Ngumbu v Himosa Travellers Sacco Limited & another [2024] KECPT 965 (KLR)

Ngumbu v Himosa Travellers Sacco Limited & another (Tribunal Case 961 (E1033) of 2022) [2024] KECPT 965 (KLR) (Civ) (30 May 2024) (Judgment)

Neutral citation: [2024] KECPT 965 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case 961 (E1033) of 2022

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

May 30, 2024

Between

Peter Karogo Ngumbu

Claimant

and

Himosa Travellers Sacco Limited

1st Respondent

Humphrey Maina kamau t/a Nurisha Auction

2nd Respondent

Judgment

1. The Claim herein was brought to the Tribunal by the Claimant vide a Statement of Claim dated 4th December, 2022, filed on 16th December, 2022.

2. In his Claim, the Claimant states that he is the registered and/or beneficial owner of motor vehicle registration number KBZ 976Z (Isuzu NPR). That on or about 7th April, 2022 the 2nd Respondent purportedly under the instruction of the 1st Respondent, repossessed the said motor vehicle registration number KBZ 976Z to recover the sum of Kshs 223,560. 00/= allegedly owing to the 1st Respondent from the Claim. That the Claimant does not owe the 1st Respondent the sum of Kshs 223,560. 00/= as alleged or at all. That the Claimant had used motor vehicle registration number KBZ 976Z as collateral for loan facility of Kshs 1,000,000/= advanced by Co-operative Bank of Kenya and the sad Bank was registered as a joint owner of the motor vehicle. That it was agreed between the Claimant, the 1st Respondent and Co-operative bank that the Claimant would be servicing the loan facility to Cooperative through the 1st Respondent Bank account with Cooperative Bank whereby the 1st Respondent would use the Claimant’s savings to pay the Claimant’s loan facility with the Bank.

3. The Claimant states further that the 1st Respondent agreed that it would be deducting the sum of Kshs 48,620/= per month and remit the same Cooperative Bank which amount was subsequently revised to Kshs, 38,620/=. That the 1st Respondent deducted the sums of money from the Claimant but did not remit the same to Cooperative Bank as agreed. That the actions by the Respondent in failing to remit money to Cooperative Bank and repossessing the Claimant’s motor vehicle is fraudulent for reasons that:1. The Claimant does not owe the 1st Respondent the sum of Kshs 223,560. 00;2. There is no agreement between the Claimant and the 1st Respondent which would entitle the 1st Respondent to repossess the subject motor vehicle.3. There is no valid judgement in favor of the 1st Respondent and thus the 2nd Respondent acted contrary to the provisions of the Auctioneers Act in repossessing the Claimant’s motor vehicle.4. The 1st Respondent deducted money from the Claimant’s earnings but failed to remit to the Co-operative Bank.

4. Further, the Claimant states that he used the subject motor vehicle for matatu business whereby he was earning the net sum of Kshs, 5,000. 00/= per day from the vehicle. That the illegal actions of the Respondents have denied the Claimant the source of his livelihood with no legal justification. That the Respondents are not entitled to continue holding the motor vehicle and should return the same or pay to him the value of the said vehicle being Kshs 3,000,000/=. That despite demand and notice of intention to sue, the Respondents have refused to make good Claimant’s Claim.

5. The Claimant prays for judgement against the Respondents jointly and severally for: -a.A declaration that motor vehicle registration number KBZ 976Z (Isuzu NPR) belonged to the Claimant.b.In the alternative to prayer (a) above, an order do issue directing the Respondents to compensate the Claimant the value of motor vehicle registration number KBZ 976Z (Isuzu NPR)c.Loss of user for motor vehicle registration number KBZ 976Z at the rate of Kshs 5,000,000/= per day with effect from 7th April, 2022 until the ownership of motor vehicle registration number KBZ 976Z is restored to the Claimant or compensation for the value of the subject motor vehicle paid to the Claimant.d.General damages.e.Interest on (b) and (c) above at court rates from 7th April, 2022 until payment in full,f.Costs of this suit.g.Any further relief that the Honourable Court may deem fit to grant.

6. The Respondent replied to the Statement of Claim vide a reply to Statement of Claim dated 31st January, 2023. Therein, the Respondent’s deny that the Claimant is the owner and/or beneficial interest owner of motor vehicle registration number KBZ 976Z (Isuzu NPR) since the ownership has already passed on to another person legally. That the repossession stated under paragraph 5 of the Statement of Claim and add that as at the 7th April, 2022 the sum of money which was owing on account of the Claimant’s loan and upon which the said motor vehicle registration number KBZ 976Z was repossessed is not just the purported sum of Kshs 223,560/=. The repossession was done to recover and also settle the loan facility advanced to the 1st Respondents by the Co-operative Bank of Kenya and the Claimant’s loan. That upon repossession sale, money was deducted from the 1st Respondent’s account for the re-payment towards the settlement of the Claimant’s balance.

7. Further, the Respondent avers that the Claimant owed the 1st Respondent the money. That the Claimant was not one of the beneficiaries of the loan facilities advanced by Co-operative Bank of Kenya to the 1st Respondent and motor vehicle registration number KBZ 976Z was a collateral security in terms of the letter of offer executed between the Bank and the Respondent. That the Respondents deny the particulars of fraud and illegality and state that the ownership of motor vehicle registration number KBZ 976Z legally passed on to another person through a public auction done in strict adherence to the relevant laws. That the motor vehicle was valued by a qualified valuer before the auction was conducted. That demand and notice of intention to sue was not served. The Respondents pray that the Claimant’s suit is dismissed with costs.

Claimant’s Case 8. The Claimant adduced sworn evidence at the hearing. He introduced himself as a business man with a matatu vehicle.

9. The Claimant produced as his Evidence -in Chief, his Witness Statement dated 14/12/2022 filed on 16/12/2022.

10. The Claimant further produced in evidence his List of Documents dated 14/12/2022 and marked the documents as the Claimant’s exhibits 1 to 8.

11. The Claimant stated that he is the registered owner of the vehicle together with Co-operative Bank, as per exhibit number 3 of the Claimant’s List of Documents. That he was given a loan through the 1st Respondent to which the motor vehicle was used as collateral. That the motor vehicle was taken from him by the 1st Respondent, not the Bank. That ‘the Respondent did not inform me how much was owing’. That he wishes the Tribunal to grant his prayers as per the Statement of Claim.

12. On Cross-examination, the Claimant stated that he worked as the 1st Respondent’s Treasurer. That he was summoned as a member of the 1st Respondent about hid debt which he was told was Kshs 120,000/=. That he took a loan from the Bank, however he could not confirm that he signed a document from the Bank regarding the loan, but confirmed that the loan was in the name of the 1st Respondent. That the money was transferred to the 1st Respondent account and the 1st Respondent transferred the money to him. That the purpose of the loan was to buy another motor vehicle. That he bought motor vehicle registration number KAZ 861, which he has since sold.

13. On further cross-examination, the Claimant stated that he had not completed making payments to the 1st Respondent when his vehicle was sold. That he was informed he had arrears in the Sacco and not in the Bank. That the Claimant’s document dated April shows how payments are made by the whole Sacco, it is not for an individual. That the paid money in the month of November, and April but said he had no evidence.

14. On Re-examination, the Claimant stated that the 1st Respondent is the custodian of the schedule dated April, 2021, exhibit number 5 of the Claimant’s List of Document. That the 1st Respondent took the vehicle in which he used to keep the documents hence he did not bring them to court. That the loan was given to him by the 1st Respondent but he got funds from the Co-operative Bank. On request for clarification by the Tribunal, the Claimant stated that there are months where he did not pay the loan because of Covid pandemic. That he has loan arrears by the accounts have not been reconciled. The vehicle was taken in April, 2022.

Respondent’s Case. 15. The Respondent’s Witness Scholastica Muthoni adduced sworn evidence at the hearing. That she is a member of the County Assembly of the County of Nairobi. That she is the Chairperson of the 1st Respondent. That the Claimant is still the treasurer of the 1st Respondent. That the 1st Respondent went dormant.

16. The witness produced the Respondent’s Witness Statement dated 31/1/2023 filed on 14/3/2023 as her Evidence- in- Chief. The Witness also produced the Respondent’s List of Document dated 31st January, 2023 in evidence and marked the documents therein marked as Respondents’ Exhibit 1-13 as they appear on the list.

17. The witness further states that the Claimant was given a loan by the 1st Respondent after the 1st Respondent took a loan from Co-operative Bank. That exhibit 1 of the Respondents’ list of documents being letter dated 16/2/2021 is addressed to the 1st Respondent by the Bank. That as per the said document, the sum of Kshs 3,000,000/= was approved and released. That the 1st Respondent was the Applicant. That he was given his loan by the 1st Respondent.

18. Further, the witness stated that the Claimant paid his loan but not consistently. That he failed to pay for 6 months. That the loan had been disbursed to 3 beneficiaries as per Respondent’s exhibit 3. That as per exhibit 4, the Claimant was not paying and he became in arrears. The 1st Respondent paid for him.

19. On whether the Claimant’s vehicle was taken without notice, the witness states that the Claimant was given notice. That the sale was advertised in the newspaper on Wednesday, 20th April, 2022. That the motor vehicle was valued by Union Assessors and Contractors as per the Respondents’ exhibit 11. That after the sale, the 1st Respondent paid the balance of Kshs 613,600/= and cleared the Claimant’s 6 months arrears of Kshs 223,460/= and the auctioneers fees of Kshs 59,000/=. That the Claimant’s vehicle was sold legally. That the Claimant’s case be dismissed with costs.

20. On cross-examination, the witness reiterated that the Claimant was given the loan by the 1st Respondent, however she could not answer if there was a loan agreement between the Claimant and the 1st Respondent.

21. The witness further stated that the claimant was supported to pay the sum of Kshs 48,000/= per month to the 1st Respondent through daily collections. That the loan was issued by the Bank to the Claimants through the Sacco, hence the joint ownership of motor vehicle registration number KBZ 976Z.

22. On being asked whether she had brought to the Tribunal the Claimant’s loan repayment schedule, she referred to Respondents’ exhibit 4, that the Bank fixed the monthly repayment sum of Kshs 48,000/=. That the Bank could not directly go after the Claimant because the 1st Respondent took the loan on behalf of the Claimant.

23. On re-examination, the witness stated that the Sacco took the loan from the Bank and the Claimant was paying the 1st Respondent by way of Sacco deposits as shown on the schedule.

24. After the hearing, parties filed Written Submissions. The Claimant’s Written Submissions are dated 28th November, 2023 while the Respondent’s Written Submissions are dated 8th December, 2023.

Analysis. 25. We have considered the pleadings of the parties together with the documentary and oral evidence adduced at the hearing by both sides. We have also considered the Written Submissions filed by the parties and have observed that:1. The Claimant as a member of the 1st Respondent obtained loan facilities provided by Co-operative Bank of Kenya through the 1st Respondent, who was the borrower in the letter of offer.2. The Claimant provided his motor vehicle registration number KBZ 976Z as security for the loan.3. The Claimant defaulted in payment of the loan and the 1st Respondent proceeded to realize the security.4. There was no privity of Contract between the Bank and the Claimant and the Claimant through the 1st Respondent, provided the security of the Claimant’s vehicle for the loan.5. The 1st Respondent was paid the sum of Kshs 3,000,000/= by the Bank for three beneficiaries, the Claimant included.6. The recovery process was done after default and the Claimant’s motor vehicle registration number KBZ 976Z was sold to a third party after valuation as per valuation report.

Determination. 26. From the foregoing, though the only issue is whether or not the Claimant is entitled to prayers sought in the Statement of Claim.a.On whether or not the Claimant is the owner of motor vehicle registration number KBZ 976Z, we note that whereas the said vehicle was jointly owned by the Claimant and the Bank as at December, 2022, there is no dispute as to the fact that the said vehicle has since been sold in recovery of the loan arrears by the 1st Respondent.Though there is no evidence of the new ownership, we have no reason to doubt that the vehicle was sold and no longer belongs to the Claimant. Prayer (a) therefore fails.b.On the alternative, prayer for an order directing the Respondents to compensate the Claimant the value of the motor vehicle registration number KBZ 976Z. we find that the said motor vehicle was sild procedurally after the Claimant went into arrears and was issued with the relevant notices and valuation of the vehicle.

27. However, we are not satisfied that the proceeds of the sale were applied properly. Whereas out of the proceeds the sum of Kshs 613,600/= was said by the Respondents’ witness to have been paid to clear the loan balance and Kshs 223,460/= went towards the Claimant’s 6 months arrears and Kshs 59,000/= went to settle the Auctioneers fees, the 1st Respondent has not clearly stated how much the Claimant’s vehicle was sold for.

28. Noting that the Proclamation Notice served upon the Claimant stated the total amount due from the Claimant as Kshs 223,500/= only as at 28th March, 2022, we are lost to why the sum of Kshs 613,600/= was applied to the loan balances that are neither explained nor contained in the Proclamation Notice. It is trite that when a borrower defaults, the whole loan amount falls due. We are therefore satisfied that the only loan amount due from the Claimant as at the date of sale of the motor vehicle is Kshs 223,500/=.

Final Orders 29. Claim dated 14. 12. 2022 is found to be with merit. Judgment is entered in favour of Claimant against Respondent.1. We therefore order 1st Respondent to pay to the Claimant part of the proceeds of the sale of motor vehicle registration KBZ 976Z amounting Kshs 613,600/=2. On the claim for loss of user of motor vehicle registration number KBZ 976Z, the claimant has not proved by documentary evidence, the earnings of Kshs 5000/= per day for the 170 days of loss of user- prayer fails.3. In any event, we find that save for how the proceeds or sale were applied the attachment was warranted and the process was properly carried out.4. The claim for General damages is allowed and the claimant is awarded the sum of Kshs 50,000/=.5. The claimant is awarded costs of suit and interest at tribunal rates from the date of judgment.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF MAY, 2024. Hon. J. Mwatsama Deputy Chairperson Signed 30. 5.2024Hon. Beatrice Sawe Member Signed 30. 5.2024Hon. Fridah Lotuiya Member Signed 30. 5.2024Hon. Philip Gichuki Member Signed 30. 5.2024Hon. Michael Chesikaw Member Signed 30. 5.2024Hon. Paul Aol Member Signed 30. 5.2024Tribunal Clerk JonahKamwaro advocate for the ClaimantNyakeriga advocate for the RespondentNyakeriga advocate - We pray for 30 days stay.Kamwaro advocate – We have no objectionTribunal orders : 30 days stay of execution granted.Hon. J. Mwatsama Deputy Chairperson Signed 30. 5.2024