[2024] KECPT 1694 (KLR)

Okere v British American Tobacco Sacco Society Limited (Tribunal Case 345 of 2015) [2024] KECPT 1694 (KLR) (3 October 2024) (Judgment)

Neutral citation: [2024] KECPT 1694 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 345 of 2015

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

October 3, 2024

Between

Victor Okere

Claimant

and

British American Tobacco Sacco Society Limited

Respondent

Judgment

1. The claim herein was bought by the Claimant to the Tribunal vide the Memorandum of Claim dated 4th June, 2015, filed on 5th June, 2015. The memorandum of Claim was filed against British American Tobacco Sacco Society Ltd as the then 1st Respondent and British American Tobacco (K) Ltd as the then 2nd Respondent. The then 2nd Respondent was thereafter struck out of the case by the Tribunal in its Ruling delivered on 8th July, 2016; on the ground that the 2nd Respondent being the Employee of the Claimant ought not to have been sued before the Tribunal. The Memorandum of Claim was subsequently amended on 28th June and filed on the same date against the Respondent.

2. In the Amended Statement of Claim titled; the Statement of Claim, the Claimant prayed for judgement against the Respondent for:-a.A declaration that the claimant having fully repaid all the monies owed to the Respondent, the Respondents are stopped whether by themselves, agents, workers and/or servants from any further deductions to the Claimant’s salary.b.An order to the Respondent to refund the Claimant all money unlawfully and illegally deducted from his account from 29th July, 2010 till payment in full.c.The costs in this cause.d.Any other or further relief that this Court may deem fit to grant.e.Interests on (a) and (b) above.

3. The Claimant states in the Statement of Claim that at all material times relevant to this suit, he was a member of the Respondent. That on various dates between 2007 and 2008, the Claimant took loans of Kshs. 2,050,000/=, Kshs, 3,000,000/= and Kshs. 660,000/= from the Respondent. That it was a term of the Loan Agreement that the said loan would be repaid through a check-off system by way of monthly deductions from his salary. The Claimant further states that the Respondent ordinarily accepted lump sum cash payments. That he repaid each of the loans by 29th July, 2010 when his account stood at Nil. That however, the Respondent purported to reverse some of the entries made into his account statement claiming proof of payments when it had acknowledged receipt of the said monies and credited his account with the same. That the Respondent has continued to illegally and unlawfully make deductions to his salary without any basis, causing him financial hardships. That the Respondent has also continued to arbitrarily alter the purported loan balance which is sufficient proof that its actions are in bad faith as particularized in the claim.

4. The Respondent responded to the Claimant’s Statement of Claim vide the Respondent’s Amended Statement of Defence, amended on 19th July, 2021. In its Defence, the Respondent admits that the Claimant was a member of the Respondent and states further that the Claimant borrowed from the Respondent and was granted a loan of Kshs. 2,050,000/= sometime on or about 17th January, 2007, Kshs. 660,000/= on or about 27th November, 2007 and Kshs. 3,000,000/= on or about 23rd July, 2008. The Respondent admits that the loans were to be repaid through check-off system by way of monthly deductions from the Claimant’s salary and states that it accepts lump sum cash payments only when borrowers inform it beforehand that they intended to make such payments. That upon making such deposits, the borrowers must present deposit slip to the Respondent’s offices as evidence of such payment.

5. Further, the Respondent denies that the Claimant repaid all his loans by 29th July, 2010 as alleged. That unknown to the Respondent, the Claimant made fictitious payments towards payment of the Kshs. 2,050,000/= loan and the Kshs. 660,000/= and presented fraudulent deposit slips, which led to the Respondent to post the said payments into the Claimant’s loan. That on account of the fictitious payments and fraudulent deposit slips, the Claimant’s loan account and on the strength, the Respondent advanced the Claimant the Kshs. 3,000,000/= loan sometime on or about 23rd July, 2008.

6. The Respondent states that sometime in the year 2011, it caused a forensic account to be carried out on all its loan accounts and after thorough bank reconciliation, it became evident that the claimant had not made any actual payments in respect to the Loan of Kshs. 660,000/= while in he had not paid all installments in respect to the loan of Kshs. 2,050,000/= but had instead in both cases falsified payments.That the Respondent informed the Respondent of this finding and requested him to present to the Respondent proof of payment of lump sum amounts he purported to have made but the Claimant failed to do so. That the Respondent did reverse all the fictitious payments made by the Claimant and proceeded to demand actual payment of the same from the Claimant, which the Claimant agreed that the deductions made towards payment of the Claimant’s loans are legal and lawful.

7. The Respondent states further that it only reversed all the fictitious payments made by the Claimant and the reversal does not amount to bad faith. The Respondent denies the particulars of bad faith and adds that it did not alter the Claimant’s account to reflect non-existent loans. That it reconciled the account to reflect loans that had not been fully paid by the Claimant. That it is lawfully recovering from the Claimant the outstanding loan balance and interest accrued thereon. That it owes the Claimant no refund as the Claimant is yet to fully repay his aforesaid loan, hence no over-deduction. That the loan installment of Kshs. 43,000/= deducted from the Claimant’s salary before the deduction was stopped , the deduction was lawful as the Claimant still has an outstanding loan balance which as of 28th February, 2015, the total amount unpaid as well as all the interest accrued from the two loans of Kshs. 2,050,000/= and 660,000/= was Kshs. 3,406,883/=. Consequently, the Respondent prays that the Claimant’s Statement of Claim be dismissed with costs.

The case proceeded to hearing viva voce. Claimant’s Case 8. At the hearing, the Claimant adduced sworn evidence and produced his Witness Statement dated 16th November, 2018 filed on 21/11/2018 as his Evidence in Chief. The Claimant also produced his lists of documents dated 17/2/2017, 4/9/2018 and the supplementary list dated 28/7/2020 as exhibits. In his Witness Statement, the Claimant stated that he took various loans of Kshs. 2,050,000/=, Kshs. 660,000/= and Kshs. 3,000,000/= from the Respondent on various dates. That in October, 2011, the Claimant started making payments of Kshs. 10,000/= until May, 2012, during which period the Respondent did not give him any updates. That in June 2012, the Claimant requested the Sacco to increase the deduction to Kshs. 43,000/= per month and was out of nowhere slapped with a loan balance of Kshs. 9,245,000/= without explanation. That in July 2013, the Respondent deducted Kshs. 63,000/= without the Claimant’s consent, instead of 43,000/= thereby transgressing the 1/3 Rule and that he was given a loan balance of Kshs. 5,461,373/= without explanation. That when he could not get an explanation from the Respondent, he sought advise from his employer’s Human Resource Manager who advised him to take legal action. That though his advocates filed a suit erroneously in the Milimani Courts, the said Court issued orders compelling the Sacco to revert back to deducting Kshs. 43,000/=. That again the Respondent pushed the loan balance to Kshs. 8,041,000/= without explanation. That the Sacco as at the date of filing this Tribunal case, the Respondent was still deducting Kshs. 43,000/= and have not given any reason why they are doing so and where all the figures termed as loan balance are from. That as a result of the manipulations of his account, he has been overcharged with amounts more than Kshs. 3,000,000/= which he requests the Tribunal to assist him recover from the Respondent.

9. On cross-examination, the Claimant stated that he finished paying. That he was paying through offset, check-off from salary and deposit. That for the Kshs. 3,000,000/= loan, there was check-off and cash payments and referred the tribunal to his payslips of September 2010 and August 2010. At page 48 of the List of Documents filed on 4/9/2018. That by September 2010, he had no loan as he had cleared the same through contribution and offset of shares.

10. The Claimant also stated on Cross-examination that he paid towards of the loan of Kshs. 2,050,000/= cash of Kshs. 900,000/= and Kshs. 1,200,000/= to the Respondent’s Secretariat which have not been receipted but reflect in the pay slip and he cleared the loan.The Claimant states that in respect to the 2007 loan of Kshs. 660,000/= he used check-off of Kshs. 10,266/= and cleared in 2016. That he did not realize that the Respondent did not start deducting the check off until 2016, when the Respondent started deducting Kshs. 43,000/=. That the Kshs. 660,000/= loan was a top-up loan advanced when he had not finished paying the Kshs. 2,050,000/= loan from November 2007. That he was advanced the Kshs. 3,000,000/= when the Kshs. 660,000/= loan was not being deducted. That he finished paying the Kshs. 3,000,000/= loan in August, 2010, having used shares and check-off. That he did not use cash to pay the Kshs. 3,000,000/= loan. That only the Kshs. 2,050,000/= was paid in cash. That the only loan still then pending was the Kshs. 660,000/= loan on which the Respondent gave a balance of Kshs. 9,245,000/= in June, 2012. That at that time, he had cleared all other loans except the Kshs. 660,000/= loan. That as at 2018, he had overpaid the loans by over Kshs. 3,000,000/= and continued paying until the Tribunal ordered the deductions to be stopped. That he does not know why his balances increased and decreased in July 2013 and in August 2013.

11. The Claimant’s second witness “CW2” Nicholus Mutemi (CPA), stated in his evidence that the Claimant requested for an audit of his loans and repayments as per lists of documents dated 4/9/2018 and 28/7/2020. That there were irregular deductions after he had cleared the loans. That from June 2018, Kshs. 43,000/= was being deducted. Claimant Witness 2 produced the tabulations as Claimant’s exhibits 2 and 3.

12. On cross examination, Claimant Witness 2 stated that for his analysis, he relied on the Claimant’s April, 2007 to June 2018 pay slips and loan statement from the Sacco. The irregularity was that as at August 2010, he Kshs. 3,000,000/= loan was cleared. That two years later a Kshs. 9,200,000/= loan was put in the pay slip of June, 2007. That as at July, 2008, there was a loan balance of Kshs. 1,600,000/= on which he paid a lump sum and there was no loan balance the next month. In July 2018, there was an overpayment of Kshs. 3,000,000/= loan without any deductions on the Kshs. 660,000/= loan. That thereafter, there were deductions of Kshs. 43,000/= per month.

Respondent’s Case. 13. The Respondent’s first witness, Patrick Muvera, “RW1” states that he was the Chairman of the Respondent for 7 years. The Witness produced the Witness Statement dated 19/11/2018 as the Respondent’s evidence in Chief and also produced the Respondent’s List of Documents dated 26/9/2018 and 19/7/2021 as the Respondent’s exhibit 1 and 2. In his statement dated 19/11/2018, the Respondent Witness 1 states that on or about 17th January 2007, the Claimant was granted the Sum of Kshs. 2,050,000/= and later was granted the sum of Kshs. 660,000/= on 27th November, 2007 and the sum of Kshs, 3,000,000/= on 23rd July, 2017. That the Claimant was to repay each of the debts through check-off system by way of monthly deductions from his salary. That check-off system is the major way through which members repay their loans. However, the Respondents accepts lump sum cash payments only when borrowers inform it before hand and then upon making such deposits, the borrowers must present the deposit slip to the Respondent’s offices as evidence of such payment upon which the Respondent issues an official receipt to the individual who makes the large deposit. That the Claimant did not complete repayment of the Kshs. 2,050,000/= loan despite his statement of account issued by the Respondent shows that the Claimant at one time did clear the loans of Kshs. 2,050,000/= as well as Kshs. 600,000/=. That unknown to the Respondent, the Claimant knowingly made fictitious payments in respect to these two loans and presented fraudulent deposit slips to the Respondent, which led the Respondent to post the said payments into the Claimant’s loan account. That on account of the fictitious payments and fraudulent deposit slips, the Claimant’s loan account was cleared and it is on this strength that the Respondent advanced to the Claimant the loan amount of Kshs. 3,000,000/=. That at the time of advancing there subsequent loans, the Respondent had not discovered the Claimant’s fictitious payments which Claimant Witness 1 alleged were discovered after a forensic audit was conducted in the year 2011. That it then became evident that the Claimant had not made any factual payments in respect to the loan of Kshs. 660,000/= while in respect to the loan of Kshs. 2,050,000/= he had not paid all the installments but had instead in both cases falsified payments. That the Claimant failed to provide proof of payment of the lump sum amounts he purported to have made. That the Claimant admitted to one Bernard Oginno that he had not made any actual payments in respect to the loan of Kshs. 660,000/= while he had not paid all installments but in both cases falsified payment. That consequently, the Respondent reversed all the fictitious payments made by the Claimant and proceeded to demand actual payment of the same from the Claimant. That in a bid to recover the outstanding balance from the Claimant, the Respondent has been deducting the sum of Kshs. 43,000/- through the check-off system. That the Claimant still has an outstanding loan balance with the Respondent which as of 28th February, 2015, the total amount unpaid as well as all the interest accrued from the two loans of Kshs. 660,000/= collectively was Kshs. 3,406,883/= and the interest continues to accrue. That it is not true that the Respondent arbitrarily alters the Respondent’s loan balance but only seeks to recover sums which were fictitiously made by the Claimant.

14. On cross-examination the witness stated that he did not have the documentary proof of his claim. That the legal suspension seen on page 10 of the Respondents are costs of this case which are charged to the Claimant amounting to Kshs. 392,400/=. That he did not have details of how the legal suspension amounts were arrived at. That the Claimant was granted 3 loans between 2007 and 2008 totaling to Kshs.5,710,000/=. Loans are three times the deposits. Than as per the pay slips of July, 2007, at page 7 of the Claimant’s documents. That payments were through check-off and if there are no loan deductions, the loan is cleared, hence from August, 2010 to May, 2012 shows no loan that in May 2012 there was a Co-operative loan balance of Kshs. 9,245,000/= in June 2012. That there is no evidence of loan Application. That the deductions on the Co-operative loan was Kshs. 56,733. 34/=. that for the Kshs. 9,245,000/= payments were deducted at Kshs. 43,000/= per month as from May 2012 and in July 2012 the loan balance was Kshs. 6,149,000/=. That the loan balance in June 2013 shows are Kshs. 5,676,000/=, in July 2013 shows as Kshs.5,461,376/=, in August, 2013, the loan balance shows as Kshs.8,041,000/=. That the forensic audit mentioned in his statement is in the office. That there are no minutes for the approval of forensic before court. The Respondent’s second witness, Alfred Wambua introduced himself as an accountant and produced his Witness Statement dated 19/10/2023 which reiterated the contents of the Statement of Defence and also the contents of the Respondent’s Claims (RW1) Written Statement and added that upon the forensic audit and reconciliation of accounts, Respondent discovered the following anomalies with the Claimant’s account:-a.Loan written off described as repayment Kshs. 307,750. 72. b.Loan written off described as discounting Kshs. 596,403. 35/=.c.The loan of Kshs. 660,000/= issued to the Claimant but was intentionally omitted in his loan account.d.Loan Written off described as discounting error Kshs. 703,596. 45/=.e.Shares account described as correction.That the Kshs. 157,000/= on credit side on 20/1/2011 is a fictitious payment increasing the deposits. That the loan amount of Kshs. 660,000/= shows it was debited on approval and transferred. That the debit entry of Kshs. 3,000,000/= is also evident. That the Kshs. 660,000/= was never posted on Claimant’s loan statement hence it did not feature on the records and was not paid. That in 2006 there was a change of system which necessitated funds transfer on account of transition. That pay slips are not accounting documents. That check-off advise is run by an employer hence Sacco cannot rely on the pay slip.On Cross-examination, the Witness stated that he joined the Respondent on 15th September, 2022. That the Respondent. That the Credit entry must be traced to the bank account. That money was not traced in the account between 2006 and 2010. The anomalies were from the forensic audit. On re-examination, the Witness averred that the figures he gave in his statement were from Claimant’s statements deposits and reconciliation.The before Kshs. 157,000/=.f.Kshs. 307,722. 61 credited as system change over share balance.g.Interest accrued for over a period of irregular transactions and omissions Kshs. 527,423/= and,h.End year adjournments as interest change after July 2010 Kshs. 214,999. 65/=

15. The Witness stated that the fictitious payments as well as the stated shares resulted in the Respondent reclaiming the Claimant’s loan account losing money. That the total amount used to fraudulently write off the Claimant’s loan account and inflate his shares was the sum of Kshs. 3,474. 98/=, which amount was reversed by the Respondent to recover the amounts.At the hearing, Respondent Witness 2 stated that the account statement shows the debit and credit. That Kshs. 2,050,000/= debited on 21. 3.2007 is a loan. That entry no. 16 for Kshs. 703,596. 45/= is a false entry is not recorded in the account. It reduced the loan balance to Kshs. 1. 023,855. 9/=. That entry number 17, the discounting entry reduced the loan balance and the amounts were not traced in the accounts of the Sacco. That the Respondent accepts bank transfers, cheques and deposits.That deposits were not seen in the payslips and the amounts were not traced in the Sacco account.After the hearing was concluded, the parties filed Written submissions. The Claimant’s Written Submissions are dated 23rd November, 2023 and filed on 12/01/2024. While the Respondent’s Submissions are dated 19th March, 2024 and filed on 19/03/2024.

Analysis and Determination. 16. We have considered the pleadings and documents filed by the parties herein together with the Written Submissions and the case-law attached thereto and note that: -1. It is not in dispute that the Claimant borrowed three loans from the Respondent being:a.Kshs. 2,050,000/= on or about 17/01/2007. b.Kshs. 660,000/= on or about 27th November, 2007,c.Kshs. 3,000,000/= on or about 18th June, 2008. 2.It is also not in dispute that the said loans were to be paid by way of check-off system by monthly deductions on the Claimant’s payslips.3. The loan of Kshs. 660,000/= was not subjected to the monthly deduction hence was not recovered as per the terms of loan agreement.4. The Claimant avers to have paid off and cleared his loans by way of payment though the check-off system, deposits and share set-off.5. The Respondent contends that the Claimant payments towards the loans of Kshs. 2,050,000 and Kshs. 3,000,000/= and that in the end, he was found to owe the Respondent the sum of Kshs. 3,474,895 which was reversed.6. The Respondent admits that other than check-off payments, it accepted lump sum payments whose procedure the Respondent provided.7. It is not in dispute that the Respondent made deductions to the Claimant’s account over the years in recovery of the loan amounts.

17. From the foregoing, it is not lost on us that this is a case of the Claimant’s word against the Respondent’s word. The claimant has not produced any evidence of the lump sum payments towards his Co-operative loan. However, we note that most of his payslips elicit deductions towards the co-operative loan of Kshs. 43,000/= in most instances from the year 2007 to the year 2020. It is also on record that the deductions continued upto 13/07/2021 when they were stopped by the Tribunal.Having noted that the amounts stated by the Respondent’s witness member, Alfred Wambua were as a result of an internal process of the Respondent and having also noted that the Statement account produced by the Respondent Witness was a document of the Respondent containing amounts and entries that could not be substantiated by the Respondent’s Witness, we deem it fair and just in the circumstances and weighing the evidence of the parties and hold that the Claimant has proved on a balance of probability that as at the 29/07/2010, the Claimant had fully paid his two loans of Kshs. 2,050,000/= and Kshs. 3,000,000/= and the loan of Kshs. 660,000/= was thereafter paid off by way if further deductions on his salary upto 13/07/2021 when the deductions were stopped by the Court.We have weighed the evidence of the parties and find that the Claimant has proved his case against the Respondent on a balance of probability.We rely on the case of Palace Investment vs Geoffrey Kariuki Mwenda and another (2015) eKLR wherein the Court of Appeal stated that Balance of preponderance or probabilities are used in cases where a draw is not enough and a court or a Tribunal cannot decide one way or another because both parties are unconvincing and the Court or Tribunal has to go with one party whose case is more probable than not and give them the win.Justice Kimari in William Kabogo Gitau vs George Thuo and 2 others [2010]KLR defines Balance of probability in percentage terms and states that it is where the court stands with a party whose case or evidence has 51% chance probability as opposed to the party whose case or evidence has 49% chance or probability.

Consequently orders as follows. 1. A declaration that the Claimant having fully repaid all the monies owed to the Respondent, the Respondents are stopped whether by themselves, agents, workers and/or servants from any further deductions to the Claimant’s salary is allowed.

2. An order to the Respondent to refund the Claimant all money unlawfully and illegally deducted from his account from 29th July, 2010 till payment in full – fails.

3. Each party to bear its own costs of this suit.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 3RD DAY OF OCTOBER, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 3. 10. 2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 3. 10. 2024HON. BEATRICE SAWE MEMBER SIGNED 3. 10. 2024HON. FRIDAH LOTUIYA MEMBER SIGNED 3. 10. 2024HON. PHILIP GICHUKI MEMBER SIGNED 3. 10. 2024HON. MICHAEL CHESIKAW MEMBER SIGNED 3. 10. 2024HON. PAUL AOL MEMBER SIGNED 3. 10. 2024Tribunal Clerk MutaiMbuthia advocate for the Claimant - PresentMs. Gakuru advocate for the Respondent.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 3. 10. 2024