Kibira v Macharia [2024] KECPT 1168 (KLR)

Kibira v Macharia (Tribunal Case 751 of 2019) [2024] KECPT 1168 (KLR) (25 July 2024) (Judgment)

Neutral citation: [2024] KECPT 1168 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 751 of 2019

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

July 25, 2024

Between

David Macharia Kibira

Claimant

and

Mary Nyambura Macharia

Respondent

Judgment

1. The matter for determination is vide a Statement of Claim dated 13/12/2019. The Claimant avers they were husband and wife and were members of Biashara Sacco. The 1st Claimant was the registered proprietor of property Title No. Thegenge/Karia/4358 situated in Nyeri and he had erected a single-story Commercial/residential building company of 4 shops and 7 residential single rooms at the area.On 1st October, 2014, the Claimant charged the property in favour of the Respondent for Kshs. 1,500,000/=. The Claimant avers he had not obtained financial advancement as high as the change.

2. In the year 2015 the Respondent allegedly provided one Francis Maina Mwangi with Financial Accommodation to the tune of approximately Kshs. 1,200,000/= and in 2017 the Respondent loaded the amount advanced to Francis Maina Mwangi to the 2nd Account. The Respondent further without authority of the Claimant registered the charge against the 1st Claimant’s title. The legal charge was dated 12/5/2011. The Claimant now avers that they do not have any outstanding liabilities. The Respondent has sought for a Statutory Power of Sale by way of public auction which was scheduled for 17/12/2019 by Providence Auctioneers.The Claimant avers the sale is fraudulent, unlawful and clear breach of the applicable statutory provision.

3. The particulars of fraud as per the Claimants are;i.Failing to issue the 2nd Claimant being the spouse of the Chargor, a 45 day statutory notice as required under Section 96(3)(c) of the Land Act.ii.Failing to issue the 1st Claimant with the statutory 45 day notice as required under Section 96(2) of the Land Act.iii.Failing to issue the 1st Claimant with the statutory 3 months’ notice as required under Section 90 of the Land Act.iv.Failing to issue an Auctioneers Notice of Sale as required under the Auctioneers Act.v.Failing to affix the Notice on or near the subject property.vi.Purporting to dispose the 1st Claimants’ property by way of a statutory power of sale before the said power had.vii.Generally acting in breach of the duties of care owed to the Claimant.The Claimant requests for;a.A declaration that the Claimants’ have complied with their obligations under the charge registered against Title No. Thegenge/Karia/4358. b.An order that accounts be taken between parties to confirm that the Claimants have repaid the sums advanced to them by the Respondent.c.General Damages.d.A permanent injunction to restrain the Respondent from selling, offering for sale, transferring and/or in any other manner disposing Title No. Thegenge/Karia/4358 over the amounts owed by Francis Maina Mwangi.e.Costs of the suit.

4. The Claimants filed their List of Documents dated 13/12/2019 file on 13/12/2010 to which they filed; 1. Search dated 7th December 2018.

2. Copy of page 40 of the Daily Nation issue of 25th November, 2019.

3. Statement of the 2nd Claimant with the Respondent.

4. Complaint by William Kibisa Macharia to the Sacco Societies Regulatory Authority.

5. Copy of the ruling in Nyeri CMCC 360 of 2018.

5. The Respondent filed Statement of Defence dated 7/7/2021 on 12/7/2021 and they denied the Claim by Claimants and state that without prejudice the 1st Claimant was a guarantor to 2nd Claimant’s Loan issued on 21/8/20217. They denied the particulars of fraud contain in the Statement of Claim and claimed or amended.i.That on or around the 18th August, 2019 the 2nd Claimant applied for a loan of Kshs. 1,200,000. 00/= and used Thegenge/Karia/4358 as security.ii.That Thegenge/Karia/4358 is registered in the name of the 1st Claimant.iii.That the loan was obtained on the 21 August, 2017 repayable by monthly installments of Kshs. 45,833. 3.iv.That due to default by the 2nd Claimant statutory notice was duly issued on the 2nd January, 2018 and served personally on the 1st Claimant on the 4th January, 2018. Further, the Respondent claim the 2nd Claimant owed the Respondent Kshs. 1,304,804. 46/= as at 1st January, 2019. The Respondent thus state the intended auction is perfectly legal and put the Claimant to strict proof.The Respondent filed List of Documents dated 7/7/2021 filed on 12/7/2021 to which included; 1. Loan application form dated 18th August, 2017.

2. Loan letter of offer and Acceptance dated 21st August, 2017.

3. Statements of Account ending the 1st January, 2019.

4. Guarantor’s Questionnaire and Declaration form.

5. Application for Consent of Land Control Board.

6. Letter of consent dated 25th September, 2014.

7. Official search dated 1st October, 2014.

8. Charge dated 27th September, 2014.

9. Statutory notice.

10. Affidavit of service dated 15th January, 2018.

They also filed Witness Statement sworn by Joseph Kamau Njamuku on 2/8/2021.

6. The matter came up for hearing of the main suit on 12/10/2022 with Claimant Witness 1 David Macharia giving their evidence. He stated he guaranteed a loan with his property Nthege/Karia/4358 in Nyeri. He confirmed the loan was given to the 2nd Claimant who subsequently defaulted.He further stated upon default, the Respondent initiated steps to exercise power of sale under Section 90 & 96 of Land Act. However, the notice issued did not meet the requirement and no other notices were given as under Section 96 Land Act.The Claimant seeks to set aside sale which is illegal and unlawful.He adopted his Witness Statement dated 13/12/2019 as his Evidence-in-Chief and produced his List of Documents as Claimant’s Exhibit 1-5.

7. The Respondent were not present during hearing of the case, as such the case proceeded undefended.Despite the Respondent having filed an Application to set aside the proceeding vide a ruling delivered on 7/3/2024, the same was not allowed.Considering the evidence adduced before the Tribunal, the Respondent’s Written Submissions dated 18/3/2024 filed on 17/4/2024, the issues for determination despite the case being undefended is;1. Issue One.Did the Claimants default?2. Issue Two.Whether proper procedure was followed for sale of the security property?

8. Issue No. 1Whether the Claimant is in default?It is clear from the evidence adduced during trial that the 2nd Claimant was advanced a loan with the 1st Claimant as the guarantor and the Title No./Thegenge/Karia/4858. Despite their Statement of Claim refuting any loan was advanced, their evidence pointed otherwise.We further looked into the Respondent’s Statement of Defence and List of Documents to which the was the 2nd Claimants loan Application from dated 18/8/2017 confirming a loan was requested and Claimant’s Statement of Accounts dated 1/1/2019 which shown a loan balance of Kshs. 1,304,809/=. This was not disputed by the Claimants. As such, we find that the Claimant did not in fact default in loan repayment.It goes without a doubt there are consequences when there is default of any loan facility and as such the Respondents acted accordingly.The question is whether the sale is legal and if all procedures which would lead to the sale were followed.

9. Issue Two.Whether proper procedure was followed for sale of the security property?The Claimant’s claim if that the Respondents did not follow proper procedure while carrying out the statutory power of sale.It is unfortunate that the Respondents were not present during trial to prosecute the Defence. Looking into the Claimant’s case and the Respondent’s documents, it is not doubted that indeed the 2nd Claimant was advanced a loan and defaulted. The Claimant’s deny receiving the necessary notices as required by law; that is, as per Section 90 Land Act 2012 which provides for;(1)If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or any part thereof due under any charge or in the performance or observation of any covenant, express or implied, in any charge, and continues to be default for one month, the chargee may serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be.(2)The notice required by subsection (1) shall adequately inform the recipient of the following matters— (a) (b) (c) the nature and extent of the default by the chargor; if the default consists of the non-payment of any money due under the charge, the amount that must be paid to rectify the default and the time, being not less than three months, by the end of which the payment in default must have been completed; if the default consists of the failure to perform or observe any covenant, express or implied, in the charge, the thing the chargor [Issue 1] 48 [Rev. 2012] Land No. 6 of 2012 must do or desist from doing so as to rectify the default and the time, being not less than two months, by the end of which the default must have been rectified; (d) (e) the consequence that if the default is not rectified within the time specified in the notice, the chargee will proceed to exercise any of the remedies referred to in this section in accordance with the procedures provided for in this sub-part; and the right of the chargor in respect of certain remedies to apply to the court for relief against those remedies.(3)f the chargor does not comply within two months after the date of service of the notice under, subsection (1), the chargee may— (a) (b) (c) (d) (e) sue the chargor for any money due and owing under the charge; appoint a receiver of the income of the charged land; lease the charged land, or if the charge is of a lease, sublease the land; enter into possession of the charged land; or sell the charged land;(4)If the charge is a charge of land held for customary land, or community land shall be valid only if the charge is done with concurrence of members of the family or community the chargee may— (a) (b) appoint a receiver of the income of the charged land; apply to the court for an order to—(i)lease the charged land or if the charge is of a lease, sublease the land or enter into possession of the charged land; (ii) sell the charged land to any person or group of persons referred to in the law relating to community land.(5)The Cabinet Secretary shall, in consultation with the Commission, prescribe the form and content of a notice to be served under this section.”And Section 96 Land Act 2012 which provides for:Where a chargor is in default of the obligations under a charge and remains in default at the expiry of the time provided for the rectification of that default in the notice served on the chargor under section 90(1),a chargee may exercise the power to sell the charged land. 53 [Issue 1] No. 6 of 2012 Land [Rev. 2012](2)Before exercising the power to sell the charged land, the chargee shall serve on the chargor a notice to sell in the prescribed form and shall not proceed to complete any contract for the sale of the charged land until at least forty days have elapsed from the date of the service of that notice to sell.(3)A copy of the notice to sell served in accordance with subsection (2) shall be served on— (a) (b) (c) (e) (f) (g) (h) (i) (j) the Commission, if the charged land is public land; the holder of the land out which the lease has been granted, if the charged land is a lease; a spouse of the chargor who had given the consent; any lessee and sublessee of the charged land or of any buildings on the charged land; any person who is a co-owner with the chargor; any other chargee of money secured by a charge on the charged land of whom the chargee proposing to exercise the power of sale has actual notice; any guarantor of the money advanced under the charge; any other person known to have a right to enter on and use the land or the natural resources in, on, or under the charged land by affixing a notice at the property; and any other persons as may be prescribed by regulations, and shall be posted in a prominent place at or as near as may be to the charged land. “Unfortunately, the notices to the Claimant, one dated 2/9/2018 is the only one that was received by the 1st Claimant.There are no other notices issued as required by the law, neither have the Respondent’s attached the same of copies of the same.All procedures towards the security given by the Claimants were not followed for the sale to be deemed proper.In that regard, the Claimant is right despite being in default.We find that the procedure was not followed and as such sale of Title No. Thegenge/Karia/4358 in the current state would not be proper.

UPSHOT.Judgement is entered in favour of the Claimant against the Respondent.a.A declaration that the Claimants’ have complied with their obligations under the charge registered against Title No. Thegenge/Karia/4358 allowed.b.An order that accounts be taken between parties to confirm that the Claimants have repaid the sums advanced to them by the Respondent- fails.c.General Damages- failsd.A permanent injunction to restrain the Respondent from selling, offering for sale, transferring and/or in any other manner disposing Title No. Thegenge/Karia/4358 over the amounts owed by Francis Maina Mwangi- fails.e.Each party to bear their own costs.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 25TH DAY OF JULY, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 25. 7.2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 25. 7.2024HON. BEATRICE SAWE MEMBER SIGNED 25. 7.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 25. 7.2024HON. PHILIP GICHUKI MEMBER SIGNED 25. 7.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 25. 7.2024HON. PAUL AOL MEMBER SIGNED 25. 7.2024TRIBUNAL CLERK JEMIMAHNganga advocate for RespondentNo appearance for ClaimantHON. B. KIMEMIA CHAIRPERSON SIGNED 25. 7.2024