Benson Irungu Mwaura v Sheria Co-operatives Savings & Credit Society of Kenya, Lucy Watiri Kamotho & Susan Wambui Kamotho [2020] KECPT 97 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL  CASE  NO. 739  OF 2017

BENSON  IRUNGU MWAURA......................................................CLAIMANT

VERSUS

SHERIA  CO-OPERATIVES  SAVINGS  AND

CREDIT  SOCIETY  OF KENYA......................................1ST RESPONDENT

LUCY  WATIRI KAMOTHO.............................................2ND RESPONDENT

SUSAN  WAMBUI KAMOTHO.........................................3RD RESPONDENT

JUDGMENT

The matter  for determination  as per the  statement  of claim filed  on  24. 11. 2017 is for a liquidated  claim  of Kshs.314,597/85/= plus  interest  at 14. 5.% from  29/5/2017 till payment in  full,  General Damages,  Exemplary  and aggravated  damages, being  money  deducted  from the claimant’s  account  by the 1st  Respondent, allegedly  for being  a guarantor of the 3rd  Respondent, which  action  was without  his  knowledge  or consent. The claimant  avers that the  2nd  and 3rd  Respondents  are sisters,  that  the  3rd  Respondent  was  an  employee of the  1st  Respondent  and illegally  acquired  the loan  for/on behalf  of the sister, the  2nd  Respondent  and the 3rd  Respondent  purported  that the claimant  was a guarantor.

The  1st  Respondent  filed  their  Defence on 5. 2.2018.  They  confirmed  that the  3rd  Respondent  was their employee  who resigned/and or left. That  they sent notice  to the claimant  when the  2nd  Respondent  did not clear  the loan  hence  recovered  thereafter  from the claimant  who was  the guarantor. The  1st  Respondent  denies  having  caused any injury  and/or  suffering  to the claimant.

The  2nd  Respondent  filed  her  defence  on  28. 12. 18 admitting  that the 3rd  Respondent  was her sister. She  denied fraud  on her and the  3rd  Respondent  and stated  that the claimant was a guarantor. She prayed to be  removed  from the claim  since the  3rd  Respondent  took the  money and  was paying Kshs.5000/= per month.

The 3rd Respondent filed her defence  on 9. 10. 18. she confirmed  that the  2nd  Respondent  was her sister  and that  she was previously  an employee  of the 1st  Respondent.  She denied  fraud,  malice and loss particulars  and prayed   to offset  the amount  at  Kshs.5000/= per month  and  interest  be  at  8. 5% and other prayers  to be dismissed.

The matter  was heard interparties.  The claimant  Cw1 Benson  Irungu Mwaura  stated  that he was  a member  of the 1st  Respondent,  having been recruited by the 3rd  Respondent  who was  an employee  of the 1st  Respondent.

The CW1 adopted  his witness  statement  filed on 24. 11. 2017 as the Evidence-In-Chief  and  produced  the list of documents  bundle filed  on  the same  date.  He stated  that he  had deposits/savings  of Kshs.314,596/=. That  he was  introduced  to the Sheria Sacco  by the 3rd  Respondent  who told  him to sign a loan form. He obtained  his first loan, which  he cleared. When  he wanted to top  up  a loan  in 2017, he was told that  he had no money  because  he had guaranteed the  2nd  Respondent  who he did not  know. He reported  to the  police station  and on arrest,  the 2nd  Respondent  stated that  the 3rd  Respondent  was her sister,  who obtained  the  loan  in her name.

On cross  examination,  he stated  that the  3rd  Respondent  was her  employer and  he signed  the loan forms,  based  on  trust.  That he  had  signed a blank  form  and he did  not receive  any notice  from the  1st Respondent.

The  1st Respondent’s case is  that Rosemary  Ogongo  the credit  Manager of 1st Respondent  adopted  her  witness statement  filed on 2. 2.2018 as the Evidence -  In - Chief and  also produced  the documents  filed on 5. 2.2018 as exhibits.

That the Claimant  signed  the loan  application  form as  a guarantor. That  he was  issued  the default  notice and  the recovery  was made. The RW2 gave similar  evidence  and adopted  this  witness  statement.

The  2nd  Respondent  case is  that she  filed a witness statement  on 28. 12. 2018 and adopted  it as the Evidence - In -Chief.  She confirmed  that she  did not know  the Claimant. That  the sister  3rd  Respondent  told her to fill the forms and took the loan after it was paid out and she never  received any portion  of the  money.  That the  3rd  Respondent  did not  disclose  the purpose  of the loan  that  she took  in her name.

The  3rd  Respondent  also adopted  her witness  statement  filed  as her evidence  in  chief.  She confirmed  that she was  working  for the  1st  Respondent  previously. That  she introduced  her sister  the 2nd Respondent  to the Sacco  to enable  her to obtain  a loan.  That she took  the loan  of Kshs.500,000/= and her savings  were Kshs.167,500/=. That  she was paying  the loan  until  she was terminated and the Claimant  notified  the  2nd  Respondent  of the recovery. That  she was repaying  the money to  the claimant.

She confirmed  that the Claimant  was her employee  before this  claim was filed. That  the Claimant  signed  the form  and  the 2nd Respondent  took the loan  on her behalf  and handed  over all the  money  to her.

She stated  that she was  liable  to pay  all the money  to the Claimant.

The Claimant filed written  submissions  on 31. 1.2020 while  the 1st Respondent  filed their  written submissions  on 28. 2.2020.

We have carefully considered the exhibits on record,  the evidence  and the submissions  of the parties.

It’s  clear that  the Claimant,  and the 2nd  and  3rd  Respondents  were members  of the 1st  Respondent. That  the 3rd  Respondent  applied  for a loan  using   the account  of the 2nd Respondent, defaulted, and  the 1st  Respondent  recovered  the money  from the Claimant who was  the guarantor as per the  Loan Application  Form. The obligation  of a guarantor  towards  a default is clear,  that they  are responsible  for either  the full  or partial  satisfaction  of the defaulted amount.

In this matter,  the issue  is clear  that there  was a collusion  between  the  2nd and  3rd  Respondents, who  were sisters, to obtain  a loan,  they used the Claimant as  the guarantor   for the  2nd  Respondent  despite the  fact that  the 2nd  Respondent  and the claimant  did not knew each  other.  The 1st  Respondent  recovered  the defaulted  amount  from the  claimant,  who was  the  guarantor.  In the circumstances, we find that  the  2nd and 3rd  Respondents  acted in  collusion to obtain  a loan  from  the 1st Respondent  using the claimant  as the guarantor. It’s clear  that  there was  a default  and  the  1st Respondent,  acted within  their  rights  to recover  from  the guarantor,  the amount  defaulted. We therefore find that  the 1st Respondent,  being  the  Society, acting  within their  rights to recover  defaulted  amounts,  are not liable  to the Claimant. The  2nd and the   3rd  Respondents are indeed  liable  since they  applied for the loan, took  the money,  defaulted  in the payment  and thus caused  the 1st Respondent  to recover  from the Claimant.

1. The  2nd and  3rd Respondents  confirmed  having applied  and  received  the loan hence  are therefore  liable,  jointly  and severally to  pay to the claimant  the recovered  sum of  Kshs.314,597/85 plus costs  and interest  at court rates from  29. 5.2017 till  payment  in full.

2. The suit against  the 1st Respondent  is accordingly  dismissed, the 2nd  and 3rd  Respondents  to pay  costs  jointly  and severally.

3. On  the issue of  general  damages,  there was no  sufficient  evidence  called  on the same.  This also  applied  to the exemplary  and aggravated  damages.  The interest  on the recovered  amount  as awarded above is fair and sufficient  in the matter.

4. The 2nd and  3rd  Respondents  are  also condemned  to pay  the costs  of the suit  to the claimant.

Read and delivered this 21st  day of May 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      21. 5.2020

Hon. F. Terer                Deputy Chairman        Signed      21. 5.2020

P. Gichuki                     Member                        Signed      21. 5.2020