Mwaniki v Embu Farmers Sacco Limited [2023] KECPT 409 (KLR)

Mwaniki v Embu Farmers Sacco Limited (Tribunal Case 11 of 2011) [2023] KECPT 409 (KLR) (27 April 2023) (Judgment)

Neutral citation: [2023] KECPT 409 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 11 of 2011

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

April 27, 2023

Between

Festus Njiru Mwaniki

Claimant

and

Embu Farmers Sacco Limited

Respondent

Judgment

1. The matter for determination is Statement of Claim dated 12. 4.2011 filed on 19. 4.2011 seeking the following prayers:a.A declaration that the Claimant was not as at the 19th June 2009 indebted to the Respondent.b.A finding that the Respondent’s action in attaching the Plaintiff’s cattle and money at his Bank Accounts was unlawful.c.An order that the Respondent do pay the Plaintiff the sum of Kshs. 433,800. 00 being as to Kshs. 250,000/= the value of the cows; and Kshs. 184,308. 35/= cash wrongfully appropriated by the Respondent from the Claimant’s account.d.Damages for trespass.e.Costs of this claimf.Such further or other relief.

2. The Respondent filed the Response dated 23. 6.2011 filed on 23. 6.2011 denying the claim.

3. The matter came up for hearing on 11. 11. 2022. The Claimant’s witness Festus Njiru Mwaniki CW1 stated that he was the Claimant in the matter and adopted his Witness Statement as Evidence- in -Chief and also produced his documents CEXH.1-5. The Respondent also called their witness Joseph Mwaniki Githinji who adopted his Witness Statement as Evidence -in -Chief and produced the documents REX.1.

4. Parties filed written submissions on 10. 2.2013 and 6. 2.2023 respectively.

Claimant’s Case 5. The Claimant’s case is that the Respondent operated Macadamia processing factory and it approached the Claimant who was a member to purchase the said nuts on their behalf. He was to be issued starting capital of Kshs. 50,000/= and he would be paid Kshs. 5/= per kilogram. This was used to repay the loan and the Claimant would retain the profit. That upon clearance of the loan, he would take another advance.

6. That this went on until April 2005 when the Respondent closed the factory without notice to the Claimant who had taken an advance of Kshs. 70,000/=, purchased nuts but they were never collected, hence the Claimant suffered loss. That in September, 2006, upon inquiry, he was informed that he had a balance of Kshs. 68,000/=.

7. On 19. 6.2009, he was informed that his balance was Kshs. 209,008. 85/=. That without any sufficient notice, his cows and property were attached.

8. That on 6. 4.2005, it is true he was advanced Kshs. 880,000/=.

9. That the Claimant was not issued with the notification of sale and did not know that the Respondent had also accessed his wife’s account.

10. The Claimant produced a valuation report for Kshs. 250,000/= and his wife’s account entry number AA24283101200021704 dated 30-31/12/10(Kshs. 184,508/35).

Respondent’s Case 11. The Respondent stated that they appointed the Claimant as the agent for purposes of buying macadamia nuts on their behalf. That the Respondent would advance same money to the Claimant for the purposes of purchasing and delivering the nuts and a commission payment of Kshs. 5/= per kilogram.

12. That the agency was not in writing and no transactions were put on record. The only records were for the charge of money.

13. That the Respondent advanced Kshs. 880,000/= between 16. 2.2005 and 16. 4.2005 to the Claimant who refused to pay and arrears accumulated to Kshs. 209,008/35 as at 2. 9.2009. They instructed Bensive Auctioneers and gave the Claimant 72 hours to redeem the cows and he did not.

14. The Auctioneers sold the cows at Kshs.51,400/= and it paid the Auctioneers charges of Kshs. 34,730/= leaving a balance of Kshs.16,670/= which was credited into the Claimant’s nominee account since the total loan had already been recovered from that account.

Issuesi.Whether there was an agency relationship between the parties.ii.Whether the claimant was indebted to the Respondent.iii.Whether the claimant is entitled to the reliefs sought. ISSUE (i) Whether there was an agency relationship between the parties. 15. The Claimant claimed that there was an agency relationship between him and the Respondent as pleaded in paragraph 5 of the Statement of Claim. That this was a verbal appointment and was never reduced into writing. The Respondent denied this issue at paragraph 5 of the Response. However, the issue at hand is based on non-payment of money.

16. We note that the Claimant was a member of the Respondent as per the Statement of Account. The Statement of Account also shows that the Respondent would advance macadamia nuts and the interest charged and the loan draw downs. We note that the form of money changing hands was in the form of advancements of loan and of nuts.

17. It is clear that money was advanced to the Claimant by the Respondent. Despite the fact that the Respondent claims that there was no agency yet there was no loan forms for the money advanced to the Claimant. This therefore shows that there was a relationship between the Claimant and Respondent that was beyond the membership relationship.

18. We note that the Claimant would collect the advance money from the Respondent, go and source for nuts and come sell them to the Respondent and obtain Kshs. 5/= per kilo. The Claimant would apply for a loan and the advances were tied to the nuts purchases, this therefore shows that the Respondent had an implied agency relationship with the Claimant.

Issue (ii) Whether the claimant was indebted to the Respondent. 19. The Claimant admitted having obtained Kshs. 880,000/= between 16. 2.2005 and 6. 4.2005. That the Respondent closed business on 6. 4.2005 and four years later, purported to claim Kshs. 209,008/35(on19. 6.2009). That the Respondent instructed the Auctioneers to recover Kshs. 212,639/= 5 years after the closure of the company, who auctioned his cows and the respondent withdrew Kshs. 184,308/35 from his wife’s account. The Claimant therefore claimed Kshs. 433,800/=.

20. The Respondents aver that the Claimant had arrears of Kshs. 209,008/35 as at September 2009 when Auctioneers issued the 7 days’ notice. That they attached 2 cows and a calf on 19. 10. 2010 which were sold for Kshs. 51,400/= and they recovered the balance of Kshs. 184,508/35.

21. We have looked at the pleadings, the Witness Statement and documents filed by the parties. We note that the Respondent did not provide the Statement of Account, Loan Statement and the Wife’s Statement.

22. The Claimant avers and pleads that he paid as per the paragraph 9 Statement of Claim which he states that he paid a total of Kshs. 72,359/=. This was not disputed by way of Statement of Account /Statement of Loan .The Respondent has the duty to keep records and to avail them when they are required. From the documents on record, we note that the statement provided is the general Statement of Account. There seems to be no loan acquired/advanced to the Claimant after the Respondent closed shop on 6. 4.2005, however, we note that there are 5 debits dated 12. 6.2009 of Kshs. 26,442/=, Kshs.26,442/=,Kshs. 26,352/=, Kshs. 26,352 and Kshs. 26,352/=. There was no explanation forthcoming from the Respondent on how this debits came about.

23. This is the advancement account and looks like the general savings Statements of the Account of the Claimant. Its not clear why the Respondent issued a default notice yet they had closed shop in 2005, (an allegation not denied by the Respondent).

24. There are no advancement forms produced by the Respondent to show that indeed there was further advancements after the year 2005. There was no explanation brought forth by the Respondent whether they were still in operation and how the rest of the amounts came about.

25. There are no notices of default filed to show that the Respondent actually issued default notice to the Claimant before sending the Auctioneers.

26. There is also no evidence to show that the proper execution procedure was followed by the respondent. 7 days’ notice was not what is prescribed by the law. Indeed there is no explanation as to why the Respondent attached the cows of the Claimant and the wife’s money from her account.

27. Its clear that the Respondent committed an illegality of attachment and sale without the proper notices, then said cows were sold at half the price of the Respondent’s valued amount yet they had not been issued as security for the loan.

28. The Respondents also attached the Claimant’s wife’s money without her consent and authority. Indeed, the Respondent committed an illegality. The Claimant averred that he had cleared the loan as at 19. 6.2009. The Respondent had a duty to keep proper records of accounts of the members. The statements produced are advancement, savings and Summary of Account of the Claimant. No proper Statement of Account has been provided by the Respondent.

29. We therefore find:a.That there is no evidence of indebtness of the claimant since no proper accounts were kept by the Respondent.b.The Respondent’s execution by attachment and sale of the Claimant’s cows was illegal as no proper notices were issued in accordance to the Auctioneer’s Act.c.The Respondent illegally attached the Claimant’s wife’s account.

30. We therefore find that the Claimant has proved his case on a balance of probabilities and grant:a.A declaration that the Claimant was not as at the 19th June 2009 indebted to the respondent.b.A finding that the Respondent’s action in attaching the plaintiff’s cattle and money at his bank accounts was unlawful.c.An order that the Respondent do pay the plaintiff the sum of Kshs. 434,308. 35 being as to Kshs. 250,000/= the value of the cows; and Kshs. 184,308. 35/= cash wrongfully appropriated from the claimant’s wife’s account.d.Damages for trespass not proved.e.Costs and interests of this claim

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 27TH DAY OF APRIL,2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 27. 4.2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 27. 4.2023HON. BEATRICE SAWE MEMBER SIGNED 27. 4.2023HON. FRIDAH LOTUIYA MEMBER SIGNED 27. 4.2023HON. PHILIP GICHUKI MEMBER SIGNED 27. 4.2023HON. MICHAEL CHESIKAW MEMBER SIGNED 27. 4.2023HON. PAUL AOL MEMBER SIGNED 27. 4.2023