Orieny & another v National Bank Of Kenya (Civil Appeal E016 of 2023) [2024] KEHC 6002 (KLR) (20 May 2024) (Judgment)
Neutral citation:
[2024] KEHC 6002 (KLR)
Republic of Kenya
Civil Appeal E016 of 2023
RE Aburili, J
May 20, 2024
Between
Meshack Orieny
1st Appellant
Joyce Orieny
2nd Appellant
and
National Bank Of Kenya
Respondent
(An appeal arising out of the judgment and decree of the Honourable J.N. Wambiliyanga in the Chief Magistrate’s Court at Kisumu delivered on the 18th January 2023 in Kisumu No. 48 of 2018)
Judgment
Introduction
1.The appellants Meshak Orieny and Joyce Orieny vide a plaint dated 30th June 2011 filed on the 28th September 2011, sought judgement against the respondent for a declaration that they had finished paying off their loan facility from the respondent and any further charges were thus illegal, a permanent injunction restraining the respondent from disposing off the suit properties as well as damages and costs of the suit.
2.It was the appellants’ case that in 1994, they applied for a loan and overdraft facility from the respondent Bank in Nakuru and received a total of Kshs. 600,000 that included Kshs. 400,000 that was to be deducted to repay the overdraft facility. The appellants averred that they deposited title deeds No. Kisumu/West Agoro/359 and Kisumu/Manyatta “B”/337 as security against the borrowed amount.
3.The appellants averred that on the 11th June 2010, they received a letter from the respondent claiming that they had defaulted in payment of the sum of Kshs. 3,924,711 which they asserted that the respondent was fraudulently claiming.
4.The respondent National Bank of Kenya filed a statement of defence dated 9th December 2011 denying the allegations of fraud made by the appellants and praying for the suit to be dismissed.
5.The trial court in its judgment found that the appellants had not proved their case on a balance of probabilities against the respondent and thus dismissed the appellants’ suit with costs.
6.The appellants were aggrieved by the decision of the Trial Court. They filed a Memorandum of Appeal dated 24th January 2023 raising the following grounds of appeal:
7.The appeal was to be canvassed by way of written submissions but only the appellants filed submissions.
The Appellants’ Submissions
8.The appellants’ counsel submitted that there was no loan as conceded by the magistrate that the Letter of offer was not produced by the respondent yet she went ahead and made a finding that there was a loan with terms and conditions which was extremely erroneous. It was submitted that loan contracts must be strictly construed and without loan agreement, the respondent could not prove that it advanced any money to the appellants.
9.It was the appellants’ submission that the failure to produce a loan agreement by the Respondent and statement of Accounts is consistent with the Appellants’ assertion that no loan was advanced and that the Respondents could not even produce any evidence of how much was owed to them because there was nothing owed and as such, the appellants must be given the benefit of doubt as was held in the case of Scholastica Nyaguthii Muturi v Housing Finance Co. of Kenya Ltd & Another [2017] eKLR.
10.The appellants further submitted that the offer letter is so important that without it, the Court cannot boldly state that this was a loan granted on terms and allow the defendant to charge figures as they wished. Reliance was placed on the case of John Muriithi Gacago Nganga v HFCK Limited and Another Nbi HCCC 15 of 2005 (UR) and Surya Holdings Limited & 2 others v CFC Stanbic Bank Limited [2014] eKLR.
11.It was submitted that the moment the Appellants stated that what they had been given was an overdraft, the burden shifted to the Defendant to prove that they offered a loan not overdraft facilities. The appellants submitted that in this matter the Respondent was the one who testified that they gave the Appellant a loan and it was incumbent upon them to state what loan was given and the terms thereof.
12.The appellants submitted that the receipts attached amounted to Kshs. 264,710 together with other amounts in the statements produced, which were not taken into account by the Magistrate and that the Appellants having stated that they had been given an overdraft of Kshs. 600,000 out of which Ksh 400,000 was deducted to pay the overdraft, there was a balance of Ksh 200,000 which could have easily been cleared by Kshs. 264,710.
13.On the allegations of fraud, it was submitted that the learned trial Magistrate had a duty to consider the particulars raised and that failure to consider the said particulars is a misdirection and error in law. The appellants submitted that whether the particulars of fraud were proved or not is immaterial but that the Learned trial magistrate had a duty to consider them and make a finding and failure to do so was a grave error of principle and Law.
14.It was submitted that the conduct of the respondent before the trial court did not deserve a reward of costs as granted by the court.
Analysis and Determination
15.This being a first appeal, this Court has the duty to analyze and re-examine the evidence adduced in the lower Court and reach its own independent conclusion but in doing so, bear in mind that it neither saw nor heard the witnesses testify and make due allowance for the said fact. In Abok James Odera T/A A.J Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates [2013] eKLR, the Court stated as follows:
16.Having considered the pleadings, the grounds of appeal and the submissions on record, the issue for determination by this court is whether the trial court erred in dismissing the appellant’s suit.
17.The burden of proof lies on the persons who alleges. Section 107 of Evidence Act defines Burden of Proof as– of essence the burden of proof is proving the matter in court. subsection (2) Refers to the legal burden of proof.
18.Section 109 of the Evidence Act exemplifies the Rule in Section 107 on proof of a particular fact. It is to the effect that the burden of proof as to any particular fact lies on the person who wishes to rely on its existence. Whoever has the obligation to convince the court is the person said to bear the burden of proof. Thus, if one does not discharge the burden of proof then one will not succeed in as far as that fact is concerned.
19.The first prayer sought by the appellants was a declaration that they had finished paying off their loan facility and that further charges were illegal.
20.The appellants submitted that what they had been given by the respondent was an overdraft and that this shifted the burden to the Defendant/respondent herein to prove that they offered a loan not overdraft facilities. However, in their own pleadings in the plaint, the appellants pleaded that in 1994, they applied for a loan and overdraft facility from the defendant’s office and that they received a total of Kshs. 600,000 which amount included Kshs. 400,000 that was deducted to repay the overdraft amount.
21.The 2nd appellant in her own testimony stated that she applied for a loan from the respondent. It was her testimony in cross-examination that as they waited for the loan to be approved, they were granted an overdraft.
22.DW1 who testified on behalf of the respondent before the trial court stated that the appellants applied for a loan of Kenya Shillings One Million out of which Kshs. 600,000 was approved.
23.It is a principle of law that parties are bound by their pleadings. The appellant herein pleaded that they had applied for a loan from the respondent. In all their dealings, the parties referred to the monies advanced as a loan. In their own letter dated 13.8.1993 produced by the respondents, the appellants sought to have the loan amount changed from One million to Six hundred thousand shillings.
24.It is therefore not correct for the appellants on approaching this court on appeal, despite the clear evidence on record to advance the argument that they did not take a loan from the respondent. This Court is not persuaded by the arguments made by the appellants that they took an overdraft and not a loan facility. Neither does this court buy the argument that therefore the burden of proof shifted onto the respondent to prove that it had advanced a loan to the appellants. I find the arguments by the appellants to amount to a mockery of the judicial system as this Court is not blind to the pleadings before it.
25.I reiterate that the evidence on record is clear that the appellants obtained a loan from the respondent and subsequently went into default in servicing the same as was demonstrably from the appellants’ own letters seeking more time to settle the loan. If the appellants had finished repaying the loan, why were they asking for more time to settle the same. What reconciliation statement did they produce in court to show that the entire loan advanced to them was fully settled and that what remained were the illegal charges? I find noting on record to support the first prayer by the appellants.
26.To this end, I find and hold that the appellants failed to prove that they did not take a loan or that they had finished paying the loan facility.
27.The appellants also sought a permanent injunction against the respondent restraining the respondent from disposing off the suit property which was given as security for the loan facility.
28.A permanent injunction fully determines the right of the Parties before the Court and is normally meant to perpetually restrain the commission of an act by the Plaintiff in order for the rights of the Plaintiff to be protected. Courts have the powers to grant the Permanent Injunction under Sections 1A, 3 & 3 A of the Civil Procedure Code, 2010 if it feels the right of a Party has been infringed, violated and/or threatened as the Court cannot just sit, wait and watch under these given circumstances.
29.In Kenya Power & Lighting Co. Limited v Sheriff Molana Habib [2018] eKLR the High Court on appeal held that:
30.The question thus is whether there were any compelling factors that would warrant the granting of a permanent order of injunction to the appellants against the respondent Bank.
31.It is not in dispute that the appellants owed the respondent as is evident from the numerous demand letters by the respondent for the settlement of defaulted loan amount, while the appellants in their own letter dated July 3, 1994 asked for more time to enable them make payments on the loan due. There is no evidence that the appellants disputed the loan due and owing or that the y settled the amounts that were owing as at the time that they were asking for more time, or later. Accordingly, the respondent was within its right to pursue measures to realise their loan. That being the case, the court cannot restrain the bank from realising the securities for the loan advanced.
32.In my humble view, the present case does not fall within the category of clear-cut cases that can form a basis to grant a permanent injunction.
33.On the allegations of fraud, it has been submitted in contention in this appeal by the appellants that the trial magistrate had a duty to consider the same notwithstanding the merits and or whether fraud was proved or not proved as pleaded. In my humble view, this is a flawed understanding of the law. I say so because, there are certain requirements that must be met for the allegation of fraud to be admitted by a court of law.
34.The first principle is that an allegation of fraud must be specifically pleaded and proved. In Vijay Morjaria v Nansingh Madhusingh Darbar & Another [2000] eKLR, Tunoi, JA (as he then was) stated as follows:
35.In R.G Patel v Lalji Makanji [1957] EA 314 the former Court of Appeal for East Africa stated as follows:
36.In Belmont Finance Corporation Ltd v Williams Furniture Ltd Buckley L.J said:
37.The second principle is that the burden of proof of an allegation of fraud is on the person alleging. In Ndolo v Ndolo [2008] 1KLR (G &F) 742 the court stated that:
38.In Christopher Ndaru Kagina v Esther Mbandi Kagina & Another [2016] eKLR the court pronounced itself as follows:
39.In the case of Urmila w/o Mahendra Shah v Barclays Bank International Ltd & Another [1979] eKLR, the Court of Appeal took the view that the onus to prove fraud in a matter is on the party who alleges it.
40.In Moses Parantai & Peris Wanjiku Mukuru suing as the legal representatives of the estate of Sospeter Mukuru Mbeere (deceased) v Stephen Njoroge Macharia [2020] eKLR, the Court of Appeal observed as follows:
41.The third principle is that the burden of proof of allegation of fraud is higher than that required in civil cases, that of proof on a balance of probabilities; and lower than that required in criminal case that is beyond reasonable doubt. In Ndolo v Ndolo [2008] 1KLR (G &F) 742 the Court stated that:
42.In Central Bank of Kenya Limited v Trust bank Limited & 4 Others [1996] eKLR, the court rendered itself as follows:
43.In Moses Parantai & Peris Wanjiku Mukuru supra, the Court of Appeal observed as follows:
44.In R.G Patel supra the former Court of Appeal for East Africa stated as follows:
45.In the instant case, it was upon the appellants to adduce evidence of the allegations of fraud that they had made against the respondent Bank which they did not. The allegations of fraud particularised by the appellants remained unsubstantiated and as a result, I hold that the same was not proved to the required standard. It therefore follows that the failure by the trial magistrate to consider whether or not fraud was proved was inconsequential.
46.Finally, as regards costs, it is trite that costs follow the event and the same is in the discretion of the trial court. The trial court having found that the appellants failed to prove their case, she was well within her powers to grant the respondent costs. I find no compelling reason to upset that discretionary power.
47.The upshot of the foregoing is that I find no reason to interfere with the trial court’s judgement. I uphold the same and proceed to dismiss the instant appeal with an order that each party do bear their own costs noting that the respondent did not participate in the appeal.
48.This file is closed.
Dated, Signed and Delivered at Kisumu this 20th Day of May, 2024R.E. ABURILIJUDGEPage 15 of 15