[2022] KEMSET 748 (KLR)

Canva Trading Kenya Ltd Mombasa v Kobia (Tribunal Case 30 of 2021) [2022] KEMSET 748 (KLR) (7 July 2022) (Judgment)

Neutral citation: [2022] KEMSET 748 (KLR)

Republic of Kenya

In the Micro and Small Enterprises Tribunal

Tribunal Case 30 of 2021

J.Bett, Chair, R.Katina, Vice Chair, J.Were, A Gikuya & A Kibet, Members

July 7, 2022

Between

Canva Trading Kenya Ltd Mombasa

Claimant

and

Alexander Kanngetu Kobia

Respondent

Judgment

Introduction 1. This claim dated 8th December, was filed at the Tribunal’s registry in Mombasa Law courts. The claimant, Canva Trading Kenya Limited Mombasa was represented by the Managing Director Ms Eunice Okal who described the claimant as “a small & micro finance giving soft loans to small business to buy motorbikes for riders on hire purchase. The claim was for recovery of Ksh 24,000/= being the accumulated amount of loan, accrued interest and penalties, incurred by the respondent who borrowed Ksh15,000/= and failed to re-pay.

2. The respondent is described as a businessman from Mombasa County.

3. The cause came up ex-parte before the tribunal on February 23, 2022 when the following directions were issued:i.That the claimant serves the claim and all the documents upon the respondent within 7 days.ii.That the respondent files and servers the response within fourteen of service of claim herein.iii.That the claimant files and serves the reply to response within seven days of service of the response.iv.That the cause be mentioned on March 23, 2022, to confirm compliance and fix a hearing date.

4. The cause was mentioned on diverse dates and finally heard on June 24, 2022. The parties had initially requested the tribunal to accord them time to explore the possibilities of settling the matter out of court. After several attempts, it became apparently clear that the parties would not settle the matter on their own. The respondent confirmed that he had been served with the claim and all the supporting documents. The affidavit of service was filed accordingly.

5. The respondent did not file any response nor appeared during the hearing. The matter had to proceed by way of formal proof as tribunal was convinced that it was proper in the circumstances to allow the matter to proceed since the claimant had sufficiently demonstrated to the tribunal that she had made every effort to duly serve the claim and all supporting documents upon the respondent. The hearing notice was also served.

The Claimant’s Case 6. The claimant avers that the respondent applied for a soft loan of Ksh15,000/=from the claimant, the Canva Trading Kenya Ltd which was approved and disbursed on September 9, 2021. The respondent was to repay by October 9, 2021.

7. In addition, the claimant avers that the loan was disbursed to the respondent subject to a charge of 20% interest per month for a period of one month. Further, that as at the time of filing this claim the respondent had not repaid the loan as per the payment schedule, thus attracting interest and penalties to a tune of Ksh 24,000/=.

8. The respondent paid Ksh 15,000/= after the first tribunal appearance on April 29, 2022. Since then, no further payment was made despite numerous promises.

9. The claimant had agreed to waive the interest due on condition that the respondent paid Ksh 18,000/= being the amount payable before she invoked the default clause. The respondent however did not pay as promised.

10. The claimant therefore claims the outstanding loan amount together with interests to the tune of Ksh 9,000/=

11. She finally submitted that the claimant is entitled to costs of this cause.

Issues for Determination 12. Arising from the claim and the oral evidence at the formal proof hearing, the following issues presented themselves for the determination by this tribunal;a.Whether the respondent was served with the claim.b.Whether the respondent obtained a loan of Ksh 15,000/= from the claimant.c.Whether the 20% interest charged by the claimant on the borrowed amount of Ksh 15,000/= for a period of one month was justified.d.Whether the claimant Canva Trading Kenya Limited-Mombasa was entitled to demand as it did the Ksh24,000/= being the principal sum, accrued interests and penalties charged on the borrowed principal sum of Ksh15,000/=.e.Who bears the cost of this claim?

Determination and Final Orders The right to be heard 13. The first issue is whether the respondent was granted the right to be heard. The tribunal had to deal with this issue as it is cognizant of the respondent’s constitutional right to be heard.

14. The tribunal notes that the claim was served upon the respondent. The respondent indeed confirmed that he was served with the claim and the supporting documents. Further, the hearing notice was also served upon the respondent. The respondent however did not file the response nor attended the hearing of the suit. No explanation was given for failure to file the response. Further, no explanation was given for the failure to attend the hearing of this suit by the respondent or his representative.

15. The tribunal heard from Ms Eunice that she had made numerous calls upon the respondent. She told this tribunal how she sought the assistance of the guarantor to urge the respondent to file the response and to attend the tribunal hearing.

16. The tribunal underscores the right to be heard as was held by the Supreme Court of India in Sangram Singh v Election TribunalKoteh1955 AIR 425thus:-“[T]here must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.”

17. Every party in a case has a right to be heard and subsequently, that right should not be denied unless there are very good reasons for doing so. The tribunal having considered the facts and prevailing circumstances set the suit for formal proof hearing on June 24, 2022. The tribunal was convinced that respondent was served with the claim and was accorded reasonable time to file and serve the response. It cannot therefore be said that the respondent was denied the constitutional right to be heard.

18. In allowing this suit to proceed to formal proof hearing, the tribunal was also guided by the constitutional principles of the right to be heard and the reasoning of the appellate court in James Kanyiita Nderitu &another [2016] eKLR, where the Court of Appeal stated thus:“From the outset, it cannot be gainsaid that a distinction has always existed between a default judgement that is regularly entered and one which is irregularly entered. In a regular default judgement, the defendant will have been duly served with summons to enter appearance or to file defence, resulting in default judgment.

19. This point is further emphasised by Ojwang, J (as he then was) in Mungai –vs- Gachuhi and another [2005] eKLR cited with approval in the case of Signature Tours & Travel Limited -V- National Bank of Kenya Limited [2017] eKLR when he stated as follows:“a court decision stands as a final decision only when a proper hearing has taken place and the parties and those who ought to be enjoined as parties have been fully heard and their representations concluded, unless they elect to forgo the opportunity.”

20. The tribunal is guided by the constitutional principles of the right of a party to be heard while noting that this right should not create injustice and prejudice to others. Having found that there was proper service and that there was no justification for the failure to file the response and attend the hearing of the suit, the tribunal was convinced that it was proper and justifiable in the circumstances to allow the matter to proceed to formal proof on June 24, 2022.

Loan advanced 21. As to whether the respondent obtained a Ksh 15,000/= loan from the claimant, the claimant relied on a loan agreement dated September 9, 2021. The agreement was signed by the respondent on September 9, 2021. Other terms of the contract including the 20% interest rate payable per month for a period of one month were set out. The form was marked “approved 15,000/= and disbursed 15,000/=.” No evidence was presented to the contrary. We therefore find that the claimant granted the respondent a loan facility of Ksh 15,000/=.

Interest charged 22. We hold the view that whereas the parties are bound by their agreements and terms thereto, such terms should apply in accordance with the law and where it is determined to be unfair, unconscionable and oppressive, we should not hesitate to re-state the law so as to protect the interest of the parties and by extension advance the public interest.

23. The tribunal considered that the loan amount of Ksh 15,000/= advanced on September 9, 2021 and due on October 15, 2021 had attracted interest to the tune of Ksh 9,000/= as at December 8, 2021. The interest charged as noted by the tribunal is within the statutory limits as set out in the in duplum rule. The tribunal finds no reason to interfere with the interest charged by the claimant.

Amount due and interest payable 24. As regards the third issue, the tribunal noted that the respondent’s debt rose from the principal sum of Ksh15,000/= to 24,000/= in a period of three months.

25. This tribunal is therefore persuaded that the claimant is entitled to the Ksh 24,000/= since this amount is not more than double the principal amount it disbursed to the respondent. The tribunal is equally persuaded that the 20% interest rate chargeable is only applicable and within the statutory limits of the in duplum rule.

26. Since the claimant has already been paid Ksh 15,000/=. The outstanding balance remains as Ksh 9,000/=.

Costs 27. On the issue of costs, the tribunal notes that the claimant has encountered considerable cost in sustaining this claim. We find that it is fair and just to award costs to the claimant.

Orders 28. Flowing from the findings, we find that in the interest of justice, the respondent should pay the claimant:-a.Interest on the principal sum of Ksh 9,000/=b.Costs of the suit of Ksh 10,000/=Those then are the orders of the tribunal.

DATED DELIVERED AND SIGNED ON THIS 7TH JULY 2022Dr J. BETT ........[CHAIRMAN]R. KATINA .........[VICE-CHAIR]Hon J. WERE ........[MEMBER]A. GIKUYA ..........[MEMBER}A. KIBET ...........[MEMBER]Judgement delivered virtually in the presence of:Ms Eunice for ClaimantDennis Kibet - Tribunal Assistant