[2021] KECPT 599 (KLR)
The Tribunal found that the Respondent breached the contract by failing to pay the agreed quarterly bonuses, which was a fundamental term of the investment agreement. Although the Claimant withdrew before the five-year maturity, this withdrawal was precipitated by the Respondent's breach. The contract allowed for...
Source-derived case information.
- Citation
- [2021] KECPT 599 (KLR)
- Parties
- Claimant: George Kimani Mungai; Respondent: Urithi Housing Coop Society Limited
- Court
- Cooperative Tribunal
- Jurisdiction
- Kenya
- Case Number
- Tribunal Case 168 of 2019
- Procedural Posture
- Civil Claim / Judgment
- Outcome
- claim allowed in part
- Legal Topics
- Breach of Contract, Investment Disputes, Contractual Penalties
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
George Kimani Mungai
Claimant
Urithi Housing Coop Society Limited
Respondent
Procedural Posture
Civil Claim / Judgment
Legal Issues
- 1 Was there a breach of contract dated 18th November 2016?
- 2 Who was in breach of the contract?
- 3 Is the Claimant entitled to his investment refund and bonuses?
Ratio Decidendi
The Tribunal found that the Respondent breached the contract by failing to pay the agreed quarterly bonuses, which was a fundamental term of the investment agreement. Although the Claimant withdrew before the five-year maturity, this withdrawal was precipitated by the Respondent's breach. The contract allowed for withdrawal before maturity, subject to a penalty of 30% on the interest earned for the relevant year. The Tribunal held that the Claimant was entitled to a refund of his principal investment and the unpaid bonuses, less the applicable penalty, as the Respondent's breach frustrated the purpose of the contract and justified the Claimant's early withdrawal. The Tribunal also awarded...
Court Disposition
claim allowed in part
Orders
- A refund of Kshs. 2,000,000 to the Claimant.
- Payment of Kshs. 204,000 as bonus to the Claimant.
Full Case Text
Judgment text and source record
75 paragraphs
REPUBLIC OF KENYA
IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI
TRIBUNAL CASE NO.168 OF 2019
GEORGE KIMANI MUNGAI...........................................CLAIMANT
VERSUS
URITHI HOUSING COOP
SOCIETY LIMITED.....................................................RESPONDENT
JUDGMENT
1. The claim is for a refund of total sum of investment in Mavuno Investment Plan and payment of bonus arrears for 2 quarters. The claim is dated 14. 3.2019 and filed on 15. 3.2019. The Claimant claims:
a. His investment refund of Kshs. 2,000,000/=
b. The bonus for two quarters.
2. The Respondent filed a Statement of Defence dated 10th April 2019filed on12th April 2019.
The defence had some admissions as to:
(i) It is true that the Claimant joined the society in the year 2016 and was given the membership No. 19203.
(ii) It is true that Claimant joined one of our products by the name Mavuno Investment plan by investing Kshs. 2,000,000/=.
(iii) It is true the Claimant and the Respondent entered into an agreement to be receiving bonus of 102,000 per quarter.
However, states the investment plan was to mature after 5 years and claimant is the one breach for terminating the contract unilaterally as per paragraph 5 of the statement of Defence.
3. The Claimant filed a Reply to the Statement of Defence dated 6. 5.2019 and filed on each date.
4. Claimant’s case.
Claimant’s case proceeded on 13. 10. 2020 with Claimant as CW1 he adopted his witness statement dated 6. 3.2020 and filed on even date. He further produced in evidence his list of documents filed on 15. 3.2019 and further list of documents filed on 6. 5.2019.
He gave evidence that he was member of Respondent MemberNo. 19203. They offered an investment product known as Mavuno Investment Plan to which I took it up as per the agreement dated 18. 1.2016 and it was to yield 24% interest that is Kshs.102,000/= per every quarter.
5. He confirms receiving payment for 7 quarters but when it came to the 8th there was no cash forthcoming as well as all other quarter to the date of filing suit.
The Claimant get alarmed when he did not get his 8th and 9th quarter investment bonus and despite several calls to the office and letters nothing was forthcoming.
It was then the Claimant wrote to them two demand letters dated 18. 2.2019 and 8. 11. 2018 requesting to have his invested cash refunded back to him.
He stated the Respondents are the ones who breached the agreement in the first place.
His claim was therefore for 2 Million after the Respondent breach having given notice to them to refund his cash.
6. During cross examination the Claimant stated he agreed the investment was for 5 years however he decided to withdraw after 2 years because the quarterly bonuses were not forthcoming.
He was categorical he was withdrawing from the product (Mavuno Investment) and not the Sacco thus he was still a member of the Respondent.
7. Respondent’s case
The Respondent’s did not call any witnesses and relied on their Statement of Defence and witness statement filed.
8. Issues Analysis
The issues for determination in this matter from the proceedings are:
a. Was there a breach of contract dated 6. 5.2019?
b. Who was in breach of the contract?
c. Is the Claimant entitled to his investment cash?
9. We must allude briefly to the submissions of the parties before proceeding with the analysis Claimant’s filed their witness submissions dated 2. 2.2021 and filed on 8. 2.2021.
The said written submissions state the claimant was an investor, he was to earn a quarterly interest of Kshs.102,000/=. They are in agreement the investment plan agreement comprehensively detailed when and how the interest was done and penalties attaching should a member withdraw from the plan before maturity.
10. The Claimant wished to get a refund only when 2 quarters went unpaid.
Question - is was he right in seeking for the same before maturity?
The Mavuno Investment plan agreement is silent on withdrawal. The only condition was lower returns on the principal sum.
11. The Respondent’s submissions on the other hand indicate the Claimant terminated the contract unilaterally and without following proper procedure.
12. Issue 1:
Was there a breach of contract dated 18th November 2016.
Yes there was a breach of contract by the Respondents for non-payment of the quarterly bonuses as agreed and tabulated.
The same is evidenced by the letter dated 19. 2.2019 by the Claimant to Respondent requesting /inquiring about his refund and payment of bonuses for two quarters due on 8th November 2018andFebruary 2019.
13. Issue 2:
Who was in breach
The Respondents were in breach of the contract for non-payment of the bonuses.
The Claimant too breached by wanting to withdrawal his investment before the 5 years plan was over however, this was occasioned by the non-payment of bonuses as agreed by the Respondent.
14. Issue 3:
Is the Claimant entitled to his cash/investment refund?
The Claimant seemed to have invested in the product to have an income within every quarter.
The fact that the same was not yielding first he opted out.
From the said Application form page 4 indicates if withdrawal period is within 12 months the percentage paid on agreed return is 100%.
Further it states - withdrawal before maturity attracts a penalty of 30% on the interest earned for a particular year.
Thus with this in mind, the Claimant is entitled to withdraw from the investment product with a penalty of 30 % attracting on the interest earned for a particular year.
FRUSTRATION OF PURPOSE
Frustration of purpose is a defence to enforcement of a contract.
Frustration of purpose occurs when an unforeseen event undermines a party’s principal purpose for entering into a contract.
In the case above the Claimant is seen to have been frustrated by the Respondent’s actions of non- payment of the bonus as agreed.
15. The upshot of the above is that we find merit in the Claimant’s claim we order as follows:
a. A refund of Kshs. 2,000,000/=.
b. The bonus of Kshs. 204,000/= to be paid to the Claimant.
c. Costs of suit and interest from date of filing suit at Tribunal rates.
JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY THIS 27TH DAY OF MAY, 2021.
Hon. B. Kimemia Chairperson Signed 27. 5.2021
Hon. J. Mwatsama Deputy Chairperson Signed 27. 5.2021
Mr. P. Gichuki Member Signed 27. 5.2021
Tribunal Clerk Leweri
Miss Thungu advocate for Claimant: Present
Miss Gitau Advocate for Respondent: Present
Miss Gitau Advocate: I pray for 30 days stay of execution
Miss Thugu Advocate : No objection
Order: 30 days stay of execution granted.
Hon. B. Kimemia Chairperson Signed 27. 5.2021