M’kala v Lavington United Sacco Limited [2023] KECPT 1090 (KLR)

M’kala v Lavington United Sacco Limited (Tribunal Case E308/258 of 2022) [2023] KECPT 1090 (KLR) (Civ) (14 December 2023) (Judgment)

Neutral citation: [2023] KECPT 1090 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case E308/258 of 2022

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

December 14, 2023

Between

David Mwongela M’kala

Claimant

and

Lavington United Sacco Limited

Respondent

Judgment

1. Before this Tribunal is a money refund Claim that the Claimant who was an employee of Lavington Security Services Limited saved with the Respondent from 2015 to 2019. It is not in dispute that he was a member of the Respondent and during the period he borrowed loans and he guaranteed his fellow members.

2. On 19/2/2019, the Claimant wrote a letter to withdraw his membership from the Sacco and filled a membership withdrawal form. He wrote another letter on 21/11/2019 as a follow up of the previous letter.

3. When the letters of withdrawal did not elicit response, the Claimant moved this Tribunal by filing a Plaint/ Statement of Claim dated 8th March, 2022 and sought for:i.Refund of his savings amounting to Kshs. 30,480/= plus interest from 12/2/2019. ii.Costs of the suit.

4. When the file was placed before the Tribunal on 17/8/2022, the Tribunal ordered the parties to negotiate the matter and attempt to settle out of the Tribunal. This did not happen so the Tribunal ordered the parties to file Written Submissions.

5. Upon reading the Claimant’s Statement of Claim/ Plaint, the Witness Statement, the Verifying Affidavit, List of Documents all dated 8/3/2022 and filed on 10/5/2022ANDThe Defendant’s/ Respondent Statement of Defence dated 25/4/2022 and filed on 17/5/2022, we have isolated two (2) issues for determination.1. Does the Claimant/Plaintiff deserve to be refunded his savings amounting Kshs.30,148/=?2. Whether guaranteeing another member is a bar to a member’s refund?

6. On issue No. 1, it is a common practice in Marketing and Sacco Societies, when a member retires, resigns or gets sacked, such a member is entitled to refund of his/her savings, shares and dividends if any. Section 4 of the Co-operative societies Act Cap. 490 provides seven (7) Principles of Co-operatives, one of which is that a member can join a Sacco voluntarily and can equally withdraw voluntarily hence operate an open membership policy provided a member meets the qualification provided under Section 14 of the Co-operative Societies Act – Cap 490 Laws of Kenya which reads as follows:“A person other than a Co-operative Society shall not be qualified for membership of a Society unless;a.He has attained the age of 18 years.b.His employment, occupation or profession falls within the category of the description of those for which the Co-operative Society is formed.c.He is resident within occupiers land within the Society’s area of operation as described in the relevant by-law”.

7. It is therefore not in dispute between the parties that the Claimant was a member of the Respondent hence would be entitled to refunds if any. According to the calculations worked out by the Claimant under paragraph 3(3) it is shown that the Claimant had savings worth Kshs 51,100/- at the time of the request to withdraw. These is not supported by any evidence of the member’s shares or savings account statement.

8. Paradoxically, the Claimant stated that he was informed that he had a loan balance of Kshs 8,949/=, guarantors of Kshs. 6,743/= and a share capital of Kshs 5,000/=. The Claimant did not back up these amounts with evidence and the figures remain hearsay.The Tribunal therefore does not consider matters of hearsay in its decision making and therefore the request for judgement of Kshs 30,480/= as a final sum due to the Claimant, does not hold any water. On the other hand, the Written Submissions of the Respondent on the amounts of the loan taken by the Claimant and the outstanding amounts are factual and easily traced to the member loan Statement which show that the Claimant took a loan of Kshs 53,800/= in 2016 and as at 30/6/2019, the amount outstanding show Kshs.10,354/=. This does not show what happened thereafter.

9. On issue No. 2, as to whether when a member guarantees another, it bars him/ her from demanding for refund of his savings, shares or dividends upon exit of the Sacco.The Claimant Submitted that the Respondent failed to provide a reason as to why the Claimant cannot be refunded his savings. On the same token, the Claimant state that the Respondent should acknowledge the request of the Claimant and as if he knows that he has outstanding obligation with the Sacco, the Claimant submit that the Respondent should deduct any outstanding obligation from his savings.

10. The above Submission of the Claimant confirms the disclosure of the Respondents that the Claimant had guaranteed some loan advance to one Mr. Fredrick Ouma, Mr. Dima Wako Wario and Mr. Ammon Bwogi Chwara whose amounts are not disclosed.The Tribunal places reliance on Section 36(1) & (2) of the Sacco Societies Act which provides as follows:“26 (1) A Sacco Society shall have a first charge against deposits and share capital and upon any dividend or interest payable to a member for any debt due to the Society from the member either as a guarantor or endorser of a loan or credit facility or for any other obligation.(2)A Sacco Society may refuse to allow withdrawals from any deposit account operated by a member where the member is in arrears on a debt owed to the Society.”On the basis of this provision, the Tribunal find that the Respondent acted within the law as the Claimant cannot cease to be a member until he discharges his obligation.

11. Who bears the costs of this suit?The position of the Law and this Tribunal is that costs follow the event, Section 27(1) of the Civil Procedure Act bestows this Tribunal with discretion to apportion costs given that the Claimant has failed on the two (2) issues, the Tribunal awards costs to the Respondent.

12. In conclusion, we find that the Claimant’s Claim dated 8/3/2022 is not merited and dismissed with costs. The Application is noted to be premature in that the Claimant should have pursued the out of Tribunal Settlement as was ordered. The Tribunal therefore enters judgement against the Claimant in favour of the Respondent. Costs shall be in favour of the Respondent.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 14TH DAY OF DECEMBER,2023. Hon. Beatrice Kimemia Chairperson Signed 14. 12. 2023Hon. J. Mwatsama Deputy Chairperson Signed 14. 12. 2023Hon. Beatrice Sawe Member Signed 14. 12. 2023Hon. Fridah Lotuiya Member Signed 14. 12. 2023Hon. Philip Gichuki Member Signed 14. 12. 2023Hon. Michael Chesikaw Member Signed 14. 12. 2023Hon. Paul Aol Member Signed 14. 12. 2023Tribunal Clerk JonahNo appearance by parties.**Judgment delivered in absence of parties.Hon. J. Mwatsama Deputy Chairperson Signed 14. 12. 2023