[2020] KECPT 89 (KLR)

REPUBLIC KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

C.T.C. NO.407 OF 2018

WYCLIFFE SHIVACHI AMUDAVI.............................................CLAIMANT

VERSUS

INVEST AND GROW SACCO LTD.....................................RESPONDENT

JUDGMENT

The Claimant has moved the Tribunal, Vide the Statement of Claim dated 8. 8.2018 seeking for the following reliefs:

(a) An order that the Respondent does refund him Kshs.320,000. 00 being the shares wrongfully and illegally debited from his account No.xxx-xxxxxxxx-00;

(b) An order that the Respondent does refund the Claimant the sum of Kshs.160,000. 00being the dividend, due but not paid to him from the year, 2015;

(c) General damages;

(d) Interest and costs.

Accompanying the claim is the Claimant’s Witness Statement filed on 24. 8.2018 and his list and bundle of documents filed on 8. 8.2018. The Claimant appeared in the Tribunal to testify, adopt the Witness Statement and produce the said documents on 13. 1.2020.

It is the Claimant’s case that at all times material to the suit, he was an employee of the Teachers Service Commission (TSC). That he was also a member of the Respondent. He avers that his relationship with the Respondent started encountering challenges in the year, 2014. He avers that when he could not resolve the same, he moved the Tribunal for injunctive reliefs under CTC.No.10/2016. That the said claim was concluded in the year, 2017 wherein the Tribunal held that the Respondent had violated the loan policy and consequently awarded him costs.

That his complaint in this suit is that despite the Ruling of 5. 12. 2017, the Respondent went ahead and unlawfully withdraw his shares in excess of Kshs.320,000. 00. That further, the Respondent has since 2015, failed and/or neglected to remit his dividends. He further accuses it of unilaterally reducing his monthly contributions from Kshs.2000/= to Kshs.1,350. 000/=.

The Claimant reiterated these averments when he appeared to testify on 13. 1.2020. During cross examination, the Claimant was referred to his loan statement (Exhibit 3 (a)). He confirmed that the statement showed that he had defaulted in repaying the loan.

Upon further cross examination, he clarified that the loan statement showed that he had defaulted in repaying the loan because he was attached to recover other loans. That the said loans were from faulty guarantorship. That he has pursued the matter criminally. That he did not guarantee the persons the Respondent alleges to have guaranteed.

That as for his loan of Kshs.360,000/= the Claimant avers that he applied for it but before he could receive the money, his account was frozen. That when he went to complain he was informed that there was a computer error. That the same incident happened again on 13. 12. 2014. That on January 9/2015, he also received another alert that his account had been frozen. That when he went back to complaint, he was informed that the issue would be sorted out by the CEO. That the CEO told him to apply for Kshs.800,000/= to clear the outstanding loan.

As regards his shares, the Claimant contend that the Respondent utilized it without notifying him. That he had capitalized his shares.

Respondent’s Case

The Respondent has opposed the claim by filing a Statement of Defence dated 4. 9.2018. It also filed a list and bundle of documents 13. 11. 2019. It also called one witness – Joseph Churchil, its Credit Recovery Officer to testify on 13. 1.2020.

It is the Respondent’s case that the Claimant failed to service his loans thus resulting in default. That it did not withdraw his shares worth Kshs.320,000/=. That his claim is Res judicata in view of CTC.No. 10/2016.

During his testimony DW-1 Joseph Churchil stated that the Claimant was granted a loan of Kshs.360,000/= on 15. 12. 2014. That subsequently, he withdrew the said loan as follows:

(a) 18. 12. 14- Kshs.20,000

(b) 22. 12. 14- Kshs.25,000

(c) 25. 12. 14- Kshs. 5,000

(d) 1. 1.2015- Kshs. 5,000

Further, he stated that the Claimant withdrew a sum of Kshs.110,000. 00/=.

That the Claimant repaid the loan until April, 2016 when he began defaulting. That the loan was recovered from his shares. That on 18. 4.15, the Claimant was paid dividends of Kshs.27,187. That again on 21. 4.2016 he was paid dividends of Kshs.34,386. That in view of this, it is not therefore true that he was not paid the same. That dividends stopped flowing to him from the date his shares were utilized to repay the loan.

As regards the claim of fictitious loans, DW-1 stated that the Claimant has not led evidence to prove his allegation. That he guaranteed loan for people who defaulted in repaying their loans.

Upon cross examination, DW-1 stated that the Respondent advanced the Claimant a sum of Kshs.360,000/=. That the said loan would be recovered by way of monthly deduction from his salary. That the loan would be repaid in 48 monthly installments. That his salary was processed through the Respondent.

That once the loan was disbursed, it was recovered through the salary until April, 2016. From May 2016, salary flow through the account was no sufficient to pay interest and the loan. That most probably, the Claimant had committed his salary elsewhere. That as at April, 2016, the salary that came into his account was Kshs.5,621, yet the loan repayment was supposed to be Kshs.13,176. That as at April, 2016, the loan balance was Kshs.259,712. That the principal amount recovered from the shares plus interest was Kshs.259,710 and Kshs.44,115 respectively.

That at the time of recovering the outstanding loan from his shares, the Claimant was duly notified.

As regards the loan he guaranteed other people, the Respondent contend that the Loan Application forms for the said persons to have the Claimants details.

Written Submissions

At the close of their cases, the Tribunal issued directions for filing of written submissions. The Claimant filed his on 30. 1.2020 while the Respondent did so on 4. 3.2020.

Claimant’s Submissions

Vide these submissions, the Claimant reiterated the averments made above and further submitted that whilst he was dutifully servicing his loan of Kshs.360,000/=, the Respondent in May , 2016 froze his account thus prompting him to institute CTC. No. 10/2016.

That vide its Ruling delivered on 5. 12. 2017, the Tribunal held thus:

“ On 12. 6.2017, the parties were heard. It came out clearly after taking the Respondent’s evidence that no further deductions were being made, the entire loan had been paid off by April, 2016. That being the case, it was agreed that the only outstanding issue was which party was to bear costs of the suit”.

That the Tribunal went ahead to Rule thus:

“ The Respondents being the cause of the entire confusion, and irregular deductions will bear the costs of the suit. “

That subsequent to the Ruling, he did not take any loan. That the said decision of the Tribunal was never appealed against. The Claimant thus wonders why the Respondent took away his shares in 2018. That it is on this basis and on the strength of the decision of the Tribunal in CTC. No. 10/ 2016 that the Claimant wants the orders sought to be granted.

Respondent’s Submissions

Vide its written submissions the Respondent reiterated the averments in its pleadings and the evidence of DW-1 Joseph Churchil. Further, the Respondent contended that it became evident that the Claimant took a loan of Kshs.360,000/= on 15. 12. 14 and later on defaulted in repaying it. That upon default, it issued all the requisite Notices before recovering the loan from his shares.

Issues for determination

This claim has presented the following issues for determination :

(a) Whether this suit is Res Judicata in view of CTC. No. 10/2016;

(b) Whether the Tribunal in CTC. No 10/2016 made conclusive findings of fact as regards the Claimants indebtedness to the Respondent;

(c) Whether the Claimant has made out a proper case for refund of shares amounting to Kshs.320,000/= and dividends of Kshs.160,000/=; and

(d) Who should meet the costs of the suit.

Res Judicata

Though the Respondent did not dwell on this issue during hearing of the claim and even at submission stage, we note that he raised it at paragraph 6 of its Statement of Response. The question that begs then is whether the Instant Claim is res judicata.

Section 7 of the Civil Procedure Act (Cap 21) Laws of Kenya defines res judicata to mean.

“ No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally determined by the court.”

We have perused the Statement of Claim in CTC. No. 10 of 2016. The Claimant is seeking for an order of injunction barring the Respondent from deducting loan from his entire salary and directing it to deduct the same at normal rates. The claim in the instant suit relate to refund of shares and payment of dividends. Clearly, the issues in these two suits are different.

Secondly, there is nothing on record to show that the said CTC. No. 10/2016 was heard and determined on merits. What has only been furnished to us is a Ruling delivered on 5. 12. 17. This cannot be said to have disposed of the suit. We thus find that the instant claim is not Res Judicata.

Whether the Tribunal in CTC. No. 10/2016 determined the issue of the Claimant’s indebtedness.

At paragraphs 8 and 9 of his written submissions, the Claimant suggests that the Tribunal in CTC. No. 10/2016 determined the issue of his indebtness to the Respondent and that it was therefore wrong for the Claimant to deduct his shares in the year 2018.

Firstly, we note that the Claimant has not exhibited a Judgment emanating from CTC. No. 10/2016 to augment his contention that the issue of indebtness has been conclusively determined. What the Claimant has annexed is a Ruling delivered on 5. 12. 2017. At paragraph 3 of the said Ruling, the Tribunal found that the entire loan had been paid off by April, 2016. It then went ahead to rule on the issue of costs. The question that comes to mind is which loan was the Tribunal referring to? Secondly, the decision was made at an interlocutory stage. What this meant is that the orders of the Tribunal were to subsist to until the hearing and determination of the main claim. Now that the Claimant did not lead evidence to show that the said claim was heard and determined on merits, we find that the Ruling of the Tribunal in the said Claim is not binding on this Tribunal.

Refund of shares and dividends

This issue forms the crux of this case. The question arises as to whether the Respondent illegally withdrew the Claimants shares amounting to Kshs.320,000. 00. Further, the question abound as to whether the Respondent refused to pay the Claimant dividends from the year, 2015. The Claimant confirms having borrowed a loan of Kshs.320. 000. 00 in 2014. That it was a term of the said loan that he would be paying Kshs.7500/= per month. That the same would be recovered from his salary as his salary was processed through the Respondent. That the Respondent regularly recovered the loan until May, 2016 when it froze his accounts. That when this happened, he instituted CTC. No. 10/2016 and the Tribunal ruled that he did not have any other loan. That he was perplexed to note that the Respondent went ahead to withdraw his shares to allegedly set off the loan.

On its part, the Respondent contend that the Claimant took the loan and later defaulted in repaying it.

We have perused the Claimants loan statement filed by the Respondent on 19. 1.2019. It shows that the Claimant received a loan of Kshs.360,000/=.

On 12. 5.2014, the said statement shows repayments from 1. 2.2015 until 27. 4.2016. That as at this date, that is, 27. 4.2016, the outstanding loan was Kshs.259,712. 70. There is nothing on record to demonstrate if the said loan was ever repaid.

We note that the Claimant contend that as at April, 2014, he had completed repaying the loan. Apart from stating so, he did not lead evidence to confirm this. The loan statement produced by the Respondent confirms this his loan standing as at 27. 4.2016.

We thus find that in the absence of proof of repayment of the loan, the Claimant was in arrears and the Respondent was legally bound to apply his shares to recover the same.

As regards the procedure for recovery of the shares, the Claimant contend that the Respondent did not comply with the provision of Rule 30 of the Co-operative Society Rules. He contends that the said Rule required the Respondent to give a mandatory 14 days’ Notice before exercising its rights under section 34 of the Co-operative Societies Act (Cap 490) Laws of Kenya. He then cited the case of Republic - versus- Legal Education & Another, Exparte Sabiba Kassamia & Another[2008] eKLR to buttress the importance of Service of Notice.

During his testimony, DW-1 stated that the requisite Notice was issued to the Claimant but did not produce the same before us. The question that arises is whether the Respondent violated Rule 30 of the Co-operative Society Rules and if so, whether the same is fatal to the Respondent’s case.

Whilst the Respondent confirmed that it did not produce the requisite Notice in court, DW-1 stated that indeed the said Notice was issued. We thus find that whilst the Respondents state so, it did not lead evidence to buttress it. It therefore follows that as we write this Judgment, there is nothing on record to show that Rule 30 was complied with. The question then is whether, in the absence of the said notice, the Claimant’s claim should succeed. Our answer is in the negative. It is an established fact that as at 27. 4.16, the Claimant was in arrears to the tune of Kshs.259,712. 70. The said arrears (plus interest) was due and that failure to exhibit documents confirming proof of issuance of Notice of utility of the shares is not fatal to the suit.

Payment of dividends

The Claimant claims payment of dividends for the period beginning May, 2015. He has tabulated it at Kshs.160,000. The Respondent has opposed the same and averred that the Claimant was paid dividends amounting to Kshs.27,187/= on 18. 4.2015 and Kshs.34,386/= on 21. 4.2016. That dividends stopped flowing to him from the date his shares were applied towards settlement of the loan arrears.

We have considered the material before us. We note that the Claimant only pleaded a figure of Kshs.160,000/= as dividends for the year, 2015 onwards without specifically proving it. We have flipped through all the documents on record and fail to find any which proves this figure. If the absence of prove of accrual of the said dividends, the claim falls float on its foot. It is therefore disallowed.

Conclusion

The upshot of the foregoing is that we find that the Claimant has not proved his case on a balance of probability and hereby dismiss it with no orders as to costs.

Judgment dated, signed and delivered in accordance with the directions given by the Hon. Chief Justice on 15. 3.2020, this 9th day of April, 2020.

Prepared by Hon. B.Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent of the parties, the final orders to be delivered by email, as accordance to the prevailing measures during the covid-19.

Hon. B. Kimemia Chairman Signed 9. 4.2020

Hon. F. Terer Deputy Chairman Signed 9. 4.2020

P. Gichuki Member Signed 9. 4.2020