Kaguan & another v Amica Savings and Credit & another [2023] KECPT 782 (KLR)

Kaguan & another v Amica Savings and Credit & another (Tribunal Case 329 of 2019) [2023] KECPT 782 (KLR) (31 August 2023) (Judgment)

Neutral citation: [2023] KECPT 782 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 329 of 2019

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

August 31, 2023

Between

Joseph Njuguna Kaguan

1st Claimant

Modern Oil Processors Ltd

2nd Claimant

and

Amica Savings and Credit

1st Respondent

Keysian Auctioneers

2nd Respondent

Judgment

1. The matter for determination was brought under a Plaint by the Claimants who states they are registered owners of Title No. Makuyu/Kimoror/Block IV/1549. Claimant avers 1st Respondent advanced the 2nd Claimant loan facilities on different occasions amounting to Kshs.63,000,000/= as security the Claimant offered Title No. Makuyu/Kimoror/Block IV/1549. The Claimants aver they have been paying the loan, however the 1st Respondent has been unilaterally increasing the interest rates without informing the Claimants.He further avers the 1st Respondent has purportedly advanced loan amounts to Applicants which were never disbursed/ reflected in Plaintiffs Accounts.They also aver the 1st Respondent has been cashing cheques without authentication of Claimants leading to overdraft in the accounts.

2. The Claimant avers the suit property was as a result advertised for sale by way of public auction placed on the suit premises by Keysan Auctioneers which was to take place on 20/3/19. Claimant avers the intended sale by public auction was marred by irregularities and illegalities because;i.The Charge instruments did not contain a special acknowledgement that the chargor understands the effect of default and the remedies on the chargee in case of default.ii.Execution of the charge was not attested by an Advocate.iii.The 1st Defendant failed to issue three months Statutory Notice, notice to sell and notification of Sale by the 2nd Defendant in accordance with the Statutory provisions in respect to issuance of notices.iv.The 1st Defendant failed to ensure that a forced sale valuation is undertaken by a licensed valuerv.The 1st Defendant failed to obtain the consent of the 1st Plaintiff prior to charging the said property to secure the amounts purportedly advanced to the Defendants but not actually disbursed to us in the interest thereof.The Claimant avers the 2nd Respondent Statutory notice for sale of land is premature, illegal and void.As such, the Claimant prays for;a.A declaration do issue that the 1st and 2nd Defendants have no right in law to seek or dispose of the Plaintiffs' property known as Title no. Makuyu/Kimoror/Block IV/1549, in convention of the law.b.A declaration that the charge on the suit property, Title no. Makuyu/Kimoror/Block IV/1549, to secure the 1st Defendant's loan from the 2nd Defendant was irregular, illegal and defective and therefore null and void.c.A permanent injunction restraining the Defendants, their servants, officers, employees, assigns and/ or agents, Advocates or Auctioneers or any other person action for and/ or on their behalf, from doing the following acts or any of them, that is to say from advertising of sale, disposing off, alienating, dealing with, selling by public auction or otherwise howsoever at any other time from or by completing by transfer or any sale concluded by auction and/or private treaty, leasing, letting or otherwise howsoever interfering with the ownership of title to and/or interest in Title no. Makuyu/Kimoror/Block IV/1549. d.Cost of this suit together with interest thereon and any further or other relief that this Honourable Tribunal deems fit to grant.

3. The Claimants filed their Witness statement dated 14/6/2019 and List of Documents dated 14/6/2019 which included1. A copy of the certificate of official search for all that parcel of land Title no. Makuyu/Kimoror/Block IV/1549. 2.Copy of advert for sale of Title no. Makuyu/Kimoror/Block IV/1549. 3.Charge document dated 1st July, 2015. 4.Charge document dated 30th September, 2016. 5.Charge document dated 20th December, 2016. 6.Charge document erroneously dated 5th December, 2022.

4. The Respondent filed a Statement of Defence dated 18/7/2019, where they denied the Claimant's Claim. they denied the particulars of illegality as set out in paragraph 14 of the Plaint and that the loan facilities have accrued interest to the tune of Kshs. 76,023,087. 10/=.The 1st Respondent avers to have given Claimant several opportunities to repay the loan but he refused and neglected to do so. The 1st Respondent admits that Property Title No. Makuyu/Kimoror/Block IV/1549 was offered as security for the loan facilities.The 1st Respondent filed Witness Statement by James Gachau dated 18/7/2019 filed on 23/7/2019 and Pius Hira dated 18/7/2019. Respondent also filed List of Documents which included:1. Certificate of Registration.

2. 1st Claimant's Statement of Accounts.

3. 2nd Claimant's Statement of Accounts.

4. Loan Application forms.

5. Title deed Makuyu/Kimoror/Block IV/1549.

6. Record of guarantors and indemnity.

7. Demand letter.

5. 1st Respondent further filed a counterclaim to the Claimants claim. the 1st Respondent avers they advanced Kshs.63,000,000/= to the 2nd Claimants.They aver the loan was in arrears of 658 days as such the 1st Respondent claim against Claimant is for Kshs 84,142,623. 93/= as at 13/11/2019 plus interest of 18% p.a. until payment in full.The 1st Respondent in the counterclaim prays for judgment against Claimant jointly and severally for;a.Kshs. 84,142,623. 93/=b.interest at 18 % p.a. on Kshs. 84,142,623. 93/= until payment in full.c.Costs of the counterclaim.d.The Claimants' suit be dismissed with costs to the Respondents.e.Interest on items (a), (b), (c) and (d) above at court rates until payment in fullf.Any other or further relief that this Honourable Court may deem fit and just to grant.1st Respondent filed further List of Documents dated 21/11/2019 filed on 22/11/2019 that is, Statement of Accounts of 2nd Claimant and List of Documents in support of Counter Claim dated 21/11/2019 filed on 22/11/2019 which included.1. Loan Application forms dated 4/11/2017 and 25/5/2017.

2. Statement of Accounts of the 2nd Claimant.

6. Matter came for trial on 15/3/21 with Claimant witness 1- Joseph Njuguna Kaguai 1st Plaintiff testifying. He stated the 2nd Claimant is his company and adopted his Witness Statement dated 14/6/19 ashis Evidence-in-Chief. He produced his List of Documents dated 14/6/2019 filed on 19/6/2019 as his evidence and the same marked Exhibit 1. On cross examination the 1st Claimant confirms having borrowed Kshs.50,000,000/=. However, further clarified he borrowed Kshs. 63,000,000/= in 2017 in the following order;1st charge – Kshs. 9,000,000/= .2nd charge – Kshs.20,000,000/= on 30/9/20163rd charge – Kshs.21,000,000/= on 20/12/20164th charge – Kshs.13,000,000/= June 20171st Claimant disputed the full amount of Kshs.63,000,000/=being disbursed.He could not account for how many installments were paid. He confirmed that he had not finished paying the loan. He confirmed that he was aware default attracts interest/penalties.He further confirms the land was not sold and he has been utilizing the land. He invested the money he was advanced.On re-examination he confirmed that his dispute was in regard to that last loan of Kshs.12,000,000/=.

7. The Respondents testified during trial. Respondent Witness 1 - James Kamau Gachau the General Manager of 1st Respondent. He adopted his Witness Statement dated 18/7/2019 filed on 23/7/2019 as his Evidence in Chief.He Produced Respondent's List of Document dated 18/7/2019 filed on 23/7/2019. He confirmed the Claimant borrowed Kshs.50,000,000/= on the Kshs.12,000,000/=.The Kshs.12,000,000/= was disbursed as per the Statement of Account. The loan interest charged due to the money markets lending rates.He confirmed the Kshs.63,000,000/= was agreed at 15%. the Claimant had ability to pay but neglected to do so. He initially was making payments and diverted funds laterRW1 confirmed having discussions with the branch manager. As at the date when later RW1 was testifying the loan default was at Kshs 119,993,093. 78/= with a final due date of June 2022. RW1 states that Claimant was to pay Kshs.1. 500,000/= per month. Respondent Witness 1 further states the loan has affected the loan processing.

8. On Cross Examination he confirmed they agreed with Claimant to consolidate the Kshs.50,000,000/=and Kshs.12,000,000/= using the same security.Respondent Witness 2 testified on 7/6/2021 Pius Muriithi Hira the Credit Manager of the 1st Respondent produced his Witness Statement dated 18/7/2019 as his Evidence- in- chief. He confirmed the Claimant's loan of Kshs.50,000,000/= was done in one Application in January and latter requested for an advance.The Claimant was charged Default interest which is charged when any one installment is not made. The loan balance as at the date of testifying was Kshs. 124,695,807. 33/=.His prayer as per this Counter claim as well is for Claimant to be compelled to pay the loan and interest.His non compliance is preventing other members from accessing the loan facilities. His evidence is that the Claimant had demonstrated his ability to repay as per the produced bank statements. He paid 5 installments of about Kshs.1. 400,000/= they are aware the Claimant constructed a hotel which is operational and yet no payment is being realized.He further confirmed Kshs.50,000,000/= was disbursed in full as a one off figure as such the security perfection was done on Title no. Makuyu/Kimoror/Block IV/1549. initially the land was charged for a less amount and a further charge was done. The chattels did not apply because the physical land was sufficient security. He confirmed there was a deed of guarantee signed by the Claimant.On re-examination he explains the Charge was for loans of Kshs.50,000,000/=. He further stated the charge document is signed by the owner then forwarded to head office for signing by General Manager or Chief Executive Officer .Parties closed their case.

9. Parties were directed to file Written Submissions with Claimants filing Written Submissions dated 22/6/21 filed on 9/7/2021 and Respondent filed their Written Submissions dated 10/6/2021 filed on 15/6/2021. we have considered the Pleadings, Evidence of the parties and Written Submissions and all Evidence produced and the issues for determinations are;1. How much loan was advanced to the 1st and 2nd Claimant?2Whether the Claimant has made their loan repayment as per the agreement?

How much loan was advanced to the 1st and 2nd Claimants? 10. It is not in doubt by either party that the 1st Respondent advanced loans to the Claimant. What is in contention is the amount disbursed. The 1st Claimant confirmed he was given a loan of Kshs. 50,000,000/= and it amounted to Kshs. 63,000,000/= as:1st charge- Kshs. 9,000,000/=2nd charge- Kshs. 20,000,000/=3rd charge – Kshs. 21,000,000/=4th charge- Kshs. 13,000,000/=Although the claimant disputed the amount he had no other proof and could not further proof how much of the loan repayment had been done. He confirmed he had not finished paying for the loan.The respondent in their evidence were clear and showed how the Kshs. 63,000,000/= was disbursed to the loan amounts on diverse dates. The claimant defaulted after sometime. The collateral for the Kshs. 50,000,000/= was title number Makuyu/kimeraru/block IV/1549. Having carefully considered the evidence by both parties and documentary evidence produced we are convinced the claimant took out a loan facility of Kshs. 62,000,000/= cumulatively.

Whether the Claimant has made their loan repayment as per the agreement? 11. While giving evidence the Claimant admitted that he had not repaid the full loan amount.He stopped making payment because he was disputing the amounts but still owed the Respondent.Respondents were clear with RW1 and RW2 testifying stating the cClaimant defaulted the loan and was charged default interest and normal interest.With this in mind what else is to be said or done but declare the Claimant does owe the Respondent the monies defaulted.The Respondent have clearly stated in their Counter -claim dated 21. 11. 2019 that the Claimant owes them Kshs. 84,142,623/=.The Claimant did not offer any evidence/explanation as to why the loan facility has not been paid up other than stating they want the accounts reconciled as he was disputing the figure of last loan advanced.The respondent offered details of how and when the amounts were advanced and as such we find the Respondent’s accounts to be accurate and correct.1. As such we find that the Statement of Claim dated 14. 6.2019 is without merit and the same dismissed with costs to Respondents.2. The Counter- claim by 1st Respondent against Claimant in the Counter -claim for Kshs. 84,142,623. 93 plus cost and interest.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 31ST DAY OF AUGUST, 2023. HON. BEATRICE KIMEMIACHAIRPERSONHON. J. MWATSAMADEPUTY CHAIRPERSONHON. BEATRICE SAWEMEMBERHON. FRIDAH LOTUIYAMEMBERHON. PHILIP GICHUKIMEMBERHON. MICHAEL CHESIKAWMEMBERHON. PAUL AOLMEMBER