[2021] KECPT 236 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.404 OF 2020

SHADRACK MUTIE MUTHIANI & 8 OTHERS............................................................CLAIMANT

VERSUS

STIMA SACCO CREDIT CO-OPERATIVE SOCIETY LIMITED ...............1ST RESPONDENT

EVELYN MMBISHI INZIANI...............................................................................2ND RESPONDENT

RULING

1. By a Notice of Motion dated 19. 10. 2020 and filed on 21. 10. 2020and amended by a Notice of Motion dated 11. 2.2021 and filed on 12. 2.2021 and the Supporting Affidavit, the Applicants/Claimants have moved this tribunal seeking inter alia the following orders :

1. Spent

2. That pending the hearing and determination of this Application, the 1st Respondent by itself, its servants, agents, employees and/or anybody whatsoever deriving under it be restrained from making any deductions against the Applicants/Claimants accounts in a bid to offset the 2nd Respondent’s loan.

3. That pending the hearing and determination of this suit, the 1st Respondent by itself, its servants, agents, employees and/or anybody whatsoever deriving under it be restrained from making any deductions against the Applicants/Claimants accounts in a bid to offset the 2nd Respondent’s loan.

4. spent

5. That pending the hearing and determination of this of this Application, the 1st Respondent by itself, its servants, agents, employees and/or anybody whatsoever deriving under it be restrained from making any deductions against the 1st to 9th Applicants/Claimants shares deposits, dividends and savings in the Sacco in a bid to offset the 2nd Respondent’s loan.

6. That pending the hearing and determination of this of this suit, the 1st Respondent by itself, its servants, agents, employees and/or anybody whatsoever deriving under it be restrained from making any deductions against the 1st to 9th Applicants/Claimants shares deposits, dividends and savings in the Sacco in a bid to offset the 2nd Respondent’s loan.

7. That a mandatory injunction be issued compelling the 1st Respondent to reinstate the 1st , 2nd ,6th , 8th, and 9th Applicants/Claimants deposits in the Sacco which deposits amount to Kenya shillings seventy seven thousand four hundred and thirty four (Kshs.77,434/=) seven hundred and twelve thousand two hundred and sixty three (kshs.712,263/=) and five hundred thousand (Kshs.500,000/=) ninety nine thousand eight hundred and forty nine (Kshs.99,849) and seven hundred and twelve thousand two hundred and sixty three (Kshs.712,263/=) respectively.

2. The Application is supported by the grounds on its face together with the Supporting Affidavit sworn by Mr. Shadrack Mutie Muthiani,the 1st Applicant /Claimant and on behalf of the other Applicants/Claimants.

The same is dated 11. 2.2021 and filed on 12. 2.2021.

3. The Notice of motion is opposed by the Respondent’s Replying Affidavit dated 16. 4.2021 and filed on 27. 4.2021.

4. The Tribunal ordered that the application be disposed off by way of written submissions.

5. The Applicants/Claimants filed their written submissions on the 12. 5.2021 and the same are dated 12. 5.2021. The Respondent filed their written submissions on 8. 6.2021. The same are dated 27. 5.2021.

APPLICANTS/CLAIMANTS CASE

The gist of the applicant/ claimant application is that:

(i) They guaranteed a loan advanced to the 2nd Respondent by the 1st Respondent.

(ii) That the 2nd Respondent defaulted in repayment of the loan so guaranteed.

(iii) That recovery was made unlawfully and unprocedurally without first notifying them of the default.

(iv) That the 1st Respondent did not inform them of the exact amount of loan disbursed to the 2nd Respondent.

(v) That the 1st Respondent unlawfully, and unprocedurally sent, electronically, texts and email messages to the Applicants requiring payments and highlighting the amounts it intended to recover from them.

RESPONDENT’S CASE

The gist of the Respondent’s case is whether:

(i) The loan totaling to Kshs.6,530,000/= was advanced to the 2nd Respondent and the same was guaranteed by the Applicants/Claimants and the 2nd Respondents salary and deposit savings.

(ii) The Applicants/Claimants were issued with notices of default of loan payment via SMS texts and emails.

(iii) That the exact loan amounts were captured in the loan Application and Agreement form which were duly executed by the Applicant/Claimant and the 2nd Respondent.

(iv) That it resulted to offsetting the defaulted amounts against the Applicant/Claimants after it had exploited all the other loan securities being the 2nd Respondent’s salary and her deposit savings.

ISSUES FOR DETERMINATION

After careful reading of the pleadings filed by all the parties, the following are the issues for consideration and determination

(i) Whether there was a default notice issued to the Applicant/Claimants.

(ii) Whether the Applicant/Claimants knew the exact loan amounts disbursed.

(iii) Whether the recovery was procedural and lawful.

(iv) Whether the Applicants/ Claimants knew the loan balances at the time of recovery.

Notice issued to the Applicant/Claimants and the above questions are very crucial in the determination of this Application. A notification of default is what puts the guarantors on notice that the loan they guaranteed is not performing and that the guarantor is not honouring the terms of the loan agreement. In other words, this is what informs of the status of the loan and serves as a warning that there is a lurking danger of recovery of the securities offered in this case deposits, shares and salaries.

In the instant case, the Applicants/Claimants are giving contradictory statements regarding notice of default issued to them by the 1st Respondent and the exact balances outstanding.

Its of note to observe that an admission of receipt of the said notices of default is expressly made vide grounds 2 and 3 on the face of the Notice of Motion. We note the same in extense ground 2.

Ground 2:

That on 15th September, 2020, the 1st Respondent vide text messages unlawfully and unprocedurally issued demand to the Applicants/Claimants requiring payments varying from Kshs.97,635/=to Kshs. 714,976/= from each applicant/claimant.

Ground 3:

That the 1st Respondent in a series of emails dated 16. 6.2020 to 18. 6.2020 forwarded to the Applicant/Claimants employer ……Kenya Limited a check off advise, which highlighted the amounts it intended to deduct from the salaries of the Applicants/Claimants monthly from the period of October 2020 until payment in full.

The above grounds make an express admission of receipt of text messages issued to demand payments of varying amounts. The second ground admits receipt of emails which highlighted the amounts the 1st Respondent intended to deduct.

However, the Applicant/Claimants erroneously describe the text messages as unlawful and unprocedural failing to take judicial notice of the new mode of litigation which is now of universal Application in our judiciary. To try to deny this is quite worrying.

In the circumstances therefore, through the admission made by the Applicant/Claimants of the receipt of default notices which clearly indicated the outstanding loan balances, this Tribunal concludes that the same was properly served and that the Applicant/Claimants were made aware of the full status of the loan. Their contention must therefore fail.

Regarding whether the Applicant/Claimants knew the exact amount of loan disbursed, we answer this by referring the Applicant/Claimants to the loan Application and Agreement form and personal loan Application and Agreement Form annexed to Replying Affidavit of 1st Respondent effecting the recovery process and that there was ….unprocedural or illegal about it. We agree with the rebuttals in the Replying Affidavit of the 1st Respondent that all the necessary notices were served and that the recovery process was done the way it was to be done.

The final matter for consideration is whether the Applicants have met the threshold to be granted an injunction.

We are guided by the old case of Giella -vs- Cassman Brown [1973]EA 358which laid down the threshold which must be met before an injunction is given:

(i) Whether there is a prima facie case with a probability of success.

(ii) Whether the applicant might suffer irreparable damage.

(iii) Balance of convenience.

The above threshold was buttressed in the case of Mrao Limited - vs- First American Bank of Kenya Limited [2003]eKLR which in the said forms, all the Applicant/Claimants appended their signatures and the same have not been challenged.

For instance, the 1st loan guaranteed was Kshs.5,700,000/= and the 2nd one was Kshs.830,000/= all totaling to a guaranteed loan of Kshs.6,530,000/= which the 1st Respondent sought to recover.

It is therefore in bad faith that the Applicant/Claimant can plead ignorance of such glaring facts.

On this ground, we find that the Applicant/Claimant are being insincere and therefore they should be discouraged by rejecting their assertion.

In whether the recovery was procedural and lawful, we have already made a finding that the 1st Respondent issued the necessary notices through SMS texts and emails notifying the Applicants/Claimants of the status of the loan performance, indicating the amounts to be recovered from them and these facts have been admitted by the Applicants/Claimants.

We therefore conclude that they followed the procedure in explained further what constitutes a prima facie case:

“ A prima facie case is more than an arguable case. It is not sufficient to raise issues. The evidence must show an infringement of a right and the probability of the applicant’s case which on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the later.”

From the above authorities , it is settled that for a party to establish a prima facie case, one must demonstrate the existence which has been infringed by the opposite party. That right should not in the imagination of a litigant. It must be demonstrable.

However, the question in the present case in whether the Applicant/Claimants have a prima face case and also whether they have demonstrated the infringement of any known right to warrant protection and redness by way of an injunction.

The Applicant/Claimants Application in majorly premised on the failure of the 1st Respondent to follow the laid down law and procedure in the recovery process.

However, although the matter of procedure and legality have been addressed in the preceding paragraphs herein above, it is only fair to state for the avoidance of doubt that the 1st Respondent has been able to demonstrate and prove through its Affidavit and annextures that the process of recovery was properly carried out.

This has further been fortified by the admissions made by the Applicants/Claimants in their pleadings. To this extent of admission, there is no prima facie case worthy of consideration by this tribunal.

The Tribunal therefore opines that since there is no prima facie case with any probability of success on account of admissions. The Applicants/Claimants stand to suffer no irreparable injury and as a result, the tribunal is in no doubt to warrant any decision on the balance of convenience.

In conclusion therefore, we find as follows:

1. That the 2nd Respondent applied for a 1st loan of Kshs. 5,700,000/= and thereafter a second loan of Kshs.830,000/= which were all guaranteed by the Applicants/Claimants. These loans were disbursed on the strength of these guarantees.

2. Thereafter, the 2nd Respondent defaulted in repayment and default notices of intention to recover were issued to the Applicants/Claimants electronically. The same were acknowledged by the Applicants/Claimants and thereafter recovery was effected.

The attempt by the Applicants/Claimants to deny the obvious neither endears them to the law nor to the facts on records.

We have carefully read and considered all the pleadings by both parties including their submissions and come to the inevitable conclusion that the Amended Notice of Motion dated 11. 2.2021 lacks merit and therefore the same is hereby dismissed with costs to the 1st Respondent.

3. Mention for Pre-trial directions on 9. 11. 2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 2ND DAY OF SEPTEMBER, 2021.

HON. B. KIMEMIA CHAIRPERSON SIGNED 2. 9.2021

HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 2. 9.2021

MR. GITONGA KAMITI MEMBER SIGNED 2. 9.2021

MR. B. AKUSALA MEMBER SIGNED 2. 9.2021

TRIBUNAL CLERK R. LEWERI

NO APPEARANCE FOR CLAIMANT

LUMBE HOLDING BRIEF FOR MUNENE FOR RESPONDENT.

HON. B. KIMEMIA CHAIRPERSON SIGNED 2. 9.2021