[2024] KECPT 1727 (KLR)

Wahome v Sheria Sacco Society Limited (Tribunal Case 2 (E002) of 2022) [2024] KECPT 1727 (KLR) (3 October 2024) (Ruling)

Neutral citation: [2024] KECPT 1727 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 2 (E002) of 2022

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

October 3, 2024

Between

Samuel Muthee Wahome

Claimant

and

Sheria Sacco Society Limited

Respondent

((Coram: Hon. B. Kimemia- chairperson, Hon. J. Mwatsama- Deputy chairperson, Hon. B. Sawe- Member, Hon. F. Lotuiya- Member, Hon.P. Gichuki- Member, Hon. M. Chesikaw- Member and Hon. P. Aol- Member.)

Ruling

1. This ruling dispenses with the Respondent’s Notice of Motion Application dated 18th December 2023 supported by an affidavit sworn by the one, Cornelius Kibet, the general Manager of the Respondent, and brought under Section 1A, 1B, and 3A, and 80 of the Civil Procedure Act Chapter 21 of Laws of Kenya, Order 45 Rule (1),(2), (3), order 51(1) of the Civil Procedure Rules and all other enabling provisions of the Law. The application seeks the following orders:1. That this Application be certified as urgent and service thereof be dispensed with in the first instance.2. That this Honourable court review its ruling delivered on 2nd March 2023 and set aside the restraining order issued with regard to the attachment of the shares of the claimant’s guarantors.3. That the Respondent be allowed to discharge its statutory obligation of instituting recovery measures through the guarantors for the loan defaulted by the Claimant.4. That the costs of the Application be provided for.

2. The Application is premised on the grounds on its face which are inter alia that: The Claimant being a member of the Respondent was granted a loan that was secured by salary, deposits & savings and guarantors. The Claimant paid the loan dutifully until he lost his job and now has no payslip. The Respondent sought to deduct the loan from guarantors, but the Claimant moved to this court to stop that move, and this court delivered a ruling to that effect on 2nd March 2023. The Applicants contend that this court made an erroneous oversight that the loan was guaranteed using the Claimant’s logbook, and land title deed. The Applicants aver that since the Claimant has no salary, and that his deposits have already been used to pay off some instalments, they are at the last resort which is the guarantors.

3. The Respondents filed a Replying Affidavit dated 11th March 2023. In their reply, the Respondents aver that the Applicant has not provided sufficient grounds under which the Tribunal can review its ruling and also that the guarantors will be condemned unheard because they have not been brought on board as interested parties. The Respondents also contend that there is no discovery of any new and important evidence nor evidence of any mistake on the part of the court. The Respondents also deponed that he has appealed to the ELRC which ordered for the computation of his terminal dues and that he will commit his terminal dues towards the settlement of this matter.

4. The Application was canvassed via written submissions and both parties filed their submissions.

5. In their submissions, the applicants noted that Section 80 of the Civil Procedure Act gives the court jurisdiction to review its judgments and rulings, especially so if there is an error on the face of it. They submitted that while the court was right in holding that the guarantors should only be attached once all avenues have been exhausted, the court made an error in finding that the Claimant’s logbook and title deed are part of the security to the Claimant’s debt.

6. The Respondents in their submissions, averred that the parties have not exhausted all relevant avenues before the attachment of the guarantors. They also submit that the guarantors are entitled to the ownership of their properties as this is a constitutional right.

Issues For Determination 7. The Application has presented the following issues for determination;i.Whether the applicant has satisfied the court to review its ruling delivered on 2nd March 2023 and set aside the restraining order issued with regard to the attachment of the shares of the Claimants guarantors?

Analysis 8. It is not in dispute that this court delivered a ruling on 2nd March 2023 restraining the Applicants from recovering the Claimant's loan from the guarantors. The Applicants have applied for a review on the basis that the Tribunal made an error apparent on the face of it.

9. Order 45 Rule 1 of the Civil Procedure Rules, 2010 provides : -45 Rule 1 (1) Any person considering himself aggrieved-a.by a decree or order from which an appeal is allowed, but from which no appeal has been preferred; orb.by a decree or order from which no appeal is hereby allowed, and who from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or the order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree or order, may apply for review of judgement to the court which passed the decree or made the order without unreasonable delay.”

10. From the above section, it can be understood that if the court made an error in its determination, that error can be a basis for review.

11. According to the Applicants, this Tribunal made an error by holding that the security for the loan accorded to the Claimant included a logbook to his motor vehicle and a title deed to his land. From the ruling, it is clear that this Tribunal made that finding. But we ask ourselves, did that in anyway led the court to decide the way it did? Is it a material error by this court? This question can only be answered by looking at the ratio of the decision. This court held that the Respondent ought to exhaust all avenues available for it before it deducts the defaulted amounts from the guarantors. The Respondent had already used the savings and deposits to offset the loan instalments. The salary is not an option anymore since the Claimant no longer in employment. The other remaining options according to the ruling would be the said logbook and the title of the Claimant’s land. It is clear from the Loan Application Form that the Claimant did not offer any motor vehicle or title to land as security for the loan. Therefore, we find that this is a material error that indeed influenced the decision of the court.

12. On the Respondent’s argument that overturning the ruling would lead to the guarantor’s being condemned unheard, this court would like to refer to the obligations of a guarantor as laid down by this Tribunal in its ruling delivered on 2nd March 2023 in this matter. In the Ruling, this Tribunal defined the obligations of a guarantor to come into force upon default of the principal debtor. The role of a guarantor is to step into shoes of the principal debtor and pay the debt to the extent they had guaranteed to pay. Therefore, the moment one signs up willingly as a guarantor, they have at the back of their mind the possibility that the debtor might default and that they will be called to make good on what they had guaranteed. Therefore, unless in situations where the contract of guarantee is disputed, there is no need of further hearing before the guarantors are made to bear the obligations they signed themselves to bear.

13. The upshot of the foregoing is that we find the Applicant’s Notice of Motion dated 18th December 2023 merited and we order as followsi.The restraining order issued with regard to the attachment of the shares of the Claimant’s guarantors is hereby set aside.ii.The costs of this application to be on the cause.iii.Pre-trial direction on 3. 2.2025.

RULING 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 MutaiWayala advocate for the Claimant/RespondentAriga advocate for the Respondent/ApplicantHon. J. Mwatsama Deputy Chairperson Signed 3. 10. 2024