Edwin Malomba Kioko v Makueni Transporters Sacco [2019] KECPT 23 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 146 OF 2016

EDWIN MALOMBA KIOKO.............................................................CLAIMANT

VERSUS

MAKUENI TRANSPORTERS SACCO ....................................RESPONDENT

JUDGMENT

1. The Claimant in this matter is EDWIN MALOMBA KIOKO.  In his amended statement of claim, he is claiming judgment for;-

a)   Restraining orders against the Respondent from selling, disposing and /or transferring motor vehicle Registration No. KBL 429U.

b)   A detailed report of the claimant’s to dividends and shares and a set off of the loan facilities with the Claimant’s shares and dividends held by the 1st Respondent and any balances due and owing to the 1st Respondent after the set off be paid by the Claimant by way of a bankers cheque and/or any mode of payment acceptable by the 1st Respondent.

c) The sale of the Motor Vehicle Registration No. KBL 429U by the respondents be declared Null and Void .

d) The 1st and 2nd Respondents be ordered to return Motor Vehicle Registration No. KBL 429U to the Claimant together with it’s ownership documents and in the alternative without prejudice, the Respondents by offend, to pay Ksh. 1000,000/- being the current purchase price of the said Motor Vehicle jointly and severally.

e) The Respondents be retrained from charging.  In trust on the loan facilities from the 14th day of December, 2015 till payment is made in full due to Respondents failure to offset the same from the Claimants.  Shares and an order to issue restraining the Respondents from charging storage fees on the illegally attached Motor Vehicle.

f)  A tabulation of the Claimant’s shares and interest and its payments.

2. The statement of claim was further amended vide leave granted on 26. 9. 16 when prayer No. (d) was amended to read Ksh. 1, 550, 000/- instead of 1, 000, 000/- .

3. The Respondent filed an amended statement of defence and counter claim.  The claim was denied and the Respondents sought judgment for Ksh. 477, 682/- being the balance of loan unpaid.  A reply to the defence and counter claim was filed.

4. The matter proceeded for hearing on 6. 3.2018.  The Claimant testified and closed his case.  The Respondent called one witness.  Directions were taken that the parties file written submissions.  Both sides have complied.  To get to the issues for determination.  We wish to review the evidence adduced.

5. The Claimant, Edwin Malomba Kioko, stated that he is one of the founding members of the Respondents.  That he had saved Ksh. 435,000/- and obtained a loan on the sum of Ksh. 550,000/- .  That he gave Motor Vehicle KBL 429U as security.  That he repaid his loan for two months and for unwell.  The loan statement produced as exhibit shows that by December, 2014 he had paid Ksh. 108, 400/-.  It also shows that he was in arrears in the sum of ksh. 587,775/-.

6. The Claimant stated that he decided to terminate his membership.  That he asked for a statement of his loan.  The letter seeking to terminate membership is dated 15. 10. 2015.  That he offered his shares to offset the outstanding loan.  That his Motor Vehicle was attached.  He claimed to have bought it for Ksh. 1. 2 million.  He complained that he was not allowed to attend the auction.  That the Vehicle was sold for Ksh. 220,000/-.  It was his prayer that the sale be declared Null and Void.  That Tribunal should help him to get the real value of the car.  In cross-examination the Claimant admitted that he obtained a total of Ksh. 600,000/- which was to earn interest.  That he was to pay the loan within 24 months.

7. Jackson Mutie Mutiso introduced himself as the Honorary Secretary to the Respondent .  That the Claimant was their member who took a loan in the sum of Ksh 600,000/- .  That he deposited his logbook and transfer forms for his Motor Vehicle .  That he defaulted leaving a balance in the sum of Ksh. 477, 682/-.  This witness stated that members savings do not guarantee loans.  This is contradicted by the loan application form which was shown to the witness during cross-examination .

8. From the evidence adduced and the submissions filed the following issues come up for determination;-

a)   Whether the Claimant obtained a loan and on what terms;

b)   Whether if so, the Claimant complied with the terms or

Defaulted;

c)  Whether the action of the Respondent in selling the Motor

Vehicle was justified;

d)  Whether the Claimant is entitled to the prayers sought;

e)  Whether the Claimant is entitled to the counter-claim; and

f)  Who bears the costs of this suit.

9.  On the first issue there is no much dispute.  The Claimant readily accepts that as a member of the Co-operative Society he applied for and was granted a loan.  At first he had indicated that it was for Ksh. 550,000/-.  He later admitted that there was an additional Ksh. 50,000/- making a total of Ksh. 600,000/-.

10. On the term of the loan we have looked at the loan application form dated 5. 11. 2013 .  It forms the contract of the loan.  The Claimant had applied for Ksh. 750,000/-, Ksh 550,000/- was approved.  The repayment period was 24 months with a monthly payment of Ksh. 28,185/- .  Security for the loan is indicated as shares and assets.  Under shares the value indicated as Ksh.  20,000/- and deposits of Kshs. 428,645/-.  Under assets a log book for Motor Vehicle KBL 429U is indicated.  There are four guarantors who have pledged the shares in case of default.  From the analysis above it is clear that the terms were set out and signed by both sides.  They are bound by them.

11. The next question is whether the Claimant complied with the terms- The Claimant testified that he paid for two months and got unwell.  In short he defaulted quite early. There was a breach on his part.  There is evidence from the Respondents that he asked for extension of repayment period.  Even after the extension nothing further was paid.  The 24 months period would have lapsed by November, 2015.  It is important to note that if he stopped paying after the second month then the Respondent were entitled to realize the pledged security.

12. This bring us to the third issue.  Whether the Respondent acted within the law in having the Motor Vehicle sold.  From the findings above it is clear that the Claimant defaulted on the loan.  He had pledged his Motor Vehicle as security.  He had even signed transfer forms so that if he defaulted the Respondent will not have to pursue him for signatures.  He did this voluntarily.  He cannot be heard his complain when the vehicle is sold.  He seemed to have a problem with the price that was realized at the auction.  He did not take issue with the auctioneers.  We do not find any wrong doing on the part of the Respondent in this sale.  Having find that the sale was lawful and in accordance with the terms of the loan agreement the claims by the Claimant for value of the car cannot be sustained.  The vehicle had already been offered as security.

13. On the fourth issue the Claimant complained that the Respondent’s should have effected a set off of his shares with the outstanding loan. He asks that the Tribunal orders that this be done and any balance be paid to him.  He also asks for dividends.  On the question of dividends.  We note that the Claimant did not indicate which years the dividends was declared and how much was owing to him.  We are not in a position to tabulate this without evidence.

14. On the shares it is common ground that the Respondent holds Ksh. 428,645/- as deposits.  The loan application form referred to earlier shows that the Claimant had Kshs. 20,000/- as shares.  Shares are accordingly non – refundable.  The loan agreement clearly shows that the shares and deposits were part of the security offered.  The security still held by the Respondent is therefore Ksh. 448,645/.  Contrary to what is submitted by the Respondent, they should apply this sum into payment of the loan and refund the balance if any.  To insist that the Claimant first pays the outstanding loan then claims for his deposits is not only in imprudent but also in breach of the loan agreements.  We ordered that Ksh. 448,645/- be applied to reduce the outstanding sum.

15. This brings us to the issue of counter-claim. From the tabulations. It is clear that after the payments a balance was left unpaid.  The tabulations in the account statement show the sum of Ksh. 404, 882/- outstanding.  This includes interest.  The sum of Ksh. 62,500/- indicated as office operations and a further Ksh. 10,300/- said to have been borrowed from the office are not substantial.  The amount due as counter claim is Ksh. 404,882/-.  This amount is set off from the shares and deposits.  After payment of this amount Ksh. 43, 763/- remains owing to the Claimants.

16. We note that this is a Co-operative Society governed by the Co-operative Societies Act and by laws .  Ordinarily shares are not refundable to members who are exiting.  They are transferable.  We ordered that the sum of Ksh.43,763 be dealt with strictly in accordance with the by laws of the Respondents.  The counter claim is therefore dealt with.

17. The last issue in that of costs.  We have anxiously deliberated on this matter.  It is clear from our findings that after the sale of the vehicle the Respondent should have applied the rest of security offered by the Claimant.  They did not.  They could not then wait to bring it as a counter claim.  The suit by the Claimant in respect of the sale of the Motor Vehicle was without merit.  It has largely been dismissed.  This matter would have been handled much better by both sides.  It did not need to come to the Tribunal.  For that reason we order that each side bears own costs.  Order accordingly.

Read and Delivered in open court this 8th day of January, 2019, in the absence of both parties duly notified.

Claimant    -             Absent

Respondent  -           Absent

Hon. Alex Ithuku   -    Signed

Chairman

P. Swanya             -  Signed

Member

F.F. Odhiambo     -   Signed

Member