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October 17, 2018

Court orders KCB to produce crucial papers in airline suit

Kenya Commercial Bank chief executive Joshua Oigara with the bank retail director Annastacia Kimtai during existing Interest rate adoption briefing in Nairobi on September1, 2016 /ENOS TECHE
Kenya Commercial Bank chief executive Joshua Oigara with the bank retail director Annastacia Kimtai during existing Interest rate adoption briefing in Nairobi on September1, 2016 /ENOS TECHE

The Court of Appeal has ordered Kenya Commercial Bank to produce crucial documents in a case filed by United Airlines Limited over a dispute to do with an aircraft purchase loan.

United Airlines Limited filed a suit against KCB at the High Court in 1994 seeking several reliefs following a dispute over a Sh12 million loan to purchase an aircraft from Canada.

"The respondent approved our the loan subject to the aircraft being delivered and registered in Kenya and evidence to the effect being availed to them. KCB was supposed to remit the money to Canada for the purchase," United Airlines said.

The airline argued that while the loan amount was to released after the aircraft arrived in Nairobi, the bank went ahead to disburse the cash before this happened.

The dispute arose when it became apparent that the aircraft was not going to be delivered, yet the money had been sent to the supplier in Canada. There was a problem in the transaction between KCB and the bankers in Canada and New York, the reason the deal went south. 

Appellant Judges W.Karanja, G.Kariuki and J.Mohammed ruled that the bank, being an agent of its customers, its obligated to disclose to the customers any information that may have any bearing on the customer's account.

"It cannot be justified to deliberately withhold from the customer relevant information pertaining to the customers account, doing so would amount to dereliction of duty on the part of the bank", the Judges ruled.

The matter was listed before Justice J. Mbaluto where three witnesses testified for United Airlines Limited before Elkane Aluwale, the airline's managing director was called to the witness stand. In the course of his evidence, the witness sought to produce some documents which were said to be copies of internal correspondence between the respondent’s officers and the other banks.

KCB however objected to the production of the said documents on grounds that they could only be produced by the maker or the persons the documents were addressed to. It was KCB's contention that the documents, having not been addressed or copied to the witness, were illegally obtained and the court was called upon to uphold the objection and disallow the production of the said documents. Section 140(2) and Section 139 of the Evidence Act were relied upon.

In response to the objection, the appellant posited that Section 142(2) of the Evidence Act was not applicable. They argued that since the said documents related to the witness’ bank account, then he could not be stopped from producing them in evidence regardless of the manner in which he had procured them. Counsel for the respondent also argued that since the witness was not the maker of the documents, he could not be cross-examined on them as he had no competence to answer any questions arising from them.

The court, in its brief ruling, said the document could only be produced by the person who had made it or who had received the same. Another witness informed the court that in 1994, he used to be the relationship manager for the appellant’s account, and was therefore, conversant with the transaction in question. In the course of the transaction, the witness had written an internal memo to the respondent’s senior legal officer.

"The witness sought to produce the said memo in evidence but an objection was taken by counsel for the respondent on the basis that it was a photocopy, and secondly that the document was an internal inter-office communication and was a privileged document which could not be tendered in evidence", the court heard.

The counsel for United Airlines insisted on the production of the document as the original was in possession of KCB.

"We think we have said enough to show that the document in question ought to have been admitted in evidence. In the circumstances, we allow this appeal with costs to the appellants", the Judges concluded.

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