[2023] KECPT 847 (KLR)

Gutto v Otieno (Tribunal Case 106 of 2021) [2023] KECPT 847 (KLR) (Civ) (19 October 2023) (Judgment)

Neutral citation: [2023] KECPT 847 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case 106 of 2021

BM Kimemia, Chair, J. Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

October 19, 2023

Between

Victor Mekonge Gutto

Claimant

and

David Otieno

Respondent

Judgment

1. The Claim herein was brought to the Tribunal by way of Statement of Claim dated 12th February 2021, filed on even date. The Claimant’s Claim against the Respondent as per the nature of the Statement of Claim is that the Respondent and he were members of the H/M Co-operative Savings and Credit Society Ltd, when the Respondent approached him to guarantee a loan that the Respondent defaulted to pay, and had areas of Kshs. 317,881/= for which the Claimant’s share deposits were deducted in recovery; that the Respondent did not perform his part of the obligation as per the loan agreement and defaulted on his part of the loan, that the Claimant has sought for refund of the deducted amount in vain. The Claimant avers that the Respondent is liable to indemnify the Claimant for the loss of the shares of Kshs. 317,881/= and Claims refund thereof; costs of loss of dividends and costs of suit and interest until payment in full.

2. The Respondent defended the Claim by way of a Defence dated 1st December 2021 filed on even date.

3. In the Defence, the Respondent denies the Claimant’s Claim, and particularly the veracity of a repayment certificate dated 12th January, 2021 and avers further that the Claimant failed to enjoin the Sacco yet he has made averments against it; That pursuant to a tripartite meeting between the Claimant, the Sacco and the Defendant, it was agreed that the Defendant would place a standing order of Kshs. 23,178. 83/= with the bank to clear an outstanding balance which the Defendant accrued. The Defendant states that he continues to service the Sacco loan before or on 15th every month at Kshs. 23,178. 83/= and prays that the Claimant suit be dismissed with costs thereof and interest.The Case proceeded for hearing on 6. 6.23.

Claimant’s case 4. The Claimant was the first witness in his case and he adduced his evidence by relying on his Statement of Claim, his List of Documents dated 12/2/2021 filed on even date, his case summary filed on 13/7/2022, Replying Affidavit dated 7/7/2022, filed on 8/7/2022, further Affidavit dated 21/1/2021 filed on even date, which he produced as his evidence in chief. On Cross Examination, the Claimant stated that he filed his Claim at the Tribunal in the year 2021 for recovery of Kshs. 317,851/= from the Respondent; That as at July, 2022, the amount due to him had not changed; That he is still a member of the Sacco and he does not know whether the Respondent is still a member. He also confirmed that he knew the Respondent lost his job after securing the loan but he did not know why he lost the job. The Claimant admitted that there was a meeting between the Sacco, Respondent and himself but denied that the meeting was called after the Claimant’s inquiry and that the Respondent since has secured a job. The Claimant also denied that it was agreed in the meeting that the Respondent would resume payment of his loan; and further denied that there was an agreement that the Respondent would pay Kshs. 23,178. 83/= per month.

5. The Claimant averred that the meeting was on 5th November, 2020, but was not for discussing the said issues.

6. That in November, 2020 the Respondent had resumed payment and by December 2020, he was reimbursed Kshs. 26,280/=.

7. The Claimant stated that he was denied a loan because he had guaranteed the Respondent a loan; that guarantors were liable as per the Application form and that his shares were not sufficient; that the sum of Kshs. 317,881/= had been deducted towards settling the Respondent’s loan. The Claimant stated that he did not enjoin the Sacco because the Respondent is the one who defaulted; that the Respondent has paid the full amount of Kshs.318,000/=.

8. On Re-examination the Respondent stated that there were 3 options for the Sacco, the deduction of the Respondent’s deposits, the utilization of the security offered at the time of Application for the loan and deduction of the guarantors’ deposits; that the Respondent failed in his response to address the issues of his shares and security; the Respondent does not address the issue of the Claimant’s deducted shares anywhere in his pleadings.

9. The Claimant’s second witness Edward Oboyo also adduced evidence, relying on his Witness Statement dated 20/1/2022 filed on 14/7/2022 which he adopted as his evidence in chief. The witness stated that he worked with the Claimant and they both guaranteed the Respondent’s loans; that their shares were not supposed to be used to pay the loan, that his shares were not deducted as he had left the company’s employment before the shares were deducted.

Respondent’s case. 10. The Respondent adduced evidence in support of his Defence against the Claim and adopted further witness statement dated 28/4/2023 as his Evidence- in -chief.

11. The Respondent stated that he lost his job after taking the loan and on 9/10/2020 he called the Sacco and wanted to discuss how to repay the loan; that a meeting was held in November, 2020; that at the xtiem, he had not paid the loan for a period of over one year; and after the meeting he was to pay Kshs.23,178/= through a standing order from 10/11/2020.

12. The Respondent adduced evidence further that he had been making payments as per his loan statement from the Co-operative bank. That he finished all the payments and was still contributing to the Sacco. That he was issued with a certificate dated 28/4/23 showing his loan balance as nil. The Respondent stated that though he was served with a demand letter on 11/2/2021, the suit was filed the following day. The Respondent further confirmed that at the time of applying for the loan, he used motor vehicle registration number KBL 925 T as security and that he surrendered the logbook to the Sacco. That later he sold the aforesaid vehicle to settle school fees and provided the logbook for motor vehicle number KCS 459E as security. Though he did not alter the loan form to include the new motor vehicle registration number KCS 459E, that the total loan borrowed was Kshs. 829,000/= and he had been paying Kshs 5,000/ per month before default. That after default, he reached out to the Sacco on 9/10/2020 and requested for his loan statement. The Respondent admitted that the Claimant’s shares were deducted because of the loan. That the motor vehicle listed as security was available.

13. After hearing, the Claimant filed written Submissions, while the Respondent did not file any.

Determination. 14. We have considered all the pleadings and documents filed by the parties together with oral evidence and find that:1. The Respondent borrowed a loan from the Sacco.2. The securities to the said loan were;i.Respondent’s shares.ii.Logbook for motor vehicle registration number KBL 925 T.3. The Claimant and Edward Obonyo guaranteed the Respondent’s loan.4. The Respondent defaulted in payment of the loan and the Sacco deducted the Claimant’s shares amounting to Kshs. 317,881/=5. The Respondent under pressure put in place a payment plan; thereby paying the amount in full.

15. It is not clear why the Sacco did not realize the security motor vehicle when the Respondent defaulted to pay and since the Sacco is not a party to these proceedings, we are not in a position to ascertain why.

16. To determine the issues between the Claimant and Respondent, we find that when the loan fell due and the Respondent was in default, the Claimant made an effort to have the Respondent settle the loan.

17. We are satisfied that the shares of the Claimant settled the Respondent’s loan and prevented any action from being taken against the Respondent by the Sacco.

18. The Respondent is therefore liable to refund the Claimant’s deducted shares. In regard to the Claim for lost dividends, the Claimant has not produced evidence in support of the same.

19. We take note of and sympathize with the Claimant’s hardship, but we are aware that the loan guarantor enters into the agreement to guarantee the loan willingly with full knowledge that he stands to pay the borrower’s loan in the event of default.

20. We rely on Nairobi HCCCNo. 537 of 2011, Talewa Road Contractors Ltd –vs- Jamii Bora Charitable Trust Registered Members and another where it was held that parties are bound by their agreement.

21. We also note that the Claimant acknowledges that the Respondent paid the amount due, a fact which is confirmed from the Sacco Statement produced in evidence.

22. We are satisfied that the sum of Kshs. 317,881/= claimed by the Claimant has been paid to the Sacco and refunded to the Claimant

23. Consequently, we enter judgement in favour of the Claimant against the respondent for payment of costs of the suit herein calculated on the Claimed amount of Kshs. 317,881/= plus interest thereon at Tribunal rate after taxation until payment in full.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 19. 10. 2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 19. 10. 2023HON. BEATRICE SAWE MEMBER SIGNED 19. 10. 2023HON. FRIDAH LOTUIYA MEMBER SIGNED 19. 10. 2023HON. PHILIP GICHUKI MEMBER SIGNED 19. 10. 2023HON. MICHAEL CHESIKAW MEMBER SIGNED 19. 10. 2023HON. PAUL AOL MEMBER SIGNED 19. 10. 2023TRIBUNAL CLERK JONAHVictor Guto - PresentDavid Otieno- No appearanceJudgment as read out.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 19. 10. 2023