] eKLR & Transnational Bank Ltd vs Peter Kipsat Lelei & another [2016] eKLR.

17. On who should bear costs of this suit, the Respondent relying on the provisions of Section 27 of the Civil Procedure Act d submitted that the Appellant should bear the costs of this Appeal.

Analysis & Determination 18. I have considered the appeal, submissions by counsel for the parties and the authorities relied on.

19. This being a first appeal, parties are entitled to and expect a rehearing, reevaluation and reconsideration of the evidence afresh and a determination of this court with reasons for such determination.

20. In other words, a first appeal is by way of retrial and this court, as the first appellate court, has a duty to re-evaluate, re-analyze and re-consider the evidence and draw its own conclusions, of course bearing in mind that it did not see witnesses testifying and therefore give due allowance for that.

21. In Gitobu Imanyara & 2 others vs Attorney General [2016] eKLR, the Court of Appeal stated that;“[A]n 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 allowances in this respect”

22. In Peters vs Sunday Post Ltd [1958] EA 424, the Court held that;“Whilst an appellate court has jurisdiction to review the evidence to determine whether the conclusions of the trial judge should stand, this jurisdiction is exercised with caution; if there is no evidence to support a particular conclusion, or if it is shown that the trial judge has failed to appreciate the weight or bearing of circumstances admitted or proved, or had plainly gone wrong, the appellate court will not hesitate so to decide”

23. Similarly, in Abok James Odera t/a A.J Odera & Associates vs John Patrick Machira t/a Machira & Co. Advocates [2013] e KLR, the same stated with regard to the duty of the first appellate court;“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way”

24. The only issue that arises for determination herein is whether the Appellant proved its case to the required standard.

25. Joshua Machii who testified on behalf of the Appellant adopted his statement as his evidence in chief. In that statement, he stated that the Respondent was a customer of the Appellant and a holder of current account no. 01020-944861-00 and that on various occasions, the respondent drew cheques against the said account when it had insufficient funds and at special request of the Respondent, the Appellant granted him temporary overdrafts to enable payment of said cheques. He stated that the respondent defaulted in repaying the overdrawn amounts which stood at Ksh.1, 654,286. 35 as at 31st July, 2005 together with interest accruing thereon at the Appellant’s overdraft rate at 13. 75% p.a. He produced statement of accounts in support of the Appellant’s case.

26. In cross examination, he told court that he did not have document to show that the said account belonged to Respondent. He did not have any evidence of dishonored cheque. He confirmed there was no evidence to show the Respondent signed the overdraft facility; that the claimed sum attracted an interest of 13. 75%; & that there was an agreement between the Appellant and the Respondent for the loan. He also confirmed that he did not have any evidence to show that the Respondent had operated his account.

27. In reexamination, he stated that the Respondent confirmed to be an account holder of the said account and that he had agreed to have a loan facility in his filed written statement.

28. It is trite law that he who alleges must prove. The Evidence Act, places the burden of proof of any fact on the person who wishes to rely on the same. Section 107 of the Evidence Act provides as follows:-“Burden of proof(1)Whoever desires any court to give judgment as to any legal 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.”

29. In this case, the Appellant produced statements of account which on the face of it show that the Respondent herein was holder of an account no. 01020-944861-00 with it at Nakuru Branch. The statements of account on record show that the overdrawn amounts stood at Ksh.1, 654,286. 35 as at 31st July, 2005. The Respondent neither adduced any evidence to controvert this position nor challenged the authenticity of the statements of accounts during cross examination.

30. The burden of proof in civil cases is on a balance of probability. This was described in the case of Kanyungu Njogu vs Daniel Kimani Maingi [2000] eKLR that when the court is faced with two probabilities, it can only decide the case on a balance of probability, if there is evidence to show that one probability was more probable than the other.

31. Lord Denning J. in Miller vs Minister of Pensions (1947) 2 ALL ER 372, discussing that burden of proof had this to say-“That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘We think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not.Thus, proof on a balance or preponderance of probabilities means a win, however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un)convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”

32. The trial magistrate based his judgment on the oral evidence of the appellant’s witness. That witness adopted his statement. The plaintiff had also filed its list of documents on 12th April 2019. The defendant also filed his statement, but did not give evidence.

33. From the foregoing, the trial court was enjoined to look at the totality of the evidence adduced, not just the oral evidence. The trial court ended up not considering the documentary evidence that had been relied upon by the appellant. That, in my view, was an error.

34. As I have stated, this court has to look at the evidence afresh to satisfy itself that the appellant proved its case as required or otherwise.

35. From the material on the court record, the respondent did not deny that he was the holder of the account in question. Further, in his affidavit filed in court on 12th April 2013 at paragraph 2, he admitted that the appellant had agreed to offer him overdraft facility which allowed him to draw cheques on his account regardless of whether his account had sufficient funds. It is thus not in dispute that the overdraft facility existed. He then went ahead to make allegations against a 3rd party, one James Kadima Wamukoya. He alleged that he entrusted the said person with cheques to pay his creditors, but he allegedly drew the cheques in his favour, thus overdrawing his account.

36. It is thus clear that the respondent’s account with the appellant was overdrawn. The manner in which it was overdrawn, as between the parties, is immaterial. The respondent did not pursue the application to join the 3rd party nor tender evidence to support his case.

37. In the circumstances, the evidence by the appellant was not rebutted by evidence to the contrary. I am thus of the considered view that the Appellant proved on a balance of probability that the Respondent owed it Kshs.1, 654,286. 35 as at 31st July, 2005.

38. The appellant’s further claim was for the amount in issue to attract interest at 13. 75% per annum. However, there was no credible documentary evidence in support of that allegation.

39. From the foregoing, I find that the trial magistrate erred in dismissing the Appellants case in its entirety.

40. I therefore set aside the Judgement of the lower court and enter judgement in favour of the Appellant for a sum of Ksh.1,654,286. 35/=. The amount shall accrue interest at court rates from the date of filing suit, that is on 3rd November 2005. The interest shall be subject to any limitation of time on accrual of such interest.

41. On Costs, these are at the discretion of the court and they follow the event. See the Halsbury’s Laws of England; 4th Edition (Re-issue), {2010}, Vol.10. para 16;“The court has discretion as to whether costs are payable by one party to another, the amount of those costs, and when they are to be paid. Where costs are in the discretion of the court, a party has no right to costs unless and until the court awards them to him, and the court has an absolute and unfettered discretion to award or not to award them. This discretion must be exercised judicially; it must not be exercised arbitrarily but in accordance with reason and justice”

42. The Appellant has been successful in this Appeal. I therefore, award it costs of the appeal and full costs in the lower court.

43. Orders Accordingly.

DATED, SIGNED AND DELIVERED AT NAKURU THIS 4TH DAY OF DECEMBER, 2023. H. M. NYAGA,JUDGE.In the presence of;C/A KipsugutMs Karanja for RespondentMr. Scarf for Appellant