The High Court dismissed an appeal by Safaricom PLC against a judgment requiring it to compensate a customer who lost Sh268,420.61 through fraudulent withdrawals while he was out of the country with his SIM card.
In a judgment delivered on Wednesday, Justice Francis Weche Andayi upheld the Small Claims Court’s finding that Safaricom breached its duty of care towards Evans Abuki Mogusu, ruling that the telecommunications giant failed to prove its allegation that the customer had compromised his PIN.
The case dates back to transactions between February and December 2023, when Mogusu’s M-Pesa line saw repeated withdrawals totalling Sh268,420.61.
His evidence, which the trial court accepted, was that he was outside Kenya with his SIM card throughout the period and had not authorised any of the transactions.
Safaricom appealed on 14 grounds, arguing that the adjudicator erred by disregarding that all M-Pesa transactions require a PIN known only to the account holder.
The company maintained that correct PIN entry is deemed to be by the customer, and that Mogusu had either shared his details or delayed reporting suspicious activity.
But Justice Andayi said that 12 of the 14 grounds improperly challenged findings of fact rather than points of law, the only basis on which Small Claims Court decisions can be appealed.
“The appellant holds all the data to show the exact points at which the transactions were carried out on the respondent’s M-Pesa account,” the judge said.
“Once the respondent adduced evidence that he had his SIM card with him out of the country… the evidential burden shifted to the appellant to prove its contention that in fact, access to the account had been authorised by the respondent.”
The court took judicial notice of the fact that M-Pesa withdrawals can only be conducted within proximity of an agent. With Mogusu abroad but his account being accessed locally, Justice Andayi said this “ought to have aroused doubts and put the appellant on inquiry.”
“In the present case, the fact that transactions for deposit and withdrawal of funds were being made on a number or account using a SIM card that was outside the country was one that was out of the ordinary course,” the judgment reads.
“It is apparent that the appellant failed to make any inquiry of the same and consequently it was negligent.”
The judge further ruled that only Safaricom, as the issuing entity, could explain the existence of a duplicate SIM card registered in Mogusu’s name using his national ID credentials.
“Therefore, it behooved the appellant to prove its allegation that the respondent had either willingly or negligently given out his personal details including his PIN and national ID card that enabled the transactions to take place while he was away. Otherwise, the court cannot come to any other conclusion other than that the appellant was in breach of its duty of care,” the court held.
Justice Andayi held that “there are other persons other than the respondent who may have access to the appellant’s database of its customers such as the appellant’s employees, directors among others and therefore have details of the customers and these can be fraudulently applied.”
The judge criticised Safaricom’s counsel for treating the matter as a rehearing, saying that Section 38 of the Small Claims Court Act restricts appeals to points of law only.
“In my thinking, in the spirit of the SCCA, [an adjudicator] should come down to the level of the ordinary person on the streets,” Justice Andayi said.
“The operations of the SCC must thus be distinguished from those of the magistrate’s court.”
The court further noted that the Small Claims Court is exempted from strict evidentiary rules, and that a judgment from the court “should not be more than two pages long.”
Safaricom had sought to rely on Clause 6 of its M-Pesa terms and conditions, which disclaims liability where a correct PIN is entered. However, the court found that the PIN issue alone was insufficient where evidence showed the customer was in possession of his SIM card abroad.
“The respondent’s evidence that such access was not authorized by him or through his knowledge therefore remains unchallenged,” the court ruled.
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