Equity Bank (Kenya) Limited v Westlink Mbo Ltd & 2 others (Civil Appeal 532 of 2019) [2024] KECA 518 (KLR)
The bottom line
#The Court of Appeal cut Equity Bank's bill from about Kshs. 39 million to Kshs. 31.8 million, confirming banks are liable for tellers' fraudulent deposit slips.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether Westlink established its claims for Kshs. 27,335,000.00; Kshs. 7,500,000.00; and Kshs. 4,485,000.00 respectively
- 2.If so, whether the Bank is vicariously liable for the actions of its employees, the 2nd and 3rd respondents
- 3.Whether the Judge erred in awarding Westlink general damages of Kshs. 2,000,000.00
- 4.Whether the Judge erred in awarding interest at the rate of 20% p.a.
Key legal issues
#Proof of the Kshs. 27,335,000.00 claim based on reprinted deposit slips
Finding upheld that bank tellers issued reprints of genuine deposit slips without corresponding credits, and the Bank is vicariously liable
The Court reviewed the evidence as a first appellate court, noting specific examples of deposit slips reprinted to misrepresent deposits of Kshs. 8,000,000.00 each. The reprints and bank statements showing no corresponding credits demonstrated the tellers' fraud. The slips bore the teller's stamp and were issued in the course of duty, so the Bank, as employer, bore vicarious liability for the actionable conduct of its employees.
Vicarious liability of the Bank
The Bank is vicariously liable for the fraudulent acts of its teller employees
Relying on the definition of vicarious liability and authorities including Barwick v English Joint Stock Bank as cited in Patriotic Guards Ltd, the Court held that deposit slips with the teller's stamp were issued by employees in the course of duty. The tellers received payments, issued reprints to the unsuspecting depositor, and failed to credit the account; the employment relationship grounded the Bank's liability.
The Kshs. 7,500,000.00 funds transfer claim
Award set aside because the customer's account lacked sufficient funds
The Court distinguished a customer's transfer application from a deposit slip. Whereas a deposit slip is prima facie evidence of receipt of funds, a transfer application is not; the Bank demonstrated that Elinah K. Zablon Tai's account held only Kshs. 1,201,975.80, insufficient to meet the Kshs. 7,500,000.00 transfer. The trial Judge erred in applying the same finding to both transactions.
The Kshs. 4,485,000.00 debit/reversal claim
Award upheld because the Bank failed to explain why the original credits were erroneous, despite showing corresponding credits
The Court found the trial Judge erred in stating there were no corresponding credits - the statements showed matching credits for each reversal. However, the Bank's duty was to explain why the credits were erroneous, which it did not do. Absent justification, the debit without explanation was wrongful and the award stood.
Admissibility of PW1's evidence adopting the absent Managing Director's statement
Objection to hearsay came too late; no objection was raised at trial
PW1 adopted the witness statement of the Managing Director without objection and was cross-examined at length without suggestion he lacked personal knowledge. The trial Judge, who observed the witnesses, found PW1 truthful and the Bank's witness not a witness of the facts. Objection to admissibility should have been taken before the trial court for a ruling.
General damages of Kshs. 2,000,000.00
Award set aside for lack of pleading and proof
A claim for loss of business and loss of investment opportunity should have been pleaded and proved. No proper basis was laid for the figure, which appeared plucked from the air. The Court set it aside.
Legal principles established
#- A bank deposit slip issued by the bank is prima facie evidence of receipt of the funds it represents, and an employer bank is vicariously liable for fraudulent deposit slips issued by its tellers in the course of their duty
- A bank which debits a customer's account by way of reversal must explain and justify why the original credits were erroneous; absent such explanation the debit is wrongful
- Objection to the admissibility of a witness's evidence as hearsay must be raised before the trial court at the time the evidence is tendered; it is too late on appeal
- General damages and interest rates not pleaded or supported by evidence cannot stand on appeal
Court orders
#- 1.Upheld the awards by the High Court in favour of Westlink of Kshs. 27,335,000.00 and Kshs. 4,485,000.00 (total Kshs. 31,820,000.00) with interest at court rates (12% p.a.) from date of filing suit until payment in full
- 2.Set aside the awards in favour of Westlink of Kshs. 7,500,000.00 and Kshs. 2,000,000.00
- 3.Appellant to have 2/3 of the costs of the appeal; Westlink to have the costs of the suit in the High Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Jurisdiction invoked
- First appeal to the Court of Appeal under Rule 31(1)(a) of the Court of Appeal Rules, 2022
Relief refused
#Award of Kshs. 7,500,000.00 for the failed funds transfer
The customer's account did not have sufficient funds; an application to transfer funds differs from a deposit slip which is prima facie evidence of receipt
General damages of Kshs. 2,000,000.00
No proper basis was laid; the claim should have been pleaded and proved
Interest at 20% p.a.
Rate neither pleaded nor supported by any evidence; replaced with court rates
Costs
As the appellant has partially succeeded in the appeal, it will have 2/3 of the costs of the appeal while Westlink will have the costs of the suit in the High Court.
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.
a. We uphold the awards by the High Court in favour of Westlink of Kshs. Kshs. 27,335,000.00 and Kshs. 4,485,000.00 (total Kshs. 31,820,000.00) with interest at court rates (12% p.a.) from date of filing suit until payment in full.
b. We set aside the awards in favour of Westlink of Kshs. 7,500,000.00 and Kshs. 2,000,000.00.
c. As the appellant has partially succeeded in the appeal, it will have 2/3 of the costs of the appeal while Westlink will have the costs of the suit in the High Court.
An application by a customer to the Bank requesting the transfer of funds is in our view difierent from a deposit slip issued by the Bank which is for all purposes prima facie evidence of receipt of funds represented by such deposit slip.
In the circumstances, absent an explanation or justification by the Bank for the reversal, we uphold the finding by the Judge awarding Westlink the amount of Kshs. 4,485,000.00 debited from its account without explanation.
In our view, it is rather late in the day for objection to be taken on the admissibility of PW1’s evidence.
Issues in the judgment
#The judgment states Westlink sought Kshs. 39,720,000.00 but immediately corrects that the correct total is Kshs. 39,320,000.00
The judgment records a credit date of 1st September 2009 in the discussion of reversals, though the bank statement period and reversals were in 2008 - likely a typographical error for 2008
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kenyansa v Chebii (Environment and Land Appeal E012 of 2025) [2025] KEELC 5405 (KLR)[2025] KEELC 5405 (KLR)16 Jul 2025
Cite this brief
#Cite this brief
Caselaw, "Equity Bank (Kenya) Limited v Westlink Mbo Ltd & 2 others (Civil Appeal 532 of 2019) [2024] KECA 518 (KLR)", Case Analysis (2024). Civil Appeal (Court of Appeal, Nairobi) - judgment delivered 26th April 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/518/eng@2024-04-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.