M'Mrimberia v Fen Sacco Society Limited [2023] KECPT 830 (KLR)

M'Mrimberia v Fen Sacco Society Limited (Tribunal Case 151 (E230) of 2021) [2023] KECPT 830 (KLR) (31 August 2023) (Judgment)

Neutral citation: [2023] KECPT 830 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 151 (E230) of 2021

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

August 31, 2023

Between

Elizabeth M'Mrimberia

Claimant

and

Fen Sacco Society Limited

Respondent

Judgment

1. The Claim for determination is Statement of Claim dated 29. 7.2019 filed on 16. 3.2021

2. The Claimant claims to have joined Respondent SACCO – Fen SACCO in 2013 and has saved money for 2 years.

3. In the year 2015, the Claimant/Applicant for a loan of Ksh 100,000/= was granted. She repaid the amount within 10 months.

4. In January 2016, she applied for another loan of Ksh 300,000/= and was granted which loan she repaid in 12 months.

5. She requested a 3rd loan and this time it was not granted because she had guaranteed three people and the Respondent requested security. The claimant offered her 2 residential houses as security. However later, she was informed she had unpaid arrears of Ksh 265,000/=

6. The Claimant avers to have had savings of Ksh 126,000/= and shares worth Ksh 6,000/=

7. The Claimant prays for:1. Payment of Ksh 132,000/=2. Cost of the suit3. InterestClaimant further filed a List of Documents dated 29. 7.2019 filed on 16. 3.2021

8. Respondent filed Statement of Defense and Counter claim dated 9. 7.2021 filed on 6. 8.2021 to which they represented. The loan of Ksh 300,000/= was not paid within 12 months as alleged as it was to be repaid within 24 months and Claimant had outstanding amounts of Ksh 376,123/= inclusive of interest.

9. That the way the Claimant aver to have been paid was never received and co-operation transactions are not reflected in the Respondent’s balance account as the Respondent's M-pesa paybill No. is new to Co-operative Bank and any payment is accredited to the Account.

10. Further the Claimant is a guarantor to 3 people who defaulted and are in arrears i.e.i.Stanslaus Mbai Muya – Ksh 104,000/=ii.Susan Njoki Kamau – Ksh 400,000/=iii.Bonface Kilonzo Mbai – Ksh 90,001/=

11. Respondent used Claimant’s savings to offset Stanslaus Mbai Muya Account.

12. Respondent also avers notices were issued to Claimant and she did not settle.

13. In their Counter-claim, the Respondent claims they advanced Claimant Ksh 300,000/=, and the Claimant defaulted.The balance stood at Ksh 376,213/=

14. The Claimant was to guarantee Susan to a tune of Ksh 400,000/= and Boniface Ksh 900,000/= who had defaulted, as such, the Respondent seeks for:a.The sum of Ksh 597,170/= plus interest at the rate of 1% per month (12% per annum) until payment in full.b.The costs of the suit.c.Interest in (a) and (b) above at court rates.

15. The Respondent filed their list of documents dated 9. 7.2021 on 6. 8.2021. and a supplementary list of documents dated 16. 5.2022 on an even date.

16. Matter came for hearing on 12. 1.2022 with CW1 – Elizabeth Mwai giving evidence. She adopted her witness statement dated 29. 7.2019 as her evidence in chief and produced a list of Documents dated 29. 7.2019 as evidence.

17. On cross-examination, she stated on the issue of guarantorsStanslaus Mbai – they were 4 guarantors as such cannot bear burden alone.Susan Njoki – cleared her loanBoniface Mbai – she could not remember guaranteeing him.

18. The RW1 – Leah Mahandi adopted her witness statement dated 9. 7.2021 as her evidence in chief and produced a list of documents dated R Exh 1-16 and a Supplementary List dated R Ex17She stated that the money the Claimant was paying was not credited to her AccountThey are claiming the loan and guaranteed sums.

19. On cross-examination, she stated the money was to be paid to the bank or paybill. Account details were issued to members.She confirmed there was an Officer called Jared who had stolen the Respondent’s cash. He (Jared) had taken advantage of the situation.

20. Having heard all parties, they were directed to file written submissions, and Claimant filed their written submissions on 24. 1.2023 on 2. 2.2023 and Respondent filed written submissions dated 1. 3.2023 on 8. 3.2023. Having considered pleadings and evidence adduced the issue for determination are:Issue onei.Whether the Claimant did pay her loan of Ksh 300,000/=Issue twoii.Whether the Claimant is bound to pay for the guarantees non-payment of the loan.

Issue One Whether The Claimant Did Pay Her Loan Of Ksh 300,000/= 21. The Claimant produced documents to support her claim with receipts attached. The said receipts were not disputed by the Respondent, and this confirms that indeed Claimant made payment.

22. The Respondent further confirms one of their officers was involved in the embezzlement of funds and as such we cannot expect the Claimant, an innocent party to pay for the mistakes of Respondent’s employee.We are satisfied that the Claimant did pay up their loan.

Issue Two Whether The Claimant Is Bound To Pay For The Guarantees Non-payment Of The Loan. 23. It has been said time and again that a guarantor should not be a burden to the person who leaves risk to guarantee the borrower.Guarantors do so in good faith, and it would not be prudent for them to be punished for the omission of the people they are guaranteeing.

24. As such despite the person guaranteed not being diligent to pay their loans, the Respondent did not provide the loan account statement of Stanislaus Mbai Muya, Susan Njoki Kamau, and Boniface Mbai for the Tribunal to confirm the loan amount unpaid and what extent Claimant would have been liable if at all.

25. Further, as stated, the guarantors of any given loan ought to be the last result taken by any SACCO. The Sacco/Respondent ought to have looked for other means to recover their loan payment and not take the ready way out.

26. Respondent did not give any attempt or indicate any steps taken to recover the loans from the defaulters.As such, we are not convinced the Claimant ought to bear the burden of non-payment of defaulters whom the Respondent has not engaged other than the demand letter.

Upshot 27. As such with the above, we find merit in the Claimant’s case.

28. Judgment is entered in favor of Claimant against Respondent for Ksh 132,000/= plus cost and interest.

JUDGMENT RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 31ST DAY OF AUGUST, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 31. 8.2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 31. 8.2023HON. BEATRICE SAWE MEMBER SIGNED 31. 8.2023HON. FRIDAH LOTUIYA MEMBER SIGNED 31. 8.2023HON. PHILIP GICHUKI MEMBER SIGNED 31. 8.2023HON. MICHAEL CHESIKAW MEMBER SIGNED 31. 8.2023HON. PAUL AOL MEMBER SIGNED 31. 8.2023TRIBUNAL CLERK JEMIMAH