Nthiga v Kenya Union of Savings & Credit Cooperative Limited (KUSCCO) [2024] KECPT 249 (KLR)

Nthiga v Kenya Union of Savings & Credit Cooperative Limited (KUSCCO) (Tribunal Case 61 of 2021) [2024] KECPT 249 (KLR) (7 March 2024) (Judgment)

Neutral citation: [2024] KECPT 249 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 61 of 2021

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

March 7, 2024

Between

Lydia Njoki Nthiga

Claimant

and

Kenya Union of Savings & Credit Cooperative Limited (KUSCCO)

Respondent

Judgment

CLAIMANT’S CASE. 1. The Claimant’s case is based on the following;a.Statement of Claim dated 28/1/2021. b.Witness statement dated 28/1/2021. c.List of Documents received on 2/2/2021 and further list dates 6/2/2023. d.Hearing proceedings on 22/6/2023. e.Written Submissions dated 29/9/2023. f.Claimant’s Supplementary Affidavit dated 22/3/2021. The Claimant through her Statement of Claim dated 28/1/2021 stated that she had a Savings Account with the Respondent.She further states that around November, 2013, she applied and was granted a loan of Kshs. 2,000,000/= with her parcel of land L.R. No. Miti Mingi/Mbaruk Block 8/1876(Kianoya) Nakuru County used as the security for the loan.

2. She states that she serviced her loan until When her health deteriorated, a situation that she notified the Respondent.The Respondent served the Claimant with a 45 days’ notice and notification of sale through Keysian Auctioneers with the intention of selling the loan security parcel of land.She claims that the Respondent failed to have an independent valuer of the property as required by Section 97 of the Land Act 2012.

3. She claims further that the Respondent provided a Statement of accounts of the Claimant with some payments missing.She further Claims that the Respondent charged interest at rates and penalties without her knowledge.She prays for judgement against the Respondent for: -a.The Respondent be ordered to provide a detailed Statement of Account for her Loan and Savings Account reflecting all the monies paid by the Applicant and those withdrawn by the Respondent from her savings account.b.Any monies transferred from the Claimant’s savings account to the loan account by the Respondent without the knowledge and consent of the Applicant, be restored back to her savings account.c.The parties be ordered to undertake an exercise of reconciliation of accounts to ascertain the date when the loan went into default, and to ascertain the correct amount owed by the Claimant.d.An order be issued that valuation by an independent valuer be done of the subject property, Land Reference Number Miti Mingi/Mbaruk Block 8/1876. e.Costs of this suit.f.Any other relief this Honourable Tribunal deems fit to grant.

4. In her Witness Statement, the Claimant reiterated her position adding that she was on the verge of losing her property and that the Respondent has failed to issue her proper accounts of her loan.The Claimant has produced relevant to prove her case.During the hearing of the case on 6/2/2023, the Claimant adopted her Statement of Claim and List of Documents as her Evidence- in- Chief.During the hearing, the Claimant admitted borrowing Kshs. 2,000,000/= from the Respondent. She stated that she repaid the loan up to 2018 when she got a stroke, occasioning the inability to repay.She stated that she informed the Respondent of her health situation. She stated that the next thing she saw was an Auctioneers’ Notice. She stated that the Respondent was usually late in updating her Loan Account. She claims that interest rate was not indicated in the Loan Application.

5. The Claimant admits owing the Respondent Kshs. 1,200,000/= while the Respondent is Claiming Kshs. 3,200,000/=. She states that a current valuation was not done and that the Respondent relied on a 2013 Valuation report.She stated that she is ready to repay if the Security land is sold at current rates.She also stated that the Respondent was still holding her savings.On Cross examination she confirmed that she was aware there would be loan interest but not loan penalties.She admitted that her property would be sold on default of her loan. On re-examination, the Claimant confirmed that she had to have savings with the Respondent in order to qualify for the loan. She also confirmed filing of the valuation report.In her Written Submissions, the Claimant gave a brief of the case confirming that she is the rightful owner of the Security property.

6. She expounded on the difficulties the encountered in trying to get an updated loan account. She states that the first valuation was done in 2013 when she applied for the loan and that the Respondent wanted to use the same valuation to auction her property, claiming it was 8 years old.The second valuation was undertaken on this court’s direction and that the value of the security land was Kshs. 2,500,000/= while the 2013 valuation was Kshs. 1,800,000/=She avers she had done her own account reconciliation and that she was not having a loan balance. She was not comfortable with the account balance given by the Respondent.She admitted not having repaid her loan since the time she suffered a stroke. She admitted that the Respondent can exercise its statutory right to sell the Security Property but she avers the same should be sold at current market rate.

Respondent’s Case. 7. The Respondent’s case is built on the following documents and the proceedings.a.Respondent’s Replying Affidavit dated 15/3/2021. b.Respondent’s Witness statement dated 27/9/2021. c.Respondent’s Statement of Response to Claim and Counter Claim dated 25/9/2021. d.List of Documents dated 25/9/2021 and further documents dated 1/2/2023. e.Hearing on 22/6/2023. f.Submissions dated …In her Replying Affidavit dated 15/3/2021, the Respondent through the Central Finance Fund manager confirms that the Claimant was loaned Kshs. 2,000,000/= and used her property (land) as security. She denied receiving any communication on the Claimant’s health status.She also confirmed that all the payments made by the Claimant have been properly accounted for. She states that the Claimant was thoroughly taken through her obligations before the loan was given.She denied that there were irregular activities in the Claimant’s loan account. She claims that the Claimant was dishonest throughout the period of the loan. She states that the Claimant has not shown willingness to repay her loan.

8. The Respondent has also filed a Counter-claim dated 25/9/2022 praying for: -a.The Claimant’s suit against them be dismissed with costs.b.The Claimant be ordered to pay the outstanding loan amount that remains unpaid to date with the interests thereon at market rates.c.Without prejudice to the foregoing, and in the alternative, the Respondent be allowed to exercise their statutory right of sale to sell the Claimant’s property in order to recover the outstanding amounts on the loan.d.Any other order that this court deems fit to grant in the interests of justice and in the circumstances.In her witness statement, the Respondent reiterates that the Claimant indeed was granted Kshs. 2,000,000/= with her land as security. She states that she is the one who processes and awarded the Claimant Kshs. 2,000,000/= on 27/11/2013. She stated that it was mandatory to provide Security for such loans.Upon default by the Claimant, the Respondent witness did a default letter to the Claimant on 29/5/2019. The demand notice was not respondent to by the Claimant. Upon default, interest and penalties continued to accrue. She stated that the loan balance was Kshs. 3,496,547. 50/= as at 14/7/2021. She states that due to the default, the Respondent marked the Security title for sale in recovery of the defaulted amount.The matter was forwarded to the Respondent’s Auctioneers where a valuation was done on 19/10/2019 and a notice sent to Claimant on 20/11/2020 indicating 45 days’ notice before execution of sale.She states that, as a procedure, the auctioneer advertised the security property for sale. She states that the Claimant upon seeing the sale advertisement of the land, she filed this case. She states that the Respondent has filed Claimant’s account dates to the Claimant’s advocate indicating all loan repayments and loan balances.She affirmed that the interest charged is correct. She states that the Claimant has not made any repayments since moving to this court and the loan is still accruing interest and penalties, hence the Counter-claim.The Respondent has filed relevant documents to support her case.

9. During the hearing of the mater on 22/6/2023, the Respondent Witness adopted her Witness Statement dated 27/1/2021 and her documents plus further documents dated 1/2/2023 as her Evidence -in -Chief.She avers that the Claimant owes the Respondent Kshs. 3,682,275/= as at December, 2022. She states that the Claimant was notified of loan details and she signed for the same. She stated that the defaulted amount is still accruing. She also confirmed that the Claimant’s savings of Kshs. 400,000/= was loanee 20% security for the loan.She prays the court for the recovery of Kshs. 3,682,275/= and the cost of the suit.

10. On Cross-Examination, the Witness states that she sent reminder letter to Claimant by post office. She stated that the loan interest was 8% but the penalties were not explicit. She confirmed that the available Valuation Report is of 2013 and that no valuation was done at the time of planned auction.She stated that a loanee required to deposit 20% of the loan applied. In this case, the Claimant had savings of Kshs. 400,000/=. She states that the Claimant’s savings are in the Respondent’s system but cannot be accessed by the Claimant.She stated that account reconciliations are done every month end. She confirmed that the Claimant’s last repayment was 2016.

11. On re-examination, the Respondent witness stated that loan interest can be calculated from the Loan Application Form. She averred that the Claimant never communicated her health situation to the Respondent.In their Submissions, the Respondent reiterates that the Claimant was uncooperative while the Respondent continues to suffer losses as a result of the defaults.The Respondent states that though empathizing with the Claimant, the Claimant must bear the loan obligations which she signed long before she got sick.The Respondent states that the Claimant knew of the loan obligations and penalties in the evet of default. As regards, the Claimant’s savings with the Respondent, the Respondents confirm their existence but avers that the savings are security to the loan.The Respondent states that due process was followed in advertising for sale of the security property, more than one year since the loan was defaulted. The Respondent states that they are ready to let the Claimant do a valuation, pay for it but leave the Respondent to exercise its statutory power of sale.

Analysis. 12. Both the Claimant and the Respondent agree that the Claimant was loaned Kshs. 2,000,000/= loan and that the Claimant had a Kshs. 400,000/= saving which was used as a part security to the loan. The Claimant does not deny that she g=has defaulted on her loan.We have perused the loan agreement between Claimant and Respondent and tow out that there was indeed a contract between the two parties.While the principle loaned amount is not in dispute, the interest rate and penalties are not explicitly expressed in the loan Application form. This has caused the disagreements on loan balances as provided by the Respondent an issue this court is called upon to give directions.This issue of charger is mention under notes contained in the loan agreement. Again, there is no specific figure mentioned for interest or penalties. We also observe that the Claimant did not communicate her health status to the Respondent but kept on defaulting on her loan until the auction notice was given.We also observe that the Claimant did not respond to notices and reminders from the Respondent until her security property was advertised for auction. There two observations show that the Claimant was not serious in repaying her loan.We also note that the Respondent exercised restraint in handling the Claimant but were constrained since they were obliged to ensure the loan was repaid. We also observe that the Claimant is not against the auction of the Security property. What she prays for is a current valuation report. The Respondent does not refuse to allow the Claimant to do her valuation at her cost and then leave the Respondent to auction the land, pay itself and remit the balance (if any) to the Claimant.

13. As regards, the counter claim by the Respondent, the prayers have been addressed during the proceedings. As regards, prayer (b) in the counter claim, we feel that the account reconciliation should be fast tracked as the Claimant pays the loan.

Conclusion. 14. In view of the Proceedings by both parties, we are convinced that the Claimant has adequately prosecuted her case and therefore enter judgement as hereunder: -

a.The Respondent is hereby ordered to provide a detailed statement of Account for her loan and savings account reflecting all the monies paid by the Applicant and those withdrawn by the Respondent from her savings account.b.Fails.c.The parties are hereby ordered to undertake an exercise of reconciliation of accounts either by themselves or by an independent auditor to ascertain the date when the loan went into default and parties to share the costs of auditing and reconciliation. This exercise should be completed within 60 days.d.An order is hereby issued that valuation by an independent valuer be done of the subject property, Land Reference Number Miti Mingi/Mbaruk Block 8/1876 and costs of the exercise be borne by the Claimant.e.Each party to bear its own costs.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 7TH DAY OF MARCH, 2024. Hon. Beatrice Kimemia Chairperson Signed 7. 3.2024Hon. Beatrice Sawe - Member Signed 7. 3. 2024Hon. Fridah Lotuiya - Member signed 7. 3.2024Hon. Philip Gichuki - Member Signed 7. 3.2024Hon. Michael Chesikaw - Member Signed 7. 3.2024Hon. Paul Aol - Member Signed 7. 3.2024**Tribunal Clerk JemimahMiss Kiambi advocate holding brief for Owaga for RespondentMwangi Ndirangu advocate for ClaimantHon. Beatrice Kimemia - Chairperson Signed 7. 3.2024