[2024] KECPT 907 (KLR)
The Tribunal found that the defendant had not denied owing the applicant his deposits and that the deduction of the guaranteed amount was unlawful, as there was no evidence that the society had pursued the principal debtor before targeting the guarantor. The fact that the principal debtor remained a member and held...
Source-derived case information.
- Citation
- [2024] KECPT 907 (KLR)
- Parties
- Applicant: John OCOMtieno Were; Respondent: Kisumu Airport Taxi Operators Savings Credit Cooperative Society Limited; Respondent: Cooperative Bank; Respondent: Safaricom Limited
- Court
- Cooperative Tribunal
- Jurisdiction
- Kenya
- Case Number
- Tribunal Case 620/E006 of 2021
- Procedural Posture
- Tribunal Claim / Judgment
- Outcome
- judgment for applicant
- Judges
- BM Kimemia, J. Mwatsama, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw, PO Aol
- Legal Topics
- Cooperative Society Deposits, Guarantor Liability, Member Withdrawal Rights, Refund of Shares
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
John OCOMtieno Were
Applicant
Kisumu Airport Taxi Operators Savings Credit Cooperative Society Limited
Respondent
Cooperative Bank
Respondent
Safaricom Limited
Respondent
Procedural Posture
Tribunal Claim / Judgment
Legal Issues
- 1 Whether the defendant is obligated to refund the plaintiff his deposits upon withdrawal of membership.
- 2 Whether deductions from the plaintiff's deposits to cover a guaranteed loan were lawful.
- 3 Whether the defendant's resolution to pay a reduced sum after the plaintiff's resignation is valid.
Ratio Decidendi
The Tribunal found that the defendant had not denied owing the applicant his deposits and that the deduction of the guaranteed amount was unlawful, as there was no evidence that the society had pursued the principal debtor before targeting the guarantor. The fact that the principal debtor remained a member and held office further undermined the justification for deducting the applicant's deposits. The Tribunal also held that the resolution to pay a reduced sum was invalid, as it was made after the applicant had resigned and without affording him a hearing. The Tribunal concluded that the applicant was entitled to a full refund of his deposits, and any further delay would amount to a...
Court Disposition
judgment for applicant
Orders
- The defendant shall pay the applicant Kshs. 227,247/=.
- Costs and interest of the suit are awarded to the applicant.
Full Case Text
Judgment text and source record
32 paragraphs
Were v Kisumu Airport Taxi Operators Savings Credit Cooperative Society Limited; Cooperative Bank & another (Garnishee) (Tribunal Case 620/E006 of 2021) [2024] KECPT 907 (KLR) (27 June 2024) (Judgment)
Neutral citation: [2024] KECPT 907 (KLR)
Republic of Kenya
In the Cooperative Tribunal
Tribunal Case 620/E006 of 2021
BM Kimemia, Chair, J. Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members
June 27, 2024
Between
John OCOMtieno Were
Claimant
and
Kisumu Airport Taxi Operators Savings Credit Cooperative Society Limited
Judgment debtor
and
Cooperative Bank
Garnishee
Safaricom Limited
Garnishee
(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- Membe)
Judgment
DIVISION - JUDGMENT OF THE TRIBUNAL 1. The Plaintiff was a member of the Defendant’s Society having joined around 6th February, 2013, till around 25th May, 2017 when he issued a notice in writing to withdraw his membership. As at the time of withdrawing his membership, his shares were totaling to Kshs. 227,247/=.
2. That sometimes around 17th December, 2018, the Defendant acknowledged having received the Withdrawal Notice and communicated to the Plaintiff that they had an Annual General Meeting as a society and passed a resolution to pay the Plaintiff a sum of Kshs. 49,234/= after some deductions, which was way more less than his deposits.
3. It is the Plaintiff’s position that the resolutions do not apply or affect him as they were passed when he had ceased to be a member of the Defendant’s society.
4. When the Defendant still did not pay him despite issuing them with a Demand Notice, the Plaintiff moved to court to recover his deposits of Kshs.277,247/=. The Defendant responded and agreed to owing the Plaintiff and further stated that they could only pay the plaintiff a sum of Kshs. 49,234/= as a result of many things which included mismanagement and mis appropriation of members funds to the tune of Kshs. 2,900,000/= which they first have to recover from the officials who mismanaged and misappropriated the societies funds.
5. At the trial, evidence was adduced by the Plaintiff which confirmed that he ceased to be a member of the Defendant society in 2017 and he is yet to be refunded his contributions. The Plaintiff also agreed to have guaranteed a member by the name of Clackson Achacha but to the tune of Kshs. 20,000/= and as at the time of tendering his resignation, he had not been informed of that member defaulting in their payments to service their loans.The Plaintiff also stated at the hearing that at the time he tendered his resignation as a member of the Defendant’s society, issues of misappropriation or mismanagement had not arisen.
6. The Plaintiff also stated on record that the member he had guaranteed, Clackson Achacha, was still a member of the Society and even served as the Treasurer of the Society after he had left and to deduct his deposits to pay his loan will in essence be swindling him.The Defendant, through their Chairperson Moses Sigonga, adduced evidence at the trial to confirm that the Plaintiff was their member and resigned in 2017 and that during the period of 2013-2017 there was mismanagement and misappropriation of finances and a party by the name of John Owenga had been surcharged and they were in the process of reclaiming Kshs. 2,800,000/= from him. Mr. Sigunga confirmed that they not refunded nor cleared the Claimant and once they get refunds from the surcharge of Mr. John Owenga, they will do so less the amount he guaranteed Clackson Achacha which to him was Kshs. 116,000/=
7. We have looked at the pleadings, the submissions and evidence adduced at the hearing and the only question remaining for determination is as to whether the Defendant should pay the Plaintiff his deposits and how much.SHOULD THE DEFENDANT PAY THE PLAINTIFF HIS DEPOSITS AND HOW MUCH?The beginning point is to admit that the Defendant has not denied owing the Plaintiff. According to the Defendant, they are willing to pay the Plaintiff how much he is owed, less the amount he had guaranteed Mr. Clackson Achacha which was deducted to service the loan Mr. Achacha had defaulted on.This in essence also call upon this tribunal to discuss briefly the role of a guarantor, and apply facts to law in this case and whether agree or disagree with the Defendant position.
8. In every numerous decisions this Tribunal has been consistent that a guarantors obligation is secondary and only comes to play when the Principal Debtor fails to pay or service their loan. That there must first be an attempt to pursue the Principal Debtor and only land on the guarantor after all avenues of compelling the Principal Debtor have failed or have been exhausted.That to abandon the Principal Debtor and viciously pursue the guarantor, is tantamount to allowing the Principal Debtor to benefit from their breaches.
9. In this particular case, no evidence has been adduced to show even at all that the Defendant did put some plan in action to pursue the amount they are owed and recover from Clackson Achacha as the Principle Debtor before going for the Plaintiff as a guarantor.This Tribunal finds it strange that at the time of deciding to deduct the Plaintiff’s deposits to pay for Clackson Achacha’s loan, the said Clackson Achacha was serving as the Treasurer of the Defendant. To allow such an action to stand will not only be bad for public policy and injustice, but will also send wrong communication or scare potential guarantors in the Cooperative sector. As such, we find the move illegal and unjust and overrule it as a Tribunal.
10. That dealt with, it is also important to note that by the time a resolution was passed to pay the Claimant a sum of Kshs. 49,234/= he had already resigned and ceased to be a member of the Defendant society. To mean, he could not even have had the opportunity to communicate what he thought of the decision. That decision cannot stand as it offends the constitution spirit and objective that parties should not be condemned unheardThe Claimant has waited from 2017, to be refunded his deposits and to make him wait any longer will be to delay justice.
DIVISION - FINAL ORDERSJudgment entered in favour of Claimant against Respondent for Kshs. 227,247/=.SUBPARA 1. The Statement of Claim dated 16th December, 2019 and filed on 4th August, 2021 succeeds.SUBPARA 2. The Defendant to pay the Plaintiff a sum of Kshs. 227,247/=.SUBPARA 3. Cost and interest of the suit awarded to the Plaintiff.
Judgmentsigned, dated and delivered virtually at Nairobi this 27th day of June, 2024. Hon. B. Kimemia Chairperson Signed 27. 6.2024Hon. J. Mwatsama Deputy Chairperson Signed 27. 6.2024Hon. Beatrice Sawe Member Signed 27. 6.2024Hon. Fridah Lotuiya Member Signed 27. 6.2024Hon. Philip Gichuki Member Signed 27. 6.2024Hon. Michael Chesikaw Member Signed 27. 6.2024Hon. Paul Aol Member Signed 27. 6.2024Tribunal Clerk JonahNo appearance by partiesJudgment delivered in absence of parties.Hon. J. Mwatsama Deputy Chairperson Signed 27. 6.2024