[2022] KEMSET 186 (KLR)

Nyambari Young Traders Shg v Muhia (MSET Nairobi 3 of 2021) [2022] KEMSET 186 (KLR) (Civ) (15 June 2022) (Judgment)

Neutral citation: [2022] KEMSET 186 (KLR)

Republic of Kenya

In the Micro and Small Enterprises Tribunal

Civil

MSET Nairobi 3 of 2021

J.Bett, Chair, R.Katina, Vice Chair, J.Were, A.Gikuya & A.Kibet, Members

June 15, 2022

Between

Nyambari Young Traders Shg

Claimant

and

Michael Gitau Muhia

Respondent

Judgment

1. The matter was brought to the attention of the Tribunal on 18th November, 2021 when the officials of Nyambari Young Traders SHG filed the claim against the Respondent, Michael Gitau Muhia seeking repayment of Kes 122,160/- plus cost of the suit and any interest thereof at court rates.

2. The Respondent was served with the claim and appointed G.N. Kimani & Company Advocates to represent him in this matter. The Advocate filed an Objection of Claim against the Claimant on the following grounds:i.Claimant is not a legal entity and has no capacity to sueii.Cause of the action is alleged to have occurred in 2015 (10th February 2015) and as such the claim is time barrediii.Claimant has concealed vital details to the courtiv.Claim at clause 2 is fraudulent and amount claimed doesn’t add up and the same is challenged and dismissal of the claim is sought since the total claim cannot add up as the Respondent has no money owing to the claimant and the claimant is put to strict proofv.Advocate charges need to be proved and purpose disclosedvi.Alleged interest is punitive and illegal

3. The claim was then set down for hearing and proceeded for hearing on 13th April 2022 and 6th May 2022 where the Claimant called a few witnesses and the Respondent also gave his evidence under oath.

Claimant’s Evidence 4. The Claimaint’s witnesses testified that the Respondent obtained a loan on 6th October 2009 for Kes 150,000/- that was to be charged an interest of 10%. The Respondent executed the loan agreement on part V of the document. The loan was secured by a radio cassette, two (2) cows, wall-unit, a donkey cart and a shaving machine. The Respondent paid the loan for a while and in 2012, he disappeared with a debt of KES 86,440/-.

5. The Claimant’s officials looked for the Respondent and managed to get a meeting with him where he explained that he had faced some challenges but promised to resume the loan repayment. He later paid Kes 44,600/- leaving a debt of Kes 76,708/- outstanding exclusive of interest.

6. The Claimant sought the services of a lawyer and a demand letter (copy in file) from CW Kinuthia Advocates was issued dated 27th January 2015, for a claim of Kes 126,160/- that was made up of:Principal amount: Kes 122,160Advocates collection charges Kes 8,000/-Costs of the demand letter Kes 2,000/-Disbursement expenses Kes 4,000/-Total Kes 126,160/-

7. The Claimant had their lawyer, C.W. Kinuthia draft a Memorandum of Understanding (MoU) dated 10th Feb 2015 between the Claimant and the Nyambari Young Traders committing to pay Kes 7,000/- by the 10th of every month commencing 10th March 2015 until the full sum of 126,160/- is fully repaid (This sum was then reduced to Kes 88,000/-). The MoU was executed by Michael Gitau Muhia (Respondent), Peter Njuguna (Chairman), Peter Kuria (Secretary) and Fredrick Macharia (Vice-Secretary) executed the document as officials of Nyambari Young Traders. CW Kinuthia Advocates witnessed all the signatures.

8. The Respondent failed to make the payments as agreed as per the terms of the MoU. The Claimants availed the following receipts from Equity under the name of Michael Gitau Muhia:i.16th March 2015, Kes 7,000 was deposited;ii.6th April 2016 Kes 3,000/- was deposited (though what has been presented is a copy of the back slip hence unable to verify the details);iii.23rd June 2017, 1,000/- was deposited (though what has been presented is a copy of the a slip whose contents are unclear hence unable to verify the details)

9. By the time the case was filed with the Tribunal, the below was the breakdown of the claim:Outstanding principal Kes 88,000/-Advocate charges Kes 40,000/-Fines Kes 12,600/-Office contribution Kes 4,160/-Welfare Kes 4,160/-Interest Kes 20,000/-Total claim Kes 168,920/-Less deducted amount:Amount paid to date Kes 44,600/-Respondent’s savings Kes 66,290/-Emergency Kes 2,170/-Sapa Assets Kes 2,170/-Total deductions (Kes 115,230/-)Balance owed by Respondent Kes 53,690The Tribunal finds that the Balance outstanding from the Respondent is Kes 53,690/- and not Kes 51,690/-. The Tribunal notes that the Claimant had indicated the total claim to be 166,920/- and not Kes 168,920/- that the Tribunal arrived at by adding up the total outstanding claims as calculated above.

10. The Claimant also indicated that the Respondent was deemed a non-member of the group vide an extract of the resolution of a meeting held on 23rd December, 2014 that sought to declare Michael Muhia a non-active member for failing to attend any meeting for more than a year.

Respondent’s Evidence 11. Respondent swore under oath that he took a loan of Kes 150,000/- on 6th October 2009 from the Claimant. He claims the amount outstanding debt owed by him is Kes 88,000/- and also adds that he had savings amounting to Kes 68,290/-. The amount of loans and savings each member would take was recorded in the pass book that was kept by the group. He claims that even if his savings were used to reduce his debt, he would have a loan of around Kes 20,000/- remaining and not the amount claimed by the Claimant.

12. The Respondent also indicated that he was still a member of the group, and as such, he is also entitled to dividends from 2009 - 2022 from the assets purchased by the group. He claimed that there were plots in Naivasha and Gitithia, shares in Mumias Sugar (37,410 shares), Eveready (5,950 shares) and Safaricom (33,000 shares).

13. Respondent objects to the advocate charges of (Kes 40,000/-), fines charged (Kes 12,600/-), office contribution (Kes 4,160/-) and welfare charges (Kes 4,160/-). The Respondent infers that he has no information on how his savings of Kes 68,290/- was applied or used as he was not informed of this.

14. Respondent seeks a refund of his principal amount of Kes 88,000/-. He also claims that Kes 1,900/- was debited from his savings and was used to locate him yet he was always at his home. The Respondent claims that he did not also get any communication informing him that he is no longer a member of the group or an invoice for the legal fees paid to the lawyer amounting to Kes 40,000/-.

15. He requested the Tribunal to dismiss the claim as it is unfounded. He requests to be reinstated as a member and allowed to attend the meetings.

16. During cross- examination, the Respondent confirmed that he last attended the group meetings in 2012 and the last time he paid his membership of Kes 30/- per month was in 2021 through M-Pesa to the group’s account at Equity Bank. However, he did not provide evidence of the same.

Issues For Determination 17. The Tribunal identified the following issues for determination:i.Does the claimant have capacity to sue?ii.Is the claim time barred?iii.What is the amount outstanding on the loan?iv.What is the amount of the Respondent’s shares/savings with the group?v.Are there any dividends due to the Respondent?

Analysis Of The Evidence And Determination Claimant’s capacity to sue 18. The Claimant, Nyambari Young Traders SHG cannot sue in its own name as it is not a legal entity. That said, the Tribunal does not engage itself in technicalities as ordinary courts do. It takes into account the nature of the people bringing claims to the Tribunal and determines the same on substance rather than form. For that reason, although the Claimant is not a legal entity that has capacity to sue and be sued, the Tribunal is of the opinion that there is a legitimate claim that needs to be addressed and fully determined in the interest of justice to all.

Is the Claim time barred? 19. The MoU between the parties was dated 10th February 2015. The Respondent made payments as per the evidence (copies of Equity bank deposit slips) provided by the Claimants on 16th March 2015 (Kes 7,000/-), 6th April 2016 (Kes 3,000/-) though the slip presented is a copy of the back of the bank slip hence unable to verify the details and 23rd June 2017 (Kes 1,000/-) though what has been presented is a copy of the a slip whose contents are unclear hence unable to verify the details.Does the Tribunal have the jurisdiction to hear the matter by virtue of the Limitations of Actions Act Cap 22 Laws of Kenya?Section 4 (1) of the Limitation of Actions Act provides as follows:“The following actions may not be brought after the end of six years from the date on which the cause of action accrued:a.actions founded on contract…..In Rosemary Wanjiru Kungu v Elijah Macharia Githinji & another {2014}, it was held inter alia that: - (a) the object of a limitation enactment is to prevent a plaintiff from prosecuting stale claims on the one hand, and on the other hand protect a defendant after he has lost evidence for his defense from being disturbed after along lapse of time; (b) unless an applicant shows grounds upon which he could claim exemption, a court shall reject his claim.The Respondent last made payment on 23rd July 2017 as per the evidence provided to the Tribunal. The matter is still within time as six (6) years from the last date of breach (July 2017) will lapse in 2023. The Respondent claims the time started running when the MoU was signed yet still continued to make payment with the last being in 2017.

The Tribunal therefore finds that the Claim is not time barred.

What is the amount outstanding on the loan? 20. The parties all agree that the Respondent took a loan of Kes 150,000/-. As at the time of the MoU, Kes 126,160/- was due and owing, however both parties agreed that Kes 88,000/- was the eventual outstanding principal amount owed by the Respondent after discussions and agreement between the parties.The Respondent takes issue with (i) Advocates fee of Kes 40,000/-. The Tribunal requested the parties to avail documentary evidence for any claim made. It is evident that the lawyer was appointed and work was done as per the demand letter and MoU drafted by C.W. Kinuthia Advocates. As such the claim of Kes 40,000/- is therefore substantiated as it is evident that legal charges were incurred in relation to having the Respondent pay the debt owed.The Tribunal however finds that the fines charged of 12,600/-, office contributions of Kes 4,160 and Welfare contributions have not been substantiated. As such, the Tribunal is hard pressed supporting the Claimant’s charges and fines with no evidence.Further during cross examination, the Claimant’s witnesses confirmed that the fines were as stipulated or provided for in the Constitution. A copy of the same was availed to the Tribunal but how the Claimant arrived at this was not substantiated: i.e. the period it relates to, which fine in particular (as the constitution provides for various fines). The Claimant was put to strict proof of the claims but no evidence was availed to support the fines, office and welfare contributions. Further, the Tribunal was not served with documents supporting the emergency and SAPA asset purchase hence unable to rely on this information in determining the final outstanding amount.The Claimant provided evidence that Kes 11,000/- was paid by the Respondent on 16th March 2015 (Kes 7,000/-), 6th April 2016 (Kes 3,000/-) and 23rd June 2017 (Kes 1,000/-). These amounts should go towards reduction of the loan amount of Kes 88,000/- however, this has not been used to reduce the outstanding loan amount, therefore making the outstanding loan amount Kes 77,000/-. On reduction of the Respondent’s shares detailed below, the amount owed by the Respondent amounts to Kes 10,710/- exclusive of interest.

The shares due to the Respondent 21. Both the Claimant and Respondent agree that the copy of the loans & savings pass book serves as proper evidence to the amount of both savings and loans by each member. A copy of the pass book availed as evidence shows that the Claimant’s savings amounted to Kes 66,290 as at 7th August 2012. The Respondent has not provided any evidence to contradict this, though he claims that his savings had amounted to Kes 68,290/- less Kes 1,900/- that was used by the Claimant to look for him. The amount as at 7th August 2012 did not include any deductions and as such, the Tribunal confirms that the savings made by the Respondent amounted to Kes 66,290/-. The same was used by the Claimant in reducing the loan owed by the Respondent.

Dividends owed to the Respondent 22. The Respondent claims that he is owed dividends for the last twelve years but did not indicate how the same was arrived at. During cross- examination, the Claimant’s witness indicated that assets indicated as owned by the Claimant (as per paragraph 12) were owned by different people based on their registration dates. Further, the Claimant’s witness denied ownership of these assets and claimed that the only dividends earned is from interest from the loans paid by the members.The Respondent was put to strict proof of his claim on dividends owed but did not avail evidence of the same to the TribunalIn Civil Appeal No. 13 of 2018 Ainu Shamsi Hauliers Limited Versus Anastacia Ndinda Mwanzia (suing as Administrator of the Estate of Harrison Mwendwa Karili[2018]e-KLR C. Kariuki – J., held that no Court of Law should be deprived of information which will assist it reach a fair and first determination of a case.The Respondent did not provide information or evidence to the Tribunal that would assist in the determination of his claim and as such, the Tribunal deems this claim unsubstantiated.

23. On the issue of the Respondent’s membership, the Tribunal reviewed the constitution and Paragraph 3 provides for four instances in which membership can be terminated. Para 3 (b) of the Claimant’s Constitution provides that a member is removed from membership by vote of not less than two thirds of the members of the organisation at an extraordinary general meeting of the organisation convened at which he has been given a reasonable opportunity of attention and being heard. The member will forfeit a maximum of Kes 4,000/-. The copy of extract of minutes (for the meeting held on 23rd December, 2014) shared indicate this was the Annual General meeting and not an extraordinary general meeting as provided for in the constitution. Further, there is no evidence of voting of at least two thirds of the members thereby indicating that the Respondent is still a non-member nor is there evidence of him being given a reasonable opportunity of being heard by the group. The Respondent is therefore free to continue with membership of the group on payment of membership fee due and owing and payment of loan arrears.

DIVISION - Orders 1. Flowing from the findings, we find that in the interest of justice, the Respondent should pay the Claimant:-a)The outstanding loan amount of Kes 10,710/-b)Costs of the Advocates legal fees due to C.W. Advocates of Ksh 40,000/=c)Interest on (a) and (b) above at prevailing court rates.d)Each party to bear their own costs

Those then are the Orders of the Tribunal.

DATED DELIVERED AND SIGNED ON THIS 15 TH JUNE 2022Dr. J. BETT ................................[CHAIRMAN]R. KATINA.................................[VICE-CHAIR]J. WERE.......................................[MEMBER]A. GIKUYA.....................................[MEMBER}A. KIBET.......................................[MEMBER]10