[2024] KECPT 246 (KLR)

Kenya Bankers Sacco Limited v Mucheke (Tribunal Case 949 (E1016) of 2022) [2024] KECPT 246 (KLR) (7 March 2024) (Judgment)

Neutral citation: [2024] KECPT 246 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 949 (E1016) of 2022

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

March 7, 2024

Between

Kenya Bankers Sacco Limited

Claimant

and

Moses Murungi Mucheke

Respondent

Judgment

1. The matter for determination is a Statement of Claim dated 3rd December 2022, in which the Claimant avers that the Respondent was its member and that he applied for and was advanced a loan amount of Kshs. 1,500,000/=. This loan was to be serviced through 60 instalments of Kshs. 28,805/= each but it’s the Claimants claim that the Respondent defaulted after honoring some initial instalments. It is also the Claimants claim that it could not recover the loan through the guarantor since the Claimant had forged the signatures of one guarantor, namely Gikundo.The Claimant therefore prays for;a)General Damagesb)Loan arrears of Kshs. 876,646. 09/=c)Cost of this suit.d)interest on (1) (2) or (3) above.

2. The Respondent failed to enter appearance or file responses to the claim.

3. The Claimant filed a request for judgment on 12th January 2023. Judgement was entered in favour of the Claimant against the Respondent for Kshs. 876,646. 09/= on 2nd February 2023. The Claimant was directed to file and serve submission for the prayer of general damages.

4. The Claimant filed submissions in respect of the prayer for general damages. In his submission, the Claimant submits that it is entitled to damages for breach of contract from the Respondent since the Respondent failed to repay the loan as expected, deposited a cheque that bounced, and also by forging the signature of one of the guarantors. The Claimant relied on various authorities, claiming that the injury it suffered is injury to its reputation and business.

5. This Tribunal has considered the pleadings filed by the Claimant and the submissions. The Respondent did not appear in this matter, and therefore the evidence on record remain uncontroverted. A judgement has already been entered in respect of the loan arrears. This court will therefore, only consider the issue of General Damages. The question that this Tribunal asks itself is whether the Claimant is entitled to the award of General Damages for breach of contract.

6. The Court of Appeal in Jogoo Kimakia Bus Services Ltd vs. Electrocom International Ltd [1992] KLR 177 stated that:“The law on damages stipulates various types of damages. ………………General damages are awarded in respect of such damages as the law presumes to result from the infringement of a legal right or duty. Damages must be proved but the claimant may not be able to quantify exactly any particular items in it…….”Similarly in the case of Consolata Anyango Ouma vs. South Nyanza Sugar Co. Ltd (2015) eKLR, the court held as follows:“The next question is whether the appellant was entitled to damages as a result of the breach. As a general principle, the purpose of damages for breach of contract is, subject to mitigation of loss, the claimant is to be put as far as possible in the same position he would have been if the breach complained of had not occurred. This is principle is encapsulated in the Latin phrase restitution in integrum (see Kenya Industrial Estates Ltd v Lee Enterprises Ltd NRB CA Civil Appeal No. 54 of 2004 [2009]eKLR, Kenya Breweries Ltd v Natex Distributors Ltd Milimani HCCC No. 704 of 2000 [2004]eKLR). The measure of damages is in accordance with the rule established in the case of Hadley v Baxendale (1854) 9. Exch. 341 that the measure of damages is such as may be fairly and reasonably be considered arising naturally from the breach itself or such as may be reasonably contemplated by the parties at the time the contract was made and a probable result of such breach”.

7. From the above, it is clear that General damages for breach of contract are awarded when there has been a breach of contract, and they are awarded to put the injured party as close as possible to where he was when the breach occurred. The question that we ask ourselves now, is whether there was breach, and whether that breach warrants the award of general damages. From the Claimants claim and submissions, it is clear that the relationship between the parties was that of a debtor and creditor, where the Claimant advanced a loan to the Respondent and the Respondent defaulted on the same. This court will not dwell on the issue of forged signature since we are not handwriting experts and the Claimant did not produce evidence of such an expert.

8. It is clear that the Respondent defaulted in repaying his loans, contrary to what he agreed to in a loan agreement he signed on 12th February 2016. The question, therefore, is were the Claimant’s rights infringed? The Claimant in his submissions, submits that it suffered damage to its reputation and business. The claimant has not shown how it suffered damage to its reputation. The claimant is in the business of a Cooperative Society, and loaning members is one of its core business. When one is in the business of loaning money, default on repayments is expected and it is not clear how that ruins reputation, if at all. On the question of injury to business, this Tribunal notes that indeed the Respondent defaulted in his loans, however, loaning by Saccos is a complex process in which a member is required to have guarantors, his deposits and sometimes additional security to cushion the Sacco from any loss in case of default. This Tribunal notes that indeed the Respondent’s loans were guaranteed by a total of 10 guarantors, and he had deposits to the tune of Kshs. 505, 637/- at the moment the loans were advanced to him. This Tribunal fails to see how the Respondent’s default could have caused them an injury to business, unless they had failed to do due diligence on the viability of the guarantors and the shares of the Respondent.

9. In the upshot of the foregoing,a.The Claimant’s claim for general damages in hereby dismissed.b.Judgment confirmed in favour of Claimant against Respondent for Kshs. 876,646/09 as entered on 2. 2.2023. c.The Claimant is hereby awarded costs and interest from date of filing claim.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 7TH DAY OF MARCH, 2024. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 7. 3.2024HON. BEATRICE SAWE MEMBER SIGNED 7. 3. 2024HON. FRIDAH LOTUIYA MEMBER SIGNED 7. 3.2024HON. PHILIP GICHUKI MEMBER SIGNED 7. 3.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 7. 3.2024HON. PAUL AOL MEMBER SIGNED 7. 3.2024Tribunal Clerk JemimahMiss Omuya for ClaimantNo appearance for RespondentHON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 7. 3.2024