Ruchugo v Co-operative Bank Housing Cooperative Society Ltd [2024] KECPT 923 (KLR)

Ruchugo v Co-operative Bank Housing Cooperative Society Ltd (Tribunal Case E715/663 of 2022) [2024] KECPT 923 (KLR) (30 May 2024) (Judgment)

Neutral citation: [2024] KECPT 923 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case E715/663 of 2022

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

May 30, 2024

Between

Juliah Kaguru Ruchugo

Claimant

and

Co-operative Bank Housing Cooperative Society Ltd

Respondent

Judgment

1. The matter for determination is a Statement of Claim dated 25th July 2022. In the Statement of Claim, the Claimant claims that she was a member of the Respondent until 11th September 2013 when she withdrew. She avers that in 2011, she bought a piece of land Mtwapa/Kijipwa Block 1/61 from the Respondent, and the same was offered for Kshs. 800,000/-. The Respondent loaned the Claimant the Kshs. 800,000/- to clear the purchase price, an amount which she claimed she repaid with her retirement benefits. The Claimant claims that the Respondent has since refused to transfer the piece of land and irrationally demanded a further Kshs. 250,000/= in which the Claimant was arm twisted to pay Kshs. 150,000/=. The Claimant feels aggrieved and, prays for:a.An order directing the Respondent to transfer of plot number Mtwapa/kijipwa block 1/61 to the claimant failure to which the executive Officer do execute all the necessary documents to facilitate the said transfer.b.The refund of sum of Kshs. 150,000/= with interest from October 2021. c.A permanent injunction stopping the Respondentt and its agents from interfering with the Claimant’s user and quiet possession of Mtwapa/Kijipwa Block 1/61. d.Costs of this suit together with interest thereon at prevailing court rates.e.Any such or further relief as this Honourable court may deem appropriate.The Claimant filed a Witness Statement and a List of Documents in support of her claim.

2. The Respondent entered appearance and filed a Statement of Defence dated 23rd September 2022. In their Defence, the Respondents admit that the Claimant was its member and that indeed she purchased a parcel of land at Ksh. 800,000/-. However, they aver that in 2015, a feasibility study was carried out from which investors agreed to contribute an additional Ksh. 250,400/-

3. During the hearing, the Claimant adopted her statement and produced the documents in support of her claim. Exhibit 6 is a clearance certificate that she was given by the Respondent upon clearing her loan balance. The Claimant also highlighted clause 10 of the offer letter stated that her understanding was tha the amenities of the serviced plot was part of the purchase price. She further testified that she was informed that the Ksh. 250,000/= increament was resolved in an Annual General Meeting in 2015, and yet by that time she was no longer a member of the Respondent.

4. One John Kimutai, the Manager of the Respondent, testified for the Respondent. In his testimony, he acknowledged that the Claimant was among the founding members of the Respondent, and now she remains an investor in one of the Respondent’s projects. He testified that in the Annual General Meeting of 29th November 2014, they discussed what developments in the Mtwapa property were to be done and how the same was to be financed and it was followed by the feasibility meeting dated 28th March 2015, in which the Ksh. 250,400/- was agreed. He further stated that the mother's title was charged to the bank, and the agreement was for partial discharge upon which an investor would get their title after payment. On cross-examination, he stated that the Claimant was bound by the investors of Mtwapa project.

5. Both parties filed their submissions. Claimant filed written submissions dated 16. 10. 2023 and Respondent filed their written submission dated 4. 12. 2024.

Analysis 6. This Tribunal has taken note of the pleadings filed by the parties and the evidence adduced during the hearing. It is not in dispute that the Claimant was a member of the Respondent. It is not in dispute that the Claimant entered into an agreement with the Respondent for the purchase of a plot of land in Mtwapa, plot number Mtwapa/Kijipwa Block 1/16 for a purchase price of Ksh. 800,000/=. It is also not in dispute that the Claimant paid the Ksh. 800000/= and was issued with a letter to that effect. It is also not in dispute that the Respondent demanded a further Kshs. 250,400/= from the Claimant, and that the Claimant is yet to be given his title because of this amount.

7. What is in dispute is whether the Claimant should pay this money as a precondition to the transfer of land. In answering this question, this Tribunal will look at the circumstances that would ordinarily lead to the transfer of land. For a sale of land there ought to be a a written contract. Section 3(3) of the Law of Contract Act provides as follows:“(3)No suit shall be brought upon a contract for the disposition of an interest in land unless—(a)the contract upon which the suit is founded—(i)is in writing; (ii)is signed by all the parties thereto;

8. And so we ask ourselves, is there a contract? Our attention is drawn to the offer letter dated 11th January 2011 written by the Respondent to the Claimant. The letter is an offer to sell the Claimant and indeed allocates 1 plot in Mtwapa (phase 1) subject to the acceptance by the Claimant. The terms of the offer are that the Claimant is advanced a loan by the Respondent of Ksh. 800,000/= to purchase the land. Other terms are that the members will be required to form a welfare committee to be charged with the maintenance of the property. The developments in the estate are to include social amenities, such as a school, swimming pool playground recreational centre among others. There is also a term to the effect that financial obligations towards future developments beyond those mentioned to be incurred by individual owners.We note that the Claimant accepted the terms of the offer, and signed the offer letter on 18th January 2011, and the same is witnessed by one John. K. Businei.

9. On 28th June 2011, the Respondent issued an instalment clearance notice to the Respondent to the effect that the Claimant has cleared paying the instalments envisaged in the offer letter of 18th January 2021. This letter also communicates that the subdivision process has been started and the Claimant was to be informed of the process. Indeed the Claimant was issued with a Beacon Certificate for plot number 061 dated 23rd June 2012. And this seems to be the last official communication regarding the subject plot of land before the emails regarding the additional costs sometime in 2021.

10. The question we ask ourselves is whether there was a valid contract for the sale of land and whether the same was performed. The Respondent offered, and the Claimant accepted, and indeed paid, and received a notice of completion of payment. We find this to be a valid contract that has been performed by the Claimant. The plot was part of a big undivided land, the Respondent caused the division of the land, beaconing and issued the Claimant a beacon certificate and sent the copy of the Title deed on 21st March 2022. We find that there was a complete meeting of the minds of both parties, on the identity of the subject property, and also on the terms of the contract. There was no mention of an investment body for the plot of land in the letter of offer, in the notice of completion or anywhere else.

11. Prayer 1 is for an order directing the respondent to transfer Plot number Mtwapa/Kijipwa Block 1/61 to the Claimant. This is an order of specific performance. In Gurdev Singh Birdi and Marinder Singh Ghatora v Abubakar Mahhubuti Court of Appeal No 165 of 1996, the Court of Appeal outlined the following principle which guides our courts when exercising jurisdiction to grant the remedy of specific performance.“It cannot be gainsaid that the underlying principle in granting the equitable relief of specific performance has always been that under all the obtaining circumstances in the particular case, it is just and equitable so to do with a view to doing more perfect and complete justice. Indeed...a plaintiff must show that he has performed all the terms of the contract which he has undertaken to perform, whether expressly or by implication, and which he ought to have performed at the date of the writ in the action.”

12. According to the offer letter, the Claimant’s duty was to repay the loan taken to purchase the land. The Claimant provided documents to show that she indeed cleared the instalments and was given a completion letter to that effect. We find that the Claimant has performed her obligations arising out of the contract for the sale of land.

13. It is the Respondent’s contention that the Ksh. 250,400/= increment to be paid, is a result of a meeting of investors. This can, therefore, not be said to be part of the contract of sale of land since there was no reference to the investors, and neither were those investors parties to the contract of sale between the Claimant and the Respondent for the subject property. We find that the land sale transaction was distinct from the obligations arising out of the alleged investor resolutions. What the Respondent is doing, is to bundle the two obligations to coerce the Claimant to perform the obligations under the alleged investor resolution.

14. On the second prayer, the Claimant prays for a refund of Kshs. 150,000/=. This court will now look at the circumstances under which the money was paid. It started with a notice of a meeting issued on 31st October 2014. In that notice, members are reminded that the members in their Annual General Meeting resolved that members in various projects be involved in making decisions aimed at finalizing them, and called all investors to the Mtwapa project to a meeting on 29th November 2014. The agenda of the meeting is to review the current status of Mtwapa project and the way forward.

15. From the minutes of the meeting held on 29th November 2014, it is noted members resolved that a feasibility study be carried out on the various options and if the feasibility is negative, them members can consider option 1.

16. The various options are investment options that the members were presented with. There was discussion by members of the options, with one member even raising the issue that some people might not be able to shoulder the burden of the added costs. The investors who voted at this meeting were 43. 31 for and 12 against the resolution.

17. The next communication after the investors meeting was a letter dated 25th February 2015. In that letter, the Respondent informs the members that the feasibility study was started and the consultant is yet to give a report. It also reports on the suggestion of the lawyer. The Respondent proposed that the investors should consider option 1, and communication to the effect that investors will have to add Kshs.272,129/-. In a subsequent meeting held on 25th March 2015, the amount was reduced to Kshs. 250,400/-. Each investor was to be loaned the amount to be repaid over 84 months.

18. The Claimant claims that she paid the Kshs. 150,000/= out of duress, because the Respondent could not transfer the title to the property before she paid the additional amount. In the transactions that led to the investors resolving to add an additional Kshs. 250,400/- , this court does not find any clause or agenda that sought to bundle the transfer of the property with the payment of the additional amount. Indeed, in the meeting held on 29th November in the introduction of the meeting, the Respondent informed the investors that the buying price is Kshs. 800,000/-. Therefore, this court finds that the two transactions of buying land and of developing the same are distinct. It is indeed duress and illegal to bundle the transfer of land with the payment of an additional amount. This court did not receive any evidence to the effect that the investors are formed in any legal vehicle capable of making resolutions that bind other investors. There is no provision for conduct of investors or investment units in the by-laws of the Respondent.

19. This court understands that some of the developments to be made are crucial for the functioning of the plots. However, we feel that the Respondent would have come up with a better way of convincing their investors to fund the developments rather than bundling two distinct transactions, and punishing people who have long cleared the purchase price. And for this reason, this court will not issue an injunction stopping the Respondent from engaging the Claimant on how better to contribute and develop the land.

20. The upshot of the above is that we find merit in the Claimant’s claim. We order as follows: Judgment is entered in favour of Claimant against Respondent.a.The Respondent is hereby ordered to transfer Plot Number Mtwapa/Kijipwa block 1/61 to the Claimant within 30 days of this judgementb.The Respondent to refund the Claimant the sum of Ksh.150,000/- 30 days from date of judgment.c.Costs of suit and interest from the date of filing suit at Tribunal rates.

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 JonahAtieno advocate for the RespondentNakeel advocate for the ClaimantHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 5.2024