Delivering the judgment, Justice Eric Ogolla ruled that Ecobank breached its fiduciary duty, its legal obligation to act in the best interest of the estate, by releasing funds from an account explicitly protected by a court order.
“Ecobank Kenya Limited, domiciled at Ecobank Towers, must pay the estate of Mbiyu Koinange the sum of KSh284, 000,000 with interest accruing therefrom,” Justice Ogolla stated.
The dispute arises from the court-ordered sale of 100 acres of the Closeburn Estate in Runda, a property owned by Koinange, who died without a will. The sale generated KSh1.16 billion, of which KSh890 million was transferred from Co-operative Bank to Ecobank under the care of the estate administrators’ advocates. A court order issued on 26 July 2011 by then-Justice David Maraga directed that the remaining KSh284 million be held in a trust account and not disbursed without court permission, pending the resolution of creditors’ claims.
Despite this, Eddah Wanjiru Mbiyu, Koinange’s widow and one of the estate’s administrators, discovered that the entire sum had been withdrawn without judicial authorization.“It later came to my knowledge that Ecobank, without court permission, illegally caused the entire sum of KSh284 million to be withdrawn,” she stated in her affidavit.
The application, supported by all beneficiaries of Koinange’s polygamous estate, was filed by Senior Counsel Paul Muite. He emphasised that the account was a trust account created specifically for the estate’s beneficiaries, and Ecobank was aware of its protected status but failed to demand a court order before releasing the funds.“Ecobank Kenya Limited, without court authority or the applicant’s consent, allowed the funds to be withdrawn, to the detriment of the estate,” Muite submitted.
In its defence, Ecobank, through an affidavit sworn by branch manager Violet Monari, denied wrongdoing, claiming it had not been served with the July 2011 court order. The bank stated it only became aware of a later order issued on 4 September 2014, which it claimed to have complied with. Justice Ogolla rejected this argument, stating that banks handling estate accounts are presumed to have “constructive knowledge” of their special status, meaning they should be aware of legal protections even without direct notification. “When an account is opened in the name of an estate, the bank must recognize the special category of the customer,” Justice Ogolla said.
The judge noted that the significant sum involved should have prompted oversight from senior bank officials. “It was an amount of money whose movement or transfer could not occur without attracting the attention of responsible managers,” he observed. The court described Ecobank’s handling of the account as either grossly negligent or potentially fraudulent, emphasising the bank’s disregard for its duty toward a legally protected estate. “The casual manner in which Ecobank treated the account and disbursed the money could only have been done by way of wilful negligence, if not wilful fraud,” Justice Ogolla stated.
Ecobank’s argument that the claim was statute-barred was also dismissed. Justice Ogolla clarified that the Law of Succession provides special protection for estate accounts, exempting such claims from standard time limitations.“The estate of a deceased person is a special estate protected by law and administered by the court through appointed administrators,” he said.
[/full]
