Steel Makers Limited v CFC Stanbic Bank Limited [2015] KEHC 8327 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL AND ADMIRALTY DIVISION

CIVIL CASE NO. 683 OF 2010

STEEL MAKERS LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF

VERSUS

CFC STANBIC BANK LIMITED ::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT

J U D G M E N T

INTRODUCTION

1. The Plaintiff came to this court by way of the Plaint dated 12th October, 2010 and amended on 2nd December, 2010. There was also an oral amendment made on 27th April, 2015. The Plaintiff sought for judgment against the Defendant for:-

a. A declaration that the Defendant cannot enforce against it the facility contract made by it and its former banker, CFC Bank Ltd on 25th March, 2008.

b. A declaration that the Plaintiff does not owe the Defendant Kshs. 2,946,606/03.

c. A declaration that the Defendant has been inducing diamond Trust Ltd. to break its banker/customer contract with the Plaintiff since April, 2010.

d. (i) a permanent injunction restraining the Defendant    from inducing Diamond Trust Bank Ltd. to breach its contract by paying the Defendant Kshs. 2,946,606/03.

(ii) an order that the defendant to pay the Plaintiff Kshs. 32,209,335/=.

(iii) an order that the defendant do pay interest on Kshs. 32,209,335/= from 1st September, 2009 at 14% compound interest to the date of payment.

(iv) interest on (d) (iii)

e. Costs of this suit.

2. In its submissions, the Plaintiff indicated that it was abandoning prayers (c) and (d) (i) because the defendant had abandoned its threat to harm Diamond Trust Bank of Kenya.

3. In response to the Plaintiff’s claim, the Defendant filed its Defence and Counterclaim dated 4th February, 2011 on 9th February, 2011.

THE PLAINTIFF’S CASE

4. The Plaintiff avers that sometime in April 2008, its former banker, CFC Bank Ltd, informed them that it was in the process of merging with Stanbic Bank Ltd. to form the Defendant and that the merger would enhance its capacity to provide facilities to its customers, including the Plaintiff. CFC Bank sanctioned an increase of the existing facilities which the Plaintiff had with CFC Bank, by Kshs.100 million in the agreed facility contract and the parties agreed that this increase would be formalized after the completion of the merger. The Plaintiff further avers that the merger took place in May 2008. The Plaintiff contends that the effect of the merger was to terminate its contractual relationship with the said CFC Bank Ltd. The plaintiff further contends that a non-party to that contract, like the Defendant, cannot enforce the same. The Plaintiff had entered into a written facility contract with its said former banker, CFC Bank Ltd on 25th March, 2008.

5. The Plaintiff’s case is that between May 2008 and 2nd March, 2009, the Plaintiff and the Defendant acted under a mutual mistake that the facility contract entered into by the Plaintiff and CFC Bank Ltd. governed their relationship. The Plaintiff’s position is that by the Defendant receiving and making payments on its behalf, an oral banker/customer contract came into existence in May 2008, by conduit, or usage, or tradition, and the same continued until 31st March, 2010 when the plaintiff transferred its business to Diamond Trust Bank Ltd. The Defendant has laid out the terms of the alleged oral contract under paragraph 5A of its amended Plaint.

6. The Plaintiff avers that after 2nd March, 2009, the Defendant informed them that it would grant to it the kind of facilities it enjoyed with its previous banker, only after it carried out an independent review through a consultant. However, as is averred by the Plaintiff, the Defendant declined to undertake an independent review as promised, and in breach of its implied term to give the Plaintiff notice of termination of the banker/customer contract, it terminated the said oral banker/customer contract without giving the Plaintiff any notice whatsoever.

7. It is the Plaintiff’s assertion that between June, 2008 and April 2010, the Defendant, in breach of the oral banker - customer contract, charged purported excess debt interest and purported default interest which had not been agreed upon. The particulars of purported excess debt interest and purported default interest are to be found at paragraph 5B of the Amended Plaint. The Plaintiff contends that any amount of money recovered by a banker from a customer's account as interest in breach of the banker—customer contract or by mistake is recoverable together with interest at compound rate from the banker in an action in restitution.

8. The Plaintiff’s case therefore is that it is entitled in an action in restitution, to a refund of Kshs.32,209,335/= debited by the Defendant by mistake/in breach of the banker - customer contract in force.

9. The Plaintiff further avers that on 4th November, 2009, it informed the Defendant that it had arranged for Diamond Trust Bank Ltd. to take its liabilities inherited from CFC Bank Ltd. and pay the amount owed under the facility contract of 25th March, 2008. On 25th November, 2009, Diamond Trust Bank Ltd. informed the Defendant that it had approved to take over the Plaintiff’s liabilities.

10. It is however the Plaintiff’s contention that on 24th November, 2009, when the Defendant knew that the Plaintiff had arranged to pay the money it owed its previous bank, CFC Bank Ltd, the Defendant mischievously, through its advocates, Messrs. Hamilton Harrison & Mathews, demanded that it be paid, within seven days, all the money owed under the facility contract made on 25th March, 2008 with CFC Bank Ltd. The Plaintiff contends that the said demand was bad in law, as the Defendant was not entitled to make it being that it was not a party to the said facility contract.

11. The Plaintiff also avers that on 14th April, 2010 the Defendant falsely claimed that it was, under the facility contract entered into by the Plaintiff and its former bank, the said CFC Bank Ltd, owed Kshs. 2,946,606/03, being the alleged fees it had paid its said advocates, Messrs. Hamilton Harrison & Mathews to make the demand for payment. The Plaintiff contends that it does not owe the Defendant the said Kshs. 2,946,606/03 or any portion of the same because the Defendant was not privy to the facility contract. According to the Plaintiff, the rights created by the said facility contract dated 25th March, 2008 to recover legal fees from them could only be enforced by the parties to the said contract, and further that it did not create, in favour of the Defendant, rights which the latter could enforce after it was incorporated.

THE DEFENDANT’S CASE

12. In its Defence dated 4th February, 2011, the Defendant denies being in breach of the banking contract between the Plaintiff and The Defendant. In the counter-claim, the Defendant prays for Judgment to be entered against the Plaintiff for Kshs. 3,043,056. 94 and USD 25 together with interest at the rate of 25. 25% and 4. 25% respectively from 31st May, 2010 till payment in full. However, in its submissions it turns out that the Defendant claims Kshs. 2,956,606. 03 (and not Kshs. 3,043,056. 94) being costs it incurred to recover the money owed to it by the Plaintiff.

13. The Defendant denies that the effect of the merger was to terminate the Plaintiff’s contractual relationship with CFC Bank Limited. It further denies the Plaintiff’s allegation that the Defendant is a non-party to the facility contract between the Plaintiff and CFC Bank Limited. It is the Defendant’s case that upon the merger, all the assets and all liabilities of CFC Bank Limited were vested in the Defendant and became binding upon the Defendant. It is also the Defendant’s case that the credit facilities granted to the Plaintiff remained in full force and were construed for all intents and purposes as if they were entered into, made, drawn up or executed with, by or in favour of the Defendant to whom all assets and liabilities of CFC Bank Limited had been transferred and were now vested in. The Defendant therefore denied the allegation that the parties herein acted under a mutual mistake in relation to the enforcement of the facility contract.

14. It was also the Defendant’s case that it had the right to demand payment of the outstanding debt, costs and any other disbursements including legal costs under the facility contract. The Defendant averred that it was a term of the facility contract that the Plaintiff would be liable for all costs and expenses including the legal costs between the Defendant and its advocate incurred and all legal charges incurred as a result of the facilities granted to it. The Defendant therefore denies that the demand for Kshs. 2,946,606. 03 was illegal as alleged in the amended plaint.

15. With regard to the Oral contract, the defendant denies that an oral banker/customer contract came into existence between it and the Plaintiff in May 2008 by conduct, or usage, or tradition and that the same  continued until 31st March 2010 as alleged or at all.

16. On the issue of improper interest, the defendant denies that it charged excess debt interest and default interest which were not agreed on. The Defendant further denies that the amount paid to it by the Plaintiff is recoverable with interest at compounded rates. The Defendant avers that any interest that was charged was in accordance with the terms and conditions of the facility documents and the security documents duly executed by the Plaintiff. The Defendant further denies that the Plaintiff is entitled to a refund of Kshs. 32,209,335 as claimed.

17. The Defendant also denied the allegation that its demand letter of 24th November, 2009 was mischievous. It averred that the said letter was premised on the Plaintiff’s own undertaking to repay the entire debt within 14 days of 30th October 2009 which undertaking the Plaintiff had failed to honour.

18. In the circumstances foregoing, it was the Defendant’s case that the Plaintiff had no reasonable cause of action against it and that its claim against the Defendant ought to be struck out with costs.

PLAINTIFF’S REPLY

19. In response to the Defendant’s defence and counterclaim, the Plaintiff filed a reply to defence and defence to Counterclaim dated 4th March, 2011. The Plaintiff essentially reiterated its case as stated in the amended plaint. It maintained its position that there were no rights and obligations which were acquired by the Defendant under the facility contract made on 25th March, 2008 after the merger and that it was entitled to a refund of the Kshs. 32,209,335/= which it paid the defendant under a mistake of law.

THE HEARING

20. The Plaintiff called only one witness, Mr. Aaron Johnson, a director of the Plaintiff, to testify in support of its case. PW 1 relied on his witness statement dated 4th March, 2011 as his evidence. In his testimony, he confirmed that CFC Bank Ltd was its former Bank and that they had a facility contract dated 25th March, 2008 for an overdraft of Kshs. 235,000,000/=, among other facilities. The facility contract was to be in force until 31st October, 2008. PW 1 testified that CFC Bank enhanced the overdraft facility of Kshs. 235,000,000/= by an additional Kshs. 100,000,000/= before May, 2008. According to him this increase was to be formalized once the merger took place. However, the Defendant never formalized the increase to the facility.

21. Upon cross examination, PW 1 confirmed that the Defendant was the successor in title of CFC Bank Ltd and that the facilities offered on 25th March, 2008 also bound the Defendant as the successor in title of CFC Bank Ltd. He further confirmed that the Kshs. 100,000,000/= increase in overdraft facility was not part of the written facility contract. It was his testimony that the Plaintiff repaid the money in 2009. It was his contention that the Defendant started charging abnormal interest rates on their facilities and the increase on facility of Kshs. 100,000,000/=. It was therefore PW 1’s case that the sum of Kshs. 32,209,335/= claimed by the Plaintiff arose out of the wrongful charges and interests and penalties on the said Kshs. 100 million.

22. On the issue of interest rate he testified that the Plaintiff was aware that the Defendant had a right to vary interest rates without notice to the Plaintiff. He further testified that the legal fees charged was Kshs. 3,251,491. 13/= which according to the Plaintiff was excessive. It was his testimony that this was written off as per 16th December, 2010.

23. On re-examination, PW 1 was referred to pages 186 to 187 of the Plaintiff’s bundle, and clarified that the legal fees payable was Kshs. 2,538,678/=. According to PW 1 the fees was in respect of only a demand letter. He further testified that the Plaintiff received a Statement from the Defendant which indicated that as at 3rd January 2011 the Plaintiff did not owe the Defendant any money. (see page 199 of the Plaintiff’s Bundle of documents).  PW 1 further stated that by 31st March, 2010 the Plaintiff had paid all the amounts demanded by the Defendant which did not include legal fees. On the issue of unauthorised exposure, PW 1 reiterated that the additional Kshs. 100,000,000/= was offered to them by CFC Bank Ltd.

24. The Defendant called one witness, Alfornse Kisilu. He relied on his witness statement dated 20th February, 2015 as his evidence in Chief.

25. Upon Cross examination, DW 1 stated that he was aware that contractual terms between a Banker and a customer could be oral or written. He denied that the Overdraft limit of Kshs. 235 million had been raised pursuant to an oral contract as alluded to by the Plaintiff. He however agreed that some ledger balances from the Defendant Bank indicated that the overdraft limit of Kshs. 235,000,000/= had been exceeded. (see pages 114 and 116 of the Defendant’s bundle of documents). In that case it was his position that the Bank had allowed the Plaintiff to exceed the said limit. He however still maintained his position that there was no oral contract between the parties to increase the overdraft limit by Kshs. 100,000,000/=. It was his testimony that he could not really tell whether there was an oral agreement between the Plaintiff and the Bank to increase the overdraft limit. He was however aware that the Bank at its discretion could allow a customer to overdraw the account.

26. On the issue of interest rates, it was DW 1’s testimony that the applicable interest rate on the Overdraft facility was 14% p.a. However the Defendant charged a rate of 22. 25% on the ‘unauthorised overdraft’ amount. DW 1 stated that the said rate was because of the element of default and overdrawing of the accounts. He however could not tell whether the rate of 22. 25% was correct as he was not aware of the base rate at that particular point in time.

27. With regard to the legal fees, it was DW 1’s testimony that on 14th April, 2010 the Defendant debited the Plaintiff’s account with Kshs. 2,540,178/= which he supposed was the legal fees. It was also his testimony that there was a write off of Kshs. 3,251,491. 3 which accounted for the said legal fees.

ANALYSIS

28. I have carefully considered the pleadings herein, bundle of documents as well as both Counsels’ written and oral submissions in support of their respective cases. Having done so, I take the following view of the matter.

29. The parties set out a total of 19 issues for determination in the Statement of agreed issues dated 27th February, 2012 and filed on 5th April, 2012. However, upon examination of the said issues, I find that the same can be  summarized as follows:-

a. Whether the Defendant was entitled to enforce against the Plaintiff the facility contract made on 25th March, 2008 between the Plaintiff and CFC Bank Limited;

b. Whether the Plaintiff is entitled to a refund of Kshs. 32, 209, 335/= on account that this was unlawful interest charged by the Defendant;

c. Whether the Defendant is entitled to Kshs. 2,936,606/= being the legal fees to be paid to its advocates by the Plaintiff and the claim of USD 25;

30. The uncontested facts in this case are that CFC Bank Ltd merged with Stanbic Bank on 31st May, 2008 to form the Defendant, CFC Stanbic Bank Ltd. At the time of the merger there was in existence the facility contract made on 25th March, 2008 by the Plaintiff with its former bank CFC Bank Ltd. The contract was to expire on 31st October, 2008 and the parties are in agreement that the same was not renewed.

31. The Defendant has not disputed that there existed a Banker customer relationship between the Plaintiff and the Defendant.

Whether the Defendant was entitled to enforce against the Plaintiff the facility contract made on 25th March, 2008 between the Plaintiff and CFC Bank Limited

32. The Plaintiff is adamant that the Defendant was not entitled to enforce against it the facility contract of 25th March, 2008 as it was not a party to the same.

33. By a Gazette Notice Number 4925 dated 10th June 2008, the shareholders of CFC Bank Limited approved the sale and the shareholders of Stanbic Bank Limited approved the purchase and transfer of the assets and liabilities of CFC Bank Limited to Stanbic Bank Limited pursuant to the resolutions passed on 12th November 2007.

34. When CFC Bank Ltd merged with Stanbic Bank to form the Defendant, all its assets and all its liabilities were transferred to the Defendant herein. This is provided for in Section 9 of the Banking Act which states that a merger has the effect of transferring the assets and obligations of the Bank to be acquired to the acquiring Bank. (see in particular Section 9 (3) of the Banking Act.) In that case, the credit facilities granted to the Plaintiff by CFC Bank Limited were also acquired and/or vested in the Defendant.

35. Therefore by virtue of the merger that occurred on 31st May, 2008, the Defendant became a party to the facility contract dated 25th march, 2008 entered into by the Plaintiff and CFC Bank Limited. The Defendant could therefore enforce the said facility against the Plaintiff.

36. In the circumstances, the Plaintiff’s hard-line position that the rights created by the said facility contract dated 25th March, 2008 could not be enforced by the Defendant cannot stand in law. Therefore any position the Plaintiff has put forward before the Court based on this position can also not stand.

Whether the Plaintiff is entitled to a refund of Kshs. 32, 209, 335/= on account that this was unlawful interest charged by the Defendant

37. The Plaintiff has raised several issues with regard to its claim for a restitution of the Kshs. 32,209,335/= being unlawful interest charged by the Defendant. At this juncture, it is also worthy to note that it seems the Plaintiff abandoned the claim that there was an oral contract between it and the Defendant from May 2008, by conduit, or usage, or tradition, and the same continued until 31st March, 2010. In its evidence and submissions the only oral contract the Plaintiff dwelled on was the one allegedly entered into by the Plaintiff itself and CFC Bank Ltd with regard to increasing the Overdraft facility limit of Kshs. 235 million by Kshs. 100 million. In any case, there could not have been an implied contract as the relationship between the Plaintiff and the Defendant herein was evidently governed by the facility contract of 25th March, 2008. I digress.

38. The Plaintiff’s case is that its former Bank entered into an oral contract with it in April 2008, whereby the Bank agreed to increase the overdraft facilities by Kshs. 100 million above the limit of Kshs. 235 million. The Plaintiff avers that this oral agreement is supported by the fact that there are bank statements which show that the overdraft limit was exceeded up to about Kshs. 255 million and other Bank statements show even higher amounts.

39. It is further the Plaintiff’s case that following the merger, it continued to operate its account the way it had done before and with the permission granted orally, it enjoyed facilities of Kshs. 235 million to about Kshs. 309 million.

40. However, on 2nd March, 2009, the Defendant complained to the Plaintiff that they had exceeded the authorized overdraft limit of Kshs. 235 million and demanded immediate repayment of the unauthorised amount of Kshs. 110, 880, 159/=. The Plaintiff contends that it made a payment of the said amount so as to settle the ‘unauthorized exposure’. It claims that out of the said amount, Kshs. 32,209,335/= was improper interest and they are entitled to a refund of the same. The Plaintiff relied on the cases of Lawrence M. Maithya –V- HFCK (2003) 1 E.A 98and Paragon Finance PLC –V- Nash and Another (2002) 2 All E.R 2 for the proposition that there is implied in the banker/customer contract that the interest rate will not be set by the banker arbitrarily, dishonestly or for an improper purpose.

41. It is also the Plaintiff’s contention that the payment of Kshs. 110,880,159 made to the Defendant was under a mistake of law and it is their case that they are entitled to a restitution of the same. To this end the Plaintiff relied on Goff & Jones; The Law of Restitution, 7th Edition, Chapter Five as attached to its list of authorities.

42. On the issue of interest rate, the Defendant submitted that it was at liberty to charge interest rates from time to time without any notice to the Plaintiff and that in case of a default, interest rate was payable. It was further the Defendant’s submissions that the penal interest which the Plaintiff disputed was part of the facility contract. The Defendant noted that the application of the interest continued even after the period of the facility lapsed because the Plaintiff had not discharged its indebtedness to the Defendant. It was therefore its case that the interest charged was not arbitrary.

43. In view of the foregoing, was there an oral contract between the Plaintiff and CFC Bank Ltd to increase the Overdraft limit by Kshs. 100,000,000/=? The Plaintiff is categorical that indeed there was an oral contract to that end. The Defendant on the other hand denies the existence of such an oral contract but from the evidence of DW 1 it also turns out it is not very sure of the position. DW 1 told the Court that on account of the ledger statements which indicated the limit of Kshs. 235,000,000/= had bee surpassed it appears the Defendant Bank had allowed the Plaintiff to exceed the given limit. At this stage it is difficult to establish with certainty whether indeed the Plaintiff entered into an oral contract with CFC Bank to increase the overdraft limit. However, this Court cannot also comprehend how the Plaintiff could exceed the given limit without the Defendant’s consent or its former Bank’s consent or approval when it comes to overdraft facility. In the event that there was any ‘unauthorised exposure’ as the Defendant puts it then the same can only be blamed on the Defendant and the Plaintiff should not be penalized for the same.

44. The Defendant demanded Kshs. 110,880,159/= from the Plaintiff together with interest accrued thereon. The Plaintiff does not seem to have a problem with the total amount demanded save for the interests charged thereon. It is clear that the ‘unauthorized overdraft’ amount would have fallen due anyway and the same was therefore repayable. What the Plaintiff is claiming is the figure of Kshs. 32,209,335/= being interest that according to it was improperly charged by the Defendant.

45. On cross-examination, DW 1 indicated that the interest applicable to the Overdraft facility was 14% p.a. However, in recovering the ‘unauthorized overdraft’ facility from the Plaintiff, the Defendant charged interest at 22. 25% p.a. (see page 162 of the Plaintiff’s Bundle of documents). It was DW 1’s testimony that the rate of 22. 25% was applied instead of 14% because of the element of default and overdrawing of the accounts. He however could not tell whether the rate of 22. 25% was correct as he was not aware of the base rate at the material time. DW 1 however reiterated that the Defendant was at liberty to charge interest rates from time to time without any notice to the Plaintiff.

46.  How did the Plaintiff arrive at the figure of Kshs 32,209,335? The tabulation of this claim is to be found at paragraph 5B of the amended Plaint. I believe the tabulation was made by the Plaintiff and not an expert in financial matters. The Court is not privy to what criteria the Plaintiff used in making the tabulation and arriving at the claimed figure. It is obviously difficult to follow through this tabulation and calculations without an expert report or substantive explanation of the same. Unfortunately, the Court’s hands are tied in that it cannot just award figures presented to it by a party without substantial backing. It is trite law that special damages must be specifically pleaded and strictly proved. In the circumstances at hand, it cannot be said that the Plaintiff has strictly proved the amount of Kshs. 32,209,335/=.

Whether the Defendant is entitled to Kshs. 2,936,606/= being the legal fees to be paid to its advocates by the Plaintiff and the claim of USD 25

47. The Defendant’s case is that under the facility contract, the Plaintiff was to pay legal fees to the Bank’s advocates. It is the Defendant’s case that as the contract provided for the Plaintiff to bear legal costs, it cannot be argued that the said costs are not due.

48. With regard to the Plaintiff’s argument that the legal fees had been written off by the Defendant and therefore could not be claimed, it was the Defendant’s position that this was not a valid argument. The Defendant submitted that the write off was only done after the counter-claim was presented in court.

49. The Defendant has not been very consistent as regards the figure of the legal fees. At page 187 of the Plaintiff’s bundle of documents which is a letter from the Defendant to the Plaintiff dated 5th May, 2010, the Defendant was demanding for a total of Kshs. 2,946,606 as legal fees. The Defendant mentioned the same figure at paragraph 34 of its Defence and Counterclaim but in its counterclaim prayed for the sum of Kshs. 3,043,056. 94 from the Plaintiff. Further in its written submissions, the Defendant indicated that it was claiming Kshs. 2,956,606. 03. This Court will go with the figure of Kshs. 2,946, 606 as calculated by the Defendant in its letter dated 5th May, 2010.

50. Nevertheless, notwithstanding the foregoing inconsistencies, this Court’s position is that the legal fees claimed by the Defendant is in the nature of special damages and therefore the same must be strictly proved. The Defendant in the said letter dated 5th May, 2010 at page 534 demonstrated how the legal fees of Kshs. 2, 946, 606 was arrived at using the Advocates Remuneration Order (ARO). The Defendant in particular referred to Schedule V, part II, Section 8 (f) of the ARO to justify the said amount. I have perused the said provisions and confirm that the calculation of the legal fees by the Defendant is in order. It is not in dispute that the Defendant’s Advocates wrote a demand letter to the Plaintiff demanding for the outstanding payment. The Defendant admitted that only one demand letter was written and therefore reduced the legal fee by one-half as required in the aforementioned schedule V. In the circumstances the Defendant has justified the amount of legal fees it is claiming from the Plaintiff. It is also clear under the facility letter dated 25th March, 2008 that the Plaintiff would bear any legal costs incurred by the Defendant under the facility.

51. Having established the foregoing, is the said sum of Kshs. 2,946, 606 due to the Defendant? During cross-examination, DW 1 was not certain as to whether or not the legal fees were outstanding. He was referred to Page 544 of the Defendant’s bundle of documents whereby it was his testimony that on 14th April, 2010 the Defendant debited the Plaintiff’s account with Kshs. 2,540,178 which amount he supposed could have been the legal fees. It was the Plaintiff’s submission that the alleged legal fees had not been included in the earlier statements of indebtedness. It was also the Plaintiff’s submission that on 16th December, 2010, two months after the filing if this suit, the Defendant wrote-off the purported legal fees. To this end it was the Defendant’s submission that the write-off was a book-keeping issue.

52. From the foregoing, it is evident that the issue of the legal fees is not a straight forward one and the Defendant has not strictly proved its entitlement to the same. Besides, the demand for outstanding monies by the Defendant also does not appear to have been done in good faith considering that the Plaintiff wrote to the Defendant on 4th November, 2009 clearly indicating that Diamond Trust Bank Ltd would take over CFC Stanbic Bank facilities. The Defendant through its Advocates wrote back to the Plaintiff on 24th November, 2009 demanding payment of outstanding amounts. This is despite the fact that the Plaintiff had already indicated its facilities would be taken over by another Bank. This Court’s view is that the said demand letter may have been unnecessary if the Defendant Bank indulged the Plaintiff and the new Bank that was to take over the facilities. In any case, as is evident from the pleadings, Diamond Trust Bank engaged the Defendant and took over the facilities.

53. In a synopsis and towards achieving the ends of justice this Court is of the view that the sum of Kshs. 2,946, 606/= is not due to the Defendant.

54. With respect to the claim of USD 25 which the Defendant has averred the Plaintiff failed to pay when finally settling the accounts, the Defendant did not do much to demonstrate or prove to this Court that the amount was indeed outstanding. The amount being in the nature of special damages must strictly be proved which the Defendant has failed to do.

55. In the upshot of the foregoing, both the Plaintiff and the Defendant have failed to prove their cases on a balance of probabilities. Therefore, the following are the orders of the Court:-

a. The Plaintiff’s case brought to Court by way of the Plaint dated 12th October, 2010 and amended on 2nd December, 2010 is hereby dismissed save for prayer (b) which is the declaration that the Plaintiff does not owe the Defendant Kshs. 2,946,606/03.

b. The Defendant’s Counterclaim dated 4th February, 2011 is hereby dismissed.

c. Each Party to bear their own costs of the suit.

That is the Judgement of the court.

READ, DELIVERED AND DATED AT NAIROBI THIS 19TH DAY OF OCTOBER 2015

E. K. O. OGOLA

JUDGE

PRESENT:

Dr. Kuria for the Plaintiff

M/s Kariuki holding brief for Murugara for the Defendants

Teresia – Court Clerk