A routine KSh8,620 dinner bill at a Nairobi hotel spiralled into several days of indignity after I&M Bank’s system falsely indicated that a customer lacked funds. His passport, bank card and wife’s phone were detained as collateral, prompting a legal battle that has now cost the bank KSh500,000.
A dinner outing turned into a humiliating ordeal after I&M Bank’s systems rejected a customer’s debit card despite available credit.
Gibson Omboya Shiraku had attempted to settle a KSh 8,620 bill at Nairobi’s Ole Sereni Hotel.
But his Visa Electron card repeatedly failed, displaying messages suggesting his account lacked sufficient funds.
He subsequently tried withdrawing money from an ATM at the nearby Panari Hotel. That attempt failed too, with the machine expressly indicating insufficient funds.
What followed was an embarrassing confrontation that eventually landed the bank in court.
Hotel employees confiscated Shiraku’s bank card, passport and his wife’s mobile phone. They retained the belongings until the outstanding bill was settled in cash five days later.
The High Court has now upheld a KSh500,000 damages award against the financial institution.
In a judgement delivered in late September 2026, Justice Anthony Mrima dismissed I&M Bank’s appeal entirely.
The judge found that an internal reconciliation process had temporarily disconnected Shiraku’s card from his overdraft facility.
More damagingly, the bank’s own witness admitted that Shiraku had sufficient funds available.
Bank’s Admission
The bank’s defence rested on an explanation that ultimately undermined its position.
During cross-examination, its witness, John Njoroge, admitted Shiraku enjoyed an operative overdraft facility.
Njoroge explained that I&M Bank conducted end-of-day reconciliation exercises affecting debit card operations.
During these exercises, the system temporarily disconnected debit cards from customers’ overdraft accounts.
Crucially, customers had no way of knowing when these reconciliations occurred.
That admission proved particularly damaging because Shiraku remained within his approved overdraft limit.
Justice Mrima rejected the bank’s description of the incident as an unforeseen technical malfunction.
Instead, he characterised the system configuration as an internal operational defect.
The judge observed that banks owe customers contractual and fiduciary duties of care.
Those obligations include ensuring customers can access available funds through agreed banking facilities.
He further noted that technical information about the card remained exclusively within the bank’s knowledge.
Customers could not reasonably anticipate when the bank’s reconciliation process would render their cards inoperative.
The judge held that I&M Bank should have warned customers about these interruptions.
Its failure amounted to what the judgement described as a “glaring breach of contractual duty and actionable negligence”.
Hidden Clause
Yet the bank had another defence: its contractual terms expressly excluded liability for card-related claims.
I&M Bank argued that Shiraku accepted those provisions when signing a replacement card form.
The document, dated June 30, 2015, contained an acknowledgement accepting applicable debit card terms.
However, the bank produced a separate 26-page document containing the disputed contractual provisions.
Shiraku maintained that he had never received that document.
More importantly, the bank could not demonstrate that it supplied those terms before securing his acceptance.
The judge found no express mention of the exclusion clause in the replacement form.
That omission became decisive because the provision sought to absolve the bank from substantial legal responsibility.
Justice Mrima examined two persuasive English decisions addressing particularly onerous contractual provisions.
In Blu-Sky Solutions Limited v Be Caring Limited, the court warned against concealed contractual exclusions.
The judgement also relied on Goodlife Foods Ltd v Hall Fire Protection Ltd.
That decision reinforced the requirement for fair notice of unusually burdensome contractual conditions.
Justice Mrima concluded that merely acknowledging general terms did not establish informed acceptance.
He consequently rejected the bank’s attempt to rely on its undisclosed exclusion clause.
“The Appellant cannot rely on an exclusion clause buried in an unsupplied collateral document,” the judge ruled.
He added that parties enforcing such provisions must demonstrate reasonable disclosure efforts.
Damaging Message
The court then examined whether the bank’s transaction messages amounted to actionable defamation.
Under established legal principles, defamation requires a false statement communicated to another person.
The statement must also lower the claimant’s reputation among right-thinking members of society.
Justice Mrima relied on the Court of Appeal decision in Selina Patani v Dhiranji V. Patani [2019] eKLR.
The judge found that the Panari ATM receipts contained the most damaging message.
They expressly stated that Shiraku had insufficient funds when attempting to withdraw money.
Yet the bank had already acknowledged that his account remained within its overdraft limit.
The judge therefore found the message factually false and potentially damaging to Shiraku’s reputation.
I&M Bank had argued that ATM receipts could not constitute publication for defamation purposes.
However, Justice Mrima rejected that argument after examining the surrounding circumstances.
Hotel waitress Joy Peter summoned security officer Lucia Kambua after the initial payment difficulties emerged.
The security officer accompanied Shiraku’s wife, Rhoda Omboyi Ndula, to Panari Hotel.
Their evidence established that hotel employees knew Shiraku could not settle his outstanding bill.
The judge concluded that publication occurred because third parties encountered the disputed information.
More importantly, the messages carried consequences beyond the embarrassment of a declined transaction.
The hotel retained Shiraku’s passport and bank card alongside his wife’s mobile phone.
The belongings remained withheld for five days until the outstanding bill was settled.
Justice Mrima found that the circumstances exposed Shiraku to public ridicule and reputational damage.
The false message suggested financial dishonesty within an ordinary commercial transaction.
The court therefore concluded that the circumstances amounted to actionable defamation.
Appeal Dismissed
Having examined the evidence, Justice Mrima found no reason to overturn the magistrate’s decision.
The court concluded that Shiraku had established his case on a balance of probabilities.
It found that I&M Bank breached its contractual obligations and negligently managed its overdraft system.
It also established that false information damaged the customer’s reputation before hotel employees.
The judge consequently dismissed the appeal in its entirety.
He upheld the original KSh500,000 general damages award, together with costs and interest.
Additionally, I&M Bank was ordered to bear the costs of the appeal.
The judgement was delivered at Nairobi’s Milimani Law Courts on September 30, 2026.
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The decision carries important implications for financial institutions operating increasingly automated banking systems.
It demonstrates that internal technological arrangements cannot automatically excuse failures affecting customers’ access to money.
It also reinforces the importance of disclosing onerous contractual provisions before customers accept banking services.
For Shiraku, an unsuccessful KSh8,620 dinner payment became a costly legal battle.
The High Court has now affirmed that banks must answer for preventable operational failures.
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