Barchok (Suing on his Behalf and on Behalf of 26 other Members) v Post Bank Regulated Non-WDT Sacco Society Ltd & another [2023] KECPT 908 (KLR)

Barchok (Suing on his Behalf and on Behalf of 26 other Members) v Post Bank Regulated Non-WDT Sacco Society Ltd & another (Tribunal Case 24/E039 of 2023) [2023] KECPT 908 (KLR) (Civ) (26 October 2023) (Ruling)

Neutral citation: [2023] KECPT 908 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case 24/E039 of 2023

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

October 26, 2023

Between

Samson Barchok (Suing on his Behalf and on Behalf of 26 other Members)

Claimant

and

Post Bank Regulated Non-WDT Sacco Society Ltd

1st Respondent

Festus Mbevo

2nd Respondent

Ruling

1. The Application for determination is a Notice of Motion dated 12th January 2023 brought under Articles 46 & 46 of the Constitution, Section 21 (c) and (d), of the Co-operative Societies Act, rules 3 & 4 of the Co-operative Tribunal (Practice and Procedure) Rules, 2009 and rules 8. 1(b), 12 and 44 of the Respondents’ By-Laws and rule 7. 0.1( e)of the Respondents’ Cr. Policy.The Application seeks for orders:1. Spent.

2. Pending hearing and determination of this application and claim herein, the 1st Respondent be barred from continuing to deduct the applicants’ money to pay for loans given to the following people;-a.Brian Kyalo,b.Johnes Mateli, (hereinafter “the said people)c.Catherine Kyalo, andd.Jean Kyalo.

3. Pending the hearing and determination of the application and claim herein the 1st Respondent be prevented from attaching the applicant’s shares for loan defaults by the said people.

4. Pending hearing and determination of the Application and claim herein, the 1st Respondents be barred from clearing the 2md Respondent from his financial obligations to the Respondent.

5. The 1st Respondents be compelled to produce to this Tribunal application forms for membership by the said people on whose account deductions from the applicants are being made.

6. The 1st Respondents be compelled to produce to this Tribunal Loan Applications & appraisal forms of the said people.

7. The 1st Respondent be compelled to produce a board resolution that admitted the said people into the Respondents’ membership.

8. The 1st Respondents do produce account statements of the said people.

9. A declaration that the 1st Respondents’ officials acted negligently and/or failed in their legal standard of care by awarding loans to the said people.

10. Costs be awarded to the Applicants.

2. The Application is supported with Affidavit of Samson Barchok sworn on 12/1/2023 sworn on 12/1/2023 where he avers that the 1st Respondent By-laws stated that those who could be members of the Respondents are; Employees of Postbank.

Employees of Postbank Sacco.

Members out of ­­Common Board accepted through a resolution of the Board.

The Claimant avers between 2019 and 2021, the 1st Respondent gave loans to;Brian KyaloJohnes MateiCatherine KyaloJean Kyalo.However, the 1st Respondent gave the above-mentioned people guarantor terms and Claimants mistakenly thought they were members. The Claimant avers it was incumbent upon the 1st Respondent to appraise the said people and thus were not qualified to get the loans as advanced by the 1st Respondent.

3. The 2nd Respondent is said to be a relative of Brian Kyalo, Johnes Mateli, Catherine Kyalo and Jean Kyalo; who were brought in as common board members as per the 1st Respondent credit policy, which provides that if they took loans he would be a super guarantor, liable for their loans if they defaulted for it provides “… only the super guarantor shall be informed and deducted.” As such the 2nd Respondent should be held liable for the defaulters loans.

4. The 1st Respondent filed a Replying Affidavit in response to the Application despite orders granted for matter to proceed for full dressed hearing.The Replying Affidavit was sworn by Manice Ngung’u sworn on 11/4/2023. She stated that Brian Kyalo and Jean Kyalo are members of 1st Respondents and attached copies of their membership Application forms.The loans were appraised and as such given the Loan Forms. That the 1st Respondent loan facilities to be accessible to outside Common Board members are required to get voluntary guarantors within the Common Board for their facilities to be approved.

5. The 1st Respondent avers the Applicants willingly agreed to guarantee the loan facilities and are bound. 1st Respondent further states the Claimant ought to have exercised the duty of care and verified the membership of the 4 members as such the Claimants are liable for the default.The 1st Respondent thus costed the recovery from the Applicants is well within its means and under the credit policy within the Applicant’s knowingly as such the 1st Respondent will suffer financially and expose its own members to finance loss since there is no other collateral from which the defaulted amount can be recovered.As such, Application dated 21/1/2023 should be dismissed with costs.As at the date of writing this ruling the 2nd Respondent had not filed a response to the Application despite service.

6. Parties filed Written Submissions with 1st Respondent filing Written Submissions with 1st Respondent filing Written Submissions dated 11/7/2023, Applicant filed Written submissions dated 16/6/2023.

7. Having considered the Application, Replying Affidavit and Written Submissions by parties we find the issues for determination are whether the Applicant has satisfied the principles as in Giella vs Casman Brown?

Prima Facie Case. 8. It is not doubted that the Applicants are being deducted their salary- to cater for a loan defaultWhether or not this is correct is an issue that would require parties to give evidence as to the veracity of the loan agreement and credit policy.From the face of it is clear the Claimants are a bit at a loss from the deductions and an issue which needs to be resolved which is irreparable loss.

Balance of Convenience. 9. The Balance of convenience tilts towards the Claimant and as such would grant the orders.As such we find in favor of Claimant against Respondent on a balance of probability and allow the Application in terms of prayer number 2 and 4.

10. Further the Respondents are to file Statement of Defence, Witness Statements and List of Documents 21 days from today.The List of Documents to include Loan Defaulters’ Membership Forms, Loan Application in Appraisal Forms and Accounts Statements.The Claimants are granted leave to file Supplementary Documents 14 days upon service.Mention for Pre-trial direction on 16/1/2024. Notice to issue.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 26TH DAY OF OCTOBER, 2023. HON. BEATRICE KIMEMIA - CHAIRPERSONHON. J. MWATSAMA - DEPUTY CHAIRPERSONHON. BEATRICE SAWE - MEMBERHON. FRIDAH LOTUIYA - MEMBERHON. PHILIP GICHUKI - MEMBERHON. MICHAEL CHESIKAW - MEMBERHON. PAUL AOL - MEMBER