Teacher awarded Sh200,000 for being wrongfully enlisted as loan defaulter

A high school teacher has been awarded sh200, 000 by a Kakamega High court for being erroneously enlisted with Credit Reference Bureau as a loan defaulter.

Christine Namalwa Masinde by a suit dated December 18, 2014 moved to court seeking relief on general damages for unlawful listing under the credit reference bureau. The damages hereinafter referred to as CRB, Financial, moral and social embarrassment, cost and interest.

She claimed that on May 20, 2014 National Bank of Kenya maliciously and unlawfully caused her to be listed under CRB as a loan defaulter and as a result she was unable to access credit facilities at KCB.

Namalwa claimed that she was listed with CRB as a loan defaulter without any notice and without her having committed any default in loan repayment.

Namalwa while giving her testimony in court said that she took loan with the bank which was serviceable through a check off system on her salary and properly serviced it.

She sought loan with Kenya Commercial Bank but could not secure the same as she learned that NBK had caused her to be listed as a defaulter with CRB. This made KCB not to extend credit facilities to her.

She averred that she suffered financial embarrassment and delay in processing her loan facilities as at a later stage she was de-listed. She termed the listing unlawful and malicious thus claimed damages.

The bank, however, denied the allegations in a replying affidavit dated May 4, 2015 and pleaded that it never maliciously caused Namalwa to be listed under CRB as a loan defaulter.

NBK pleaded that the plaintiff, was advanced credit facilities at its Kakamega branch and in 2013, at a time when they were restructuring its loan portfolio that affected repayment period of most loan facilities in its system including Namalwa's account.

It further stated that upon notification by Namalwa of the erroneous listing it (the bank) promptly rectified the situations and had the plaintiff de-listed.

The bank through its representatives informed the court that upon notification by Namalwa of the erroneous listing with CRB, it on its own promptly rectified the situation and caused her to be delisted.

It further stated that upon notification that KCB had denied plaintiff a loan facility on account of the listing, it communicated using the inter-bank communication system and informed KCB that the listing was out of error hence it should not use it as a reason to deny her the loan facility.

KCB later confirmed to the defendant that the teacher was advanced the loan sought.

Namalwa was called to NBKs office after KCB loan was approved and personally apologized for the inconveniences caused.

NBK operators regretted the incident and stated that it was out of an error which the bank itself took steps to rectify the situation and that the plaintiff never suffered any inconvenience given that the loan was later approved.

Justice Jutice Mutungi Charles Kariuki in his judgment delivered on December 13, 2016 noted that Namalwa was not notified of the action by the bank of listing her at CRB as the bank did not communicate to her over the same not even a notice to show cause why she should not be listed as a loan defaulter.

Justice Kariuki stated that the evidence in record showed that the bank failed to demonstrate its diligence in enlisting Namalwa with CRB as a defaulter. He said the bank acted negligently.

The judge also stated that it is common sense and good practice to notify customer in default of an intention to enlist the customer as a loan payment defaulter so that if there was an error or mistake, same can be rectified, the court found that the bank was liable for the unlawful listing of the plaintiff as a loan defaulter with the CRB.

He said the court finds that Namalwa is entitled to damages as she was embarrassed financially by the bank which had accepted they erred and acted in mitigation in getting her de-listed and urging KCB to advance her the loan sought.

"The court, therefore, awards the plaintiff (Namalwa) on financial embarrassment and unlawful listing with CRB as a loan defaulter by an award of general damages of sh200,000 costs and interest" read part of the judgment.