Barrack v Dhamini Sacco Limited [2025] KECPT 255 (KLR)

Barrack v Dhamini Sacco Limited (Tribunal Case 158. E002 of 2024) [2025] KECPT 255 (KLR) (29 April 2025) (Ruling)

Neutral citation: [2025] KECPT 255 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 158. E002 of 2024

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

April 29, 2025

Between

Eunice Awuor Barrack

Claimant

and

Dhamini Sacco Limited

Respondent

Ruling

1. The Amended Notice of Motion Application dated 16th December, 2024 is brought under Order 8 Rule 3 (1) and Order 51 Rule 1 of the Civil Procedure Rules and Section 3A of the Civil Procedure Act seeking orders :1. That the Honourable Court may be pleased to grant the Respondent leave to amend their Statement of Defence and further include a Counterclaim2. That the annexed draft amended Defence and Counterclaim be deemed as duly filed and served.

2. The Application was made on the grounds:i.That the Respondent has since the commencement of the suit come into possession of documentation relevant to the matter.ii.That it is necessary for the Respondent to include counterclaim so as to enable all matters in dispute as between the two parties be adjudicated upon effectively and conclusively.iii.That the Claimant is indebted to the Respondent in terms of unpaid loan which is directly related to the subject matter of the suit in question.iv.That the amendment sought will assist the Honorable Court determine the real issues in dispute between the Plaintiff and the Defendant.v.That the Respondent has in their possession important documentation that will assist the court determine the real issues and questions in controversy between the parties in the matter.vi.That the Respondent stands to suffer prejudice if the Application is not granted.

3. The annexed Statement of Defence and Counterclaim stated:1. That in the month of September 2020 the Respondent advanced to the Claimant a loan facility of Kshs. 3,250, 000/= to enable the Claimant invest in assets and her various business ventures2. That the Claimant executed blank Transfer instruments in favor of the Respondent as loan security over parcels of land the Claimant was purchasing from the Respondent’s Housing Cooperative Society Limited, more specifically Title Numbers. Donyo Sabuk/Komarock Block1/102043, 102043 and 1020463. That subsequent to default on loan repayments plus interest, the Respondent utilized the Claimant’s Sacco shares in the sum of Kshs. 1,038,020/= to offset part of the loan arrears, thus leaving an outstanding balance of Kshs. 3,615,413. 95/= as at February 2024 inclusive of interest as due and owing from the Claimant to the Respondent.4. That as at February 2024, the outstanding loan inclusive of interest amount due from the Claimant to the respondent is the sum of Kshs. 3,615,413. 95/=5. That given the Claimant’s inability to meet her monthly loan repayments, she sometimes in the month of September 2022 approached the Respondent and requested for the loan to be restructured, which said request the Respondent acceded to and the restructured loan due and owing then stood at Kshs. 4,128,000/= inclusive of accrued interest.6. That despite efforts to restructure the subject loan the Claimant continually failed to honor the terms of the loan repayment, as a result of which the Respondent was left with no option but to offset parts of the Claimant's loan arrears by utilizing the Claimant’s Sacco shares valued at Kshs. 1,038,020/=. She approached the Respondent with her request to sell off one of her plots purchased from the Respondent’s Housing Cooperative Society at a minimum sale price of Kshs. 500,000/= and premised on those instructions, the Claimant executed the transfer instrument and the subject plot was sometimes in the month of October 2023 sold off to a third party at Kshs. 530,000/= and the proceeds of the sale credited to the Claimant's loan account.7. That to date despite persistent reminders made to the Claimant by the Respondent, the Claimant’s loan account is still in arrears and the amount outstanding inclusive of interest as at August 2024 is Kshs. 3,257,233/=8. That the Respondent’s claim as against the Claimant is for the sum of Kshs. 3,257,233/= inclusive of interest as at August 2024 and the same continues to accrue further.

4. That on 7th October, 2024 this Tribunal gave orders for the Application to be served and for parties to file their written submissions within 30 days. The Claimant filed a Replying Affidavit dated 11th December, 2024 stating among others:i.That the Respondent’s Application for leaveii.To amend the Defence is baseless as the draft amended Defence does not contain anything new or ground that may warrant amendment.iii.That the Respondent prayer 2 may be denied as it has not sought leave of court to file a counterclaim.iv.That the court may not allow filing of counter claim until the Respondent seek the leave of court to file it, by allowing the Respondent to file the same on the strength of the instant Application dated 9th August 2024, then it may be an abuse of the court process.v.That the Respondent has not disclosed to the Tribunal the purported evidence claimed to have been found that may be relevant to the instant matter.vi.That if the Respondent had any evidence against the Claimant, then it was their obligation to move to court before the Claimant had filed the instant claim against them.vii.That the Respondent may not suffer any prejudice at all should the Tribunal decline the orders sought in the Application, as the same is brought in bad faith as the Application lacks merit and may not stand the test of law and the same may be dismissed with costs.viii.That in order to be relevant, the Respondent could have sought leave to file the counter claim and not seek lame ground to deem the filing of counterclaim whose leave to file has not been sought.

5. That the Claimant filed her written submissions dated 13th December, 2024 stating among others:I.That the matter before court is straightforward and the Honorable Tribunal may reach a conclusion which may please the Claimant to realize the hand of justice in her rescue from being stripped of her properties with the Respondent who has put her as their own prisonerII.That the matter is a matter which may be referred to mediation before the Tribunal proceed and determine to save time of the Tribunal

6. The Respondents on their end filed their written submissions dated 7th February 2025 stating among others:I.That the Claimant has not availed substantive grounds to warrant the refusal of the Orders sought by the RespondentII.That the grounds relied upon are that the Respondent seeks to amend its Defence and to include a counterclaim in the suit, which amendments and counterclaims sought will assist the Honourable Court to determine the real issues in dispute between the parties and to effectively and conclusively adjudicate over the matter.III.The proposed amendments and inclusion of a counterclaim are necessary to predicate the indebtedness of the Claimant to the Respondent, as such indebtedness is directly and substantially in pari materia with the course of action.IV.That amendments of pleadings can be done at any stage of the proceedings and unless the intended amendment was likely to cause prejudice to the adverse party, which prejudice costs could not compensate, then the leave to amend should be granted freely.V.That the respondent has made a case for leave to amend their statement of Defence.VI.That the claimant has in her pleadings admitted to being indebted to the Respondent on account of a loan facility advanced to her by the Respondent and which loan she defaulted on repayments hence the reason why she moved this Honourable Tribunal seeking injunctive reliefs.VII.That the Respondent seeks to enjoin their counterclaim as against the claimant as the same relates to the same transaction and or series of transactions in the cause of action in the suit.VIII.That the Respondent needs to be allowed a just opportunity to pursue recovery of monies owed by the Claimant to obviate the need to file multiplicity of suits to recover the mentioned amounts.IX.That there is no new or inconsistent cause of action which is being introduced by the amendments, and the claimant will not suffer prejudice as she will have an opportunity to respond to the amendments.X.That the Application has been presented in good faith and the Claimant will not suffer any prejudice as she will have an opportunity to file a rebuttal by way of Defence to the counterclaim, and their amendments are necessary to enable justice to be done between the parties.

7. Has the Respondent satisfied the threshold for seeking leave to amend their Statement of Defence and to introduce a Counterclaim?

8. The general power to amend pleadings draws from Section 100 of the Civil Procedure Act, which grants parties to a claim the right to amend their pleadings at any stage of the proceedings in conformity with the criteria set out under Order 8 rule 3 of the Civil Procedure Rules which stipulates:“...Subject to Order 1, Rules 9 and 10, Order 24, Rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings.”

9. Further Order 8, Rule 5 gives the court the general power to amend or to allow amendment and provides:“...For the purpose of determining the real question in controversy between the parties, or of correcting any defect or error in any proceedings, the court may either on its own motion or on the application of any party order any document to be amended in such manner as it directs and on such terms as to costs or otherwise as are just.”

10. The threshold a court should consider in amendment of pleadings were well set out by the Court of Appeal in the case of Central Kenya Limited v Trust Bank Limited & 5 Others [2002] eKLR was follows:“...that a party is allowed to make such amendments as may be necessary for determining the real question in controversy or to avoid a multiplicity of suits provided that there has been no undue delay, that no new or inconsistent cause of action is introduced, that no vested interest or accrued legal right is affected and that the amendment can be allowed without injustice to the other side.”

11. The same position was reinforced further in the case of Coffee Board of Kenya v Thiks Coffee Mills Limited & 2 Others (2014) eKLR where the court said:i.That amendments should be allowed which are necessary for determination of the real controversies in the suit;ii.That the proposed amendment should not alter and be a substitute of the cause of action on the basis of which the original list was raised;iii.That inconsistent and contradictory allegations in negation to the admitted position of facts or mutually destructive allegations of fact would not be allowed to be incorporate by means of amendments;iv.That proposed amendments should not cause prejudice to the other side which cannot be compensated by means of costs;v.That amendments of a claim or relief barred by time should not be allowed;vi.That no amendment should be allowed which amounts to or results in defeating a legal right to the opposite party on account of lapse of time;vii.That no party should suffer on account of the technicalities of law and amendment should be allowed to minimize the litigation between the parties;viii.That the delay in filing the petitions for amendment should be properly compensated by costs;ix.That error or mistake, which is not fraudulent, should not be made the ground for rejecting the application for amendment of pleadings.

12. We have subjected and considered the Application in line with the threshold outlined and it is our considered position that to grant the leave to amend and add a counterclaim will save this Tribunal’s time in dealing with a multiplicity of claims, it is also our finding that the Application does not introduce any new cause(s) of action nor delay the determination of the claim filed, it adds more information and helps the Tribunal deal with all the issues between the Claimant and the Respondent at one go.

13. The proposed amendments and counterclaim substantially involve the loan facilities taken up by the Claimant from the Respondent and they give an account in detail on how the credit facilities grew to the amount they are being claimed for presently. As such, We are not convinced as a Tribunal that the proposed amendments and counterclaim will change the character of the case or introduce new causes of action. In fact, it our considered view that the proposed amendments are necessary for the purpose of determining the real questions in controversy between the parties.

Final Orders:1. The Amended Notice of Motion dated 16th December, 2024 succeeds.2. The annexed Draft Amended Defence and Counter-Claim dated 30th May, 2024 is deemed as duly filed and served subject to payment of fees.3. The Claimant granted leave to file a Reply to Defence and Counter-Claim within 14 days of service.4. The respondent to file and serve their reply within 7 days of service5. Costs in the cause.6. Pre- trial directions on 3. 6.2025. Notice to issue to Respondent

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 29TH DAY OF APRIL, 2025. HON. B. KIMEMIA CHAIRPERSON SIGNED 29. 4.2025HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 29. 4.2025HON. BEATRICE SAWE MEMBER SIGNED 29. 4.2025HON. FRIDAH LOTUIYA MEMBER SIGNED 29. 4.2025HON. PHILIP GICHUKI MEMBER SIGNED 29. 4.2025HON. MICHAEL CHESIKAW MEMBER SIGNED 29. 4.2025Tribunal Clerk JemimahEunice Awuor Barrack – Claimant presentNo appearance for RespondentHON. B. KIMEMIA CHAIRPERSON SIGNED 29. 4.2025