Barclays Bank of Kenya Ltd v Denis Amolo Owuor [2022] KEHC 27058 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT HOMA BAY

CIVIL APPEAL NO.16 OF 2020

BETWEEN

BARCLAYS BANK OF KENYA LTD.........................................................................APPELLANT

AND

DENIS AMOLO OWUOR........................................................................................RESPONDENT

(Being an Appeal from the judgment and decree in Homa Bay Chief Magistrate’s

CMCC No. 111 of 2018 by Hon. Tom Mark Olando –Senior Resident Magistrate).

JUDGMENT

1.   The appellant herein was the defendant in Homa Bay Chief Magistrate’s CMCC No. 111 of 2018. The respondent had sued for an order against the appellant to give account as to what was due to him and for general damages. The learned trial magistrate delivered judgment in favour of the respondent on 11^th march 2020.

2.   The appellant was aggrieved by the said judgment and filed this appeal. The appellant was represented by Miriam Onsongo. The appellant raised the following  grounds of appeal:

a)   The learned trial magistrate erred in law and in fact in finding that the respondent’s business had suffered as a result of the wrongful listing at the Credit Bureau when there was no such evidence.

b)   The learned magistrate erred in law and in fact in awarding general damages for kshs.1,500,000/-, when the respondent neither pleaded any loss suffered as a result of the wrongful listing and neither did he lead any evidence to this effect.

c)   The learned magistrate erred in law and in fact in making a finding that the listing at the Credit Reference Bureau was wrongful when the respondent had admitted to being in default of the repayments during his testimony and in failing to find that the Respondent could not maintain an action against the appellant on account of the report in question without pleading and without evidence that the appellant had acted in bad faith in reporting the matter to the Credit Reference Bureau.

d)   The Learned magistrate failed to consider the appellant’s written submissions to the effect that the respondent had a duty to mitigate his risks by seeking an interim order against the appellant stopping it from charging interest on the loans at commercial rates before the Employment and Labor Relations Court in cause No.1125 of 2015.

e)   The learned magistrate misunderstood the effect and the import of the judgment of the Employment & Labour Relations Court in Civil Cause No.1125 of 2015 and more specifically in finding that the finding that the termination of the respondent’s employment was unlawful entitled the respondent to enjoy the lending terms that he enjoyed before the termination and in failing to consider the implication of the finding of that court dismissing the respondent’s prayer for reinstatement.

f)   The learned magistrate erred in fact and in law in failing to find that the suit was res judicata and was therefore fit for dismissal.

g)   The learned magistrate erred in law and in fact when he made a finding that the respondent is entitled to the sum of kshs.845,000 and kshs.99,000/- being lawyer’s fees and card payment when no evidence was led to prove this.

h)   The learned magistrate erred in law and in fact when he failed to consider that the appellant had offered a rebate of over kshs.400, 000/- to the respondent hence reached at a wrong figure.

i)    The learned magistrate erred in law in holding that the respondent was entitled to interest from the date of filing the suit when the respondent had not sought such relief.

j)    The learned magistrate erred in law when he shifted the burden of proof in civil proceedings from a plaintiff to a defendant thus arriving at a wrong conclusion.

k)   The learned magistrate erred in law and in fact in proceeding to take accounts without involving either party and hence clogged the appellant’s fight to a fair hearing.  In any case, the respondent had abandoned the claim for accounts by failing to comply with the law applicable to a suit for accounts.

l)    The judgment appealed against was against the weight of the evidence and the suit should have been dismissed.

3.   The respondent was represented by the firm of G.S Okoth & Company, Advocates. He raised the following grounds in opposition:

a)   That the appellant did not raise the issue of res judicata in the trial court.

b)   That during submission the appellant urged issues that were not part of grounds of appeal.

c)   That the appellant failed to prove that there was a variation clause.

d)   That the respondent was unlawfully listed at the CRB.

4.   This Court is the first appellate court. I am aware of my duty to evaluate the entire evidence on record bearing in mind that I had no advantage of seeing the witnesses testify and watch their demeanor. I will be guided by the pronouncements in the case of Selle vs. Associated Motor Boat Co. Ltd. [1965] E.A. 123, where it was held that the first appellate court has to reconsider and evaluate the evidence that was tendered before the trial court, assess it and make its own conclusions in the matter.

5.   There are three issues that need adjudication in this appeal. These are:

a)   After the termination of the employment of the respondent whether he was entitled to continue earning lower interest rates specifically tailored for the employees;

b)   Whether at the time the respondent was referred to CRB he had an outstanding loan which had fallen into arrears; and

c)   Whether the appellant followed the law in reporting the respondent to CRB.

6.   When the respondent’s employment was terminated, either wrongly or fairly, his benefits as an employee stopped. Since the Employment and Labour Relations Court did not reinstate him, then it was erroneous for the trial court to make a finding that the change in the interest rate to be unlawful.

7.   The evidence of Castro Mutai (DW1) was that it was a term in the letter of offer which was duly signed by both parties that in the event of the employment relationship between the parties ended, then the rate of interest would be charged at 29.5% of the outstanding balance. This evidence was not challenged.

8.   The redress for the respondent for the loss due to the wrongful dismissal ought to have been in damages and not varying the contractual obligations by the parties.

9.   From the evidence of Castro Mutai (DW1) the case was reported to CRB on 21^st September, 2015. The respondent was not exact on the date for he said the report was made sometimes in 2015. We can therefore deduce that the date given by Castro Mutai (DW1) was the actual date of reporting for it was not contested.  At the time of maturity on 21^st September, 2015 the loan had arrears of Kshs. 5 million. This is confirmed by the deductions made in respect of compensation- for compulsory acquisition of the security deposited and registered with the Bank- by National Land Commission in 2016.

10. I therefore find that the report to CRB by the appellant was factual.

11. Regulation 50 (1) of the Credit Reference Bureau Regulations 2013 provides:

An institution shall -

(a) notify the customer within one month before a loan becomes non-performing that the institution shall submit to a Bureau the information on the loan immediately it becomes non-performing:

Provided that for loans whose repayment interval or period is less than one month, the notice shall be served two weeks before the loan becomes non-performing;

(b) notify each customer, within thirty days of the first listing, that his name has been submitted to all licensed Bureaus;

(c) issue an adverse action notice to a customer against whom a decision has been taken or determination made, in whole or in part, that is adverse to the interests of the customer based on information obtained from a Bureau;

12. The respondent urged me to follow the decision in Eunice Nganga vs. Higher Education Loans Board & 2 Others [2020] eKLR where Makau J at paragraph 92 said: 

From the above it is clear that the Credit Information provider, 1^st Respondent herein, before furnishing negative information to the Bureau, herein the 2^nd and 3^rd Respondents, was bound to give notice to the Petitioner of adverse information and give her an opportunity to be heard before listing her. The 1^st Respondent in forwarding the Petitioner’s name for listing acted in breach of Article 47 of the Constitution and Section 4(3) of the Fair Administrative Action Act.  The Petitioner’s right to fair hearing as enshrined under Article 50 of the Constitution was violated by the 1^st Respondent. This further violated the Petitioner’s rights and resulted in her being denied financial facilities from Banks, who accessed that adverse information. The Petitioner had the right and legitimate expectation to be notified of the adverse Report and to be given a chance to be heard before being adversely listed as required contrary to the procedure chosen by the 1^st Respondent to forward the adverse information to the Bureau to have Petitioner listed contrary to the constitution and statute and therefore illegal and unlawful.

13. The circumstances in the instant case are different from those that obtained in the Eunice Nganga (supra) case. Eunice was listed while she had no arrears but the respondent herein was listed while he had substantial arrears. Though the appellant had an obligation to inform him, in my view, he did not deserve to be awarded any compensation.  The information to CRB was correct and the loan was paid a year later after the listing.

14. From the foregoing, I find that the appeal must succeed. I set aside the judgment and decree of the trial court. The appeal therefore is allowed with costs.

DELIVERED AND SIGNED AT HOMA BAY THIS 9TH DAY OF MARCH, 2022

KIARIE WAWERU KIARIE

JUDGE