[2022] KEMSET 765 (KLR)

Canva Trading Kenya Ltd Mombasa v Onyango (Tribunal Case 30 of 2021) [2022] KEMSET 765 (KLR) (Civ) (17 June 2022) (Judgment)

Neutral citation: [2022] KEMSET 765 (KLR)

Republic of Kenya

In the Micro and Small Enterprises Tribunal

Civil

Tribunal Case 30 of 2021

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

June 17, 2022

Between

Canva Trading Kenya Ltd Mombasa

Claimant

and

Hellen Akinyi Onyango

Respondent

Judgment

1. This claim was filed at the Tribunal’s registry in Mombasa Law courts.The claimant was introduced as “a small & micro finance giving soft loans to small business to buy motorbikes for riders on hire purchase, “based in Mombasa and its environs,and was represented by the managing director Ms Eunice Okal who appeared for the claimant before the Tribunal.The respondent, Ms Hellen Akinyi Onyango was introduced as a self-employed lady carrying on business in Mombasa. She appeared in person in this matter.

2. Theclaim was for the recovery of ksh 41,000/=, being a debt that accrued interest owed by the respondent who had initially borrowed ksh16,000/=.

3. The matter was mentioned for directions on diverse dates before the parties herein appeared for the final virtual hearing on May 24, 2022.

The Claimant’s Case 4. The claimant avers that the respondent visited their Business premises, the Canva Trading Kenya Ltd on April 6, 2021 and applied for a loan of Ksh 16,000/=

5. She avers that the respondent submitted the requisite copy of her ID No 14620873,KRA pin number,and passport photo.

6. For purposes of collateral as security, the claimant avers that the respondent Committed her 32-inch Sony Television set serial No 602436551, an LG refrigerator serial no 500NLX 2000 and a ramtons 2 burner Cooker.

7. The claimant further stated that the respondent also introduced one Victoria Atieno of ID no 22549628 who agreed to be the guarantor. The loan application was approved and ksh 16,000/= was disbursed on April 7, 2021. According to the claimant, the respondent was to repay by May 17, 2021.

8. In addition, the claimant avers that the loan was disbursed to the respondent subject to a charge of 20% interest per month. This loan was to be repaid within one month, that is on May 17, 2021,as per the loan agreement. Further averring that as at the time of filing this claim, the respondent had only paid ksh 5000/= thus leaving a balance that had accumulated to 41,000/=Nine months on, from the initial amount of ksh 16,000/=

9. The claimant while closing her case prayed to be assisted by the tribunal to resolve the dispute.

Respondent’s Response 10. The respondent did not deny that she had borrowed a loan of ksh 16,000/= at an interest of 20% per month from the Canva Trading Kenya Limited.

11. She however acknowledges that she did not begin repayment of the loan within one month as agreed but she made payments in two instalments of ksh 5000/= each to the claimants by Mpesa transaction on unspecified dates, thus she had paid a total of 10,000/= at the time of hearing this matter.

12. The respondent’s contention was that the claimant’s calculations amounting to 41,000/= were not correct, saying that the actual outstanding amount due is 31,600/=based on her calculation after deducting ksh 10,000/= from the principal amount and 20% monthly interest thereon for 8 months and not 9 moths as alleged by the claimant.

13. The respondent further requested the claimant to allow her to provide evidence of the 2 (two) instalments of Ksh 5000/= she had made by providing proof of Mpesa transactions. The court accepted and urged her to submit before close of business on the material day. The claimant had no objection to that request.

14. The respondent while closing her case requested to be given an opportunity to make a payment proposal to clear the outstanding debt she owes the claimant.

Issues For Determination 15. Having carefully heard both parties presenting their positions before the Tribunal, we proceeded to consider the following issues:a)Whether the claimant, Canva Trading Kenya Limited-Mombasa was entitled to demand as it did the Ksh 41,000/= being the principal sum, accrued interests charged on the borrowed principal sum of Ksh 16,000/=.b)Whether the period from the date of disbursement of the said loan of April 7, 2021 to the date of filing the claim in Court on December 8, 2021 is 8 months or 9 months.c)What is the right amount owed by the respondent; is it 41,000/= or 31,600/=?d)Costs.

Determination 16. The first issue is whether the claimant was entitled to demand thereof ksh 41,000/= from the respondent who borrowed 16,000/=The Tribunal noted that the parties were both small scale entrepreneurs who closely supported each other in their business ventures. From the respondent’s submissions she approached the claimant with a request for a loan in which she committed herself to repay. This is demonstrated by the overwhelming commitment she showed by supplying all the required documentation including providing relevant securities for the borrowed amount of ksh 16,000/=which was to be paid within one month that is on April 17, 2021, but was not be paid thus setting off accrual of the 20% interest for every month that passed without repayment against the expectation of the lender.

17. As regards the second issue, the Tribunal found it a straight forward matter to determine.The period between the disbursement date of the loan being April 7, 2021 and the date of filing this claim in court, i.e., December 8, 2021 added up to 8 months considering that the respondent was granted one month to repay the loan. Therefore the claimant was entitled to 8 months interest on the principal amount and not 9 months as averred.

18. The third issue regarding the correct amount owed and claimed. The respondent provided the Mpesa statements as evidence of the two instalments of ksh 5000/= she had made.The first Mpesa statement was presented as follows:ksh 5000/= sent to Canva Trading ltd for account of Hellen A Onyango on May 17, 2021 at 4:54 pm.The Second one read as follows:‘Ksh 5000 sent to Canva Trading Kenya Ltd for account of Hellen A Onyango on July 12, 2021 at 2:26 pm.The statements are pasted below:Based on this evidence of payment we find that the respondent’s calculations were correct. Going by this figure therefore, the respondent ought to pay ksh 31,600/= and not 41,000/=It is worthwhile to note that the Tribunal would have been concerned if the principal sum of ksh 16,000/= advanced to the respondent had attracted interest of upto 41,000/= in 8 months. In our view accumulation of interest that doubled principal violates the principles of lending by financial institutions drawn from section 44A of the Banking Act which provides statutory application of the Induplum rule, which stated that interest ceases to accumulate upon any amount of loan owing once the accrued interest equals the amount of Amount due and interest payable. Thankfully, the Tribunal does not have to mete out its determination on this issue, since the correct calculations gives us ksh 31,600/= which is slightly lower that double the principal amount the respondent borrowed.

Costs 19. On the issue of costs, the Tribunal was told of the purpose for which the loan was advanced to the respondent; the efforts taken by both the parties who are to support each other as entrepreneurs. The Tribunal finds that this is a classic case to apply ADR in order to accord the parties a second chance to mend their relationship. Therefore, they may discuss this issue further. We therefore find that each party bears its own cost

Orders 20. We find that in the interest of justice, the respondentshallpay the claimant in 3 equal instalments in 3 months from the date of this judgement as calculated below:a)Balance of the principal sum of ksh 6,000/=b)Interest on principal amount of ksh 3200X 8 months=25,600/=c)Each party to bear its own costs.

Those then are the orders of the Tribunal.

Dated delivered and signed on this June 17, 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:SUBPARA 1. Claimant, Eunice OkalSUBPARA 2. Respondent, Hellen OnyangoSUBPARA 3. Court Assistant, Isaac KapalikineiJudgment-Mombasa MSET No 30 of 2021-Canva Trading Kenya Ltd v Hellen Akinyi Onyango pg 9