Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
Court of AppealDismissedCivil Appeal No. 36 of 2014

Diamond Trust Bank Kenya Ltd v Said Hamad Shamisi & 2 others [2015] KECA 717 (KLR)

Court of Appeal of Kenya
15 May 2015
ASAsike-MakhandiaWilliam OukoW. OukoKMK. M'inoti
7,074 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~28 min to read original · ~4 min brief

The bottom line

#

Kenya's Court of Appeal upheld a Kshs 10 million award against Diamond Trust Bank for selling buses it didn't own, confirming banks must prove signatures and good faith.

What this practically means

#

Executive summary

#
The Bank appealed against a High Court judgment (Kasango, J.) awarding Shamisi Kshs 10 million with interest and costs for conversion of two Nissan Diesel buses. Shamisi had agreed to sell the buses to Mjahid for Kshs 10 million; Mjahid paid a Kshs 500,000 deposit by cheques that were dishonoured, and received possession of the buses and logbooks solely for valuation to secure hire purchase financing. The Bank financed Mjahid and another party, registered the buses jointly in its and Coachline's names, and paid the proceeds to third parties on alleged instructions of Shamisi. The Court of Appeal, as a first appellate court, re-evaluated the evidence and dismissed all seven grounds. It held that Shamisi's testimony was no admission of no claim and that estoppel failed because it must be specially pleaded. The burden of proving Shamisi's signatures on the invoices and instruction letters lay on the Bank under sections 107 and 109 of the Evidence Act, which it failed to discharge. Property in the buses passed only on payment of the balance, per section 19 of the Sale of Goods Act. The Bank, having actual notice of Shamisi's ownership, could not invoke the section 26(2) protection for good-faith purchasers; the burden of proving good faith and want of notice lay on it. The agreed sale price days before conversion was a sound measure of damages, and interest from filing suit was a proper exercise of discretion under section 26 of the Civil Procedure Act. The judgment binds subordinate courts on burden of proof in conversion and estoppel pleading.

Questions the Court framed

#

The issues the Court set itself to decide, in its own words.

  1. 1.Whether Shamisi's evidence amounted to an admission that he had no claim against the Bank, barring his claim by estoppel
  2. 2.Whether the trial judge shifted the burden of proof by requiring the Bank to prove the signatures on the invoices and instruction letters and non-receipt of a demand letter
  3. 3.Whether the property in the two buses had passed to Mjahid upon payment of the deposit and delivery of possession
  4. 4.Whether the Bank was protected by section 26(2) of the Sale of Goods Act as a good-faith financier without notice
  5. 5.Whether the award of Kshs 10 million as damages for conversion was supported by evidence of market value
  6. 6.Whether interest should have been awarded from the date of filing suit rather than the date of judgment
  7. 7.Whether the trial judge erred in declining to consider the Bank's documents filed late

Key legal issues

#
01

Estoppel based on statements at trial

Holding

Shamisi's evidence did not amount to an admission of no claim against the Bank; estoppel failed both on the facts and because it was not specially pleaded.

Reasoning

Read holistically, Shamisi's evidence was that he never dealt with the Bank and complained of the transfer of his buses. Section 120 of the Evidence Act requires an unequivocal representation acted upon to detriment; none existed. Further, following Odgers, estoppel must be specially pleaded with full detail of the constituting facts, and the Bank had not pleaded it.

p. 5
02

Burden of proof on signatures and demand letter

Holding

No shifting of the burden occurred; the Bank, asserting that Shamisi signed the invoices and instruction letters, bore the burden of proving those facts.

Reasoning

Sections 107(2) and 109 of the Evidence Act place the burden on the party asserting facts it wishes the court to believe. Since the Bank asserted Shamisi had signed the documents, it had to prove it, including by expert or confrontation evidence. Demand and refusal is not an essential precondition of conversion where the defendant has wrongfully disposed of the goods.

p. 6
03

Passing of property in the buses

Holding

Property in the buses passed to Mjahid only upon payment of the balance of the purchase price; possession was given solely for valuation to obtain hire purchase financing.

Reasoning

Under section 19(2) of the Sale of Goods Act, intention is ascertained from the contract terms, the parties' conduct and the circumstances. The deposit cheques were dishonoured and never made good, and the Bank was never privy to the Shamisi–Mjahid agreement, so it could not establish a contrary intention. The only evidence of intention was Shamisi's.

p. 7
04

Section 26(2) Sale of Goods Act protection

Holding

The Bank could not invoke section 26(2) because it had actual notice of Shamisi's ownership; good faith under section 2(2) is honesty irrespective of negligence, but notice defeats the defence.

Reasoning

The hire purchase forms identified Shamisi as dealer and owner, the logbooks were in his name, and established practice required the dealer to submit transfer documents and receive payment. Yet the Bank transferred the buses and paid all proceeds to third parties. The burden of proving good faith and lack of notice lay on the Bank, which failed to discharge it.

p. 9
05

Measure of damages for conversion

Holding

The Kshs 10 million award, being the agreed sale price days before conversion, was a sound measure of market value at the date of conversion.

Reasoning

The prima facie measure is market value at date and place of conversion. The agreed price, reached barely weeks before conversion, was never seriously challenged; a CMC Motors valuation and the Bank's own lending of Kshs 13 million put the value higher. Shamisi claimed less than he could have. The agreed price has judicially been accepted as reasonable value.

p. 10
06

Interest from date of filing suit

Holding

The judge properly exercised her discretion under section 26 of the Civil Procedure Act in awarding interest from the date of filing suit, the claim being definite and ascertainable.

Reasoning

Section 26 confers a wide and unfettered discretion to order interest from the date of suit where the decree is for payment of money. The amount claimed was specified in the plaint and known before judgment, and Shamisi was deprived of use of the money by the Bank's wrongful act. An appellate court will not interfere with a discretion not exercised wrongly.

p. 10
07

Bank's late-filed documents

Holding

The trial judge was justified in disregarding the Bank's late documents where the Bank never confronted Shamisi with them in cross-examination.

Reasoning

The documents were filed ten years after close of pleadings and after Shamisi had testified in chief, and were never put to him. Having failed to confront him with the allegedly signed authorizations, the Bank could not fault the judge for declining to consider them.

p. 9

Legal principles established

#
  • A party asserting that the plaintiff signed documents bears the burden of proving that fact; failure to confront the plaintiff with the documents or to call handwriting evidence is fatal.
  • A party invoking section 26(2) of the Sale of Goods Act bears the burden of proving it received the goods in good faith and without notice of the owner's rights.
  • Demand and refusal is not an essential precondition of conversion where the defendant wrongfully disposed of the goods or asserted a title adverse to the owner.
  • Estoppel must be specially pleaded with particularity; it cannot be founded on statements made during the hearing.
  • A first appellate court must reappraise the evidence and reach its own conclusions while respecting trial-court credibility findings.
  • The discretion to award interest under section 26 of the Civil Procedure Act is wide and unfettered, and interest may run from the date of filing suit where the claim is definite and ascertainable.

Court orders

#
  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to Shamisi

The bench

#

One judgment of the whole court — no separate or dissenting opinions.

AS
majority
William Ouko
W. OukoJA
Currently serving
majority
KM
majority
On appeal from
High Court of Kenya at Mombasa
HCCC No. 21 of 1998
Jurisdiction invoked
First appeal under the Court of Appeal's appellate jurisdiction (no specific provision cited in the judgment)

Relief refused

#

Setting aside the High Court judgment awarding Kshs 10 million, damages and costs

All seven grounds of appeal failed after re-evaluation of the evidence

p. 11

Reliance on estoppel to bar Shamisi's claim

No unequivocal representation by Shamisi to the Bank; estoppel must be specially pleaded and was not

p. 5

Costs

Appeal dismissed with costs to Shamisi (the 1st respondent).

Quotable passages

#

Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Ultimately we have come to the conclusion that this appeal has no merit and the same is hereby dismissed with costs to Shamisi. It is so ordered.
p. 11Disposition - appeal dismissed
the burden is upon the defendant to establish that he dealt with the goods of the plaintiff honestly or in good faith and without notice.
p. 8Burden of proof under section 26(2) Sale of Goods Act
If the evidence of a handwriting expert was therefore required to prove the existence of the facts that the bank was asserting, it was for the Bank to adduce it.
p. 6Burden of proving signatures
The more compelling reason why estoppel was not applicable in this case is that it must be specially pleaded.
p. 5Estoppel must be specially pleaded
we are under a duty to reappraise the evidence that was adduced before the trial court, look at it with a fresh eye and come to our own conclusions, which may or may not necessarily coincide with the conclusions of the trial court.
p. 5Duty of first appellate court
the learned judge had the discretion to award interest from the date of filing suit as Shamisi's claim was definite and ascertainable before judgment.
p. 10Discretionary award of interest
persons deal with the property in chattels or exercise acts of ownership over them at their peril
p. 9Dealing with another's chattels at one's peril

Issues in the judgment

#
minor

The judgment states default judgment was entered against the Bank on 18th March 1993, which predates the February 1997 transaction that founded the suit; this appears to be an error for 1998 or similar.

minor

The date of the High Court judgment is stated inconsistently: the header says the judgment was dated 15th May 2014 while the body says the judgment was dated 15th May 2015.

minor

The date of oral exposition of submissions (23rd April 2015) appears to post-date the appeal number/year and sits awkwardly with the delivery date, suggesting a typographical slip in the judgment.

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (6)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Diamond Trust Bank Kenya Ltd v Said Hamad Shamisi & 2 others [2015] KECA 717 (KLR)", Case Analysis (2015). Civil Appeal No. 36 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/717/eng@2015-05-15

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.