[2020] KECPT 97 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 739 OF 2017

BENSON IRUNGU MWAURA......................................................CLAIMANT

VERSUS

SHERIA CO-OPERATIVES SAVINGS AND

CREDIT SOCIETY OF KENYA......................................1ST RESPONDENT

LUCY WATIRI KAMOTHO.............................................2ND RESPONDENT

SUSAN WAMBUI KAMOTHO.........................................3RD RESPONDENT

JUDGMENT

The matter for determination as per the statement of claim filed on 24. 11. 2017 is for a liquidated claim of Kshs.314,597/85/= plus interest at 14. 5.% from 29/5/2017 till payment in full, General Damages, Exemplary and aggravated damages, being money deducted from the claimant’s account by the 1st Respondent, allegedly for being a guarantor of the 3rd Respondent, which action was without his knowledge or consent. The claimant avers that the 2nd and 3rd Respondents are sisters, that the 3rd Respondent was an employee of the 1st Respondent and illegally acquired the loan for/on behalf of the sister, the 2nd Respondent and the 3rd Respondent purported that the claimant was a guarantor.

The 1st Respondent filed their Defence on 5. 2.2018. They confirmed that the 3rd Respondent was their employee who resigned/and or left. That they sent notice to the claimant when the 2nd Respondent did not clear the loan hence recovered thereafter from the claimant who was the guarantor. The 1st Respondent denies having caused any injury and/or suffering to the claimant.

The 2nd Respondent filed her defence on 28. 12. 18 admitting that the 3rd Respondent was her sister. She denied fraud on her and the 3rd Respondent and stated that the claimant was a guarantor. She prayed to be removed from the claim since the 3rd Respondent took the money and was paying Kshs.5000/= per month.

The 3rd Respondent filed her defence on 9. 10. 18. she confirmed that the 2nd Respondent was her sister and that she was previously an employee of the 1st Respondent. She denied fraud, malice and loss particulars and prayed to offset the amount at Kshs.5000/= per month and interest be at 8. 5% and other prayers to be dismissed.

The matter was heard interparties. The claimant Cw1 Benson Irungu Mwaura stated that he was a member of the 1st Respondent, having been recruited by the 3rd Respondent who was an employee of the 1st Respondent.

The CW1 adopted his witness statement filed on 24. 11. 2017 as the Evidence-In-Chief and produced the list of documents bundle filed on the same date. He stated that he had deposits/savings of Kshs.314,596/=. That he was introduced to the Sheria Sacco by the 3rd Respondent who told him to sign a loan form. He obtained his first loan, which he cleared. When he wanted to top up a loan in 2017, he was told that he had no money because he had guaranteed the 2nd Respondent who he did not know. He reported to the police station and on arrest, the 2nd Respondent stated that the 3rd Respondent was her sister, who obtained the loan in her name.

On cross examination, he stated that the 3rd Respondent was her employer and he signed the loan forms, based on trust. That he had signed a blank form and he did not receive any notice from the 1st Respondent.

The 1st Respondent’s case is that Rosemary Ogongo the credit Manager of 1st Respondent adopted her witness statement filed on 2. 2.2018 as the Evidence - In - Chief and also produced the documents filed on 5. 2.2018 as exhibits.

That the Claimant signed the loan application form as a guarantor. That he was issued the default notice and the recovery was made. The RW2 gave similar evidence and adopted this witness statement.

The 2nd Respondent case is that she filed a witness statement on 28. 12. 2018 and adopted it as the Evidence - In -Chief. She confirmed that she did not know the Claimant. That the sister 3rd Respondent told her to fill the forms and took the loan after it was paid out and she never received any portion of the money. That the 3rd Respondent did not disclose the purpose of the loan that she took in her name.

The 3rd Respondent also adopted her witness statement filed as her evidence in chief. She confirmed that she was working for the 1st Respondent previously. That she introduced her sister the 2nd Respondent to the Sacco to enable her to obtain a loan. That she took the loan of Kshs.500,000/= and her savings were Kshs.167,500/=. That she was paying the loan until she was terminated and the Claimant notified the 2nd Respondent of the recovery. That she was repaying the money to the claimant.

She confirmed that the Claimant was her employee before this claim was filed. That the Claimant signed the form and the 2nd Respondent took the loan on her behalf and handed over all the money to her.

She stated that she was liable to pay all the money to the Claimant.

The Claimant filed written submissions on 31. 1.2020 while the 1st Respondent filed their written submissions on 28. 2.2020.

We have carefully considered the exhibits on record, the evidence and the submissions of the parties.

It’s clear that the Claimant, and the 2nd and 3rd Respondents were members of the 1st Respondent. That the 3rd Respondent applied for a loan using the account of the 2nd Respondent, defaulted, and the 1st Respondent recovered the money from the Claimant who was the guarantor as per the Loan Application Form. The obligation of a guarantor towards a default is clear, that they are responsible for either the full or partial satisfaction of the defaulted amount.

In this matter, the issue is clear that there was a collusion between the 2nd and 3rd Respondents, who were sisters, to obtain a loan, they used the Claimant as the guarantor for the 2nd Respondent despite the fact that the 2nd Respondent and the claimant did not knew each other. The 1st Respondent recovered the defaulted amount from the claimant, who was the guarantor. In the circumstances, we find that the 2nd and 3rd Respondents acted in collusion to obtain a loan from the 1st Respondent using the claimant as the guarantor. It’s clear that there was a default and the 1st Respondent, acted within their rights to recover from the guarantor, the amount defaulted. We therefore find that the 1st Respondent, being the Society, acting within their rights to recover defaulted amounts, are not liable to the Claimant. The 2nd and the 3rd Respondents are indeed liable since they applied for the loan, took the money, defaulted in the payment and thus caused the 1st Respondent to recover from the Claimant.

1. The 2nd and 3rd Respondents confirmed having applied and received the loan hence are therefore liable, jointly and severally to pay to the claimant the recovered sum of Kshs.314,597/85 plus costs and interest at court rates from 29. 5.2017 till payment in full.

2. The suit against the 1st Respondent is accordingly dismissed, the 2nd and 3rd Respondents to pay costs jointly and severally.

3. On the issue of general damages, there was no sufficient evidence called on the same. This also applied to the exemplary and aggravated damages. The interest on the recovered amount as awarded above is fair and sufficient in the matter.

4. The 2nd and 3rd Respondents are also condemned to pay the costs of the suit to the claimant.

Read and delivered this 21st day of May 2020.

Prepared by Hon. B. Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent of the parties, the final orders to be delivered by email, as accordance to the prevailing measures during the covid-19.

Hon. B. Kimemia Chairman Signed 21. 5.2020

Hon. F. Terer Deputy Chairman Signed 21. 5.2020

P. Gichuki Member Signed 21. 5.2020