[2023] KECPT 1074 (KLR)

Kisumu Urban Apostolate Programmes (KUAP-PANDPIER) v K-Met Savings and Credit Cooperative Society Limited (Tribunal Case 125 of 2020) [2023] KECPT 1074 (KLR) (30 November 2023) (Judgment)

Neutral citation: [2023] KECPT 1074 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 125 of 2020

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

November 30, 2023

Between

Kisumu Urban Apostolate Programmes (KUAP-PANDPIER)

Claimant

and

K-Met Savings and Credit Cooperative Society Limited

Respondent

Judgment

1. The Claimant’s case is contained in the Complaint dated 10/3/2020. The Complainant was a member of the Respondent Sacco since 2015. The Claimant avers that they had deposited ksh 1,460,000/= paid by cheque to the Respondent Sacco. Such deposits should be refundable upon exiting the Sacco.

2. The Claimant also avers that the deposits should earn interest and dividends on the share capital.The Claimant states that they withdrew from the Sacco vide letter dated 23/10/2019. In the withdrawal notice, the Claimant states that they requested to be refunded their deposits, interest thereon and dividends accruing. The Complainants prays for judgement against the Respondent for:a.An order for refund of deposit of Kenya shillings One million, Four hundred and sixty thousand (ksh 1,460,000/=) only.b.An order for payment of interest on deposit as declared in the audited accounts from August 2015 to the date of refund of the deposit.c.An order for the payment of dividend on share capital as declared in the audited accounts from august 2015 to the date of payment in full.d.Interest on (a) above at 14% per annum from October 2019 till payment in full.e.Costs of the case.f.Any other or further relief the honorable tribunal may deem fit and just to grant.

3. In the Claimant’s Witness Statement dated 10/3/2020, the Claimant witness Mr. Eric Achola Ombuoro confirms the contents of the Statement of Claim.In their further Complainant Witness Statement, the Claimant has tabulated the interest they are demanding from the Respondent. from the calculation, the claimant is demanding ksh 35,846. 60/= from the Respondent.During the herein of the Claimant’s case on 9/2/2023, the Claimant witness Mr. Eric Ochola adopted his witness statement dated 10/3/2020 and further statement dated 18/11/2020 as his Evidence- in- chief.He also adopted his list of documents dated 19/11/2020. He stated that he was the finance office of the Claimant and he is a CPA holder.He stated that the Claimant approached the Respondent to offer financial resources through a proposal to offer training to the Respondent.The Claimant was to offer security for the member’s loans.The Claimant Witness states that the terms of engagement was that the Claimant would be a member of the Respondent through buying shares.

4. He states that sometime in 2019, the Claimant realized that they were not getting Share Certificates and not being invited for the Respondent Annual General Meeting, thus resolved to terminate their membership with the Respondent.Subsequently, the Claimant states that they wrote a Demand Letter on 29/1/2020 which was acknowledged by the Respondent accepting liability but no repayment plan.He states that the amount deposited into the Respondent account was security for member’s loans.The witness denied he was an agent of the Respondent and prayed for refund of ksh 1,460,000/= interest thereof and dividends.

5. On cross examination, the Claimant Witness stated that the Claimant was a Non-Governmental Organization and wanted a financial partner in their income generating project. He stated that the Respondent drafted the terms.He stated that by 29/11/2020, the amount outstanding was ksh 148,000/=He also stated that the Claimant identified beneficiaries who joined the Respondent as a member.

6. On re-examination, the Claimant stated that they applied for membership to the Respondent and paid share capital, deposits and money to facilitate training.In their Written Submission dated 14/3/2023, the Claimant outlines the terms of engagements between themselves and the Respondent wherein the Claimant deposit with the Respondent will only be used as security for loans extended to members seconded by the Claimant.The Claimant produced copies of cheques confirming payment of ksh 1,460,000/= to the Respondent. The Claimant also produced evidence pf receipt from the Respondent for ksh 1,460,000/=The Claimant states that the Respondent vide letter of 29/1/2020 did not dispute the claimed amount.He states that the Claimant was a corporate member of the Respondent that the deposits paid to the Respondent were non withdrawable.Until upon termination of membership, the Claimant also tabulated the amount of interest claimed using the 2015-2019 Respondent’s audited accounts. The Respondent did not file a contrary calculation. He states that the 29/1/2020 letter from the Respondent clearly implies that the ksh 1,460,000/= belongs to the Complainant.

Respondent’s Case 7. The Respondent’s case is contained in the response to Statement of Claim dated 15/9/2021 wherein the Claimant’s membership into the Respondent is admitted.The Respondent admits the Claimant deposited ksh 1,460,000/= with the Respondent but denies that the ksh 1,460,000/= were shares and that the amount would be refundable upon leaving the Sacco.

8. The Respondent denies that the Claimant was to be paid interest on its deposits and dividend on shares. The Respondent admits that the Claimant letter of withdrawing dated 23/10/2019 but denies that the withdrawal was occasioned by failure on the part of the Respondent to honor its obligations.The Respondent denies that it has refused to refund the Claimant. It also states that the Claimants joined the Respondent as a corporate member and that the deposits made were to be utilized by the Respondent towards advancing loans to the identified beneficiaries.

9. In his Witness Statement dated 1/7/2022, the Respondent Witness Mr. Peter Ochieng Mugah stated that he was the manager of the Respondent Sacco and that he was privy to the facts in this dispute.He stated that the partnership between the Claimant and the Respondent was for the former to use the Respondent’s established infrastructure as a Sacco to pay out funds to identified beneficiaries.The Respondent avers that their Memorandums of Understanding were executed and the Claimant was admitted as a member of the Respondent. the Respondent avers that the Respondent was to be paid an agreed management fees for using the Respondent’s infrastructure. This explains why the amounts sent to the Respondent were slightly higher than what the Claimant is demanding. The Respondent states that the Claimant sent monies to the Respondent to be utilized asper Claimant’s directions.The Respondent reiterates that at all times, funds sent by the Claimant was spent as per the Claimant’s instructions usually as loans to the identified beneficiaries.The Respondent avers that some of the beneficiaries have repaid their loans while others have not.The Respondent avers that the amount being claimed by the Claimant was funds sent to the Respondent for loaning to the identified beneficiaries.He states that the Claimant may only be entitled to the balance, if any of the difference between amounts received and the amounts advanced as loans.

10. During the hearing of the Respondent’s case on 9/2/2023, the Respondent Witness Mr. Peter Ochieng Mugah adopted his Witness Statement and list of Documents dated 11/7/2022 and 1/7/2020 respectively as his evidence in chief.He stated that he was a Senior Loan Officer with the Respondent since 2009 and was the manager at the time of the partnership between the Claimant and Respondent.He confirmed three Memorandums of Understanding were done with a view to give the Respondents funds to manage on behalf of the Claimant.Members were to access Credit/Loans and the deposits were to act as security.In their Written Submissions, the Respondent Summarized the reasons for opposing the Claim hereunder:The Claimant provided startup capital to be used to provide loans to beneficiaries that were identified by the Claimant.The Respondent denies that the Claimant gave deposits to the Respondent. the Respondent cites the first agreement stating that out of the total ksh 673,000/= budget, only ksh 2000/= was assigned for purchase of shares.In the 2nd Agreement out of the ksh 700,200/= budget, nothing was assigned for purchase of shares. In the third agreement nothing was assigned for shares.The Respondent avers that the amounts deposited in the Claimant’s deposit account with the Respondent was for the implementation of the agreement between the parties.The Respondent avers that the Claimant has not proved that the monies deposited were for shareholding. The Respondent states that the monies deposited by the client were utilized as per the agreement between the parties.The Respondent states that there is no evidence adduced by the Claimant to show there were refundable deposits.As regards claim and interest by the Claimant, the Respondent states that there was no clause in the agreement on dividends or interest on deposited monies.

Findings 11. From the proceedings, it is true the Claimant joined the Respondent as a member corporate in 2015. The Claimant has proven depositing ksh 1,460,000/= into the Respondent’s accounts by way of cheques and receipt issued by the Respondent.The Respondent concurs to receiving the ksh 1,460,000/= but states that the said ksh 1,460,000/= was for onward loaning to the beneficiaries as identified by the Claimant.It is on record that the Claimant withdrew from the Respondent on 23/10/2019. The Respondent acknowledged the notice and ksh 1,221,043/= as the balance.

12. We also note that from the list of documents, the Memorandum of Understanding between the Claimant and the Respondent are explicit as regards the deposit issue. Clause 3 and 4 of the Memorandum of Understanding clearly spell out that while the deposits will act as security for loans advanced to the beneficiaries, the same will be refundable upon terminating of membership with the Respondent.

13. We also note that the Respondent does not deny owing the Claimant the ksh 1,460,000/= as claimed. The Claimant has produced documents from the Respondent that confirm that the ksh 1,460,000/= Claim is adduced from the Respondent’s own documents.In all the transactions that total to ksh 1,460,000/= the item shares/ deposits is clearly recorded.The Respondent through their Sacco manager in a letter dated 29/1/2020 addressed to the Claimant’s advocate acknowledges owing the Claimant the ksh 1,460,000/=. From the proceedings, it is evident that the Claimant contributed ksh 1,460,000/= on diverse dates to the Respondent. It has also been documented by the Respondent documents that the ksh 1,460,000/= was indeed received. The issue is whether the said ksh 1,460,000/= was deposited as security for loans.The Memorandum of Understanding has explained what the ksh 1,460,000/= claimed is. It is the deposits contributed by the Claimant to the Respondent, whether they were a security for loans or not.

14. As regards the claim of interest on deposits, the Claimant produced the List of Documents as exhibits dated 10/3/2020 and tabulated the interest declared as follows:a.2015 – 1. 99%b.2016 – 1. 77%c.2017 – 1. 32%, translating to interest on deposits as hereunder; 2015 for ksh 450,000/= deposits = ksh 3,234. 74/=

2016 for ksh 450,000/= deposits = ksh 4,944. 42/=

2016 for ksh 175,000/= deposits = ksh 1,514. 59/=

2017 for ksh 225,000/= deposits = ksh 1,951. 62/=

2017 for ksh 175,000/= deposits = ksh 2,308. 52/=

15. The above tabulation is contained in the further Claimant’s Witness Statement dated 18/11/2020 and the Claimant’s Statement of 10/3/2020. The Respondent through their Written Submissions have stated that the Claim on interest and dividends is misconceived. The Respondent states that interest and dividends were not part of the Memorandum of understanding between the Claimant and Respondent.The Respondent has challenged the Claimants calculation of interest and deposits.

Conclusion 16. We have considered the evidence on record and the court proceedings and note that the Claimant has proved beyond reasonable doubt that their deposits with the Respondent were ksh 1,460,000/= as tabulated. 21/8/2015 - ksh 450,000/=

19/5/2015 - ksh 450,000/=

6/7/2016 - ksh 175,000/=

13/1/2017 - ksh 225,000/=

5. 5.2017 - ksh 175,000/=

The interest earned was ksh 35,848. 60/= as tabulated below.Amount Interest-rate Interest-dueksh ksh450,000 1. 99% 3,234. 74450,000 1. 77% 4,844. 42175,000 1. 77% 1,514. 59160,000 1. 32% 2,035. 45225,000 1. 32% 1,951. 63175,000 1. 32% 2,308. 53The ksh 35,848. 60/= was interest earned between 2015 and 2017.

17. We therefore find that the Claimant has proved his claim on a balance of probabilities and accordingly enter judgement in favor of the Claimant against the Respondent as follows.a.Refund of deposit of ksh 1,460,000/=b.Interest on deposit as declared ksh 35,848. 60/=c.Prayer for payment of dividends on share capital is marked as abandoned.d.Interest on prayer (a) and (b) from October 2019 at Tribunal rates.e.Costs of the suit.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF NOVEMBER, 2023. Hon. Beatrice Kimemia Chairperson Signed 30. 11. 2023Hon. J. Mwatsama Deputy Chairperson Signed 30. 11. 2023Hon. Beatrice Sawe Member Signed 30. 11. 2023Hon. Fridah Lotuiya Member Signed 30. 11. 2023Hon. Philip Gichuki Member Signed 30. 11. 2023Hon. Michael Chesikaw Member Signed 30. 11. 2023Hon. Paul Aol Member Signed 30. 11. 2023Tribunal Clerk JonahD Onyango advocate for Claimant.Olel Onyango & Ingutiah advocate for RespondentHon. J. Mwatsama Deputy Chairperson Signed 30. 11. 2023