[2024] KECPT 914 (KLR)

Mbithi v Sheria Sacco Socitety Ltd (Tribunal Case 003 of 2020) [2024] KECPT 914 (KLR) (30 May 2024) (Judgment)

Neutral citation: [2024] KECPT 914 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 003 of 2020

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

May 30, 2024

Between

Peter Mutuku Mbithi

Claimant

and

Sheria Sacco Socitety Ltd

Respondent

Judgment

1. Matter for determination is Statement of Claim dated 6/1/2020 filed on 9/1/2020. The Claimant avers he was a fully paid up and contributing member of the Respondent Sacco and as at December, 2012 he had deposits of Kshs. 1,000,000/=.The Claimant avers that in the year 2012, he took a development loan amounting to Kshs. 2,400,000/= and facility was secured by his deposits held by the Sacco and guaranteed by 5 guarantors.The Claimant was repaying the loan through monthly instalments until April 2013 when he stopped working for his then employer Ethics and Anticorruption Commission.Upon default, the Respondent attached the Claimant’s deposits of Kshs. 1,000,000/= and attached 2 guarantors; that is Martin Machira Ngati and John Samoei for Kshs. 1,100,000/= in full payment of the loan balance.

2. In 2019, the Claimant applied for another loan facility at National Industrial Credit Bank Limited and Equity Bank however, both Applications were rejected as he had been listed with the Credit Reference Bureau as a loan defaulter. The position was misleading as the Respondent had recovered their full loan balance.The Claimant’s prayers were for:a.A declaration that the Claimant does not owe the Respondent any money whatsoever.b.An order directing the Respondent to communicate to the Metropol Corporation Limited and the Credit Reference Bureau that the Claimant does not owe any money to the Respondent at all.c.Damages for the loss of opportunity, embarrassment and damage of business reputation of the Claimant.d.Costs of this suit together with interest at court rates on a, b and c abovee.Any other reliefs that this Honourable Tribunal may deem fit to grant in favour of the Plaintiff against the Defendant.The Claimant filed List of Witness dated 6/1/2020 and Witness Statement dated 6/7/2020 and Martin Machira Witness Statement dated 7/1/2020 filed on 9/1/2020. He also filed List of Documents dated 6/1/2020 which included:1. Copy of Metropol Corporation Limited Supplied to Equity Bank.2. Copy of demand letter dated 20th March, 2019. 3.Copy of Demand letter dated 17th January, 2019.

3. The Respondent filed a Defence and Counter Claim dated 19/2/2020 filed on even date. The Respondent denied the contents of the statement of Claim. The Respondent stated the Claimant joined the Respondent Sacco in 2009 and in 2012 applied for the Diamond loan of Kshs. 2,400,000/= payable in 60 months. The Claimant only serviced loan up to April 2013 when he alleged losing his job.On 5/11/2013, the Respondent wrote to the Claimant and in the demanded request for payment. The Respondent’s Counter Claim was that the Claimant defaulted and despite several demand notices, the Claimant failed to pay up his loan.The Respondent in the Counter Claim states the outstanding loan as 16/12/2014 was Kshs. 2,115,232. 10/= and Kshs. 587,835. 20/= as accrued interest.

4. The Respondent in the Counter Claim states on 16/12/2014, the Claimant recovered part of the outstanding loan amount from the Respondent’s deposits Kshs. 962,200/=, 50% of his Benevolent fund of Kshs. 5,790. 00/= and his guarantors deposits of Kshs. 1,018,496. 00/= leaving a balance of Kshs. 716,551. 30/= and they confirmed having forwarded name of the Respondent to the Credit Reference Bureau as a loan defaulter.as at 21/1/2020, the outstanding loan amount is at Kshs. 1,218,054. 90/= and thus cannot remove the Claimant as defaulter as he still owes them Kshs. 1,218,054. 90/=the Claimant Claim in the Counter Claim is for:a.The sum of Kshs. 1,218,054. 90b.Costs of the Counterclaim and the suit.c.Interest on (a) above from the date of filing suit unlit the date of payment in full.d.Any other or further relief as the Honourable Court may deem fit to grant.

5. The Claimant filed Response to Counter Claim as well as Defence where he denied any notice being Written to him. He denied having any further outstanding amount of the loan after recovery and denies the Respondent was justified to forward the Claimant’s name to the Credit Reference bureau. As such, he prayed for Respondent’s Defence to be dismissed and judgement entered in favour of Claimants.The Claimant further stated the Counter Claim was stated time barred. The Respondent filed Witness Statement Dated 18/6/2021 and List of Documents dated 24/6/2021 filed on 25/6/2021 which included:1. Loan Application Form dated 24/10/2012. 2.Membership Application Form.3. Loan Account Statement dated 14/02/2020. 4.Letter dated 5/11/2012. 5.Letter dated 17/12/2013. 6.Letter dated 5/6/2014. 7.Letter dated 29/12/2014. 8.Letter dated 22/7/2013.

6. Matter came for hearing on 17/11/2022 with the Claimant’s case. Claimant adopted his Witness Statement dated 6/1/2020 filed on 9/1/2020 as his Evidence -in -Chief. He further adopted his List of Documents dated 6/1/2020 filed on 9/1/2020 were produced as Claimant’s Exhibit 1-3. On Cross-Examination, he confirmed he came to court because he was listed by the Credit Reference bureau. He stated that he had cleared his loans but had not provided a schedule to show they had cleared his loan. He stated that he did not agree he still had a loan balance. He stated his loan was all paid up.

7. The Respondent gave sworn evidence through Cornelius Kibet. He stated that he was the Head of Credit in Sheria Sacco. He adopted his Witness Statement dated 18/6/2021 filed on 25/6/2021 and produced hid List of Documents dated 18/6/2021. He confirmed the Claimant took a loan of Kshs. 2,400,000/= and page 6 of the Respondent’s documents interest accrued each month. Recovery was done as at June 2014. Guarantor total recoveries done was Kshs. 1,018,496. 00/=, that is from page 6 Respondent’s documents on 16/12/2014. According to the Respondent on page 14, Respondent’s List of Documents the member is advised to pay the balance. On Cross examination, he confirmed the Claimant had 3 guarantors but only recovered from 2 guarantors. He confirmed the loan was fully secured. They did not recover from the 3rd guarantor because he had liabilities.He confirmed still on cross examination that they informed the Claimant of the default via the address he gave at the time of the Application of the loan. However, he stated the address therein belonged to the Respondent.The Respondent witness would not ascertain whether they responded to the letter dated 17/10/2019 received on 22/10/2019 or from letter dates 20/3/2019 from the Claimant’s Bundle of Documents.

8. On further Cross-Examination on the payment done on 6/10/2013. The Respondent Witness indicated the transaction was for another loan statement and there was overpayment for previous loan which they did not attach. The payment of 29/7/2014 was done for the interest accrued and dividend.On the question why they want to recover Kshs. 562,452. 40/= the Respondent’s response was this was the balance at the beginning of November, 2014.

9. Parties were to file Written Submissions, and Claimants filed their Written Submissions dated 10/8/2023. On 25/8/2023 and the Respondent filed their Written Submissions dated 26/10/2023 on 24/11/2023. Having considered the pleadings evidence given in Court and Witness Submissions.The issues to be determined are:Issue One.Whether the Claimant had a loan balance?Issue Two.How much was the outstanding loan balance if any?

Issue One. Whether the Claimant had a loan balance?According to the Claimant, he admits he got a loan from the Respondent. He began payment but got challenges one year later and thus defaulted. Upon default, he confirms his savings were deducted as well as his guarantors’ and as such, the loan had been fully paid.The Respondent on the other hand states that it is true the Claimant defaulted and deductions were done. However, there was still a balance of the outstanding loan of Kshs. 716,551. 30/= as accrued interest as at 16th December, 2014. On non-payment of the interest amount, the same accrued interest. Therefore, on the question whether the Claimant had an outstanding loan balance the same is positive.

PARA 10 Issue Two. How much was the outstanding loan balance if any?From the evidence, the Claimant’s Loan Statement produced by the Respondents in their List of Documents. Page 6 shows as at 16/12/2014 the outstanding balance was Kshs. 716,551. 30/= therefore, the Claimant’s Claim and prayers would have to fail. A declaration cannot be made as indeed the Claimant owed the Respondent money; as such we cannot issue an order directing the Respondent to communicate to the Metropol Corporation Limited and the Credit Reference Bureau that the Claimant does not owe any money to the Respondent at all.Prayer for damages for the loss of opportunity, embarrassment and damage of business reputation of the Claimant fails. 11. Looking into the Counter Claim, we note that indeed the Claimant does have some defaulted amount. However, we note the Claimant was not informed of the outstanding loan balance upon deductions. We are inclined to believe, the Claimant was not aware of the interest accrued upon the deductions made and the Respondent being silent on the matter.That does not however, exonerate the Claimant from paying his debt. We also note the Claimant wrote 2 letters dated 20/3/2019 and 17/10/2019 to the Respondent without eliciting response from them. This would have enabled the Claimant to get means to pay.The Claimant’s Claim dated 6. 1.2020 is dismissed with costs.For the Counter Claim dated 19. 2.2020, judgement is entered in favour of the Claimant against the Respondent for Kshs. 716,551. 30/= from the date of judgment Counter- Claim plus interest and cost.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF MAY, 2024. Hon. J. Mwatsama - Deputy Chairperson Signed 30. 5.2024Hon. Beatrice Sawe - Member Signed 30. 5.2024Hon. Fridah Lotuiya - Member Signed 30. 5.2024Hon. Philip Gichuki - Member Signed 30. 5.2024Hon. Michael Chesikaw - Member Signed 30. 5.2024Hon. Paul Aol - Member Signed 30. 5.2024Tribunal Clerk JonahAriga advocate holding brief for Mr. Getange advocate for the Respondent.Peter Mutuku- No appearanceMutuku Mbithi & Butuyu Advocate – No appearanceHon. J. Mwatsama - Deputy Chairperson Signed 30. 5.2024