A High Court judge has faulted Equity Bank Limited for negligence after client’s car logbook was withheld for years and the vehicle mysteriously registered in a stranger’s name, despite full repayment of a KSh300,000 loan.
- •In a judgment delivered in civil suit by, the High Court overturned a magistrate’s decision that had dismissed the client’s (Paul Mungatia) claim against the bank.
- •The dispute traces back to April 2016 when Mungatia took a KSh300,000 loan from the lender, surrendering the original logbook of his Mercedes Benz as security.
- •Mungatia cleared the loan by July 2017 but his logbook was never returned so he could neither transfer ownership nor insure the vehicle.
The shock came when he attempted to sell the car for KSh 700,000, only to discover it had been transferred to Kenyanjui Mbugua Dennis, a third party.
The bank admitted receiving the logbook and transfer forms but shifted blame to the National Transport and Safety Authority (NTSA), arguing that it had forwarded the documents for joint registration and that any erroneous transfer was the Authority’s fault.
It even produced a 2017 letter to NTSA seeking rectification.
However, the High Court ruled that under the loan agreement, it was the bank’s responsibility to ensure the joint registration was perfected before disbursing the loan.
“If the respondent had registered the security prior to disbursement… it would have been impossible for the appellant’s vehicle to be registered in the name of a third party,” the judge observed.
The court held that the bank owed its customer a duty of care and breached it by failing to secure the vehicle’s joint registration, leaving the door open for irregular transfer.
The judge noted that institutions must take reasonable care to avoid foreseeable harm to those closely affected by their actions.
While the lower court had sympathised with the borrower’s “profound hardship”, it absolved the bank, suggesting NTSA should have been sued instead.
Though Mungatia sought KSh 1 million in damages, the court found he partly failed to mitigate his losses. Evidence showed that NTSA had corrected the double registration error in 2018 and advised him to log into the Transport Information Management System (TIMS) to accept ownership, which he did not do.
The court awarded him KSh100,000 in general damages.
