By Michael M. Murungi, Advocate
Bank of Baroda (Kenya) Ltd v Timwood Products Ltd [2008] eKLR
(http://www.kenyalaw.org
)
Court of Appeal at Nairobi
R.S.C. Omolo, P.K. Tunoi & E.M. Githinji, JJ.A
May 30, 2008
The Court of Appeal has confirmed a decision of the High Court
awarding damages against a commercial bank for wrongfully dishonoring
the cheques issued by its customer. On November 10, 2000, the High
Court had awarded Timwood Products Ltd over Kshs. 3 Million for loss
of business credit, reputation and loss of profit against the Bank of
Baroda after the company had sued the bank for wrongfully dishonoring
18 cheques.
Timwood had been a long-standing customer of the bank. Early in
1996, a management dispute broke out between two groups of its
directors, the Patels and the Bakranias. Mr. A. Patel was one of the
shareholders/directors who had previously served as the chairman of
the company. At the height of the dispute and out of the fear that
that the company s finances might be applied without the consent of
the Patels, he wrote two letters advising the bank to freeze the
company's accounts. Though the dispute found its way into the High
Court, the parties came to a settlement and on May 31, 1996, they
recorded a consent agreement before the Court. One of the terms of
that consent was an order of injunction restraining the Bakranias
from paying out the funds of the company without the authority and
signature of Mr. Patel. This order was served on the bank.
As it turned out, the bank s interpretation of the order and the
actions which it took with regard to the company s account on the
faith of that interpretation became the subject matter of further
litigation between the company and the bank. As far as the bank was
concerned, the effect of the order was to freeze Timwood s bank
accounts. On that basis, the bank declined to honor a total of 18
cheques totaling to Kshs. 646,258.85 drawn by the company on its
current account. The statement of dishonour simply stated payment
stopped . This was despite the fact that there were sufficient funds
in the company s account to settle the cheques. As far as the bank
was concerned, since it had been served with the court order, then,
even though it was not a party to the case in which the order was
made, if it had ignored the order and honoured the eighteen cheques
it could have been cited for contempt of court for aiding and
abetting the disobedience of the order.
That was the argument that the bank put forward through its lawyer,
Mr. Fraser, while defending itself in a case filed against it by the
company for damages for breach of banking contract, loss of credit
and business reputation and loss of profit on account of the wrongful
dishonor of the company s cheques.
In answer to these contentions, Mr. Nagpal, who led the company s
team of lawyers, submitted that the court order did not freeze
Timwood s bank accounts at all. Rather, the effect of the order was
that before any payments could be made on any cheques drawn on the
account, the bank had to be satisfied that Mr. Patel had
countersigned against the cheques or that he had had sufficient
opportunity to countersign them. He submitted that there was nothing
to show that the cheques had not been countersigned or that Mr. Patel
had not had sufficient opportunity to sign them and therefore, the
bank s action was wrong.
The High Court (the late Mr. Justice Hewitt) had entered judgment in
favour of the company and ordered the bank to pay to it Kshs. 3
Million for loss of credit, loss of business reputation and loss of
profit and a further Kshs. 80,000 for losses arising from currency
fluctuations on Timwood s forex bank account. The bank appealed
against the decision and the company filed a cross-appeal seeking
punitive damages against the bank.
The appeal was heard by R.S.C. Omolo, P.K. Tunoi and E.M. Githinji,
JJ.A. In their unanimous decision, they first observed that where
third parties such as banks are served with or are otherwise notified
of the existence of an injunction either freezing an account or
prohibiting the doing of some act, the bank's only duty is to the
court and it runs the risk of punishment for contempt of court if it
does not comply. This is so particularly where there is no relevant
communication or act between the bank and the party who obtains the
order or any reliance by that party on the bank so that the bank
cannot be understood as having voluntarily assumed responsibility for
its actions so as to give rise to a duty of care towards the party.
However, on the evidence in this case, the Court of Appeal agreed
with Timwood s advocate that the Court order served on the Bank of
Baroda did not have the effect of freezing the company's bank
accounts. In the Court s opinion, the bank had no basis for
dishonouring the cheques and damages could be awarded for the
wrongful dishonour of a cheque by a bank.
The Court then looked at the grounds of appeal challenging the
measure of damages awarded to Timwood. It clarified that loss of
profits is a special quantifiable damage which lends itself to easy
calculation and it ought to be specifically claimed and proved. Being
a special damage, it may not be lumped together with loss of credit
and business reputation which are in the nature of general damages
not capable of immediate objective quantification. However, the Court
found that Timwood had failed to prove its claim for loss of profits.
In the Court s opinion, the award of Kshs. 3 Million on the
compendious head of loss of business credit, reputation and loss of
profit was not so high as to call for any varaition. That award would
stand. As for Timwood s cross-appeal, the Court observed that punitive
or exemplary damages are awarded only where there is oppressive,
arbitrary or unconstitutional action by servants of the government;
and where a defendant's action was calculated to procure him some
benefit, not necessarily financial, at the expense of the plaintiff.
Timwood was not entitled to any further award of damages. Save for a
slight adjustment on the award of interest, the bank s appeal was
dismissed and the decision of the High Court was confirmed.
Download Case
<http://kenyalaw.org/Downloads_FreeCases/civil_appeal_132_of_2001.pdf>
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© Copyright 2008 Kenya Law Reports
Tuesday 1 July 2008
COHABITING FATHER ORDERED TO MAINTAIN CHILDREN
By David Mutunga, Advocate
JGM v CNW [2008] eKLR www.kenyalaw.org
<http://www.kenyalawreports.org/>
High Court at Nakuru
Koome J
May 23rd 2008
The High court sitting at Nakuru has declared that a father of
children born out of wedlock can and will have parental
responsibility for such children. Lady Justice Martha Koome further
strongly said that under the Children Act, 2001, the welfare and the
best interest of the child is of paramount consideration and every
judicial officer is enjoined to treat the best interest of the child
as such. The Judge lamented that the Children Act discriminatee
against children born out of wedlock and implored Parliament to amend
it.
Claire (not her real name) had filed a suit in the Nyahururu
Principal Magistrate s court seeking maintenance for her twin
children who she allged were fathered by one Japhet (not his real
name). Claire claimed that she had lived with Japhet as husband and
wife even though they were not legally married. She claimed that were
living with another of her children who was not borne out of the
cohabitation, but whom Japhet accepted and was providing for his
support.
Claire alleged that Japhet had driven her out of their matrimonial
soon after she delivered the twins and that she was forced to move to
another house where Japhet had bought land.
In his statement of defence Japhet stated that he had had a brief
whirlwind liaison with Claire and that Claire was married to another
man. He stated that he was not the father of the twins and therefore
he was not responsible for their maintenance. At the close of the
trial the magistrate found that both Japhet and Claire were living
together as husband and wife and that the twins were born out of that
relationship and ordered Japhet to pay Kshs 9,000 per month towards
the upkeep of the twins.
Japhet appealed against the decision of the Magistrate s court on
the grounds that there never existed a marriage between him and
Claire and that the children were not born while he was staying with
her. He further challenged the decision of the Magistrate s court on
the ground that the Magistrate erred in ordering him to pay Ksh 9,000
per month without any proof that he could afford it.
Claire on the other hand submitted that the Magistrate s court had
properly evaluated the evidence and arrived at the right conclusion
that she had cohabited with Japhet as husband and wife and indeed the
two swore affidavits to support Claire s change of her surname to
reflect Japhet s. Her claim was supported by Japhet s first wife who
admitted that Japhet was living with Claire and she was pregnant when
she left Japhet s house. Japhet even purported to transact a land deal
in which he referred to Claire as his wife.
Lady Justice Martha Koome heard the appeal. She observed that Claire
had proved that Japhet had assisted her to construct a house and that
it was on that evidence that he was ordered to pay KShs. 9,000 as he
was a man of means.
Justice Koome made an observation that Claire had not sought for
presumption of marriage by virtue of cohabitation but rather she only
sought for an order of maintenance of the children. The Judge observed
stated that when Claire Wahome filed the suit, she must have been sure
that she was married to Japhet as she had the affidavits sworn
declaring the marriage and some dowry had been paid which is a step
towards formalization of Kikuyu customary marriages.
Justice Koome recalled that under section 24(1) of the Children Act,
where a child is born out of wedlock the parental responsibility is
placed on the mother in the first instance. The father can acquire
parental responsibility if he makes an application to the court
seeking parental responsibility or where the father and mother by
agreement provide for the father to have parental responsibility for
the child. This provision, the Judge noted, has been criticized, and
rightly so, for its differential treatment of children born out of
wedlock. She remarked that Parliament needed to amend the Act and
make it possible for either the mother, child, guardian or anybody to
make an application for parental responsibility even for a child born
out of wedlock .
The Judge found that on the evidence adduced in the magistrate s
court, Claire and Japhet were cohabiting as husband and wife in the
course of which they were begotten of the twins. She noted that
though statute laws do not recognize cohabitation as a form of
cohabitation, the Courts have awakened to the reality that Kenyans
are routinely living together as man and wife and bringing forth
children and when the relationship goes awry, or one of the partners
dies, the victims who are usually women, come to court to seek
justice. The Courts have therefore presumed the existence of a
marriage in many cases where parties who have capacity to enter into
a marriage hold themselves as such and cohabit for a period of time.
Noting that under the Children s Act the welfare and the best
interest of the child is of paramount consideration and every
judicial officer is enjoined to bear that in mind, Justice Koome
found that the trial Magistrate was right in ordering Japhet to pay
KShs 9,000 per month. His appeal was therefore dismissed.
Download File
<http://kenyalaw.org/Downloads_FreeCases/hcca_40_of_2004.pdf>
JGM v CNW [2008] eKLR www.kenyalaw.org
<http://www.kenyalawreports.org/>
High Court at Nakuru
Koome J
May 23rd 2008
The High court sitting at Nakuru has declared that a father of
children born out of wedlock can and will have parental
responsibility for such children. Lady Justice Martha Koome further
strongly said that under the Children Act, 2001, the welfare and the
best interest of the child is of paramount consideration and every
judicial officer is enjoined to treat the best interest of the child
as such. The Judge lamented that the Children Act discriminatee
against children born out of wedlock and implored Parliament to amend
it.
Claire (not her real name) had filed a suit in the Nyahururu
Principal Magistrate s court seeking maintenance for her twin
children who she allged were fathered by one Japhet (not his real
name). Claire claimed that she had lived with Japhet as husband and
wife even though they were not legally married. She claimed that were
living with another of her children who was not borne out of the
cohabitation, but whom Japhet accepted and was providing for his
support.
Claire alleged that Japhet had driven her out of their matrimonial
soon after she delivered the twins and that she was forced to move to
another house where Japhet had bought land.
In his statement of defence Japhet stated that he had had a brief
whirlwind liaison with Claire and that Claire was married to another
man. He stated that he was not the father of the twins and therefore
he was not responsible for their maintenance. At the close of the
trial the magistrate found that both Japhet and Claire were living
together as husband and wife and that the twins were born out of that
relationship and ordered Japhet to pay Kshs 9,000 per month towards
the upkeep of the twins.
Japhet appealed against the decision of the Magistrate s court on
the grounds that there never existed a marriage between him and
Claire and that the children were not born while he was staying with
her. He further challenged the decision of the Magistrate s court on
the ground that the Magistrate erred in ordering him to pay Ksh 9,000
per month without any proof that he could afford it.
Claire on the other hand submitted that the Magistrate s court had
properly evaluated the evidence and arrived at the right conclusion
that she had cohabited with Japhet as husband and wife and indeed the
two swore affidavits to support Claire s change of her surname to
reflect Japhet s. Her claim was supported by Japhet s first wife who
admitted that Japhet was living with Claire and she was pregnant when
she left Japhet s house. Japhet even purported to transact a land deal
in which he referred to Claire as his wife.
Lady Justice Martha Koome heard the appeal. She observed that Claire
had proved that Japhet had assisted her to construct a house and that
it was on that evidence that he was ordered to pay KShs. 9,000 as he
was a man of means.
Justice Koome made an observation that Claire had not sought for
presumption of marriage by virtue of cohabitation but rather she only
sought for an order of maintenance of the children. The Judge observed
stated that when Claire Wahome filed the suit, she must have been sure
that she was married to Japhet as she had the affidavits sworn
declaring the marriage and some dowry had been paid which is a step
towards formalization of Kikuyu customary marriages.
Justice Koome recalled that under section 24(1) of the Children Act,
where a child is born out of wedlock the parental responsibility is
placed on the mother in the first instance. The father can acquire
parental responsibility if he makes an application to the court
seeking parental responsibility or where the father and mother by
agreement provide for the father to have parental responsibility for
the child. This provision, the Judge noted, has been criticized, and
rightly so, for its differential treatment of children born out of
wedlock. She remarked that Parliament needed to amend the Act and
make it possible for either the mother, child, guardian or anybody to
make an application for parental responsibility even for a child born
out of wedlock .
The Judge found that on the evidence adduced in the magistrate s
court, Claire and Japhet were cohabiting as husband and wife in the
course of which they were begotten of the twins. She noted that
though statute laws do not recognize cohabitation as a form of
cohabitation, the Courts have awakened to the reality that Kenyans
are routinely living together as man and wife and bringing forth
children and when the relationship goes awry, or one of the partners
dies, the victims who are usually women, come to court to seek
justice. The Courts have therefore presumed the existence of a
marriage in many cases where parties who have capacity to enter into
a marriage hold themselves as such and cohabit for a period of time.
Noting that under the Children s Act the welfare and the best
interest of the child is of paramount consideration and every
judicial officer is enjoined to bear that in mind, Justice Koome
found that the trial Magistrate was right in ordering Japhet to pay
KShs 9,000 per month. His appeal was therefore dismissed.
Download File
<http://kenyalaw.org/Downloads_FreeCases/hcca_40_of_2004.pdf>
When justice prevails, appeal immediately!
A junior partner in a firm was sent to a far-away state to represent a long-term client accused of robbery. After days of trial, the case was won, the client acquitted and released. Excited about his success, the attorney telegraphed the firm: "Justice prevailed."
The senior partner replied in haste: "Appeal immediately."
L-K’ers: What is your take on this? Email your opinion now to: pmusyimi@gmail.com
The senior partner replied in haste: "Appeal immediately."
L-K’ers: What is your take on this? Email your opinion now to: pmusyimi@gmail.com
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