Onjonga v Kedaco Savings & Credit Cooperative Society Limited [2023] KEHC 25523 (KLR)

Onjonga v Kedaco Savings & Credit Cooperative Society Limited (Civil Appeal E828 of 2022) [2023] KEHC 25523 (KLR) (Civ) (16 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25523 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E828 of 2022

JN Mulwa, J

November 16, 2023

Between

Peter Ouma Onjonga

Appellant

and

Kedaco Savings & Credit Cooperative Society Limited

Respondent

(An appeal against the Judgment and Orders of the Chairperson of the Co-operative Tribunal of Kenya at Nairobi in Tribunal Case No. 448 of 2017 delivered by Hon. B. Kimemia on 25{{^th}} March, 2021)

Judgment

1. By a Statement of Claim dated 14/6/2017 the Appellant instituted a case before the Co-operative Tribunal, Nairobi Civil Suit No. 448 of 2017 against the Respondent herein claiming a sum of Kshs. 652,000/= and interest thereon. It was pleaded that the Appellant applied for a loan from the Respondent which was subsequently approved and he faithfully made his monthly repayments as per the loan agreement, leaving a balance of Kshs. 377,900/= as at 31/3/2011. The Appellant further pleaded that from 2011 the Respondent thereafter illegally posted a total of Kshs.651,000/= into the Appellant’s loan account without his authorization and consent thereby bringing the total loan outstanding to Kshs.1,029,900/= without any justification and henceforth commenced the monthly deductions from his salary but in excess of the lawful amount of Kshs.377,900/= .The Appellant ended up paying a total sum of Kshs.652,000/= illegally as a loan from his salary and Co-operatives savings.

2. In its statement of defense, the Respondent then the Defendant averred that the Appellant was being economical with the truth when he says that the deductions from his salary to settle the sum of Kshs.652,000/=was illegal and was not supported by the Respondent’s rules and Regulations.

3. Upon full trial, the tribunal dismissed the Claimant’s suit with parties bearing their own costs. Aggrieved by the decision, the Appellant lodged the instant appeal by a Memorandum of Appeal dated 14/10/2022 and filed on 18/10/2022 raising the following grounds:a.The learned Chairperson erred in law and fact by disregarding the fact that the Appellant never signed any loan application forms.b.The learned Chairperson erred in law and fact by disregarding the fact that the Respondent illegally posted a loan of Kshs.652,000/= to the Appellant’s account without his authorization and/or consent.c.The learned Chairperson erred in law and fact by disregarding the fact the Respondent illegally deducting the Appellant’s salary to service a loan he never took.d.The Learned Chairperson erred in law and fact by disregarding the fact that the Appellant never received the sum of Kshs.652,000/= from the Respondent.e.The learned Chairperson erred in law and fact by disregarding the fact that the Respondent did not provide any evidence of the alleged unposted loans of Kshs.652,000/=.f.The learned Chairperson erred in law and fact by failing to take into account the Appellant’s submissions.

4. The Appellant prays that the Appeal be allowed and the judgment and final Orders of the Tribunal dated 25/3/2021 and all other consequential orders be set aside and the Court to give any other orders that it shall deem fit to grant.

5. The Appellants case is that he was claiming Kshs.652,000/- from the Respondent who has been deducting the same to his loan illegally and protests that the loan had been added without an explanation. The Appellant further claims that in March 2011 the loan he had was Kshs. 379,000/- and that in April 2011 had increased to Kshs. 529,900/=. The witness further testified that he received a letter from the Respondent informing him that he had a loan of Kshs. 652,000/= that was not posted in his loan account and that he responded to the same via a letter dated 5th December 2014. The Appellant confirmed that he was a committee member and officer of the Respondent. He also stated that he was forced to sign a form and that he feared for his life after some of the members threatened to beat him up. At some point, the Appellant stepped aside to allow investigations into the Respondent's purported loan. He further stated that he had mandate while in office to withdraw money from the Respondent’s bank account for specific reasons and that he cleared paying the loan in 2015. On re-examination, the witness stated that the handing over report had indicated that there was a short fall, Kshs.2,208,900/= and that the said amount was not reflected in the annual report and he also did not where the said amount came from.

Respondent’s Case 6. RW1 David Mutua stated that he held the position of Chairman, vice Chairman and secretary of the Respondent stated that the genesis of the Claimant’s case was in 2010 when there was a new committee which investigated the issue of unposted loans and asked for the details. The witness confirmed that he was one of the people under investigation and he was said to have an unposted loan of Kshs.1,027,000/= and that he paid it off via a check off system. He confirmed that the Appellant’s unposted loan was Kshs.652,000/=. The witness stated that according to the minutes of the SGM held on 15/5/2011 meeting resolved for the unposted loans to be paid. On cross examination the witness stated that individual committee members had unposted loans which accumulated overtime and that there were no audit reports for all loans posted through the treasurer.

7. RW2 Kenneth Odhiambo Owino who was a colleague to Appellant stated that the issue on unposted loans came up after members started complaining and demanded for their money which they said was being taken and not posted and the same did not reflect in the payslips.The witness stated that after deliberations the Appellant’s unposted loan came to Kshs.652,000/= and that he signed the minutes of the said meeting and was not forced to sign the loan applications forms .The witness further stated that according to the Respondent’s by laws Clause 46 is that they sign for liability of any loss of money when they are in office and that it requires of members to commit to take responsibility. On re-examination, the witness stated that there were four executives who were implicated including the Appellant. He further stated that the unposted loans does not show on the payslip and not repaying the money is illegal and that the said unposted loans are illegal.

8. RW3 Amos Mwangi the current treasurer, who took over from the Appellant produced the counterfoils and confirmed that the Appellant has an unposted loan of Kshs.652,000/=. On cross-examination the witness stated that when he came into office the Appellant told him that all the documents that is the counterfoils and the record of loans were all burnt at his home in Kibera. The witness further stated that they would mostly during the end of the year they would sit down and distribute the unposted loans to persons who have not taken loans and that would create an impression that the books are balanced .

Analysis and Determination 9. The court has read the Record of Appeal, the pleadings, evidence adduced before the Tribunal including the rival submissions and the trial court’s impugned judgment.The duty of an appellate court is; to re-evaluate and re-analyze the entire evidence, draw its own conclusions bearing in mind that the judge never saw or heard the witnesses testify; and taking into account that it is not bound to follow the findings of fact as found by the trial court as rendered in Selle V. Associates Motor Boat Company [1968] EA 123. Having discharged that duty, the issue that arise for determination is: whether the Appellant had unposted loans of Kshs.651,000/=

10. The Appellant stated that the Respondent posted a loan of Kshs.652,000/= without his authorization and went ahead and deducted the same from his salary. On the other hand, the Respondent stated that the Appellant had indeed an unposted loan of Kshs.652,000/=.

11. It is clear that the Appellant did, in fact, have an unposted loan because, as the Respondent's witness RW1 attested to, following discussions with the other members, there was a deficit of Kshs. 2,122,900/=. The Respondent further produced the Loan Reconciliation Statement as of December 31, 2009, in their bundle of documents, which the court also noted showed that the closing balance was Kshs. 21,208,600/=, while the loan balance according to the schedule was Kshs. 19,085,700/=, leaving a deficit of Kshs. 2,122,900/=.

12. RW1 testified that he was one of the borrowers who had taken out loans but that they had not been posted, and that the Appellant was also on the list of borrowers who had not posted their loans, totaling Kshs. 651,000. Additionally, the witness told the court that he had an unposted loan of Kshs. 1,027,000, which he has since paid off. The Court further notes that the RW1, the Chairperson, and the Appellant were among the other members or the majority of the committee members who were listed as having unposted loans that were included in the Respondent's bundle of documents and who also had unpaid debts to repay. It is also evident that the Appellant did not dispute or raise any objections to these papers. Further to the Respondent’s by laws are very clear as per clause 46 which states as follows:“In the conduct of the affairs of the society, the members of the committee shall exercise the prudence and diligence of ordinary men of the business and shall be held jointly and severally liable for any losses sustained through their acts, or failure to act, which are contrary to the Act, the Rules, the Bylaws or the directions of the General Meeting.”

13. It is also noteworthy that the RW3 who assumed the position of treasurer verified that the Appellant did, in fact, owe the Respondent the specified sum. Furthermore, the Appellant declined to provide certain loan records and counterfoils that could have been useful in identifying some of the inconsistencies that had transpired during his tenure. It is also mentioned that the Appellant claimed that the aforementioned documents were burned in his Kibera home. This seems strange to me because, as treasurer, he was in charge of handling people's money, thus he ought to have kept a backup copy of those documents.

14. This court does not also think that the Appellant was forced or rather coerced to sign the loan documents since he also had other six guarantors who had signed his loan document which is a clear indication he was not forced. The Appellant should have also reported the same to the police but opted not to do so.The other thing that comes out is that the Appellant paid the loan for five years but only came to complain about the same after he has finished paying it and on top of that the Appellant had pleaded coercion, fraud, duress or undue influence something that the Appellant had not proved to the required standard that indeed he had been forced to force to sign the loan application form. In the case of Koinange & 13 Others V. Charles Karuga Koinange 1986 KLR at page 23 Justice Amin citing the case of Ratilal Patel Makanji (1957) EA 314 observed as follows:“When fraud is alleged by the plaintiffs, the onus is on the plaintiffs to discharge the burden of proof. Allegations of fraud must be strictly proved, although the standard of proof may not be so heavy as to require proof beyond reasonable doubt, something more than a balance of probabilities is required”

15. Furthermore, in Vijay Morjaria v Nansingh Madhusingh Darbar & another [2000] eKLR (Civil Appeal No. 106 of 2000) Tunoi JA (as he then was) stated as follows:“It is well established that fraud must be specifically pleaded and that particulars of the fraud alleged must be stated on the face of the pleading. The acts alleged to be fraudulent must of course be set out, and then it should be stated that these acts were done fraudulently. It is also settled law that fraudulent conduct must be distinctly alleged and as distinctly proved, and it is not allowable to leave fraud to be inferred from the facts.” (Emphasis ours)

16. Finally,the reason the Appellant is not entitled to the orders requested is because, while serving on the Respondent committee, he and other members gave themselves loans and took advantage of other members because they held committee positions. When the members noticed the inconsistencies, they decided to fill out the loan forms in order to regularize, which prevented the Appellant from coming forward and requesting money that he knew for sure they had taken without recording and from which he has no right to do so because he has not appeared before this court with clean hands.In John Njue Nyaga v Nicholas Njiru Nyaga & Another (2013) eKLR, the Court of Appeal sitting at Nyeri observed as follows:“It is our considered view that one who comes to equity must come with clean hands and equity frowns upon secrecy and underhand dealings.” The applicant has not done so and is underserving of the orders he seeks.”Anne Mumbi Hinga v Gaitho Oil Limited (2019) eKLR the court stated as follows:“Based on my evaluation of the evidence presented above, I wish to rely on the doctrine of equity demands that he who comes to equity must come with clean hands. From the 1st respondent's actions and averments, I find that her conduct towards the transaction is contradictory as she does not have clean hands to cry foul.”

17. In conclusion, the court finds that the appeal lacks merit and is hereby dismissed with costs to the Respondent.Orders accordingly.

DELIVERED, DATED AND SIGNED IN NAIROBI THIS 16TH DAY OF NOVEMBER, 2023. JANET MULWAJUDGE