REPUBLIC OF KENYA
IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI
TRIBUNAL CASE NO. 241 OF 2016
ELIMU SACCO SOC. LTD.................................................................CLAIMANT
VERSUS
ESTHER MUGITA..........................................................................RESPONDENT
JUDGMENT
The Claimant has moved the Tribunal vide the Plaint dated 28/4/2016 seeking for the following reliefs;
a. Total Loan amount of Kshs. 545,460.05;
b. Total Interest amount of Kshs. 100,135.52;
c. Interest at Court rates on (a) above from the date of filling to the date of payment in full; and
d. Costs of this suit.
It is the Claimant’s case that the Respondent is one of its members and that in the course of time, she applied and was granted different categories of loans as follows;-
a. On 6/9/2007 a Development loan of Kshs. 530,000.00 repayable in 48 months;
b. On 11/4/208, Special Development Loan of Kshs. 375,000.00;
c. On 17/4/2009 – Kshs. 200,000.00;
d. On 21/7/2010 – Fosa Loan of Kshs. 300,000.00; and
e. On 14/1/2011 – Fosa Loan of Kshs. 200, 000.00.
The Claimant contend that the Respondent has neglected and/or refused to repay the said loans as agreed and that as at now, she is indebted to it to the fund of Kshs. 645,595.57. That it therefore wants judgment to be entered against her for the amount.
The matter came up for hearing on 6/2/2018 and 8/6/2018 where the Claimant called three (3) witnesses to testify namely; Angela Nanjoo (CW-1), Charles Obungu (CW-2), and Anastacia Anyango Apondi (CW-3).
Vide her testimony, CW-1 adopted her witness statement signed by herself on 28/4/2016. She confirmed that the Respondent applied for and was granted the foregoing loans and that subsequently she defaulted in their repayment. That efforts to recover that said monies from her became futile. That they wrote to her guarantor, employer and the Ministry of Co-operatives but nothing was forthcoming.
During Cross-Examination by Mr. Mtange, Advocate for the Respondent, CW- 1 stated that paragraph 6 of the statement of Claim shows that the loan advanced to the Respondents was Kshs. 375,000.00 whilst in the statement of account, the same is indicated as Kshs. 200,000.00. That the loan form appearing at page 34 of the statement of claim show that the loan approved was Kshs. 300,000.00 but that the said figure has been cancelled and a new figure of Kshs.500,000.00 inserted. That the loan form was amended to reflect Kshs. 500,000.00.
On his part, CW-2, Charles Obunga adopted his witness statement dated 28/6/2016 and stated that he was employed by the Claimant as a clerk in the year, 1987. That he has risen through the ranks and that at the moment, he is the Claimants loan Manager.
That as regards the initial loan of Kshs. 530,000.00, CW- 2 stated that the same was disbursed and is reflected in the Respondent’s statement of account appearing of page 28 of the Claimant’s bundle of documents filed on 20/5/2016.
That in April, 2008, the Respondent applied for a loan of Kshs. 500,000 to purchase Safaricom IPO Shares. That the said loan was disbursed in two (2) instalments. That the 1st instalment was for Kshs. 300,000 while the 2nd one was for Kshs. 200,000.00. That the loan Application forms appears at pages 34-37 of the initial bundle of documents. That one Application form was used for both loans. That the General Manager adjusted the figure from Kshs. 300,000.00 to Kshs. 500,000.00. That he countersigned against the cancellation.
On her part, CW-3, Anastacia Anyango adopted her witness statement dated 28/4/2016 and stated that the Respondent applied and was granted two Fosa Loans. That the first loan was for Kshs. 375,000.00 and the second one was Kshs. 200,000.00 granted in the year, 2011.
Respondent’s Case
The Respondent has opposed the suit by filing a statement of Defence dated 20/7/2016 and documents filed as follows;-
a. Initial list of documents dated 20/7/2016 and filed on 22/7/2016; and
b. Supplementary list of documents dated 18/1/2018 and filed on even date.
The Respondent aid not appear in court to testify but her defence and list and bundle of documents were adopted as her evidence on 2/9/2019.
Vide her statement of Defence, the Respondent denies ever being granted a special development loan of Kshs. 375,000.00 on 11/4/2008 and contend that vide her loan Application form, she applied for a loan of Kshs. 300,000.00. That the said form had been altered to reflect a sum of Kshs. 500,000.00.
That she never received a loan of Kshs. 200,000.00 on 17/4/2009. That the Claimant perpetuated fraud as follows;
a. Distortion of the loan Application form for Kshs. 300,000.00 by inserting figure of Kshs. 500,000.00;
b. Alleging that she received a sum of Ksh. 200,000.00 on 17/4/2009 while she did not.
The Respondent contend that she is still in employment and that the Claimant continues to deduct monies from her payslip. That the figures presented by the Claimant are grossly distorted, misleading and have been presented without the Claimant undertaking a true reconciliation of her account.
The Respondent further contend that her repayment for the loan was effected by way of deduction from her payslip but often times, she repaid the same by way of cash but the Claimant has omitted to reflect the same cash in her account.
The Respondent has also accused the Claimant of taking away her share of Kshs. 244,155.00 without notifying her.
Written Submissions
Vide the direction given on 2/9/2020, parties filed their final submissions as follows;
a. Initial Claimant Submissions filed on 9/10/2019;
b. Supplementary Submissions filed on 18/5/2020; and
c. Respondent on 7/11/2019.
Claimant’s Submission
Vide the Initial Submission filed on 9/10/2019, the Claimant submit thus;
That it advanced the Respondent diverse loans as follows;
a. Development Loan of Kshs. 530,000.00- disbursed on 6/9/2007; and
b. A Special Loan of Kshs. 500,000.00 – disbursed in two phases as follows;
i) Kshs. 300,000.00 on 11/4/2008;
ii) Kshs. 200,000.00 on 17/4/2008; and
iii) Two Fosa Advance loans amounting to Kshs. 575,000.00 broken into Kshs. 375,000 and Kshs. 200,000 disbursed on 21/7/2010 and 14/1/2011 respectively.
That as at the close of its case on 20/3/2009, the Respondent owed it a sum of Kshs. 507,888 on the Principal amount and Kshs. 480,811.75 on accumulated interest broken down as follows;
Development Loan
i) Balance on the principle amount – Ksh. 49,750
ii) Balance on the accumulated interest – Ksh. 79,458.35
Special Loan
i) Balance on Principal amount – Ksh. 39,122
ii) Balance on accumulated interest – Ksh. 42, 690.
Fosa Advance
i) Balance on the Principles amount – Ksh. 419,016
ii) Balance on the accumulated interest – Ksh. 358,663.
That the initial loan of Kshs. 530, 000.00 was approved on 6/9/2007 as per the loan Application form appearing at pages 30-33 in its bundle of documents. That the said loan was subsequently disbursed as shown at page 28 of the said documents.
That as regards the second loan, the Special loan of Ksh. 500,000, the Claimant contended that the Respondent was granted the said loan to facilitate her acquisition of shares in the Safaricom IPO listing.
That an initial sum of Ksh. 300,000 was granted on 11/4/2008 as shown as page 24 of the Claimant’s bundle of documents.
That due to excitement and confidence surrounding Safaricom IPO Shares , the Claimant increased the Respondent’s loan facility to interested Board Members to enable them acquire more shares. That it was on this basis that the Respondent applied and was granted Ksh. 200,000 on 17/4/208. That these loans are captured at page 24 of the Claimants bundle of documents. That the said information is also captured in the loan Application form appearing at pages 34-37 of the said bundle. That the topped up amount was superimposed on the loan Application form dated 11/4/2008 since they were part of the same transaction. That the said super-imposition was counter-signed on top of the said amount. That the disbursement if the two loans appears at page 24 of the Claimant’s bundle of documents.
As regards the Fosa loan, the Claimant submits that on 21/7/2010, the Respondent applied and was granted a Fosa loan if Kshs. 375,000.00. That the same appears at in the loan Application form appearing at page 53 if the bundle. That the loan was disbursed on even date as evidenced by the statement appearing at page 18 of the bundle of documents.
That the Claimant further applied for another Fosa loan of Kshs. 200,000.00 on 13/1/2011 and that the said amount was disbursed on 14/1/2011. That the loan Application form for the said loan appears at page 52 of the bundle whilst statement of accounts confirming it appears of page 15 of the bundle.
On the basis of the foregoing, the Claimant contend that the Respondent indeed applied and was granted the said loans. That upon receipt he has not fully repaid the same.
As regards the conduct of the Respondent’s case, the Claimant submit that by failing to avail her witness for cross- examination, the Respondent’s case remain as substantiated. It relied on the case of Stephen Gachan Githaiga & Another –vs- AG [2015] eKLR.
Respondent’s Submissions
Vide her Written Submission filed on 7/11/2019, the Respondent contend thus;
That the Plaint (Claim) as filed is poorly drafted, inaccurate in its material particulars mathematically unsound as shown below:
a. That the loan of Kshs. 530,000.00 is shown in the payslip as being deducted from the Respondent.
b. That the outstanding balalnce for the said loan is Kshs. 62,138.55 and not Kshs. 68,072.00 as shown in the statement of Claim.
That as regards the special loan of Kshs. 375,000 and Ksh. 200,000 respectively, the statement of account produced by the Claimant indicate that the loan granted was Kshs. 300,000 and not Kshs. 375,000.00. That the loan Application form appearing at pages 34-37 of the Claimants bundle of documents confirm this fact.
That there is no evidence that the loan of Kshs. 200,000.00 was granted on 17/4/2007. That appears at page 24 of the bundle is a loan of Kshs. 200,000 granted on 17/4/2008. That the Claimant has not produced the loan Application form for the said loan. That it follows therefore that the outstanding amount of Kshs. 52,122 and interest of Kshs. 37,997 is premised on a wrong amount (Kshs. 375,000) as the amount disbursed was Kshs. 300,000.00.
That as regards the Fosa loan, the Respondent contend that the statement of claim reads Kshs. 375,000 whilst the figures show Kshs. 300,000.
That the letter of offer for the said loans appearing at page 52 and 53 of the bundle do not show the rate of interest. That the demand letters appearing at pages 38-51 of the Claimant’s bundle speak to different amount.
That the Claimant deducted the sum of Kshs. 244,155 in shares belonging to her but the same is not reflected in the statements provided. That it follows therefore that the Claimant has concealed information in the statements of account and that the evidence given at variance with the claim as filed.
Claimant’s Supplementary Submissions
Vide the supplementary Submissions filed on 18/5/2020, the Claimant responded to the Respondent’s submissions dated 7/11/19 as follows:
That as regards variance between pleadings, documentary evidence and the testimony of witnesses, though it may be the case that there exist typographical errors, the same cannot warrant the Tribunal to drive the Claimant from the leaf of justice. That the Claimant meticulously, through it’s witnesses, took the Tribunal through the number and explained each aspect of the loans advanced to the Respondent. That in terms of Section 3A of the Civil Procedure Act, (Cap 21) Laws of Kenya, the Tribunal is invited to interpart the law in a manner that facilitates the just, expeditious and proportionate and affordable resolution of Eivil disputes.
That the Claimant did indeed admit that the Respondent was making partial payment albeit to way below the expected amounts.
Issues for Determination
We have framed the following issues for determination:
a. Whether there exist variance in the figures contained in the Claimant’s pleadings, documentary evidence and oral evidence;
b. If the answer in (a) above is in the affirmative, whether the same is fatal to the Claimant’s case;
c. Whether the Respondent’s failure to produce a witness to support her case is fatal to her case;
d. Whether the Respondent applied and was granted loan facilities by the Claimant;
e. Whether the Respondent has defaulted in repayment of the said loan and if the answer is in the affirmative, to what extent; and
f. What remedies are available in the circumstances.
Variance of figures
The Respondent has put forth the case that the instant suit is bereft of material particulars as it is poorly drafted, inaccurate and mathematically unsound. That recovery of the 1st loan of Kshs. 530,000.00 is ongoing and that Contrary to the Claimant’s contention that the outstanding amount is Kshs. 68,072, the correct position is that the outstanding amount is Kshs. 62,138.55.
That as regards the loan of Kshs 375,000, the Respondent contend that the loan statements produced by the Claimant show that the loan granted was KSHS. 300,000 and not Kshs. 375,000.00.
That as regards, the loan of Kshs. 200,000.00, there is no evidence that the same was granted on 17/4/2009. That what appears at page 24 of the bundle of documents a loan granted on 17/4/2008.
In a rejoinder, the Claimant contend that it has meticulously proven its case to the required standard. That whilst it was admitted that there were typographical errors, the same is not fatal to the claim.
We have carefully considered the objection raised by the Respondent herein. We wish to draw the attention of the Provisions of Rule 4 of the Co-operative Society (practice and Procedure Rules) which provide thus:
“ The Tribunal shall have poor and discretion to decide all matters before it with due speed and dispatch without under regard to techniatives of proceedings”.
What we gather from the Respondent’s objection is that the figures in the statement of Claim (plaint) should marry and /or correlate with those in documentary evidence and oral evidence. Simply put, the Respondent is questioning the form rather that the substance of the claim. Whilst it may be the case that there are inconsistences in the figures presented in the statement of claim with the evidence adduced at the hearing, we find that the same is not fatal to the Claimant’s case. The Respondent had an opportunity at the hearing to cross-examine witnesses so as to ascertain the true and/or correct figures. To this extend we find the objection unmerited and hereby overrule it.
Failure of the Respondent to call witnesses to testify
It is the Claimant’s case that the Respondent’s failure to call witnesses to testify renders its defence unsubstantiated. It relied on the case of Sephen –Gachan Githaiga & another –vs- AG [2015] eKLR to support this contention.
In response to this contention, the Respondent simply stated at paragraph 26 of her Written Submission, that the evidence contained in her list of documents filed on 22/7/2018 together with the ones contained in her supplementary list of documents filed on 18/1/2019 should not be wished away.
Whilst this Tribunal admitted the Respondent’s witness statements dated 20/7/2016 and list of documents dated 20/7/2016 and supplementary list of documents dated 18/1/19 on 2/9/2019, the prevailing legal position is that the said evidence was not subjected to cross-examination. We thus agree with the decision of the court in the Stephen Gachan case above that such evidence remain unsubstantiated. Likewise we agree with the decision of the court in the case of Interchemie EA Limited –vs- Nakuru Veterinary Centre Ltd that in the absence of witnesses on the part of the Defendant, the plaintiff’s case remain uncontroverted.
The upshot of the foregoing therefore is that by failing to produce witnesses, the evidence contained in the Respondent’s witness statement dated 20/7/2016 and her list of documents of even date and supplementary list of documents dated 18/1/19 remain unsubstantiated and we regard them as such.
Whether the Respondent applied and was granted the loan facilities claimed by the Claimant
It is the Claimant’s case that the Respondent applied and was granted loan as follows:
a. Development loan of Ksh. 530,000 – disbursed on 6/9/2007;
b. Special Development loan of Ksh. 300,000 for purchase of Safaricom IPO Shares on 11/4/2008;
c. Special Development Loan for further purchase of Safaricom IPO Share of Kshs. 200,000 on 17/4/2009;
d. Fosa Loan of Kshs. 375,000 on 21/7/2010; and
e. Fosa Loan of Kshs. 200,000 on 14/1/2011.
Whilst the Respondent has acknowledged having applied for the Development loan of Kshs. 530,000 and Fosa loan, she has vehemently denied ever applying for the special development loan for the purchase of Safaricom IPO Shares. It is thus our finding that there is no dispute about disbursement of these two (2) loans i.e the Development loan of Kshs. 530,000.00 and the Fosa loan of Kshs. 500,000.00. The bone of contention is in the Special Development loan of Kshs. 375,000.00 and Kshs. 200,000.00 respectively. The Respondent has denied ever applying for this loan and has accused the Claimant of fraud. According to her, the Claimant distorted the loan Application form for the initial loan applied of Kshs. 300,000.00 by increasing it to Kshs. 500,000.00.
On its part, the Claimant contend that the Respondent was granted the said loan in two tranches. That the initial loan of Kshs. 300,000 was granted on 11/4/2008. That the disbursement of the said loan is reflected in the statement of account appearing at page 24 of the bundle of documents contained in the list filed on 20/5/2016.
That as a result of excitement surrounding Safaricom IPO Shares offer, the Claimant increased the loan facility for the purchase of the said shares. That it is on this basis that the Respondent was advanced the sum of Kshs. 200,000 on 17/4/2008.
We have perused the statement of account appearing at page 24 of the Claimants bundle of documents filed on 20/5/2020. Towards the bottom of the said statement, there are entries showing a credit of two amounts in the Claimants account. The first amount is for Kshs. 300,000 was credited was on 11/4/2008. The second one is a credit entry of Kshs. 200,000.00 done on 17/4/2008. On this basis therefore, we are satisfied that the Claimant advanced the Respondent the said loan for the purchase of Safaricom IPO Shares.
We have perused the loan Application form appearing at pages 34-37 of the Claimant’s bundle of documents referred to above. At page 34, it is shown that the initial loan applied is Kshs, 300,000.00. It is also shown that the said figure was cancelled and a new figure of Kshs. 500,000 inserted. That above the amendment, there is a signature supporting (the amendment). It is the Respondents case that the actual and/or correct figure is Kshs. 300,000.00. That the Claimant introduced the figure of Kshs. 200,000 out of fraud.
We have considered the Respondent’s contention, vis-a-vis the Claimant’s explanation. As we have observed above, the Respondent received a sum of Kshs. 500,000.00 between 11/4/2008 and 17/4/2008. This is within the period the loan Application form being disputed was executed. Owing to the fact that the figure of Kshs. 500,000 reflected and or hit the Respondent’s account on the said dates, we agree with the Claimant that the Respondent indeed applied for the two (2) Safaricom IPO loans and that only one (1) loan Application form was used. The initial amount was Kshs. 300,000.00 and that the second amount of Kshs. 200,000 was awarded by way of an amendment of the loan application form. We are also satisfied that the amendment was properly done as it is countersigned. The Respondent’s claim and/ or allegation of fraud is therefore unfounded.
As regards, the Fosa loans of Kshs. 375,000 and Kshs. 200,000.00, we have perused the loan Application form appearing at pages 52 and 53 of the Claimants bundle of documents filed on 20/5/2016. The said forms confirm that indeed the Respondent applied for the said loans. The form appearing at page 52 is for Kshs. 200,000 while the one appearing at page 53 is for Kshs. 375,000.00. The question arises as to whether the said loans were ever disbursed. We have perused the loan statement of account appearing at page 15 of the Claimant’s initial bundle of documents. It shows a credit entry of Kshs. 200,000 done on 14/1/2011. We have also perused the loan statements of account appearing at page 18 of the said bundle, it shows a credit entry of Kshs. 375,000 on 21/7/2010. These entries answer the question in the affirmative. We thus find that the Respondent indeed applied for and received the said Fosa loans.
The upshot of the foregoing is that the Respondent applied for and was granted the said loan facilities.
Whether the Respondent defaulted in repayment of the said loans.
It is the Claimant’s case that upon receiving the said loans, the Respondent defaulted in repaying. That at some instances, she made monthly repayments at a rate way below the agreed rates. That it made several attempts to remind the Respondent to comply with the fees of the loan to no avail. That it even enlisted the help of her employer and the Commissioner of Co-operative Development to no avail.
We have perused the Respondent’s statement of account contained in the Claimant’s supplementary list of documents dated 6/2/2018. It shows the outstanding loans as at 30/10/17 as follows;-
Development Loan
a. Balance on Principal amount - Kshs. 49,750
b. Balance on interest – Kshs. 79,458.75
Special Loan
a. Balance on Principal amount – Kshs. 39,122
b. Balance on accumulated interest – Kshs. 42, 690
Fosa Loan
a. Balance on Principal amount – Kshs. 419, 016
b. Balance on accumulated interest – Kshs. 358, 663
In terms of the respective loan Application forms, the above loans were to be repaid as follows;
a. Development Loan – within 48 months;
b. Special Development Loan – within 24 months and
c. Fosa Loan – within 24 months.
It thus follow that the Development loan of Kshs. 530, 000, ought to have been repaid on or before 6/9/2009. That the Special Development loan ought to have been repaid on or before 21/7/2012 and 14/1/2013 respectively. As at 30/10/2017, the said loans were in arrears. It is thus our finding that the Respondent has defaulted in repayment of the said loans.
Remedies
In view of our findings above, the question abound as to the nature of remedies to be granted. In the present claim, the Claimant has pleaded for a sum of Kshs. 645, 595.57. As per the loan account statement dated 30/10/2017, the outstanding loan and interest amount to Kshs. 988, 699.75.
On the other hand the Respondent contends that even in the pending of these proceedings the Claimant has continued to make deduction from her salary, she has produced payslips to confirm this fact.
We have perused the said payslips contained in the Respondent’s bundle of documents dated 18/1/2018, they confirm the Respondents contention. What this portends to the case at hand therefore is that whilst we are satisfied that the Respondent has defaulted in repayment of the above loans, and that whilst it may have been the case that the total amount of outstanding loan together with interest may have been Ksh. 645,695.57, the said figure must have changed either way as there is evidence that the Claimant continued to effect monthly deductions.
Conclusion
The upshot of the foregoing is that the Claimant has proved its case on a balance of probability as follows;
1. That it advanced the Respondent three(3) sets of loans as follows:
a. Development loan of Kshs. 530,000. 00 – disbursed on 6/9/2007;
b. Special Development loan for purchase of Safaricom IPO Shares as follows:
i) Kshs. 300, 000 – disbursed on 11/4/2008; and
ii) Kshs. 200, 000 – disbursed on 17/4/2009.
c. Fosa Loan disbursed as follows;
i) Kshs. 375,000 on 21/7/2010; and
ii) Kshs. 200,000 disbursed on 14/11/2011.
2. That the Respondent defaulted in repayment of the aforesaid loans and that the Claimant is entitled to recover the outstanding balances.
3. That in order for the Tribunal to final orders as regards the exact amounts due and owing to the Claimant, it is hereby ordered as follows:
a. Parties to take accounts on the outstanding balance within 21 days herein;
b. The Claimant to furnish the Respondent (and the tribunal) with the Respondent’s current loan statements for purposes of order (a) above within 7 days herein; and
c. Mention (online) to confirm compliance and for further directions on 4/8/2020.
Ruling read, dated and delivered via email in accordance with the directions given by the Honourable , the Chief Justice on 15/3/2020, this 30th day of April, 2020.
Prepared by Hon. B. Kimemia – Chairman, Hon. F. Terer – Deputy Chairman and P. Gichuki – Member, with the consent of the parties.
The final orders to be delivered by email in accordance to the prevailing measures during the COVID-19.
Hon. B. Kimemia Signed
Chairman
Hon. F. Terer Signed
Deputy Chairman
P. Gichuki Signed