Kisumu Airport Tax Operators Savings & Credit Co-operative Society Ltd (KIATO) v Owengo [2023] KECPT 776 (KLR)

Kisumu Airport Tax Operators Savings & Credit Co-operative Society Ltd (KIATO) v Owengo (Tribunal Case 901 of 2018) [2023] KECPT 776 (KLR) (17 August 2023) (Judgment)

Neutral citation: [2023] KECPT 776 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 901 of 2018

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

August 17, 2023

Between

Kisumu Airport Tax Operators Savings & Credit Co-operative Society Ltd (KIATO)

Claimant

and

John Omolo Owengo

Respondent

Judgment

1. The Claimant filed a Statement of Claim dated 15th November of 2018. The Claimant claims the Respondent was a member of the Claimant’s Sacco and was elected as a treasurer thereof, entrusted with the solemn duty of receiving funds from members of the Claimant’s Sacco, and banking the same and keeping proper accounting records of members funds.

2. They further claim that the Respondent held this position as the treasurer of the Claimant’s Sacco from June 2013- December 2017, when he was forced to step down due to financial misappropriation approximately Kshs. 3,000,000/=.

3. The Claimant further claims that on or about the 12th day of January 2018, the Claimant and the Respondent entered into an agreement wherein the respondent acknowledged the fact that he was indebted to the Claimant to the tune Kshs. 2,882,053. 00/=. The Claimant avers that pursuant to the agreement, the Respondent further undertook to repay the said amount of Kshs. 2,882,053. 00/= within a period of three (3) years by monthly installments of Kshs. 80,335/=. The Claimant further avers that however, on 12th August 2018 the principal amount reduced by Kshs. 10,000/=

4. As a result, the Claimant avers that the sum of money of Kshs. 2,882,053. 00/= remains the outstanding amount the Respondent owes the Claimant. The Claimant further claims that in compliance with the agreement referred to, it was mutually agreed that the Claimant would be at liberty to sue for the entire outstanding amount in the event of any default by the Respondent. Further, in spite of the Respondent’s undertaking to settle the loan arrears as per the aforesaid agreement, the Respondent has to date failed to honor his obligation. It is the Claimant’s contention that as a result of the Respondent’s deliberate failure, refusal and negligence to repay the debt, they have suffered great financial loss and damage.

5. The Claimant seeks the following prayers; -a.The sum of Kshs. 2,882,053. 00. b.General damages for loss and damage.c.Costs of this suit.d.Interest on (a), (b) and (c) above at Court rates.

6. Matter proceeded for hearing on 4th October 2022 when the Claimant’s Chairperson Moses Sigunga (CW1) testified adopting his Witness Statement dated 15th November 2018 as his Evidence- in- Chief. He also produced 4 bundles of document and were marked Exhibit 1- Exhibit 4. Exhibit 1 was a List of Documents dated 15/11/2018 filed on 28/11/2018. The List had: -a.Certificate of Registration dated 26/8/2011. b.Acknowledgment of debt dated 12/1/2018. c.Demand Letter dated 30/8/2018.

7. Exhibit 2 was a List of Documents dated 14/11/2022 filed on 24/11/2022. The List had: -a.Copies of the rejected Annual Financial Statement for the year 2015-2016. b.Copies of the Audited Financial Statements for the years 2013-2021. c.Copies of Bank Statements from 2013-2018. d.Copies of receipts issued by the deponent upon receipt of cash from the year 2013-2018.

8. Exhibit 3 was a List of Documents dated 14/6/2022 filed on 20/6/2022. The List had: -a.Letter dated 12/6/2018 from Claimant to Chief Officer Department of Industrialization and Enterprise Development.b.Letter dated 28/5/2018 from Ministry of Industry Trade and Cooperatives Development to County Director of Cooperative and receipt No.40566161 also dated 28/2/2018. c.Claimants cash received vouchers dated 8/6/2017, 10/7/2017, 8/8/2017 and 30/8/2017 all issued by the Respondent.

9. Exhibit 4 was a List of Documents dated 20/9/2022 filed on 30/9/2022. The List had: -a.Minutes of the board meeting held on 6/6/2018.

10. He reiterated that his claim is as per his Statement of Claim. He stated that they made an agreement with the Respondent and that in the Annual General Meeting both supervisory reports showed amounts were not banked. On Cross Examination, he asserted that they have auditors, the supervisory team and government auditors and that as per the law, books should be audited yearly. He confirmed that he discovered the monies were lost in 2017 and that the audit report shows which year the monies were mismanaged.

11. The Claimant’s second witness (CW2), Erick Oketch Moko gave evidence and confirmed the acknowledgement of debt letter dated 12/1/2018. He asserted the Respondent was present and signed the letter willingly.

12. The Respondent filed his Defence and denied the Claimant’s claim. They further aver that if any agreement was ever executed by him as alleged, then the same is void and unenforceable for reasons that the same was obtained by misrepresentation, undue influence and coercion. They aver that no monies were ever misappropriated by him during his tenure. The Respondent avers that several audits both internal and external revealed no such misappropriation of any funds by the Respondent.

13. Matter proceeded for hearing on 5th December 2022 where the Respondent testified adopting his Witness Statement dated 1/2/2022 as his Evidence- in-Chief. He also produced his List of Documents dated 1/2/2022 in support of the case. On cross examination, he asserted his duty is to keep proper records. He stated that he would receive money from the members of the Sacco and take all the money to the bank. He stated that any member of the Executive Committee would receive money and bank it. He denied paying Kshs. 10,000/= and denied accepting to pay in installments.

14. Parties were directed to file their Written Submissions with the Claimant having filed their written submissions dated 31/01/2023 and filed on 31/03/2023. As at the time of writing this Judgement the Respondent had not filed any Written Submissions.

Issues For Determinationa.Whether the Claimant is entitled to the claims sought?b.Who bears the costs of this suit?

Analysis a. Whether the Claimant is entitled to the claims sought? 15. The Claimant’s second witness (CW2), Erick Oketch Moko, testified that the Respondent was present and willingly signed the acknowledgement of debt letter. In support of the testimony the Claimant produced the said letter dated 12/01/2018 filed on 28/11/2018. In the said letter the Respondent acknowledged the debt of Kshs. 2,882,053/= and committed to settling the said debt within a period of three years by monthly installments of Kshs 80,000/=.

16. The letter has the Respondents signature and this clearly shows he admitted he is indebted to the Claimant. The Respondent has not produced any document to ascertain that he was not in the right mental state to sign the acknowledgement letter. In addition, the Respondent has failed to produce any evidence before the Tribunal to support his claim.

17. According to Section 26 of the Cooperative Societies Act, Societies are required to produce books, accounts and documents relating to the affairs of such society. The Claimant produced the bank statements and receipt books which show the monies were received by the Respondent but he failed to deposit to the accounts as is required.

18. We therefore find that the Claimant has proven their case.

b. Who bears the costs of this suit? 19. Costs follow the event.

Upshot 20. We find in favor of the Claimant against the Respondent for Kshs. 2,882,053. 00/= plus cost and interest.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 17TH DAY OF AUGUST, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 17. 8.2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 17. 8.2023HON. BEATRICE SAWE MEMBER SIGNED 17. 8.2023HON. FRIDAH LOTUIYA MEMBER SIGNED 17. 8.2023HON. PHILIP GICHUKI MEMBER SIGNED 17. 8.2023HON. MICHAEL CHESIKAW MEMBER SIGNED 17. 8.2023HON. PAUL AOL MEMBER SIGNED 17. 8.2023Tribunal Clerk JonahMs. Odhong advocate for the Claimant.Ko’winoh advocate for the Respondent – No appearanceJudgment deliveredClaim successful to the tune of Kshs. 2,882,053/= plus cost and interest.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 17. 8.2023