Court Orders Stanbic Bank to Restore KSh 3.96 Million Withdrawn from Dead Customer’s Account

A Meru judge suspended execution of a KSh 4.46 million award against Stanbic Bank but ordered it to restore KSh 3.96 million to the deceased customer’s account. The funds, including interest, must remain locked until the appeal is determined.

Stanbic Bank Kenya Limited has been ordered to restore KSh 3.96 million to a deceased customer’s account. The money must remain inaccessible as the bank challenges a judgement arising from alleged unauthorised withdrawals.

The High Court in Meru suspended execution of a KSh 4.46 million award against the bank. However, Justice Heston Nyaga attached strict conditions to the reprieve.

The bank must credit the deceased customer’s savings account with KSh 3,964,300. Neither his widow nor his estate can withdraw the money pending further court orders.

The dispute involves Stephen Kimathi Kaugu’s account and alleged unauthorised transactions.

His widow, Bridget Kirumba Mwobobia, sued the bank as administrator of his estate.

In a ruling delivered late October 2026, Justice Nyaga balanced the bank’s right to appeal. The judge also sought to protect the widow’s interests as the successful litigant.

Disputed Funds

The dispute arose from transactions allegedly conducted without proper authorisation from Kaugu’s bank account.

The trial court found that Stanbic Bank had breached its fiduciary duty of care. That failure, according to the judgement, led to withdrawals forming the basis of the lawsuit.

On March 12, 2026, the court awarded the estate KSh 4,465,672.30 in special and general damages. The award followed findings concerning the alleged conversion of the deceased’s funds.

Dissatisfied with the decision, Stanbic Bank filed an appeal challenging the judgement. It subsequently sought to stop the widow from enforcing the decree.

The bank argued that executing the judgement before the determination of its appeal would cause substantial loss. It maintained that the appeal raised serious questions deserving judicial reconsideration.

Refund Concerns

A central concern involved whether the estate could refund the money if the bank eventually won.

Stanbic Bank argued that the widow had not demonstrated sufficient financial capacity to repay the award.

It specifically questioned her failure to disclose her source of income. The bank maintained that recovering the money could become difficult if the appeal succeeded.

Mwobobia rejected those concerns, insisting that the estate possessed substantial financial resources.

She maintained that repayment would present no difficulty should the bank eventually succeed.

She also defended the original judgement, arguing that the bank had rightly been held liable. In her response, she maintained that the appeal raised no serious or triable issues.

Justice Nyaga declined to determine the appeal’s merits at this interlocutory stage. Nevertheless, the judge found that the appeal raised triable issues on its face.

The court also considered the possibility that executing the decree could render the appeal nugatory.

This concern supported the need to preserve the disputed funds until the appeal’s determination.

Unusual Security

Rather than simply ordering payment or depositing the entire award in court, the judge devised another arrangement.

Justice Nyaga considered a proposal that would protect the successful respondent while allowing the bank to pursue its appeal.

The judge explained that security should serve both parties’ interests, stating:

“The court ought to look at a proposal that serves the interest of the successful respondent while also giving the appellant the chance to pursue its appeal.”

The court consequently identified KSh 3,964,300 as the amount allegedly withdrawn illegally.

Stanbic Bank must credit the deceased’s savings account with that amount within 30 days. The money, together with any interest earned, must remain locked and unavailable for withdrawal.

The judge explained the reasoning behind the arrangement, stating, “The best way is to have the sum alleged to have been illegally withdrawn secured.”

The order effectively preserves the disputed funds without immediately releasing them to either party.

Notably, the security amount falls KSh 501,372.30 below the original judgement award.

The ruling does not explain the difference or provide a breakdown of the two figures.

Strict Deadlines

The court attached significant consequences to the bank’s failure to comply with the security conditions.

If Stanbic Bank misses the 30-day deadline, the stay orders automatically lapse. Mwobobia would then be free to execute the original decree against the bank.

Justice Nyaga also directed the bank to file and serve its record of appeal. It must complete that process within 60 days of the ruling.

The lower court record must also be forwarded for appellate proceedings. A mention date will be scheduled to assess compliance with the court’s directions.

Meanwhile, the costs of the application will abide by the outcome of the appeal.

The ruling does not overturn the original judgement or finally determine the bank’s liability. Instead, it temporarily suspends execution while preserving the disputed funds.

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The forthcoming appeal will determine whether the trial court correctly established liability. It will also examine the evidence underlying the alleged unauthorised transactions.

For Mwobobia, the ruling preserves the money awarded to her husband’s estate. However, she cannot access the secured amount while the appeal remains pending.

For Stanbic Bank, the reprieve comes with an immediate financial obligation. The institution must restore the disputed funds while continuing its legal challenge.

The central question remains whether the bank breached its duty of care. The appeal will ultimately determine whether the original judgement survives judicial scrutiny.

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